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Section 1: DEF 14A (DEF 14A)

bdn-def14a_20200520.htm

 

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 the 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

Brandywine Realty Trust

(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 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:     

 

 

 

 

 

 

 


 


 


 

Notice of Annual Meeting of Shareholders

To our Shareholders:

We cordially invite you to attend the 2020 Annual Shareholders Meeting of Brandywine Realty Trust, a Maryland real estate investment trust (the “Company”). As of the date of this letter, the Coronavirus continues to impact our daily lives and communities. Our focus is to ensure that we meet our tenant needs and do our part to keep our tenants, employees and communities safe. Our Board is sensitive to the public health and travel concerns of shareholders and it is clear that large gathering can pose a health threat to the participants and greater communities. Accordingly, this year’s annual meeting will be a virtual meeting of shareholders. You will be able to attend the annual meeting and vote and submit questions during the annual meeting via a live webcast by visiting www.virtualshareholdermeeting.com/BDN2020. You may also submit questions in advance of the annual meeting by visiting www.proxyvote.com. We will respond to as many inquiries at the annual meeting as time allows. Prior to the annual meeting you will be able to authorize a proxy to vote your shares at www.proxyvote.com on the matters submitted for shareholder approval at the annual meeting, and we encourage you to do so.

If you plan to attend the annual meeting online, you will need the 16-digit control number included in your Notice of Internet Availability, on your proxy card or on the instructions that accompany your proxy materials. The annual meeting will begin promptly at 10:00 a.m. (Eastern Time). Online check-in will begin at 9:30 a.m. (Eastern Time), and you should allow ample time for the online check-in procedures.

MEETING DATE

MEETING TIME

RECORD DATE

Wednesday,
May 20, 2020

10:00 a.m.
(Eastern Time)

March 20, 2020


At the 2020 annual meeting, shareholders as of the close of business on the record date will be asked to consider and vote upon the following matters, as more fully described in the Proxy Statement:

1.

To consider and vote upon the election of seven persons to the Board of Trustees of the Company, each to serve for a term expiring at the 2021 annual meeting of shareholders and until his or her successor is duly elected and qualified.

2.

To consider and vote upon the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for calendar year 2020.

3.

To consider and vote upon the approval of a non-binding, advisory resolution on executive compensation.

4.

To transact such other business as may properly come before the meeting and at any postponement or adjournment of the meeting.

YOUR VOTE IS IMPORTANT TO US. Whether or not you plan to virtually attend the 2020 annual meeting, please authorize a proxy to vote your shares as soon as possible to ensure that your shares will be represented at the annual meeting.

By Order of the Board of Trustees

Shawn Neuman, Senior Vice President, General Counsel and Secretary

March 27, 2020

2929 Walnut Street, Suite 1700  |  Philadelphia, PA 19104  |  (610) 325-5600

 


 

 

 

 

 

 

 

 

Proxy Statement for the
Annual Meeting of Shareholders

To be held on May 20, 2020

The Annual Meeting of Shareholders of Brandywine Realty Trust (“Brandywine,” “we,” “us,” “our” or the “Company”) will be held on Wednesday, May 20, 2020 at 10:00 a.m., Eastern Time. Our annual meeting will be a virtual meeting of shareholders conducted via a live webcast. You will be able to attend the virtual annual meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/BDN2020. At our annual meeting, we will ask you:

1.

To consider and vote upon the election of seven persons to our Board of Trustees, each to serve for a term expiring at the 2021 annual meeting of shareholders and until his or her successor is duly elected and qualified.

2.

To consider and vote upon the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for calendar year 2020.

3.

To consider and vote upon the approval of a non-binding, advisory resolution on executive compensation.

4.

To transact such other business as may properly come before the meeting and at any postponement or adjournment of the meeting.

Only holders of record of our common shares of beneficial interest, par value $.01 per share, as of the close of business on March 20, 2020 are entitled to notice of and to vote at the 2020 annual meeting or at any postponement or adjournment of the meeting.

Our Board of Trustees knows of no other business that will be presented for consideration at the annual meeting. If any other matter should be properly presented at the annual meeting or any postponement or adjournment of the annual meeting for action by the shareholders, the persons named in the proxy card will vote the proxy in accordance with their discretion on such matter.

On or about March 27, 2020, we mailed a Notice of Internet Availability of Proxy Materials to shareholders. This proxy statement and the form of proxy are first being furnished to shareholders on or about March 27, 2020.

 

 

 

 

 


 


 

 

 

 

 

 

 

 

 

Important Notice Regarding Internet Availability of Proxy Materials

 

We are pleased to take advantage of the Securities and Exchange Commission rules allowing companies to furnish proxy materials to their shareholders over the Internet. We believe that this e-proxy process will expedite shareholders’ receipt of proxy materials, lower the costs and reduce the environmental impact of our 2020 annual meeting. We will send a full set of proxy materials or a “Notice of Internet Availability” of Proxy Materials on or about March 27, 2020, and provide access to our proxy materials over the Internet, beginning on March 27, 2020, for the holders of record and beneficial owners of our common shares as of the close of business on the record date. The Notice of Internet Availability instructs you on how to access and review the Proxy Statement and our annual report, and how to authorize a proxy to vote your shares over the Internet.

 

 

Instead of receiving paper copies of future annual reports and proxy statements in the mail, you may elect to receive an e-mail that will provide an electronic link to these documents. Choosing to receive your proxy materials online will save us the cost of producing and mailing documents to you. With electronic delivery, we will notify you by e-mail as soon as the annual report and proxy statement are available on the Internet, and you may easily submit your shareholder votes online. If you are a shareholder of record, you may enroll in the electronic delivery service at the time you vote by selecting electronic delivery if you vote on the Internet, or at any time in the future by going directly to www.proxyvote.com, selecting the “request copy” option, and following the enrollment instructions.

 

 

 

 

Important Notice Regarding the Availability of Proxy Materials
for the Shareholders Meeting to be Held on May 20, 2020

 

This proxy statement, the form of proxy and our 2019 annual report to
shareholders are available at   www.proxyvote.com.

 

 

 


 

Table of Contents

 

 

 

Business Highlights

1

 

 

Environmental, Social and Governance Snapshot

5

 

 

Commitment to Environmental Stewardship

6

 

 

Corporate Social Responsibility

8

 

 

Corporate Governance

10

 

 

Information about the Meeting and Voting

12

 

 

How Can I Participate in the Annual Meeting?

12

 

 

What Am I Voting on?

12

 

 

What Are the Board’s Recommendations?

13

 

 

Who Is Entitled to Vote?

13

 

 

How Do I Vote?

13

 

 

How May I Revoke or Change My Vote

15

 

 

What Constitutes a Quorum?

15

 

 

What Is a Broker Non-Vote?

15

 

 

What Vote Is Required to Approve Each Proposal?

16

 

 

Who Counts the Votes?

16

 

 

What Does it Mean if I Receive More Than One Proxy Card?

17

 

 

What if I Receive Only One Set of Proxy Materials Although There Are Multiple Shareholders at My Address?

17

 

 

How Do I Submit a Shareholder Proposal for Next Year’s Annual Meeting?

17

 

 

Will I Receive a Copy of the Annual Report and Form 10-K?

18

 

 

How Can I Access the Proxy Materials Electronically?

18

 

 

Proposal 1: Election of Trustees

20

 

 

Trustee Criteria, Qualifications,  Experience and Tenure

20

 

 

Annual Board Evaluation Process

22

 

 

 

Trustees; Nominees

23

 

 

Committees of the Board of Trustees

29

 

 

Trustee Independence; Independence Determination

32

 

 

Corporate Governance

34

 

 

Board’s Role in Risk Oversight

37

 

 

Trustee Nominations

38

 

 

Communications with the Board

39

 

 

Meetings of Trustees and Annual Meeting of Shareholders

39

 

 

Trustee Compensation

40

 

 

Executives and Executive Compensation

43

 

 

Current Executive Officers

43

 

 

Compensation Discussion and Analysis

46

 

 

Proposal 2: Ratification of the Appointment of Independent Registered Public Accounting Firm

87

 

 

Fees to Independent Registered Public Accounting Firm

88

 

 

Report of the Audit Committee

89

 

 

Proposal 3: Advisory Vote on Executive Compensation

91

 

 

Other Information

93

 

 

Certain Relationships and Related Party Transactions

93

 

 

Delinquent Section 16(a) Reports

94

 

 

Proposals Pursuant to SEC Rule 14a-8

94

 

 

Proxy Access Trustee Nominees

95

 

 

Other Proposals and Nominees

95

 

 

Review of Shareholder Proposals; Other Business

96

 

 

Expenses of Solicitation

96

 

 

Appendix A: Reconciliation of Non-GAAP Financial Measures to GAAP Measures (unaudited, in thousands)

98

 

 


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BRANDYWINE REALTY TRUST


 

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Business Highlights1


 

1 

Please see “Compensation Discussion – Analysis Discussion” later in this proxy statement and Appendix A to this proxy statement for a discussion of non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures.

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2020 PROXY STATEMENT

Development Highlights

Development of SHI Headquarters at Garza Ranch, Austin, TX

   Substantially Completed: March 2020

Development of Four Points Centre III,

Austin, TX

   Completion: February 2019

Development of Schuylkill Yards’

Drexel Square, Philadelphia, PA

  Opened to the public in June 2019

Completed

Redevelopment of 1676 International Drive, Tysons, VA

  Substantially Completed: January 2020


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BRANDYWINE REALTY TRUST

 


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2020 PROXY STATEMENT


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BRANDYWINE REALTY TRUST

Environmental, Social and Governance Snapshot

First WELL Core Certified project at the Bronze level, globally

First WELL v2 certification in the United States

Brandywine has reported annually to the Global Real Estate Sustainability Benchmark (GRESB) since 2012 and in 2019, scored a perfect 100 points for our commitment to Social Engagement

Repeated GRESB Green Star leader

Named a 2018 Fitwel Champion with 5.4 million certified square feet—the most of any company worldwide

Since 2016, all new construction has been LEED Certified or, at a minimum, built to LEED standards (i.e. FMC Tower, Garza Ranch, 1676 International Drive, GSA Philadelphia Campus, etc.)

275M kWh of Green Power procured in 2019 for buildings located in deregulated markets (approximately 74% of portfolio) with 100% derived from wind generation

 


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2020 PROXY STATEMENT

Commitment to Environmental Stewardship

Brandywine’s best-in-class environmental practices span the entirety of our portfolio, from the properties we develop, to the ones we lease and manage. We prioritize efforts to minimize environmental impact through energy and resource-efficient buildings in transit-oriented locations, and deliver Class A office environments that emphasize the health and well-being of building occupants.

 

WATER

ENERGY

GREENHOUSE GAS

WASTE DIVERSION

Usage down
by 11%

Usage down
by 0.06%

Emissions
down by 1.98%

38% diverted
from landfills

Sustainable Development

Clockwise: Schuylkill Yards, Philadelphia, PA; 405 Colorado, Austin, TX; and 1676 International Drive, Tysons, VA


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BRANDYWINE REALTY TRUST

Our portfolio reflects our commitment to sustainability and our focus on certified buildings that prioritize the health and wellbeing of employees, tenants, residents and visitors. From conception, we factor energy performance into each phase of the building’s life-cycle, from energy modeling during design and development, to commissioning and smart operations and maintenance practices to ensure that results are achieved. We understand that our developments will have a lasting impact on their surrounding communities, so we focus on sustainable community development by taking advantage of existing transit infrastructure and proximity to vibrant nearby amenities.

Office Building Operations

Our Operations Team continually evaluates the impact our properties have on the environment by utilizing building data to implement improvements, increase efficiencies, and create new standards to drive economies in system performance. To that end, Brandywine Realty Trust was named a Fitwel Champion in 2018 with 5.4M square feet of certified space—the most of any company worldwide.

Green Leasing:  As a recognized “Green Lease Leader”, Brandywine incorporates key sustainability language into our leases, covering issues such as chemical use, indoor air quality, energy efficiency, water efficiency, recycling, and other strategies to drive shared cost savings that benefit both tenant and landlord.

The Power of Partnerships

Green Building United:  For nearly a decade, we have partnered with Green Building United to help foster transformative impact in Philadelphia through green building education and advocacy. Brandywine has chaired numerous committees, including the annual Philadelphia Sustainability Symposium and Green Building United’s Annual Groundbreaker Awards. Brandywine was one of the first companies in the region to commit to Green Building United’s 2030 District, which targets a 50% reduction in energy usage in the city of Philadelphia by 2030.

The Common Market:  Through our partnership with The Common Market, we have brought fresh fruits and vegetables directly to our office towers. In 2018, our tenants and employees purchased nearly 3,700 pounds of locally-sourced produce from our FMC Tower Farm Stand, which in turn, helped to create nearly 840 jobs at 19 local family-owned farms. All leftover produce was donated to our neighbors at the People’s Emergency Center of West Philadelphia.


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2020 PROXY STATEMENT

Corporate Social Responsibility

At Brandywine, we believe the value in what we do, lies in the difference we can make. As such, we are committed to being good neighbors and corporate citizens in the communities in which we live and work.

Neighborhood Engagement Initiative

In collaboration with a wide range of partners, Brandywine introduced an unprecedented Neighborhood Engagement Initiative as part of Schuylkill Yards, totaling a $16+ million commitment to the surrounding community. Programs include:

u

Grow Philadelphia Capital Fund:  through a partnership with The Enterprise Center, a non-profit lender and small business technical assistance provider, we created this fund to provide low cost capital with an interest rate of 1% directly to Philadelphia Minority Enterprises to accelerate growth, enhance employment opportunities, and drive economic development in the community.

u

Construction Apprenticeship Preparatory Program:  we sponsor the Construction Apprenticeship Preparatory Program (CAPP), a 15- week classroom-based curriculum designed to prepare candidates for the required entrance exams and interview process for the skilled building trade unions. Participants who pass an apprentice exam are provided mentorship and offered employment on our projects. To date, 45 individuals have been placed in Union jobs. The next group of classes will start in January 2020.

u

Local Sourcing Initiative:  to assist in creating new procurement channels for West Philadelphia businesses, we make introductions between local businesses and our tenants, and fund a 10% discount for all tenants on their first purchase of goods or services from a West Philadelphia vendor.

u

CDC Co-Development:  we are hiring a Community Developmental Corporation (CDC) for each Schuylkill Yards project, allowing the CDCs to earn revenue and build capacity for their staff to better execute projects that enhance their community-serving mission.

u

Community Fund:  we are contributing a $9.3 million grant to a Community Fund managed by a consortium of local community groups, which will provide capital for affordable housing and preservation initiatives, additional small business and employment programs, community capacity building, and educational support for local public schools.

Philanthropy

Since our inception, Brandywine has partnered with an array of organizations to provide donations, funding and personnel to support the causes and advocacy that are important to both our company and our employees.  Highlights of this focus include:

u

Our company provides each employee with the opportunity to utilize 3-days of paid Volunteer Time Off each year to give back to nonprofit organizations of their choice.

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BRANDYWINE REALTY TRUST

u

Through our Employee Match Program, Brandywine will match a donation to certain qualifying non-profit organizations to which our employees contribute, including organizations such as the American Heart Association, Alzheimer’s Association, The Leukemia & Lymphoma Society, and Habitat for Humanity.

u

In our Philadelphia office buildings, our management teams have partnered with eWaste and PAR Recycling—companies that specifically employ formerly-incarcerated individuals as a true “second chance.”

Employee Engagement

Our employees are our greatest assets. They make the day-to-day operation and management of our buildings look easy. Their commitment to excellence in their everyday encounters helps us to foster a collaborative atmosphere where internal partnerships belay creativity and inspiration. As a company, we seek to embody the best practices for team cohesiveness, and do so by promoting diversity and inclusion throughout every level of the organization.

u

Named a 2019 Outstanding Employer by Korn Ferry, who publicly recognizes organizations that have built superior levels of engagement and enablement, as measured through recent employee surveys

u

Our annual internal Employee Engagement Survey yielded an 83% impact response, enabling the company to focus on bettering the areas deemed most important to our employees

u

To facilitate important conversations and connections between employees, we have three Affinity Teams that focus on stewarding opportunities to build leadership, promote employee engagement, and increase career success: GROW (Growth in Relationships & Opportunity for Women), Young Professionals, and Diversity, Inclusion and Belonging

u

To encourage a culture of open dialogue and provide employees with the tools to align their career development with their goals, we perform annual performance reviews that give employees an opportunity to garner formal feedback from their managers and set objectives for career growth.

u

Through our Cristo Rey partnership, Brandywine sponsors high school student internships and summer work programs

u

Brandywine was recently named to the State Street Global Advisors Gender Diversity Index which tracks US companies with the highest levels of gender diversity in leadership positions within their respective sectors  

u

To emphasize the importance of continuous learning, Brandywine offers a tuition reimbursement program to all employees


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2020 PROXY STATEMENT

Corporate Governance

Strong corporate governance encourages accountability and transparency, as it promotes the long-term interests of shareowners, strengthens Board and Management accountability, and helps build public trust in the company.

Our commitment to good corporate governance led to an industry-leading ISS Governance Quality Score of 1 in 2019 – representing the lowest shareholder risk and highest score that can be received by ISS. In addition, Brandywine continues to maintain an A Rating from MSCI ESG Research LLC.

The below list of practices highlights our alignment with good corporate governance:

Board Structure

uAll Trustees are independent other than our President and CEO

uSeparate Chairman and Chief Executive Officer

uTrustees are elected annually

uRobust role for Lead Independent Trustee, who chairs the Board

uOpen communication and effective working relationships among Trustees with regular access to management

uActive year-round shareholder outreach and engagement

uMajority voting in uncontested elections

uResignation policy for any Trustee who does not receive majority support

uRobust trustee and officer share ownership requirements

uAnti-hedging policy and anti-pledging policy by trustees and executive officers

uRegular executive sessions of independent Trustees

uTwo Audit Committee members are “audit committee financial experts”

uRisk oversight by full Board and Committees

uAnnual Board and Committee self-assessment

uExpress Board diversity commitment in Corporate Governance Principles

Shareholder Rights

uProxy access provisions in our Bylaws

uNo poison pill

uShareholders have the right to call a special meeting

uAs a Maryland REIT, we have opted out of the Maryland Unsolicited Takeover Act (MUTA) and the Maryland Business Combination Act

uSimple majority vote requirement for mergers requiring a shareholder vote

uOur shareholders have the power to amend our Bylaws


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2020 PROXY STATEMENT

Information about the Meeting and Voting

How Can I Participate in the Annual Meeting?

 

Due to the potential travel and community gathering impacts of the coronavirus outbreak (COVID-19), we are moving to an online format for the annual meeting. You can access the virtual annual meeting at the meeting time at www.virtualshareholdermeeting.com/BDN2020. By hosting the annual meeting online, we are able to communicate more effectively with our shareholders, enable increased attendance and participation, reduce costs and increase overall safety for both the Company and our shareholders. The virtual meeting has been designed to provide the same rights to participate as you would have at an in-person meeting.

If you plan to attend the annual meeting online, you will need the 16-digit control number included in your Notice of Internet Availability, on your proxy card or on the instructions that accompany your proxy materials. The annual meeting will begin promptly at 10:00 a.m. (Eastern Time). Online check-in will begin at 9:30 a.m. (Eastern Time), and you should allow ample time for the online check-in procedures.

What Am I Voting on?

 

Our Board of Trustees is soliciting your vote for:

u

The election of seven Trustees, each to serve for a term expiring at the 2021 annual meeting of shareholders and until his or her successor is duly elected and qualified. Each of the seven individuals nominated for election is currently serving on our Board.

u

Ratification of the Audit Committee’s appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for calendar year 2020.

u

Approval of a non-binding, advisory resolution on executive compensation.

If any other matter should be properly presented at the annual meeting or any postponement or adjournment of the meeting for action by the shareholders, the persons named in the proxy card will vote the proxy in accordance with his or her discretion on such matter.


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BRANDYWINE REALTY TRUST

What Are the Board’s Recommendations?

Our Board recommends that you vote:

FOR the election to the Board of each of the seven nominees identified in this proxy statement, with each to serve as a Trustee for a term expiring at the 2021 annual meeting of shareholders and until his or her successor is duly elected and qualified.

FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for calendar year 2020.

FOR the approval of a non-binding, advisory resolution on executive compensation.

Who Is Entitled to Vote?

Holders of common shares of beneficial interest, par value $0.01 per share, or common shares, of record as of the close of business on March 20, 2020 are entitled to notice of and to vote at the annual meeting. Common shares may be voted only if the shares are represented by proxy or in person by the record holder attending the annual meeting via webcast. As of the record date, 174,752,887 common shares were issued and outstanding and entitled to vote.

How Do I Vote?

Shareholders of Record

If you are a shareholder of record, there are several ways for you to vote your common shares at the annual meeting:

Voting by Internet

You may vote your shares through the Internet by signing on to the website identified on the proxy card and following the procedures described on the website. Internet voting is available 24 hours a day, and the procedures are designed to authenticate votes cast by using a personal identification number located on the proxy card. The procedures allow you to authorize a proxy to vote your shares and to confirm that your instructions have been properly recorded. If you vote through the Internet, you should not return your proxy card.

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2020 PROXY STATEMENT

Voting
by Mail

If you choose to vote by mail, simply complete the enclosed proxy card, date and sign it, and return it in the postage-paid envelope provided. If you sign your proxy card and return it without marking any voting instructions, your shares will be voted:

1.FOR the election to our Board of each of the seven nominees identified in this proxy statement, with each to serve as a Trustee for a term expiring at the 2021 annual meeting of shareholders and until his or her successor is duly elected and qualified;

2.FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for calendar year 2020; and

3.FOR the approval of a non-binding, advisory resolution on our executive compensation.


Voting by Telephone

You may vote your shares by telephone by calling toll-free 1-800-690-6903. Telephone voting is available 24 hours a day, and the procedures are designed to authenticate votes cast by using a personal identification number located on the proxy card. The procedures allow you to authorize a proxy to vote your shares and to confirm that your instructions have been properly recorded. If you vote by telephone, you should not return your proxy card.

Attendance at Virtual Meeting

The annual meeting will be a virtual meeting of shareholders and you may vote (virtually) at the annual meeting. Even if you plan to attend the virtual meeting via live webcast, we recommend that you submit your proxy card or voting instructions, or vote by telephone or the Internet by the deadline so that your vote will be counted even if you later decide not to attend the virtual meeting.

 

Beneficial Owners

If you are a shareholder whose shares are held in “street name” (i.e., in the name of a broker or other custodian), you may vote the shares at the annual meeting only if you obtain a legal proxy from the broker or other custodian giving you the right to vote the shares. Alternatively, you may have your shares voted at the meeting by following the voting instructions provided to you by your broker or custodian. Although most brokers offer voting by mail, telephone and via the Internet, availability and specific procedures will depend on their voting arrangements. If you do not provide voting instructions to your broker or other custodian, your shares are referred to as “uninstructed shares.” Under rules of the New York Stock Exchange, your broker or other custodian does not have discretion to vote uninstructed shares on non-routine matters, such as Proposals 1 and 3. Your broker or other custodian does have discretion to vote your shares on Proposal 2.


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BRANDYWINE REALTY TRUST

How May I Revoke or Change My Vote

You may revoke your proxy at any time before it is voted at the Meeting by any of the following methods:

    

  

Submitting a later-dated proxy by mail, over the telephone by calling toll-free 1-800-690-6903 or through the Internet by signing on to the website identified on the proxy card.

Sending a written notice, including by telecopy to 610-832-4928, to our Secretary. You must send any written notice of a revocation of a proxy so as to be delivered before the closing of the vote at the annual meeting to:

 

Brandywine Realty Trust
2929 Walnut Street, Suite 1700
Philadelphia, Pennsylvania 19104
Attention: Shawn Neuman, Senior Vice President, General Counsel and Secretary

Attending the annual meeting via webcast and voting your shares. Your attendance at the meeting will not in and of itself revoke any previously delivered proxy. You must also vote your shares at
the meeting.

 

What Constitutes a Quorum?

The holders of a majority of the outstanding common shares entitled to vote at the annual meeting must be present in person via attendance by live webcast or by proxy to constitute a quorum. Unless a quorum is present at the meeting, no action may be taken at the meeting except the adjournment thereof to a later time. All valid proxies returned will be included in the determination of whether a quorum is present at the meeting. The shares of a shareholder whose ballot on any or all proposals is marked as “abstain” will be treated as present for quorum purposes. “Broker non-votes,” as discussed below, will be considered as present for determining a quorum.

What Is a Broker Non-Vote?

A “broker non-vote” occurs when a broker or other nominee holding shares for a beneficial owner returns a properly-executed proxy but does not cast a vote on a particular proposal because the broker or nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner.

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2020 PROXY STATEMENT

What Vote Is Required to Approve Each Proposal?

Voting Rights Generally. Each common share is entitled to one vote on each matter to be voted on at the annual meeting. Shareholders have no cumulative voting rights. The advisory vote on Proposal 3 is non-binding, as provided by law. However, our Board will review the results of the vote and, consistent with our record of shareowner engagement, will take it into account in making a determination concerning executive compensation.

Election of Trustees. Our Bylaws provide that, in an uncontested election, a nominee for Trustee is elected only if such nominee receives the affirmative vote of a majority of the total votes cast for and against such nominee. The majority voting standard would not apply in contested elections, and Trustees are elected by a plurality of the votes cast in a contested election.

The majority voting standard will apply to the election of Trustees at the annual meeting. Accordingly, a nominee for election to the Board will be elected if such nominee receives the affirmative vote of a majority of the total votes cast for and against such nominee. Broker non-votes, if any, and abstentions will not be treated as votes cast for the election of a Trustee and will have no effect on the results of the vote, although they will be considered present for the purpose of determining the presence of a quorum.

Our Bylaws provide that a Trustee nominated for re-election who fails to receive the required number of votes for re-election must tender his or her offer to resign to our Board of Trustees for its consideration. The Corporate Governance Committee will act on an expedited basis to determine whether it is advisable to accept the Trustee’s resignation and will submit the recommendation for prompt consideration by our Board. Our Board will act on the tendered offer of resignation within 90 days following certification of the shareholder vote and will promptly and publicly disclose its decision. The Trustee whose offer of resignation is under consideration will abstain from participating in any decision regarding his or her offer of resignation. If the offer of resignation is not accepted, the Trustee will continue to serve until the next annual meeting of shareholders and until the Trustee’s successor is duly elected and qualified or until the Trustee’s earlier resignation or removal. The Corporate Governance Committee and our Board may consider any factors they deem relevant in deciding whether to accept a Trustee’s offer of resignation.

Ratification of Appointment of Independent Registered Public Accounting Firm. Ratification of the Audit Committee’s appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2020 requires the affirmative vote of a majority of all of the votes cast on this Proposal. Abstentions and broker non-votes will therefore have no effect on the result of such vote.

Non-Binding, Advisory Vote on Executive Compensation. Approval, by non-binding vote, of our executive compensation requires the affirmative vote of a majority of all of the votes cast on this Proposal. Abstentions and broker non-votes will therefore have no effect on the result of such vote.

Who Counts the Votes?

We have engaged Broadridge Financial Solutions, Inc. as our independent agent to receive and tabulate votes. Broadridge will separately tabulate “for” and “against” votes, abstentions and broker non-votes. We have also retained an independent inspector of elections to certify the results, report on the existence of a quorum and the validity of proxies and ballots.

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BRANDYWINE REALTY TRUST

What Does it Mean if I Receive More Than One Proxy Card?

Some of your shares may be registered differently or are in more than one account. You should vote each of your accounts by telephone or the Internet or mail. If you mail proxy cards, please sign, date and return each proxy card to assure that all of your shares are voted. If you hold your shares in registered form and wish to combine your shareholder accounts in the future, you should contact our transfer agent, Computershare, at (888) 985-2061; outside the U.S., (781) 575-2879. Combining accounts reduces excess printing and mailing costs, resulting in savings for us that benefit you as a shareholder.

What if I Receive Only One Set of Proxy Materials Although There Are Multiple Shareholders at My Address?

If you and other residents at your mailing address own common shares you may have received a notice that your household will receive only one annual report, proxy statement and Notice of Internet Availability of Proxy Materials. If you hold common shares in street name, you may have received this notice from your broker or other custodian and the notice may apply to each company in which you hold shares through that broker or custodian. This practice of sending only one copy of proxy materials is known as “householding.” We do this to conserve natural resources. If you did not respond to a timely notice that you did not want to participate in householding, you were deemed to have consented. You may revoke your consent to householding at any time by sending your name, the name of your brokerage firm, and your account number to Broadridge Householding Department, 51 Mercedes Way, Edgewood, NY 11717, or by calling telephone number (800) 542-1061. The revocation of your consent to householding will be effective 30 days following its receipt. If you did not receive an individual copy of this proxy statement, our annual report and Notice of Internet Availability of Proxy Materials, we will send a copy to you, free of charge, if you address your written request to Brandywine Realty Trust, 2929 Walnut Street, Suite 1700, Philadelphia, PA 19104, Attention: Shawn Neuman or by calling Mr. Neuman at (610) 832-7756. If you are receiving multiple copies of our annual report, proxy statement and Notice of Internet Availability of Proxy Materials, you may request householding by contacting Mr. Neuman in the same manner.

How Do I Submit a Shareholder Proposal for Next Year’s Annual Meeting?

Shareholder proposals may be submitted for inclusion in the proxy statement for our 2021 annual meeting of shareholders in accordance with rules of the Securities and Exchange Commission (“SEC”). See “Other Information — Proposals Pursuant to Rule 14a-8” later in this proxy statement. In addition, eligible shareholders are entitled to nominate and include in our proxy statement for our 2021 annual meeting Trustee nominees, subject to limitations and requirements in our Bylaws. See “Other Information — Proxy Access Trustee Nominees” later in this proxy statement. Any shareholder who wishes to propose any business at the 2021 annual meeting other than for inclusion in our proxy statement pursuant to Rule 14a-8 or nominees for election as Trustees pursuant to the proxy access provisions in our Bylaws, must provide timely notice and satisfy the other requirements in our Bylaws. See “Other Information — Other Proposals and Nominees” later in this proxy statement. Proposals should be sent via registered, certified, or express mail to Shawn Neuman, Senior Vice

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17


2020 PROXY STATEMENT

President, General Counsel and Secretary, Brandywine Realty Trust, 2929 Walnut Street, Suite 1700, Philadelphia, Pennsylvania 19104.

Will I Receive a Copy of the Annual Report and Form 10-K?

We have furnished our 2019 Annual Report with this proxy statement. The 2019 Annual Report includes our audited financial statements, along with other financial information about us, and is not part of the proxy solicitation materials.

You may obtain a free copy of our Form 10-K, which also includes the audited financial statements of Brandywine Operating Partnership, L.P., our operating partnership subsidiary, by one of the following:

Accessing our Internet site at
www.brandywinerealty.com
and clicking on the “Investor Relations” link

Writing to our
Senior Vice President, General Counsel and Secretary,
Shawn Neuman, at
2929 Walnut Street, Suite 1700
Philadelphia, PA 19104

Calling Mr. Neuman at:
(610) 832-7756

You may also obtain a copy of our Form 10-K and other periodic filings and current reports from the SEC’s EDGAR database at www.sec.gov.

How Can I Access the Proxy Materials Electronically?

This proxy statement and our 2019 Annual Report are available on our website at www.proxyvote.com. Instead of receiving copies of future annual reports, proxy statements, proxy cards and Notices of Internet Availability of Proxy Materials, by mail, shareholders may elect to receive an email that will provide electronic links to our proxy materials and the proxy voting site. Choosing to receive your future proxy materials or Notices of Internet Availability of Proxy Materials online will save us the cost of producing and mailing documents to you and help conserve natural resources. You may sign up for electronic delivery by visiting www.proxyvote.com.


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BRANDYWINE REALTY TRUST


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19


2020 PROXY STATEMENT

Proposal 1:
Elect
ion of Trustees

We first ask that you vote to elect to our Board each of the seven persons nominated by our Board of Trustees to serve for a term expiring at the 2021 annual meeting of shareholders and until his or her successor is duly elected and qualified. Each of the seven nominees is currently a Trustee. Each nominee has agreed to be named in this Proxy Statement and to serve if elected.

One of our current Trustees, Anthony A. Nichols, Sr., will be retiring from the Board at the end of his term at the annual meeting. In recognition of his service to the Company, and to continue to benefit from his counsel following his retirement, our Board has requested that, following the 2020 annual meeting, Mr. Nichols serve as Trustee Emeritus until the 2021 annual meeting of shareholders. As Trustee Emeritus, Mr. Nichols may attend Board meetings in an advisory capacity but will not vote on Board matters. As compensation for serving as Trustee Emeritus, Mr. Nichols will receive a one-time retainer, payable $45,000 in cash and $95,000 in common shares.

We have no reason to believe that any of the nominees will be unable or unwilling for good cause to serve if elected. However, if any nominee should become unable for any reason or unwilling for good cause to serve, proxies may be voted for another person nominated as a substitute by the Board, or the Board may reduce the number of Trustees.

Trustee Criteria, Qualifications,
Experience and Tenure

We are one of the largest publicly traded, full-service, integrated real estate companies in the United States with a core focus in the Philadelphia, Washington, D.C., and Austin markets. Organized as a real estate investment trust (REIT), we own, develop, lease and manage principally an urban, town center and transit-oriented portfolio comprising 95 properties and approximately 16.7 million square feet as of December 31, 2019.

Our business and affairs are managed under the direction of our Board of Trustees. Our Corporate Governance Principles contain Board membership qualifications and we strive for a mix of skills, experience and perspectives that will help create a dynamic and effective Board. In selecting nominees, the Board and its Corporate Governance Committee assess the independence, character and acumen of candidates and endeavor to establish areas of core competency of the Board, including, among others, industry knowledge and experience; management, accounting and finance expertise; and demonstrated business judgment, leadership and strategic vision. Our Board values diversity of backgrounds, experience, perspectives and leadership in different fields when identifying nominees.

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BRANDYWINE REALTY TRUST

Our Board and its Corporate Governance Committee consider Trustee tenure in making Board nomination decisions and believe that it is desirable to maintain a mix of longer-tenured, experienced Trustees and newer Trustees with fresh perspectives. We also believe that longer-tenured, experienced Trustees are a significant strength of the Board, given Brandywine’s size and range of activities.

Below, we identify the key experiences, qualifications and skills our Trustee nominees bring to the Board and that the Board considers important in light of our business and industry.

u

Industry Knowledge and Experience. We seek Trustees with experience as executives, directors or other leadership positions, including in commercial real estate, finance and accounting, because our success depends on acquiring, developing and leasing attractive real estate for the communities in which we have a presence, and raising and investing capital prudently to grow our portfolio with high-yielding assets. This experience is critical to the Board’s ability to understand our portfolio and business, assess our competitive position within the commercial real estate markets in which we operate, asses the strengths and weaknesses of our competitors, maintain awareness of trends and innovations in commercial real estate and real estate capital markets, and evaluate potential acquisitions and our acquisition and growth strategy.

u

Management, Accounting and Finance Expertise. We believe that an understanding of management practices, finance and financial reporting processes is important for our Trustees. We value management experience as it provides a practical understanding of organizations, processes, strategies, risk management and the methods to drive change and growth that permit the Board to identify and recommend improvements to our operations, leasing and marketing approaches and portfolio strategy. A strong understanding of accounting and finance is important for ensuring the integrity of our financial reporting and critically evaluating our performance. We currently have two Trustees who qualify as audit committee financial experts, and expect all of our Trustees to be financially knowledgeable.

u

Business Judgment, Leadership and Strategic Vision. We believe that Trustees with experience in significant leadership positions demonstrate excellent business judgment, leadership skills and strategic vision. We seek Trustees with these characteristics as they bring special insights to Board deliberations and processes. We also believe that Trustees who have served as senior executives are in a position to challenge management and contribute practical insight into business strategy and operations. In addition, many of our Trustees have experience as directors or trustees of academic, research, nonprofit, and philanthropic institutions, and bring valuable perspectives from these experiences.

u

Governance Expertise. A deep understanding of a corporate board’s duties and responsibilities enhances Board effectiveness and ensures independent oversight that is aligned with shareholder interests.


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21


2020 PROXY STATEMENT

The Board and its Corporate Governance Committee evaluate the Board’s own composition in the context of the diverse experiences and perspectives that the Trustees collectively bring to the boardroom. Their backgrounds provide the Board with vital insights in areas such as:

Commercial
Real Estate

Accounting and Financial

Risk Management

Mergers and Acquisition

Business Administration and Operations

Governmental and
Regulatory Affairs

Marketing and Sales

Capital Deployment and Capital Markets

Executive Leadership and Talent Development

Tenant and Customer
Perspective

Sustainability and Corporate Responsibility

Technology

 

The experiences, qualifications and skills of each Trustee that the Board considered in his or her nomination are included below the Trustees’ individual biographies on the following pages. The Board concluded that each nominee should serve as a Trustee based on the specific experience and attributes listed below each Trustees’ biography and the Board’s knowledge of each nominee, including the insight and collegiality each nominee is expected to bring to the Board’s functions and deliberations.

Annual Board Evaluation Process

The Board recognizes that a robust and constructive evaluation process is an essential part of good corporate governance and board effectiveness. The evaluation processes utilized by the Board are designed and implemented under the direction of the Corporate Governance Committee and aim to assess Board and committee effectiveness as well as individual Trustee performance and contribution levels. The Corporate Governance Committee and full Board consider the results of the annual evaluations in connection with their review of Trustee nominees to ensure the Board continues to operate effectively.

Each year, our Trustees complete governance questionnaires and self-assessments. In addition, the Chair of the Corporate Governance Committee coordinates in-depth interviews with each of the Trustees to solicit their feedback. These questionnaires, assessments, and feedback from the interviews facilitate a candid assessment of: the Board’s performance in areas such as business strategy, risk oversight, talent development and succession planning and corporate governance; the Board’s structure, composition and culture; and the mix of skills, qualifications and experiences of our Trustees.

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BRANDYWINE REALTY TRUST

Trustees; Nominees

Our Board, upon the recommendation of its Corporate Governance Committee, has nominated each of the seven individuals identified below for election at the annual meeting and unanimously recommends that shareholders vote FOR the election of each of the nominees as Trustee. Each nominee is currently a Trustee and has agreed to serve if elected. The Trustees have no reason to believe that any of the nominees will be unable or unwilling to be a candidate for election at the time of the meeting. If any nominee is unable or unwilling for good cause to serve on our Board, the persons named in the proxy will use their discretion in selecting and voting for a substitute candidate or the Board may reduce the number of Trustees. Each individual elected as a Trustee at the meeting will serve for a term expiring at the next annual meeting of shareholders and until his or her successor is elected and qualified.

 

NAME

AGE

Trustee Since

CURRENT POSITION

Michael J. Joyce

78

2004

Non-Executive Chairman of the Board and Trustee

Gerard H. Sweeney

63

1994

President, Chief Executive Officer and Trustee

James C. Diggs

71

2011

Trustee

Wyche Fowler

79

2004

Trustee

H. Richard Haverstick, Jr.

67

2016

Trustee

Terri A. Herubin

58

2018

Trustee

Charles P. Pizzi

69

1996

Trustee

 


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23


2020 PROXY STATEMENT

Experience, Qualifications, Attributes and Skills

 

 

 

 

JOYCE

SWEENEY

DIGGS

FOWLER

HAVERSTICK

HERUBIN

PIZZI

Commercial
Real Estate

«

«

«

«

«

«

«

Accounting and Financial

«

«

«

 

«

«

«

Risk Management

«

«

«

«

«

«

 

Mergers and Acquisitions

«

«

«

 

«

 

«

Business Administration and Operations

«

«

«

«

«

«

«

Governmental and
Regulatory Affairs

 

«

«

«

 

«

«

Marketing and Sales

«

«

«

 

 

«

«

Capital Deployment
and Capital Markets

«

«

«

«

«

«

«

Executive Leadership and Talent Development

«

«

«

«

«

«

«

Tenant and Customer
Perspective

«

«

 

 

«

«

«

Sustainability and Corporate Responsibility

 

«

«

«

 

«

 

Technology

 

 

 

 

 

«

 

 


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24


BRANDYWINE REALTY TRUST

The following are biographical summaries of the individuals nominated for election at the Meeting.

 

Michael J. Joyce

Chairman of the Board and Trustee

Mr. Joyce was first elected a Trustee on June 1, 2004 and was appointed our non-executive Chairman of the Board on February 16, 2017. From 1995 until his retirement from Deloitte in May 2004, Mr. Joyce served as New England Managing Partner of Deloitte, an international accounting firm. Prior to that, he was, for ten years, Philadelphia Managing Partner of Deloitte. Mr. Joyce served on the board of Allegheny Technologies Incorporated until expiration of his term in May 2014. In addition, Mr. Joyce served on the board of A.C. Moore Arts and Crafts, Inc. and was Chair of the board when the company was sold in 2011.

Qualifications, Attributes, Skills and Experience:   Financial expertise, including in financial reporting, accounting and controls; risk management; finance; executive leadership; and corporate and community experience.

 

 

 

Gerard H. Sweeney

President, Chief Executive Officer and Trustee

Mr. Sweeney has served as President, Chief Executive Officer and Trustee of Brandywine since the Company’s founding in 1994. Mr. Sweeney has overseen the growth of Brandywine from four properties and a total market capitalization of less than $5 million to over 33 million square feet and a total market capitalization of approximately $5.0 billion. Prior to 1994, Mr. Sweeney served as Vice President of LCOR, Incorporated (“LCOR”), a real estate development firm. Mr. Sweeney was employed by the Linpro Company (a predecessor of LCOR) from 1983 to 1994 and served in several capacities, including Financial Vice President and General Partner. During this time, Mr. Sweeney was responsible for the marketing, management, construction, asset management and financial oversight of a diversified portfolio consisting of urban high-rise, mid-rise, flex, warehouse and distribution facilities, retail and apartment complexes. Mr. Sweeney is a member of the Real Estate Roundtable, NAREIT, Urban Land Institute (“ULI”), Chairman of the Schuylkill River Development Corporation (“SRDC”), Chairman of the board for the Philadelphia Regional Port Authority and Chairman of the King of Prussia Rail Coalition Advisory Committee. Additionally, Mr. Sweeney serves on the boards of several other Philadelphia-based civic and non-profit organizations. Mr. Sweeney is also co-founder and co-CEO of Bonomo Turkish Taffy LLC.

Qualifications, Attributes, Skills and Experience:  Senior executive, with ability to drive and oversee our business strategy; detailed knowledge and unique perspective regarding our strategic and operational opportunities and challenges and our competitive and financial positioning.

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate

Accounting & Financial

Risk Management

Mergers & Acquisitions

Business Administration & Operations

Governmental & Regulatory Affairs

Marketing & Sales

Capital Deployment & Capital Markets

Executive Leadership & Talent Development

Tenant and Customer Perspective

Sustainability & Corporate Responsibility

Technology

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25


2020 PROXY STATEMENT

 

 

James C. Diggs

Trustee

Mr. Diggs was first elected a Trustee on March 21, 2011. From 1997 until his retirement in June 2010, Mr. Diggs served as Senior Vice President and General Counsel of PPG Industries, Inc., a producer of coatings and glass products. From 2004 to September 2009, Mr. Diggs also served as Corporate Secretary of PPG Industries, Inc. Mr. Diggs is a director of Allegheny Technologies Inc.

Qualifications, Attributes, Skills and Experience: Legal and risk oversight expertise; complex regulatory; environment, health and safety; financial reporting, accounting and controls; executive leadership; and corporate and community experience.

 

 

 

Wyche Fowler

Trustee

Mr. Fowler was first elected a Trustee on September 1, 2004. Mr. Fowler served as a member of the U.S. House of Representatives (1977-1986) and U.S. Senate (1987-1992) and as ambassador to Saudi Arabia (1996-2001). Mr. Fowler received an A.B. degree in English from North Carolina’s Davidson College in 1962 and a J.D. from Emory University in 1969. Mr. Fowler serves on a number of corporate boards, including Shubert Theatre, NY and Mr. Fowler is Chair Emeritus of the Middle East Institute, a nonprofit research foundation in Washington, D.C.

Qualifications, Attributes, Skills and Experience:  Deep understanding and experience in government; public policy and foreign policy expertise; complex regulatory; legal expertise; senior leadership; and corporate and community experience.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate

Accounting & Financial

Risk Management

Mergers & Acquisitions

Business Administration & Operations

Governmental & Regulatory Affairs

Marketing & Sales

Capital Deployment & Capital Markets

Executive Leadership & Talent Development

Tenant and Customer Perspective

Sustainability & Corporate Responsibility

Technology


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BRANDYWINE REALTY TRUST


 

H. Richard Haverstick, Jr.

Trustee

Mr. Haverstick was first elected a Trustee on December 6, 2016. Prior to his retirement in June 2013, Mr. Haverstick spent nearly 40 years with Ernst & Young LLP, where he served in many senior leadership roles including Global Financial Services Partner, Managing Partner of the Philadelphia Office, Philadelphia Partner-In-Charge of Financial Services, Mid-Atlantic and Southeast Region Banking Industry Leader and Mid-Atlantic Region Partner-In-Charge of Human Resources. Presently, Mr. Haverstick is a trustee and chair of the Audit Committee of the BMT Multi Cap Fund sponsored by The Bryn Mawr Trust Company and a trustee and chair of the Audit Committee of Global Beta ETF Trust. From June 2016 until its delisting in February 2018, Mr. Haverstick was a director and member of the Audit Committee of Actua Corporation. Mr. Haverstick has served as a Trustee of Thomas Jefferson University and Jefferson Health since July 2013. At Jefferson, Mr. Haverstick is chairman of the Board of Trustees. Previously Mr. Haverstick was vice chair and chair elect, chair of the Finance committee, a member of the Compensation and Human Capital Committee, a member of the Executive Committee and past chair of the Audit, Risk and Compliance Committee.  Mr. Haverstick has served in a variety of roles at civic and charitable organizations. He currently serves on the Board of Visitors at the Temple University Fox School of Business and as the Chair of the Accounting Department Advisory Board at Temple University. Previously, Mr. Haverstick held board positions with The Greater Philadelphia Chamber of Commerce, The Greater Philadelphia CEO Council for Growth, the Philadelphia Bar Foundation, The Southeast Pennsylvania Chapter of the American Red Cross, The Philadelphia Arts and Business Council, the Penjerdel Council, the Greater Philadelphia First Corporation and Movement Theater International.

Qualifications, Attributes, Skills and Experience:  Financial expertise, including in financial reporting, accounting and controls; risk management; finance; executive leadership; and corporate and community experience.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate

Accounting & Financial

Risk Management

Mergers & Acquisitions

Business Administration & Operations

Governmental & Regulatory Affairs

Marketing & Sales

Capital Deployment & Capital Markets

Executive Leadership & Talent Development

Tenant and Customer Perspective

Sustainability & Corporate Responsibility

Technology


PAGE

27


2020 PROXY STATEMENT

 

Terri A. Herubin

Trustee

Ms. Herubin was first elected to the Board on May 23, 2018. Ms. Herubin joined Greystar, a global multifamily-focused firm, in 2019 as Managing Director, Portfolio Management, where she is responsible for overseeing two of the company’s flagship perpetual life funds. She also serves as practice leader for the firm’s other domestic and international open-end investment vehicles. From 2017 until 2019, Ms. Herubin served as Managing Director, Senior Product Specialist for Real Estate, for Angelo Gordon, a private investment advisor. From 2012 until 2017, Ms. Herubin served as a Managing Director at Barings Real Estate, a private investment manager, where she was lead portfolio manager of the firm's core open-end fund and a member of its investment committee.  She joined Barings from the Townsend Group, where, as a portfolio manager in the firm’s investment management group between 2009 and 2012, she led the underwriting of U.S. commingled fund mandates.  Prior to her tenure at Townsend, Ms. Herubin was a co-portfolio manager for the New York State Teachers' Retirement System's equity real estate portfolio.  She graduated from the University of Illinois at Urbana-Champaign with a B.A. in Urban Planning and holds a J.D. from Brooklyn Law School, where she was an editor of the Law Review. Ms. Herubin is a member of W/X, New York Women Executives in Real Estate, and of the Pension Real Estate Association, for which she has been a speaker at their bi-annual meetings and a past member of the PREA-IPD Advisory Board.

Qualifications, Attributes, Skills and Experience:  Real estate; finance; capital markets; complex regulatory; risk management technology. Extensive experience in all aspects of commercial real estate investments and finance.

 

 

 

Charles P. Pizzi

Trustee

Mr. Pizzi was first elected a Trustee on August 22, 1996. Mr. Pizzi served as the President and Chief Executive Officer, as well as a director of Tasty Baking Company from October 7, 2002 until the company’s sale in May 2011. Mr. Pizzi served as President and Chief Executive officer of the Greater Philadelphia Chamber of Commerce from 1989 until October 4, 2002. Mr. Pizzi is a director of Pennsylvania Real Estate Investment Trust (serving as Lead Director and Chair, Nominating and Governance), a member of the Advisory Board (Philadelphia) of PNC, and serves on a variety of civic, educational, charitable and other boards, including the boards of Drexel University (serving on the Audit, Property and Facilities Committee), WHYY, Franklin Square Energy Fund (serving on the Audit and Nominating and Governance Committees) and Independence Health Group (serving as Chairman). Mr. Pizzi served on the Board of Directors of the Federal Reserve Bank of Philadelphia from 2006 through 2011, including as Chairman from 2010 through 2011.

Qualifications, Attributes, Skills and Experience:  Government and public policy; finance; financial reporting, accounting and controls; capital markets; risk management; extensive financial and risk oversight experience; executive leadership.

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate

Accounting & Financial

Risk Management

Mergers & Acquisitions

Business Administration & Operations

Governmental & Regulatory Affairs

Marketing & Sales

Capital Deployment & Capital Markets

Executive Leadership & Talent Development

Tenant and Customer Perspective

Sustainability & Corporate Responsibility

Technology

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BRANDYWINE REALTY TRUST

Committees of the Board of Trustees

Our Board of Trustees has standing Audit, Corporate Governance, Compensation and Executive Committees.

The table below provides 2020 membership and 2019 meeting information for each of the Board Committees.

 

2019
Meetings

 

JOYCE

NICHOLS*

SWEENEY

DIGGS

FOWLER

HAVERSTICK*

HERUBIN*

PIZZI

 

Audit

 

 

 

(Chair)

 

12

Compensation

 

 

(Chair)

 

 

9

Corporate
Governance

 

 

 

 

 

(Chair)

3

Executive

 

(Chair)

 

 

 

 

3

* Mr. Nichols will be retiring from the Board at the end of his term at the annual meeting. Each of Ms. Herubin and Mr. Haverstick will become members of the Corporate Governance Committee effective as of the annual meeting.

Audit Committee

Our Audit Committee assists our Board in overseeing:

u

the quality and integrity of our financial statements;

u

our compliance with legal and regulatory requirements;

u

our policies and practices for risk assessment and risk management, and steps taken by management to control these risks; and

u

related party transactions.

u

Our Audit Committee has sole authority to appoint, compensate, oversee and replace the independent registered public accounting firm. The committee reviews its internal quality-control procedures, assesses its independence and reviews all relationships between the independent registered public accounting firm and Brandywine.


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29


2020 PROXY STATEMENT

Our Audit Committee:

u

Approves the scope of the annual internal and external audit;

u

Pre-approves all audit and non-audit services and the related fees;

u

Reviews our consolidated financial statements and disclosures in our reports on Form 10-K and Form 10-Q;

u

Monitors the system of internal controls over financial reporting and reviews the integrity of our financial reporting process;

u

Establishes and oversees procedures for (a) complaints received by us regarding accounting, internal accounting controls or auditing matters, and (b) the confidential anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; and

u

Reviews disclosures from our independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independence of accountant’s communications with the audit committee.

Our Audit Committee relies on the expertise and knowledge of management, our internal auditors, and the independent registered public accounting firm in carrying out its oversight responsibilities.

Each member of our Audit Committee is independent within the meaning of the SEC regulations, the listing standards and requirements of the New York Stock Exchange and our Corporate Governance Principles. Each member is financially literate, knowledgeable and qualified to review financial statements. The charter of our Audit Committee requires such independence and financial literacy as a condition to continued membership on the Committee. Mr. Haverstick and Mr. Joyce are qualified as “audit committee financial experts” by SEC regulations.


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BRANDYWINE REALTY TRUST

Compensation Committee

Our Compensation Committee is responsible for:

u

reviewing, evaluating and approving compensation plans and programs for our Trustees and senior executives;

u

annually reviewing and approving corporate goals and objectives relevant to compensation of our President and CEO and other senior executives and evaluating performance in light of these goals and objectives;

u

reviewing and discussing with the full Board whether our compensation programs for employees create incentives for employees to take inappropriate or excessive risk; and

u

retaining and terminating any consultant or outside advisor to the Committee (and the Committee has sole authority to approve any such consultant’s or advisor’s fees and other terms of engagement).

Our Compensation Committee has retained Pay Governance LLC as its independent consultant. We describe the role of the Compensation Committee’s consultant in the “Compensation Discussion and Analysis” later in this proxy statement.

Each member of our Compensation Committee meets the independence requirements of the New York Stock Exchange and our Corporate Governance Principles. The charter of our Compensation Committee requires such independence as a condition to continued membership on the Committee.

For information on the process and procedures of our Compensation Committee, please see “Compensation Discussion and Analysis – Decision Making.”

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee is or has been an officer or employee of the Company. In addition, none of our executive officers serves as a member of the board of directors or compensation committee of any company that has an executive officer serving as a member of our Board.


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2020 PROXY STATEMENT

Corporate Governance Committee

Our Corporate Governance Committee is responsible for:

u

identifying and recommending individuals qualified to become members of our Board;

u

recommending to our Board any changes in our Corporate Governance Principles;

u

leading our Board in its annual review of Board performance, and making recommendations regarding Board and Committee structure, organization, membership, function and effectiveness;

u

recommending to our Board Trustee nominees for each Board committee;

u

reviewing our efforts to promote diversity among Trustees, officers, employees and contractors;

u

arranging for continuing Trustee education;

u

arranging for an orientation for all Trustees; and

u

assisting the Board in succession planning and talent development, including in identifying and evaluating potential successors to the President and Chief Executive Officer.

Each member of the Corporate Governance Committee meets the independence requirements of the New York Stock Exchange and our Corporate Governance Principles. The charter of our Corporate Governance Committee requires such independence as a condition to continued membership on the Committee.

Executive Committee

Our Executive Committee has authority to approve certain significant acquisitions, dispositions and other investments, subject to limitations set by the Board.

Trustee Independence; Independence Determination

No Trustee qualifies as independent unless our Board affirmatively determines that the Trustee has no material relationship with us, directly or as a partner, share owner, or officer of an organization that has a relationship with us.

Our Board has adopted standards that are set forth in our Corporate Governance Principles, which meet the listing standards of the New York Stock Exchange and assist our Board in its evaluation of each Trustee’s independence. A Trustee who has any of the following relationships or arrangements will not qualify as independent:

u

The Trustee is, or has been within the last three years, an employee of ours, or an immediate family member of the Trustee is, or has been within the last three years, an executive officer of ours.

u

The Trustee has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from us (excluding

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BRANDYWINE REALTY TRUST

compensation in the form of Board fees and Board committee fees and pension or other forms of deferred compensation not contingent on continued service).

u

(A) The Trustee is a current partner or employee of a firm that is our internal or external auditor; (B) the Trustee has an immediate family member who is a current partner of such a firm; (C) the Trustee has an immediate family member who is a current employee of such a firm and personally works on the audit of our financial statements; or (D) the Trustee or an immediate family member was within the last three years a partner or employee of such a firm and personally worked on our audit within that time.

u

The Trustee or an immediate family member of the Trustee is, or has been within the last three years, employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee.

u

The Trustee is a current employee, or an immediate family member of the Trustee is a current executive officer, of a company that has made payments to, or received payments from, us for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues.

In its assessment of Trustee independence, our Board considers all commercial, charitable and other transactions and relationships (including tenure of Board service) that any Trustee or member of his or her immediate family may have with us, with any of our affiliates, or with any of our consultants or advisers. Our Board applies the same criteria for assessing independence for purposes of each of the Audit Committee, Corporate Governance Committee and Compensation Committee. Furthermore, in its assessment of a Trustee’s independence for service on the Compensation Committee, our Board considers all factors the Board believes specifically relevant to determining whether the Trustee has a relationship which is material to such Trustee's ability to be independent from management in connection with his or her duties as a member of the Compensation Committee, including but not limited to any compensation payable to such Trustee. In addition, no member of the Audit Committee or Compensation Committee may accept directly or indirectly any consulting, advisory or other compensatory fee from us (other than fees for service as a Trustee and member of Board committees) or be an affiliate of us.

Our Board has affirmatively determined that Ms. Herubin and each of Messrs. Diggs, Fowler, Joyce, Haverstick, Nichols and Pizzi is independent under the standards of the New York Stock Exchange and those set forth in our Corporate Governance Principles and that the Audit Committee, Corporate Governance Committee and Compensation Committee are comprised exclusively of independent Trustees.

Our Board did not determine Mr. Sweeney to be independent because of his position as our President and Chief Executive Officer.


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Corporate Governance

Governance Compliance

Our policies and practices comply with the listing requirements of the New York Stock Exchange and the requirements of the Sarbanes-Oxley Act of 2002. Our Board and Corporate Governance Committee regularly evaluate our corporate governance policies and practices in light of changing regulatory requirements and evolving best practices.

Board Leadership Structure

Our Board believes that independent Board leadership is a critical component of our corporate governance. Mr. Joyce is Chairman of the Board and Mr. Sweeney is our President and Chief Executive Officer and a Trustee. As Chairman of the Board, Mr. Joyce presides at Board meetings and at executive sessions of non-management Trustees, oversees the agenda of Board meetings, provides guidance to our President and Chief Executive Officer as to Board views and perspectives, particularly on our strategic direction, and is available to shareholders and other parties interested in communicating with our non-management Trustees.

As President and Chief Executive Officer, Mr. Sweeney is responsible for our day-to-day operations, engaging with shareholders and external constituents, developing our future leaders and executing our strategy. The Board believes that its leadership structure (i) achieves independent oversight and evaluation of our senior management; (ii) assures effective communication between the Board and senior management on corporate strategy; and (iii) fosters effective decision-making and accountability.

Talent Development; Succession Planning; Board Refreshment

Assisted by our Corporate Governance Committee, our Board assesses succession planning and talent development for key executives and company leadership. Assessments focus on succession in the event of the unexpected incapacity of our President and Chief Executive Officer as well as on talent development for key executives. Our Corporate Governance Principles provide that our President and Chief Executive Officer should at all times make available to the Board, on a confidential basis, his recommendations and evaluations of potential successors. Fundamentally, the Board’s executive succession planning is a continuous, interactive process that takes into account the Company’s operating plans and strategic goals and that seeks to attract, develop and retain a talent-rich pool of executives. In addition, we thoughtfully plan for Trustee succession and Board refreshment. By developing and following a long-range succession plan, the Board has an ongoing opportunity to: (i) evaluate the depth and diversity of experience of our Board; (ii) expand and replace key skills, qualifications and experiences that support our strategies; (iii) build on our record of Board diversity; and (iv) maintain a balanced mix of tenures.

Trustee Continuing Education

Our Corporate Governance Principles formalize our support for Trustee participation in continuing education sessions on business-related topics, corporate governance developments, SEC initiatives and regulatory changes, and other current topics such as cyber security, including issues pertinent to our Board committees. 

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Prohibition on Classification of Board without Shareholder Approval—Opt out of Classified Board Provision of Maryland's Unsolicited Takeovers Act

Our Board has adopted a resolution prohibiting us from electing to be subject to the classified board provision of Title 3, Subtitle 8 of the MGCL without a shareholder vote. Title 3, Subtitle 8 of the MGCL is commonly referred to as the Maryland Unsolicited Takeovers Act, or MUTA. As a result of our opt-out, the Board is prohibited from becoming classified under Section 3-803 of the MGCL unless a proposal to repeal that prohibition is approved by the affirmative vote of at least a majority of the votes cast on the matter by our shareholders entitled to vote generally in the election of trustees.

Proxy Access

We provide for a right of proxy access in our Bylaws. This right enables eligible shareholders to include their nominees for election as trustees in our proxy statement for annual meetings. The proxy access provisions in our Bylaws permit up to 25 shareholders owning at least three percent of our common shares continuously for three years to nominate up to the greater of (i) two and (ii) 25 percent of the number of Trustees then serving. The complete text of our By-laws, as amended, is available on our website ( www.brandywinerealty.com).

Shareholder Outreach and Engagement

We value the views of our shareholders and regularly solicit input from them throughout the year, including through meetings with members of management, on topics such as portfolio strategy, capital allocation and corporate governance, leadership skills and resources, executive compensation and corporate social responsibility. Our direct shareholder engagement is in addition to our customary participation at industry and investment community conferences, investor road shows, and analyst meetings. We also respond to individual shareholders who provide feedback about our business and we remain committed to robust engagement as a cornerstone of our corporate governance. In 2019, we met with approximately 100 institutional investors and 14 analysts, conducted 17 regional investor meetings and property tours, and attended multiple investor conferences.

Executive and Trustee Share Ownership Requirements

We maintain minimum share ownership requirements for our executives and Trustees. We have summarized these requirements later in this proxy statement under “Compensation Discussion and Analysis — Additional Compensation Information — Share Ownership Requirements.”


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Prohibition on Hedging and Pledging of Shares

Our executives and Trustees are prohibited from hedging their ownership or offsetting any decline in the market value of our shares, including by trading in publicly-traded options, puts, calls or other derivative instruments related to our shares. They are also prohibited from pledging our shares as collateral for loans.

Code of Conduct

We maintain a Code of Business Conduct and Ethics, which is available on our website
( www.brandywinerealty.com), and is applicable to our Trustees, officers and employees. The Code of Business Conduct and Ethics reflects and reinforces our commitment to integrity in our business. Any amendments to or waivers of the Code for executive officers or Trustees may only be made by the Board or by the Audit Committee (which is composed solely of independent Trustees) and will be disclosed promptly as required by law or stock exchange regulation, and, in addition, amendments to or waivers that apply to our principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions and that relate to any matter enumerated in Item 406(b) of Regulation S‑K promulgated by the SEC will be disclosed on our website ( www.brandywinerealty.com). We also notify our vendors annually of our commitment to the highest ethical standards and the restrictions in our Code on improper payments and gratuities to our personnel.

Hotline Submissions

Our Audit Committee has established procedures, set forth in our Code of Business Conduct and Ethics, for the submission of complaints about our accounting or auditing matters. There is a hotline for anonymous concerns regarding questionable accounting or auditing matters. Any financial matters reported through the hotline will be reported to the Chairman of our Audit Committee. Our current hotline number is (877) 888-0002.

Availability of Committee Charters; Corporate Governance Principles; and Code of Business Conduct and Ethics

Our Board has adopted, and annually reviews, charters for each of the Audit, Compensation, Corporate Governance and Executive Committees. These charters and our Corporate Governance Principles and our Code of Business Conduct and Ethics are available on our website ( www.brandywinerealty.com) and we will also make available in print copies of these documents to any shareholder, without charge, upon request.


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Board’s Role in Risk Oversight

Our Board as a whole has responsibility for risk oversight, with reviews of certain areas being conducted by the relevant Board Committees that report on their deliberations to the Board. The oversight responsibility of the Board and its Committees is enabled by management reporting processes that are designed to provide visibility to the Board about the identification, assessment and management of critical risks and management’s risk mitigation strategies. These areas of focus include competitive, economic, operational, financial (accounting, credit, liquidity and tax), legal, regulatory, compliance, health, safety and reputational risks. The Board and its Committees oversee risks associated with their respective principal areas of focus, as summarized below.

 

Primary Areas of Risk Oversight

Audit
Committee

Risks and exposures associated with financial matters, particularly financial reporting, tax (including compliance with REIT rules), accounting, disclosure, internal control over financial reporting, cybersecurity, financial policies, investment guidelines, development and leasing, and credit and liquidity matters.

Compensation
Committee

Risks and exposures associated with executive compensation programs and arrangements, including incentive plans. See “Compensation Discussion and Analysis — Additional Compensation Information — Compensation and Risks.”

Corporate Governance Committee

Risks and exposures associated with leadership, succession planning and talent development; and corporate governance.

 

We maintain an internal Disclosure Committee consisting of certain members of our executive management and senior employees. Our Disclosure Committee meets at least quarterly to bring together representatives from our core business lines and employees involved in the preparation of our financial statements so that the group may discuss any issues of which the members are aware that should be considered for disclosure in our public SEC filings. Our Disclosure Committee reports to our President and Chief Executive Officer and our Executive Vice President and Chief Financial Officer.


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2020 PROXY STATEMENT

Trustee Nominations

In making its recommendations as to nominees for election to our Board, the Corporate Governance Committee may consider, in its sole judgment, recommendations of our President and Chief Executive Officer, other Trustees, shareholders and third parties. The Corporate Governance Committee may also retain third-party search firms to identify candidates. Shareholders desiring to recommend nominees should submit their recommendations in writing to Michael J. Joyce, Chairman of the Board, c/o Brandywine Realty Trust, 2929 Walnut Street, Suite 1700, Philadelphia, Pennsylvania 19104. Recommendations from shareholders should include pertinent information as specified in our Bylaws concerning the proposed nominee’s background and experience.

Our Board’s Corporate Governance Principles set forth qualifications for Trustee nominees. Qualifications include:

upersonal ethics, integrity and values;

uinquiring and independent mind;

upractical wisdom and mature judgment;

ubroad training and experience at the
policy-making level in business, government, education or technology;

uwillingness to devote the required amount of time to fulfill the duties and responsibilities of Board membership;

ucommitment to serve on the Board over a period of years in order to develop knowledge about our operations; and

uinvolvement in activities or interests that do not create a conflict with the nominee’s responsibilities to us and our shareholders.

The Corporate Governance Committee also considers such other factors as it deems appropriate, including the current composition of the Board. The Committee and Board believe that Board membership should reflect diversity in its broadest sense, including persons diverse in skills, background, gender and ethnicity. The Committee has not adopted a formal policy for the consideration of diversity in identifying candidates for the Board. The Committee and Board also consider the bearing of each Trustee’s tenure, and the tenure of the Board as a whole, on the Board’s mix of skills and experience, independence and access to new and diverse perspectives. The Committee has not adopted different criteria for considering a candidate for nomination to the Board based on whether the party making nomination is a Trustee, shareholder or third party.

If the Committee decides, on the basis of its preliminary review of a candidate, to proceed with further consideration of the candidate, members of the Committee and the Board interview the candidate. After completing its evaluation, the Committee makes a recommendation to the full Board, which makes the final determination whether to nominate or appoint the candidate as a new Trustee. Our President and Chief Executive Officer, as a Trustee, participates in the Board’s determination.

As discussed above under “Corporate Governance – Proxy Access,” our Bylaws provide for proxy access. Proxy access enables eligible shareholders to include their nominees for election as trustees in our proxy materials for annual meetings. The proxy access provisions of our Bylaws permit up to 25 shareholders owning at least three percent of our common shares continuously for three years to nominate up to the greater of (i) two and (ii) 25 percent of the number of Trustees then serving. The complete text of our Bylaws is available on our website ( www.brandywinerealty.com).

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Communications with the Board

Shareholders and other parties interested in communicating directly with our lead independent Trustee and Chairman of the Board (Mr. Joyce), or with our non-management Trustees as a group, may do so by writing to Chairman of the Board of Trustees, Brandywine Realty Trust, 2929 Walnut Street, Suite 1700, Philadelphia, Pennsylvania 19104. In addition, any shareholder or interested party who wishes to communicate with our Board or any specific Trustee, may write to Board of Trustees, c/o Brandywine Realty Trust, at 2929 Walnut Street, Suite 1700, Philadelphia, Pennsylvania 19104. Depending on the subject matter, management will:

u

forward the communication to the Trustee or Trustees to whom it is addressed (for example, if the communication received deals with questions or complaints regarding accounting, it will be forwarded by management to the Chairman of our Audit Committee for review);

u

attempt to handle the inquiry directly (for example, where the communication is a request for information about us or our operations that does not appear to require direct attention by the Board or an individual Trustee); or

u

not forward the communication if it is primarily commercial in nature or relates to an improper or irrelevant topic.

At each meeting of the Board, the Chairman of the Board will present a summary of all communications (if any) received since the last meeting of the Board that were not forwarded and will make those communications available to any Trustee upon request.

Meetings of Trustees and Annual Meeting of Shareholders

Our Board of Trustees held five meetings in 2019. In 2019, each incumbent Trustee attended at least 75% of the aggregate of the total number of meetings of the Board and meetings held by all committees on which he served. In addition, our Board holds informational sessions with our President and Chief Executive Officer. During 2019, the Board held eight informational sessions. Our non-management Trustees also hold regular meetings without management. During 2019, our non-management Trustees held five such meetings. It is our policy that all Trustees attend annual meetings of shareholders except where the failure to attend is due to unavoidable circumstances or conflicts. All Trustees attended our annual meeting of shareholders on May 22, 2019. All of the nominees are expected to attend the virtual 2020 annual meeting via live webcast.


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2020 PROXY STATEMENT

Trustee Compensation

The following table and footnotes provide information on the 2019 compensation of our Trustees (other than our President and Chief Executive Officer, who is not separately compensated for his service on the Board). In the paragraphs following the table and footnotes, we describe our standard compensation arrangements for service on the Board and Board committees.

Current Trustee Name

Fees Earned or
Paid in Cash ($) (1)

Share
Awards ($) (2)

All Other Compensation

Total ($)

 

 

 

 

 

Michael J. Joyce

$177,000

$95,000

$272,000

Anthony A. Nichols, Sr.

$75,000

$95,000

$170,000

James Diggs

$112,500

$95,000

$207,500

Wyche Fowler

$87,000

$95,000

$182,000

H. Richard Haverstick, Jr.

$108,500

$95,000

$203,500

Terri A. Herubin

$88,500

$95,000

$183,500

Charles P. Pizzi

$106,500

$95,000

$201,500

(1)

Represents the aggregate amount of all fees earned or paid in cash for services as a Trustee (including services on committees of the Board) in 2019 and, in the case of the 2019 annual retainer fee, whether paid in shares or cash. Amounts include the portion of fees that a Trustee elected to defer under our Deferred Compensation Plan, which we describe later in this proxy statement. See “Compensation Discussion and Analysis — Deferred Compensation Plan.” Mr. Fowler deferred $56,611.12 of his 2019 cash compensation into his deferred share account under our Deferred Compensation Plan.

(2)

Represents fully-vested common shares awarded on May 22, 2019 (with each common share valued at the closing price $15.01 of the common shares on May 22, 2019, the date of our 2019 annual meeting of shareholders).


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BRANDYWINE REALTY TRUST

In 2019 our Trustees (other than our President and Chief Executive Officer) received the following compensation for their service as Trustees:

u

$45,000 annual fee payable in cash or common shares, at each Trustee’s election;

u

$95,000 annual award payable in common shares (valued at the closing price of the common shares on the date of our annual meeting of shareholders);

u

$1,500 fee payable in cash for participation in each meeting and informational session of the Board;

u

$1,500 fee payable in cash for participation by a member of a Board committee in each meeting of the committee; and

u

$75,000 annual fee payable in cash for the Chair of the Board; $20,000 annual fee payable in cash for the Chair of the Audit Committee; $15,000 annual fee payable in cash for the Chair of the Compensation Committee; and $15,000 annual fee payable in cash for the Chair of the Corporate Governance Committee.

Our Trustees are also reimbursed for expenses of attending Board and Board committee meetings. In addition, our Corporate Governance Principles encourage our Trustees to attend continuing education programs for directors and provide for reimbursement of the reasonable costs of attending such programs. Trustees may elect to defer the receipt of all or a portion of their $45,000 annual fee and $1,500 per Board meeting fee into our Deferred Compensation Plan.


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2020 PROXY STATEMENT


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BRANDYWINE REALTY TRUST

Executives and Executive Compensation

Current Executive Officers

The following are biographical summaries of our current executive officers who are not Trustees:

H. Jeffrey DeVuono (age 54)

Executive Vice President and Senior Managing Director – Pennsylvania Region

 

Mr. DeVuono joined us in January of 1997. Prior to joining Brandywine, Mr. DeVuono worked for LCOR, Inc., a private development company that had a previous association with us, where he held a variety of positions, all of which related to asset management. Prior to joining LCOR, Mr. DeVuono was a sales representative for Cushman & Wakefield of Philadelphia. Mr. DeVuono serves on the Board, and is a former Chairman, of the King of Prussia Business Improvement District and is a Board Member of the Center City District. He is also a member of CoreNet, NAREIT, NAIOP, the Sunday Breakfast Club, and the University of Pennsylvania’s Wharton School Zell/Laurie Real Estate Center. He is a Trustee and Master Planning Committee Member of The Westtown School. Past Boards include the Economy League of Greater Philadelphia, University City District, Bartram’s Garden, and The Center for Emerging Visual Artists. Mr. DeVuono is a graduate of LaSalle University.

 

 

 

 

George D. Johnstone (age 56)

Executive Vice President, Operations

 

Mr. Johnstone joined us in November 1998. He works in conjunction with our regional managing directors in running our operations. Prior to being appointed EVP, Operations, Mr. Johnstone served as our Senior Vice President, Operations & Asset Management, our Vice President of Operations for the Pennsylvania Region (2004 – 2005), our Vice President of Operations for the New Jersey Region (2002 – 2004), and Director of Operations for our New Jersey Region (1998 - 2002). Prior to joining Brandywine, Mr. Johnstone was the Regional Controller for Linpro/LCOR Inc., where he was responsible for strategic and tactical accounting processes and oversight and leadership of all accounting functions. Mr. Johnstone earned his B.S. in Accounting from Albright College.

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2020 PROXY STATEMENT

Shawn Neuman (age 40)

Senior Vice President, General Counsel and Secretary

 

Mr. Neuman joined us in March 2020, as Senior Vice President, General Counsel and Secretary.  Prior to joining us, Mr. Neuman served as General Counsel and Secretary of Liberty Property Trust preceding its merger with Prologis, Inc.  Mr. Neuman joined Liberty Property Trust in 2012 and held the positions of Vice President, Real Estate Counsel and Senior Vice President, Deputy General Counsel before being appointed General Counsel.  Formerly, Mr. Neuman was a Member of the Real Estate Practice Group at the law firm Cozen O’Connor (2009-2012), and was previously an associate in the law firms Wolf Block LLP (2006-2009) and Schulte, Roth and Zabel LLP (2004-2006).  Mr. Neuman is a member of NAREIT and NAIOP.  Mr. Neuman received a B.S. in Finance from the University of Florida and earned his J.D. from NYU School of Law.

 

 

 

Daniel Palazzo (age 50)

Vice President and Chief Accounting Officer

 

Mr. Palazzo assumed this position effective January 15, 2015. Prior to his appointment as our Vice President and Chief Accounting Officer, Mr. Palazzo served as a Vice President of Asset Management in our Pennsylvania Region (2006 – 2015), the Director of Operations for our New Jersey Region (2004 – 2006), and Corporate Controller (1999 - 2004). Prior to joining Brandywine, Mr. Palazzo received his CPA in Pennsylvania and worked for Arthur Andersen in its commercial audit division, where he concentrated on real estate, construction and financial services. Mr. Palazzo is a member of NAREIT and serves on the World Affairs Council of Philadelphia Board of Directors.  Mr. Palazzo received a B.A. in Accounting from the University of Delaware.

 

 

 

 

William D. Redd (age 64)

Executive Vice President and Senior Managing Director for the Austin and Metro DC Regions

 

Mr. Redd joined Brandywine in 1999 as Vice President of our Richmond operations, and in 2008, was named Senior Vice President and Managing Director of our Richmond and Austin operations. Mr. Redd assumed his current position in 2015. Formerly, Mr. Redd was partner from 1988 until 1999 with Childress Klein Properties, a privately-held real estate firm headquartered in Charlotte, North Carolina. From 1985 until 1988, he was with the Trammell Crow Company. Mr. Redd serves on the Austin Hill Country Conservancy Board of Directors, Opportunity Austin Economic Development Corporation Board, and is a member of the Real Estate Council of Austin (RECA). He is also a member of the Virginia Commonwealth University Real Estate Circle of Excellence, Richmond Real Estate Group and Greater Richmond Association of Commercial Real Estate (GRACRE). Mr. Redd holds a law degree from the University of Virginia, a B.A. degree from Hampden-Sydney College, and Virginia law and real estate licenses.


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BRANDYWINE REALTY TRUST

Thomas E. Wirth (age 56)

Executive Vice President and Chief Financial Officer

 

Mr. Wirth, who joined us in December 2009, served as our Executive Vice President, Portfolio Management and Investments. In that position, he directed portfolio management, acquisition and disposition activities and assisted in formulating our capital allocation tactics, including structuring joint ventures and construction financings. From 2004 until 2009, Mr. Wirth served as President (2007-2009) and Chief Financial Officer of Feldman Mall Properties. From 1997 to 2004, he served first as the Vice President of Finance and later as Chief Financial Officer of SL Green Realty Corporation. Mr. Wirth has also served as Vice President of Financial Reporting and Analysis for Greenwich, Connecticut-based United Waste System, Inc., and spent ten years with Ernst & Young LLP in various positions, including Senior Manager. Mr. Wirth earned his B.A. in Business Management and Accounting from Gettysburg College.

 

 


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2020 PROXY STATEMENT

Compensation Discussion and Analysis

This Compensation Discussion and Analysis (CD&A) describes our executive compensation programs, including the oversight of such programs by our Compensation Committee and the rationale and processes used to determine the compensation for the company’s named executive officers (“NEOs”) and provides a detailed description of those programs. This CD&A, which may include forward-looking statements, should be read together with the compensation tables and related disclosures that follow this section.

 

This discussion focuses on the compensation provided to the company’s NEOs during 2019, who were:

 

 

Name

Title

Gerard H. Sweeney

President and Chief Executive Officer

Thomas E. Wirth

Executive Vice President and Chief Financial Officer

H. Jeffrey DeVuono

Executive Vice President and Senior Managing Director

George D. Johnstone

Executive Vice President, Operations

William D. Redd

Executive Vice President and Senior Managing Director

 

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BRANDYWINE REALTY TRUST

CD&A Table of Contents

 

I.

Executive Summary

48

 

 

 

II.

Compensation Philosophy

51

 

 

 

III.

Elements of Compensation

52

 

 

 

IV.

Executive Compensation Best Practices

53

 

 

 

V.

Oversight of Executive Compensation

54

 

 

 

VI.

2019 Executive Compensation

56

 

 

 

VII.

Key 2020 Executive Compensation Actions

67

 

 

 

VIII.

Additional Executive Compensation Policies and Practices

68

 


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2020 PROXY STATEMENT

I.Executive Summary

Compensation Elements

In 2019, the three key elements of our pay program continued to be base salary, annual cash incentive tied to key operational and strategic goals and long-term incentive awards linked to our common stock.  This summary discusses compensation highlights from 2019.  

2019 Brandywine Performance

Austin, Texas

 

uCommenced development of 405 Colorado in Austin, Texas.  The 204,000 square foot office tower will include a 520 above-grade parking garage.  Project costs are anticipated to total $114.0 million.

uPlaced into service our Four Points Centre, a fully leased 165,000 square foot property located in Austin, Texas.

 

Metro DC

 

uCommenced a $49.6 million redevelopment of our property located at 1676 International Drive.

uSold a 211,000 square foot office building located in Vienna, Virginia for $36.4 million.

uCompleted the financing of our Rockpoint venture totaling $249.4 million.  We own 15% of the venture and received $30.5 million.

 

University City

 

uCompleted the redevelopment of The Bulletin Building, a fully-leased, 283,000 square foot office property located in Schuylkill Yards.

uCompleted Drexel Square Park and completed our retail developments at our Cira South Garage.

uWe received full zoning approval from the City of Philadelphia for Schuylkill Yards which now allows us to develop our 5.1 million square foot mixed-use site.

 


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BRANDYWINE REALTY TRUST

 

Balance Sheet

 

uWe strengthened our balance sheet from 2018 to 2019 through our successful sales and refinancing efforts, marked by increasing our interest coverage from 3.7 to 3.9 and our debt service coverage from 3.4 to 3.6, in both cases based on EBITDA and excluding capital market, transactional and other items.  

uCompleted a $200.0 million guaranteed note financing at 3.0%.

 

Operations

 

uWe exceeded several of our operating goals including:

oSpeculative Revenue

oTenant Retention

oCash and GAAP rental rate mark-to-market

 

Key 2019 Executive Compensation Actions

Annual Incentives. Consistent with prior years, our 2019 annual incentive plan was tied to goals relating to our operations (20%), leasing (30%) and capital investments and balance sheet strength (50%) as well as the individual performance of our executives. As a result of the Company’s strong performance against goals in each of these measurement categories, the corporate financial performance provided for awards at 110% of target award levels. When taken into account with business unit, regional and/or individual goals, NEO annual incentives paid out at 110% of target awards.


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2020 PROXY STATEMENT

Long-Term Incentives. Our long-term incentive plan is designed to align management and shareholder interests, drive long-term value creation, and attract and retain key executive talent. For 2019, one-third of NEO’s annual long-term incentive opportunity is delivered in the form of restricted share rights that vest in equal proportions over three years. These 2019 restricted shares rights also had an outperformance modifier attached that could increase the original award up to 200% based on Brandywine’s achievement of superior results for same-store net operating income growth and development activity, weighted equally, during the three-year period ending December 31, 2021. Two-thirds of a NEO’s annual long-term incentive opportunity is delivered in the form of performance share units (“PSUs”) that may be earned based on our three-year total shareholder return versus the component members (excluding ourselves) of the FTSE NAREIT Equity Office Index  (the “Index Companies”). In 2019, we changed the performance measurement group for PSUs to focus solely on the FTSE NAREIT Equity Office Index to more precisely measure our performance against other companies that operate in our sector while also simplifying our plan design and administration. In prior years, PSUs were based on our three-year total shareholder return versus the component members (excluding ourselves) of the S&P US REIT Index, weighted at 50% of the PSU award opportunity and (ii) our peer group of companies, also weighted at 50% of the PSU award opportunity. For the 2017-2019 performance period, our 12.5% total shareholder return ranked at the 40th percentile of the S&P US REIT Index and at the 49th percentile of our peer group companies, resulting in a payout at 89% of target.

CEO Compensation. For 2019, the Compensation Committee made no change to Mr. Sweeney’s base salary of $750,000 or target annual incentive of 200% of base salary.  To better align Mr. Sweeney’s target total compensation with market levels, the Compensation Committee increased Mr. Sweeney’s target long-term incentive opportunity from 300% of base salary to 325% of base salary. As a result of this adjustment, Mr. Sweeney’s target total compensation increased from $4,500,000 to $4,687,500.

2019 Say on Pay Vote. The Company values shareholder perspectives on our executive compensation program. As part of the Compensation Committee’s annual review of the program, it considers the outcome of the Company’s annual shareholder advisory vote (“say-on-pay”) on the compensation of the Company’s NEOs. Approximately 89% of the advisory votes cast in 2019 were in favor of our executive compensation program. The Compensation Committee believes that this vote is indicative of our shareholders’ support of our executive compensation program.  The Compensation Committee will continue to consider shareholder feedback and the outcome of the Company’s say-on-pay votes when making future NEO compensation decisions.


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BRANDYWINE REALTY TRUST

II.Compensation Philosophy

Our Compensation Committee oversees and administers the Company’s executive compensation program. Our executive compensation program is designed to support our performance-based culture and the creation of value for our shareholders. The Compensation Committee is guided by the following key principles when making compensation-related decisions:

u

Encourage the achievement of annual and long-term business and human resource objectives that support the creation of shareholder value;

u

Attract, retain, and motivate top caliber talent;

u

enhance retention; and

u

encourage executives to achieve superior performance without excessive risk taking.

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2020 PROXY STATEMENT

III.Elements of Compensation

The elements of the Company's compensation program, when considered collectively, are intended to support our executive compensation philosophy and objectives by (i) allowing us to attract and retain executive-level talent, (ii) providing an appropriate level of financial certainty through non-variable compensation, (iii) providing opportunities for above market compensation based upon the achievement of specified financial and other appropriate performance objectives, and rewarding such achievement, and (iv) balancing short-term and long-term incentives. The key elements of our executive compensation program are outlined below, together with a summary of the purposes and considerations underlying each compensation element.

 

Pay Element

Form

Philosophy

Performance Alignment

Base Salary

Cash

uFixed pay to recognize an individual's role and responsibilities

uReviewed annually and set based on competitiveness versus the external market, individual performance, and internal equity

Annual Incentive

Cash

uAchieve annual goals measured in terms of financial, strategic, and individual performance linked to the creation of shareholder value

uRewards and recognizes
annual accomplishment of
key financial objectives

uCorporate performance measures aligned with Operational, Leasing, and Capital objectives

uRegional, Divisional, and Individual objectives ensure strong line of sight between executive pay and performance

Long-Term Incentives

Performance
Share Units
(Two-thirds of Target Award)

uAlign NEOs' interests with shareholders

uShareholder value creation

Restricted Share Rights
(One-third of Target Award)

uRetain executive talent

uIncrease in share price

 


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IV.Executive Compensation Best Practices

The Compensation Committee regularly reviews best practices in executive compensation and governance
and has revised our policies and practices over time. A listing of “what we do” and “what we don’t do” is presented below:

What We Do

What We Don’t Do

uPay for Performance:  Majority of pay is performance based and not guaranteed

uMultiple Performance Metrics and Time Horizon: Use multiple performance metrics focusing on top line and bottom line growth and multi-year vesting and measurement periods for long term incentives

uAnnual Compensation Risk Review:  Annually assess risk in compensation programs

uShare Ownership Guidelines:  NEOs must comply with share ownership requirements

uClawback Policy:  We maintain a clawback policy that provides for recovery of incentive compensation in the event of a financial restatement due to material non-compliance with federal securities laws and without regard to misconduct

uChallenging Performance Objectives:  Set challenging performance objectives for Annual Incentives

uUse of Independent Consultant:  The Compensation Committee has retained an independent compensation consultant that performs no other consulting services for the Company and has no conflicts of interest

uNo Excise Tax Gross Ups:  
The Company will not enter into any new agreements, or materially amend any existing employment agreements with its executives that provide excise tax gross-ups in the event of a change in control of the Company

uNo Repricing or Buyouts of Stock Options:  The Company’s equity plan prohibits repricing or buyouts of underwater stock options

uNo Perquisites:  The Company does not provide perquisites to our NEOs

uNo Hedging or Pledging:  NEOs
are prohibited from hedging their ownership or pledging Company
stock as collateral


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V.Oversight of Executive Compensation

Committee Authority

Our Compensation Committee’s responsibilities include:

u

Approving the goals and objectives relating to our President and Chief Executive Officer’s compensation, evaluating the performance of our President and Chief Executive Officer in light of such goals and objectives, and setting the compensation of our President and Chief Executive Officer based on this evaluation;

u

Approving the salaries and annual incentive awards of our other executive officers either (i) with the title Executive Vice President, (ii) with the title Senior Vice President or Vice President, in either case who hold a position as Managing Director, Chief Financial Officer, General Counsel or Chief Administrative Officer or (iii) who report directly to our President and Chief Executive Officer, taking into account the recommendation of our President and Chief Executive Officer and such other information as the Committee believes appropriate;

u

Administering our equity incentive plans, including granting equity-based awards under these plans and determining the terms of such awards;

u

Retaining and terminating, in its sole discretion, third party consultants to assist in the evaluation of Trustee and executive compensation (with sole authority to approve any such consultant’s fees and other terms of engagement); and

u

Assessing the appropriate structure and amount of compensation for our Trustees.

Our Compensation Committee’s charter does not authorize the Compensation Committee to delegate any of its responsibilities (including authority to grant equity-based awards) to other persons, and the Compensation Committee has not delegated any of its responsibilities to other persons.

Compensation Consultants

Our Compensation Committee recognizes the importance of objective, independent expertise and advice in carrying out its responsibilities. For 2019, the Compensation Committee retained Pay Governance LLC as its consultant. Our Compensation Committee selected Pay Governance as consultants because of its expertise and reputation. Neither we nor our Trustees or executive officers have any affiliation with Pay Governance or its executives and the engagement and scope of services of Pay Governance have been solely through our Compensation Committee.


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BRANDYWINE REALTY TRUST

During 2019, our compensation consultants advised our Compensation Committee on executive compensation matters, plan design, industry trends and practices, and our pay-for performance alignment, including as measured relative to peers and relative to our total shareholder returns. As directed by the Committee, the consultants prepared analyses for the Committee relating to all aspects of the compensation of our executives. They advised the Committee on market practices regarding executive compensation, including annual incentive awards and long-term incentive pay, and reviewed our peer group and the market positioning of the compensation provided to our current NEO’s and other senior executives. The consultants meet privately with the Committee and individual Committee members from time to time to plan for Committee meetings and discuss executive compensation matters. Pay Governance does not provide other services to us.

Our Compensation Committee received a letter from Pay Governance regarding its independence and assessed the independence of Pay Governance under New York Stock Exchange rules and concluded that Pay Governance’s work for the Committee does not raise any conflict of interest. Factors considered by the Committee include: (i) whether other services are provided to us by Pay Governance or its representatives; (ii) the amount of fees received by Pay Governance from us as a percentage of Pay Governance’s total revenue; (iii) policies of Pay Governance designed to prevent conflicts of interest; (iv) the absence of any business or personal relationship of representatives of Pay Governance or its representatives with a member of the Committee; (v) whether Pay Governance or its advisors to the Committee own any of our securities; and (vi) whether Pay Governance or its representatives have any business or personal relationship with any of our executive officers.

Role of Executives

Our Compensation Committee seeks the views of our President and Chief Executive Officer in setting and administering our executive compensation programs. In particular, at the beginning of each year, Mr. Sweeney oversees the development of proposed corporate, business unit/regional and individual goals for purposes of annual incentive compensation. These goals are derived from our corporate business plan and include both quantitative measurements and qualitative considerations selected to reinforce and enhance achievement of our operating and growth objectives. The Compensation Committee reviews these goals with Mr. Sweeney, adopts revisions it deems appropriate and determines the final goals for compensation.

Following the end of each year, Mr. Sweeney reviews with the Compensation Committee, at several meetings, the achievement of corporate, business unit/regional and individual goals and the performance of each other current named executive officer and presents his evaluation of such executive officer’s performance to the Committee. Decisions about individual compensation elements and total compensation are made by the Committee, using its judgment, focusing primarily on each current named executive officer’s performance against the officer’s performance goals as well as our overall performance. With respect to the non-quantitative performance measures applicable to our executives, the Committee relies heavily on the views of Mr. Sweeney (other than as to himself). As President and Chief Executive Officer, Mr. Sweeney oversees the day to day performance of the other current named executive officers. As such, our Compensation Committee believes that he is well positioned to evaluate their performance and make recommendations as to their overall compensation.

In addition to the role played by our President and Chief Executive Officer, our other executive officers furnish such industry data and legal and financial analyses as the Committee requests from time to time.


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2020 PROXY STATEMENT

VI.2019 Executive Compensation

Use of Peer Group Data

Our Compensation Committee, in consultation with its compensation consultant, developed a peer group as a frame of reference for our executive compensation. Our Compensation Committee selects companies for inclusion in the peer group that primarily acquire, sell, develop, lease and manage sizeable office real estate portfolios. In selecting companies, the Committee also considers their equity and total capitalization and geographic location as well as third party considerations (for example, where members of the financial community treat a particular company as being a Company peer). Our Compensation Committee has not selected or excluded companies from the peer group on account of their compensation practices. Our Compensation Committee believes that peer group data are an indicator of compensation opportunities at companies that might recruit our executives and the data therefore help the Committee set compensation at competitive levels. Our Compensation Committee also believes that peer group data provide perspective on performance measurement practices and linkages between pay and performance. The Committee does not set specific pay targets or otherwise engage in formal “benchmarking” of compensation of our executives against executives at peer group companies. The Committee does, however, attempt to set total compensation for each current named executive near the middle of the peer group data while allowing for the possibility of greater or lesser compensation based upon our corporate and individual performance.

Our Compensation Committee reviews our peer group at least annually. Following the completion of our annual peer group review for 2019, the Compensation Committee removed Liberty Property Trust from the peer group used for 2019 due to its shift in portfolio to industrial assets. Additionally, Tier REIT merged with Cousins Properties in June 2019. Accordingly, our peer group for our 2019 awards comprised the following companies:

Columbia Property Trust, Inc.

Hudson Pacific Properties, Inc.

Corporate Office Properties Trust Inc.

Kilroy Realty Corp.

Cousins Properties Inc.

Mack-Cali Realty Corporation

Douglas Emmett, Inc.

Paramount Group

Empire State Realty Trust, Inc.

Piedmont Office Realty Trust Inc.

Equity Commonwealth

Washington Real Estate Investment Trust

Highwoods Properties, Inc.

 


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BRANDYWINE REALTY TRUST

Base Salary

Base salary represents the fixed portion of an executive’s compensation and provides a regular stream of income and financial security. In setting base salaries, our Compensation Committee considers the responsibilities, skills, experience and performance of the executives and relies heavily on the views of our President and Chief Executive Officer as to the impact, contribution and expertise of our executives (except in the case of himself and his compensation). In setting base salaries, our Compensation Committee also considers the linkage of base salaries to the elements of our compensation that are tied to base salaries (such as severance and change in control benefits and annual and long-term incentive targets that are computed as a multiple of base salary). As part of the annual compensation process, the Committee may adjust base salaries to reflect changes in market data or in an executive’s responsibilities, skills, experience and performance.

For 2019, the base salaries of our current NEOs were adjusted as reflected in the table below:

Name

2018 Base Salary

2019 Base Salary

% Increase

Gerard H. Sweeney

$750,000

$750,000

0%

Thomas E. Wirth

$425,000

$450,000

5.8%

H. Jeffrey DeVuono

$400,000

$410,000

2.5%

George D. Johnstone

$358,750

$367,000

2.3%

William D. Redd

$346,000

$375,000

8.4%

Annual Incentive Awards

Annual incentive awards are designed to reward executives for achievement of annual performance goals linked to the achievement of our annual company goals. Each year our Compensation Committee establishes a target amount for annual incentive awards for each executive, with the target amount expressed as a percentage of the executive’s base salary. The targeted amounts take into account all factors that the Committee deems relevant, including the input of Pay Governance as to competitive compensation levels, the recommendation of our President and Chief Executive Officer (except with respect to his own target), responsibilities of the executives and the Committee’s view of market conditions.

2019 target percentages for annual incentive awards for NEOs were as follows:

Name

2019 Target Award as a % of Base Salary

Gerard H. Sweeney

200%

Thomas E. Wirth

100%

H. Jeffrey DeVuono

100%

George D. Johnstone

100%

William D. Redd

100%

 


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2020 PROXY STATEMENT

Annual incentive awards for 2019 were computed primarily on the basis of performance within three categories and reflected in a “scorecard”: corporate, business unit/regional and individual. The “corporate” and “business unit/regional” categories include performance measures that are derived from, or that seek to reinforce, our annual corporate business plan developed by our Board of Trustees and senior management. The “individual” category is tied to non-quantitative individual goals, including corporate initiatives, social/community activities and departmental leadership. Measurement of performance for this category is subjective. Annual incentive awards for 2019 performance were payable during the first quarter of 2020 based on 2019 performance.

The table below sets forth the relative weightings of each of the corporate, business unit/regional and individual categories used in the scorecard for 2019. The weightings reflect the different roles and responsibilities of our current NEOs.

Name

Corporate

Business Unit / Regional

Individual

Gerard H. Sweeney

80%

0%

20%

Thomas E. Wirth

50%

40%

10%

H. Jeffrey DeVuono

30%

60%

10%

George D. Johnstone

40%

50%

10%

William D. Redd

30%

60%

10%

 

With respect to corporate and business unit/regional goals, the Committee sets a threshold, target and maximum payout shortly after the beginning of each year or as soon as practicable thereafter. If we or the executive were not to achieve the threshold (minimum) performance for the applicable component, then the executive would not receive any payout for that component. If we or the executive were to achieve the threshold (minimum) performance, and no higher than the threshold for the applicable component, then the executive would receive 85% of the target payout for that component. If we or the executive were to achieve the target, and no higher than the target for the applicable component, then the executive would receive 100% of the target payout for that component. If we or the executive were to exceed target in a particular area, then the executive may be awarded up to 175% of the relevant component. Accordingly, an executive’s opportunity in respect of a given component ranges from zero (0) to 175% of target.

Following the end of each year, our President and Chief Executive Officer reviews with the Compensation Committee achievements relative to corporate, business unit/regional and individual performance objectives as well as our performance compared to our business plan for the prior year and submits recommendations for annual incentive awards based on his assessment of our overall and individual achievements. The Compensation Committee analyzes the recommendations and has unrestricted authority to modify them.

The Committee’s framework for administering the corporate scorecard expressly affords the Committee the opportunity to adjust the results of the scorecard upward or downward by 25% to reflect strategic accomplishments as well as our performance with respect to metrics selected by the Committee relative to peer company performance with respect to these metrics. In determining whether to make any such adjustments, the Committee exercises judgment and discretion as to the strategic accomplishments and metrics and the weight assigned to any such accomplishments and metrics.


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BRANDYWINE REALTY TRUST

In early 2020 the Committee reviewed the Company’s performance with respect to the established operational, leasing, and capital criteria established by the Committee. A summary of the Company’s performance against the specific criteria in these categories is presented below.

Performance Measure

Minimum

Target

Maximum

Actual

Performance

Payout

Percentage

OPERATIONS (20% WEIGHTING)

 

 

 

 

 

FFO1

$1.37

$1.42

$1.47

$1.43

118%

Cash Available for Distribution, as adjusted (CAD)2

$0.86

$0.94

$1.04

$1.07

175%

Year-End Occupancy

94.0%

94.5%

95.5%

94.5%

100%

Same Store Cash NOI Growth3

1.0%

2.0

3.00%

1.5%

93%

LEASING (30% WEIGHTING)

 

 

 

 

 

Spec Revenue Achievement

$33.0 MM

$33.5 MM

$34.5 MM

$33.8 MM

123%

Year-End Leased

95.0%

95.5%

96.0%

96.3%

175%

Revenue Maintaining Capital (% lease revenue)4

14.5%

14.0%

13.5%

14.5%

85%

CAPITAL (50% WEIGHTING)

 

 

 

 

 

Core Sales / JV Activity ($MM)

$100

$150

$200

$68

0%

Acquisitions

$50

$100

$150

$2

0%

Generate one land development start

none

1 Start

2 Starts

1 Start

100%

Leverage Target (Debt / Gross Asset Value)

40.3%

39.8%

39.0%

41.4%

0%

Net Debt / EBITDA*

6.3x

6.2x

6.0x

6.1x

138%

Fixed Charge Ratio*

3.7x

4.0x

4.3x

3.7x

85%

 

* Represents annualized fourth quarter metric.

1)

We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than we do. NAREIT defines FFO as net income (loss) before non-controlling interests of unit holders (preferred and common) and excluding gains (losses) on sales of depreciable operating property, impairment losses on depreciable consolidated real estate, impairment losses on investments in unconsolidated real estate ventures and extraordinary items (computed in accordance with GAAP); plus real estate related depreciation and amortization (excluding amortization of deferred financing costs), and after similar adjustments for unconsolidated joint ventures. Net income, the GAAP measure that we believe to be most directly comparable to FFO, includes depreciation and amortization expenses, gains or losses on sales of depreciable operating property, impairment losses on depreciable consolidated real estate, impairment losses on investments in unconsolidated real estate ventures, extraordinary items and non-controlling interests. To facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction with net income (determined in accordance with GAAP) as presented in the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. FFO does not represent cash flow from operating activities (determined in accordance with GAAP) and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as an indication of our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available for our cash needs, including our ability to make cash distributions to shareholders.

(2)

Cash available for distribution, or CAD, is a non-GAAP financial measure that is not intended as an alternative to cash flow from operating activities as determined under GAAP. CAD is presented in our investor presentations solely as a supplemental disclosure with respect to liquidity because we believe it provides useful information regarding our ability to fund our distributions. Because other companies do not necessarily calculate CAD the same way as we do, our presentation of CAD may not be comparable to similarly titled

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2020 PROXY STATEMENT

measures provided by other companies. For purposes of the scorecard, our Compensation Committee adjusts CAD to reflect intra-year capital markets and other transaction activity not taken into account in the initial scorecard metric.

(3)

NOI, or net operating income, is a non-GAAP financial measure equal to net income available to common shareholders, the most directly comparable GAAP financial measure, plus corporate general and administrative expense, depreciation and amortization, interest expense, non-controlling interests and losses from early extinguishment of debt, less interest income, development and management income, gains from property dispositions, gains on sale from discontinued operations, gains on early extinguishment of debt, income from discontinued operations, income from unconsolidated joint ventures and non-controlling interests. In some cases, we also present NOI on a cash basis, which is NOI after eliminating the effect of straight-lining of rent and deferred market intangible amortization. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income as an indication of our performance, or as an alternative to cash flow from operating activities as a measure of our liquidity or ability to make cash distributions to shareholders. Our same store portfolio generally consists of those properties that we owned for the entirety of each of the periods being compared. Refer to Appendix A to this proxy statement for a reconciliation of our 2019 same store NOI, including on a cash basis, to our 2019 net income available to common shareholders.

(4)

Revenue maintaining capital expenditures are a component of our CAD calculation and represent the portion of capital expenditures required to maintain our current level of cash available for distribution. Revenue maintaining capital expenditures include current tenant improvement and allowance expenditures for all tenant spaces that have been owned for at least one year, and that were not vacant during the twelve-month period prior to the date that the tenant improvement or allowance expenditure was incurred. Revenue maintaining capital expenditures also include other expenditures intended to maintain our current revenue base. Accordingly, we exclude capital expenditures related to development and redevelopment projects, as well as certain projects at our core properties that are intended to attract prospective tenants in order to increase revenues and/or occupancy rates.

The foregoing include various non-GAAP measures.  Please see Appendix A for reconciliation of those measures to our published financial statements.

2019 Annual Incentive Business Unit/Regional Goals

As noted above, four of our current NEOs received annual incentive awards based in part upon the performance of their respective business units or regions. Because each of Messrs. DeVuono and Redd oversee specific geographic regions of our operations, the performance metrics for the business unit/regional portion of their scorecards include region-specific operational performance measures tied to leasing revenues, capital cost controls, same store net operating income, occupancy levels and lease renewals. The business unit/regional performance measures for our other two current NEOs with business unit/regional goals are non-quantitative and the measurement of achievement involves judgment and subjectivity. The 2019 business unit performance measures for Mr. Johnstone, our Executive Vice President, Operations, related to quality and timeliness of our operational reporting system and oversight of our leasing and internal capital allocation processes. The 2019 business unit performance measures for Mr. Wirth, our Executive Vice President and Chief Financial Officer, were tied to (i) quality and timeliness of our financial reporting; (ii) operational efficiencies and process improvement; (iii) corporate controls and support of our internal audit group; and (iv) sourcing of new debt and equity capital.

2019 Annual Incentive Individual Goals

Individual goals for our executive officers are tied to executive leadership and managerial performance and are evaluated on a subjective basis annually. These goals are intended to move our company and the individual executive’s business unit or region forward in terms of organizational structure, improve on such practices as collaboration among business units or enterprise-wide thinking and address development of junior executives and succession planning. Individual performance for Mr. Sweeney is determined by the Compensation Committee. The Committee also determines individual performance for the other current NEOs after receiving recommendations from Mr. Sweeney. None of the individual goals included quantitative measures, and our Compensation Committee assigned no specific weighting to any of these goals, but rather assessed overall

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BRANDYWINE REALTY TRUST

achievement levels in determining annual incentive awards. Individual goals for Mr. Sweeney in 2019 included (i) providing ongoing strategic leadership; (ii) proactive management of sources and uses of capital, including oversight of our portfolio allocation goals; and (iii) active management of career development of high potential officers within our company.

2019 Annual Incentive Final Award Payouts

Based on its review of Company, business unit, and individual performance against the scorecard measures and goals, the Compensation Committee approved a payout of 110% of target for our NEOs. The final payouts for each NEO, to be paid in cash, were as follows:

 

2019 ANNUAL INCENTIVE FINAL PAYOUT

Name

Cash Amount

Total Payout
% of Target Award

Thomas E. Wirth

$495,000

110%

H. Jeffrey DeVuono

$451,000

110%

George D. Johnstone

$403,000

110%

William D. Redd

$412,000

110%

 

2019 President and Chief Executive Officer Annual Incentive Award

As discussed above, our Compensation Committee approves the performance goals for our President and Chief Executive Officer each year following review of our annual business plan and key objectives for that year. For 2019, 80% of the annual incentive award opportunity for Mr. Sweeney was tied to “corporate” performance measures (with the components and targets identified above) and 20% reflected the Compensation Committee’s assessment of Mr. Sweeney’s leadership of our company and strategic vision. After a review of overall performance, the Compensation Committee determined that Mr. Sweeney’s individual performance should be aligned with the financial performance of the Company, and therefore established his 2019 annual incentive at 110% of the target level, or $1,650,000.


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2020 PROXY STATEMENT

Equity-Based Long-Term Incentive Compensation

Consistent with our compensation objectives, our equity-based long-term incentive program is designed to assist us in attracting and retaining high quality executives, while tying a significant portion of compensation to our financial performance, principally in the case of this program to our total shareholder return. For the awards made in February 2019, and consistent with prior year practice, the Compensation Committee, after consultation with Pay Governance, determined target long-term incentive award values for each executive officer as set forth below:

Name

2019 TARGET LTI AWARD AS A % OF BASE SALARY**

Gerard H. Sweeney

325%

Thomas E. Wirth

210%

H. Jeffrey DeVuono

150%

George D. Johnstone

135%

William D. Redd

150%

 

**Does not include the special two-year restricted share rights award granted in 2019 in respect of 2018 performance, as discussed in our Compensation Discussion and Analysis last year.

2019 Long-Term Incentive Plan Design

Consistent with prior years, equity-based awards for executive officers in 2019 are intended to address both the long-term performance and retention objectives of our equity compensation philosophy, delivered as follows:

u

Equity-based long-term incentive awards are delivered as a mix of two-thirds performance share units (“PSUs”) and one-third time-vesting restricted share rights

u

PSUs which may be earned based on our three-year total shareholder return relative to the component members (excluding ourselves) of the FTSE NAREIT Equity Office Index. If the Company’s total shareholder return during the measurement period is negative, the maximum number of PSUs that may be earned notwithstanding relative to total shareholder return achievement above the target level is limited to 100% of the target level

u

Restricted share rights generally vest in equal proportions over three years subject to continued employment with the Company; which the Committee believes enhances executive officer retention. Dividends are paid on restricted shares over the vesting period.

u

New for 2019, the restricted shares rights also had an outperformance modifier attached that can increase the original award up to 200% based on Brandywine’s achievement of superior results for two performance measures during the three-year period ending December 31, 2021.

u

Awards are subject to accelerated vesting or settlement upon death, disability, involuntary termination or qualifying retirement, as further described below under “Vesting and Forfeiture Provisions”

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BRANDYWINE REALTY TRUST

2019 Restricted Share Rights Outperformance Modifier

As a new feature for 2019, the restricted shares right awards included an outperformance modifier that can increase the original award up to 200% based on Brandywine’s achievement of superior results for same-store net operating income growth and development activity, weighted equally, during the three-year period ending December 31, 2021. These goals are intentionally ambitious and their achievement was not considered probable on the date of grant.

Half of any additional shares earned under this outperformance feature will vest based on continued service through each of January 1, 2022 and January 1, 2023, provided that this additional service requirement will be waived in the event of a death, disability or qualifying retirement.  In the case of death, disability or qualifying retirement prior to December 31, 2021, the opportunity to earn additional shares under the outperformance feature will remain in effect, but the number of additional shares earned at the conclusion of the performance period (if any) will be pro-rated to reflect the fraction of the performance period actually worked.

Dividend equivalents on any additional shares earned under the outperformance feature will be payable in cash, but only with respect to dividends paid following the end of the applicable performance period.

2019-2021 Performance Share Unit Award Terms

In 2019, we changed the performance measurement group for PSUs to focus solely on the FTSE NAREIT Equity Office Index to more precisely measure our performance against other companies that operate in our sector while also simplifying our plan design and administration. Prior to 2019, PSUs were based on our three-year total shareholder return versus (i) the component members (excluding ourselves) of the S&P US REIT Index, weighted at 50% of the PSU award opportunity and (ii) our peer group of companies, also weighted at 50% of the PSU award opportunity.

The payout schedule for the 2019-2021 performance period is presented below and is unchanged from the 2018-2020 program:

Percentile Rank

PSU Payout %

75th Percentile and above

200%

50th Percentile

100%

25th Percentile

50%

Below 25th Percentile

0%

 

Dividend equivalents are credited in respect of outstanding PSUs in the form of additional PSUs, based on the fair market value of our shares on the dividend payment date, and such additional PSUs are subject to the same performance vesting criteria as the original PSUs.


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2020 PROXY STATEMENT

Vesting and Forfeiture Provisions

Equity awards that remain unvested upon the holder’s termination of employment with us will vest or be forfeited depending on the reason for the termination. The table below, as supplemented by the notes to the table, summarizes these provisions:

Reason for Termination

Effect on Awards

Voluntary Termination by Executive not eligible for Qualifying Retirement (1)

● Forfeit

Change in Control

● Early measurement for outperformance component of restricted common share awards (“outperformance shares”), with earned outperformance shares remaining subject to time vesting requirements

● Early measurement and payout for PSUs

● Restricted common shares vest and shares are delivered (including any previously earned but unvested outperformance shares), if a qualifying employment termination occurs within one year

Death or Disability

● Performance period for outperformance shares remains open, with payout at the end of performance period (pro-rated based on the portion of the period actually served)

● Early measurement and payout for PSUs

● Restricted common shares vest and shares are delivered (including any previously earned but unvested outperformance shares)

Qualifying Retirement (1)

● Performance period for outperformance shares remains open, with payout at the end of performance period (pro-rated based on the portion of the period actually served)

● Early measurement and payout for PSUs (pro-rated based on the portion of the performance period actually served, in the case of 2020-2022 PSUs)

● Shares underlying restricted common shares are delivered (including any previously earned but undelivered outperformance shares)

 

(1)

Qualifying Retirement means an executive’s voluntary termination of employment after reaching age 57 and accumulating at least 15 years of service with us. Two of our current named executive officers, Mr. Sweeney and Mr. Redd, have met conditions to elect a qualifying retirement as of the date of this proxy statement. The remaining named executive officers become retirement eligible as of the following dates: Mr. Wirth in December 2024, Mr. DeVuono in July 2022 and Mr. Johnstone in July 2020.


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BRANDYWINE REALTY TRUST

2017-2019 Performance Share Unit Award Outcomes

For the 2017-2019 performance period, our 12.5% total shareholder return ranked at the 40th percentile of the S&P US REIT index companies and at the 49th percentile of our peer group companies, resulting in a weighted total payout at 89% of target.  This resulted in the named executive officers earning the number of units shown below:

Name

Performance Units Earned (#)

Gerard H. Sweeney

66,391

H. Jeffrey DeVuono

18,020

George D. Johnstone

13,302

William D. Redd

12,646

Thomas E. Wirth

18,969

Deferred Compensation Plan

We offer a deferred compensation plan that enables our executives to defer a portion of their base salaries, annual incentive awards and equity awards. The amounts deferred are not included in the executive’s current taxable income and, therefore, are not currently deductible by us. The executives select from a limited number of mutual funds and investment alternatives which serve as measurement funds, and the deferred amounts are increased or decreased to correspond to the market value of the selected investments. We do not consider any of the earnings credited under the deferred compensation plan to be “above market.” We generally do not provide any matching contribution to any executive officer who participates in this plan, other than a limited amount to make up for any loss of matching contributions under our Section 401(k) plan.  However, an executive who defers more than 25% of his or her annual incentive award into the Company Share Fund under the deferred compensation plan will receive a 15% matching contribution on the excess amount, which matching contribution will itself be invested in the Company Share Fund.  We maintain this plan to help ensure that our benefits are competitive. See “Compensation Tables and Related Information — Nonqualified Deferred Compensation.”

Other Benefits

Our executives participate in company-sponsored benefit programs available generally to all our salaried employees, including our shareholder-approved non-qualified employee share purchase plan and our Section 401(k) plan. For 2019, our 401(k) plan provided a company matching contribution of 30% of the first 6% of eligible compensation contributed to the plan, up to a maximum company matching contribution of $4,860. Other benefits, such as health and dental plans, group term life insurance and short- and long-term disability insurance, are also available generally to all our salaried employees.

Perquisites

We do not provide perquisites to our executive officers.

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Post-Termination Benefits; Qualifying Retirement

We provide post-employment benefits to our executive officers that vary based on the executive and the circumstances of the executive’s termination. See “Employment and Other Agreements” and “Potential Payments upon Termination of Employment or Change-in-Control.”

Our equity-based long-term incentive awards provide for vesting of unvested awards upon a qualifying retirement. A “qualifying retirement” means the termination of employment, other than for cause, after the employee has reached age fifty-seven (57) and worked for us for at least fifteen (15) years. Our Compensation Committee believes that this definition of retirement is appropriate and rewards long-term contributions of employees to us.

We have “change of control” severance agreements with our executive officers (other than our President and Chief Executive Officer) which condition the executive’s entitlement to severance following a change of control upon a so-called “double trigger.” Under a double-trigger, the executive is entitled to severance only if, within a specified period following the change of control, the terms of his or her employment are adversely changed or he or she is terminated without cause. The entitlement of our President and Chief Executive Officer to severance following a change of control is not conditioned on an adverse change in his employment terms; rather he would be entitled to severance if he were to resign within six months following the change of control or his employment were terminated without cause. Our Compensation Committee believes that the severance protection that we provide is consistent with those maintained by our peer companies and is therefore important in enabling us to attract and retain high quality executives. We also believe it is in our best interest to have agreements with our senior executives that maintain their focus on, and commitment to, us notwithstanding a potential merger or other change of control transaction.


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VII.Key 2020 Executive Compensation Actions

Key 2020 Executive Compensation Actions

u

The number of shares subject to PSU awards (at target) and restricted share rights granted to each NEO as part of our 2020 long-term incentive compensation program are summarized below:

Name

PSUs (at target)

(#)

Restricted Share Right Awards

(#)

Gerard H. Sweeney

126,044

72,469

Thomas E. Wirth

40,482

23,275

H. Jeffrey DeVuono

28,718

16,512

George D. Johnstone

22,243

12,789

William D. Redd

26,296

15,119

 

u

The restricted shares right awards again include an outperformance modifier that can increase the number of shares payable under the award by up to 200% based on Brandywine’s achievement of superior results for two performance measures during the three-year period ending December 31, 2022.  For 2020 awards, half of the outperformance feature is again based on same-store net operating income growth.  The remaining half is based on aggregate investment activity, rather than the development activity used in 2019.  The Committee decided to substitute aggregate investment activity for development activity because it believes this measure represents a more robust evaluation of capital deployment than development activity alone.  These outperformance goals are again intentionally ambitious and their achievement was not considered probable on the date of grant.  Other than new goals for same-store net operating income growth and the replacement of aggregate investment activity goals for development goals, the remaining terms of the outperformance modifier are substantially the same as those used in 2019.

u

PSUs granted in 2020 are now pro-rated upon a Qualifying Retirement.  That is, in the event of a Qualifying Retirement during the performance period, the number of PSUs earned is determined at that time and then pro-rated to reflect the portion of the performance period actually worked since the grant date.  The pro-ration is a new feature, whereas previously awarded PSUs were measured and paid without proration upon a Qualifying Retirement.


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VIII.Additional Executive Compensation Policies and Practices

Timing of Equity and Other Awards

We do not have any process or practice to time the grant of equity awards in coordination with our release of earnings or other material non-public information. Historically, our Compensation Committee has approved annual incentive awards and equity-based long-term incentive awards after the completion of each fiscal year, following review of pertinent fiscal year information and industry data. The date on which the Committee has met has varied from year to year, primarily based on the schedules of Committee members and the timing of compilation of data requested by the Committee. We do not time the release of material information to affect the value of executive compensation.

Compensation Recovery; Clawback Agreements

We have entered into “clawback” agreements with each of our executive officers that provide that in the event of an accounting restatement due to material non-compliance with federal securities laws, and without regard to misconduct, we have the right to recover incentive-based compensation that was computed on the basis of erroneous data during the three-year period preceding the accounting restatement and that exceeded what should have been paid on the basis of the corrected data.

Share Ownership Requirements

We maintain minimum share ownership requirements for our executives and Trustees. We include these requirements in our Corporate Governance Principles. Our executive officers are required to own, within five years of their election as an executive officer, the lesser of (x) 75% of the number of common shares or share equivalents awarded to such executive officer for no consideration (other than such officer’s services) under an equity compensation program during the sixty-month period that precedes the testing date, less shares withheld for taxes and (y) common shares or share equivalents that have a market value (based on the average of the closing common share prices as reported on the New York Stock Exchange for the twelve-month period ending on June 30 of the calendar year that precedes the date of computation) at least equal to a multiple of the officers base salary. In the case of our President and Chief Executive Officer, the multiple is six, and in the case of our other executive officers, the multiple is four. Each of our non-employee Trustees is required to retain a number of common shares (or share equivalents), whether vested or not, at least equal to five (5) times the annual cash retainer (currently $45,000 per year) for service on the Board. Each of our executive officers and non-employee Trustees is in compliance with the share ownership requirements. If an officer were not to meet the requirements, the officer would be restricted from selling any common shares (or share equivalents) that have been or are thereafter awarded to him or her under any of our equity compensation programs until such officer met the requirements, except as required by law or upon the approval of the Board or the Compensation Committee or (except as to himself) the President and Chief Executive Officer.

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Hedging Prohibition

Our executives and Trustees are prohibited from hedging their ownership or offsetting any decline in the market value of our shares, including by trading in publicly-traded options, puts, calls or other derivative instruments related to our shares.

Pledges and Transactions in Shares

Our executives and Trustees are prohibited from pledging our shares as collateral for loans.

Compensation and Risks

Our Compensation Committee believes that the risks material to our business are those that derive from broad-based economic trends and specific trends related to the types of real estate we own and operate in our relevant markets. We do not believe that these risks are materially affected by, or materially arise from, our compensation policies and practices. We believe that our compensation policies and practices support achievement of competitive performance without unnecessary and excessive risk taking. Our annual incentive awards and equity-based long-term incentive awards are based on a variety of indicators of performance, thus diversifying the risk associated with any single indicator of performance. In addition, our share ownership requirements, encourage our executives to focus on sustained share price appreciation rather than short-term results. Furthermore, compliance and ethical behavior are integral factors considered in all performance assessments.

Accounting Considerations

Prior to implementation of a compensation program and awards under the program, we evaluate the cost of the program and awards in light of our current budget and anticipated budget. We also review the design of compensation programs to assure that the recognition of expense for financial reporting purposes is consistent with our financial modeling. Under FASB ASC Topic 718, the compensation cost recognized for an award classified as an equity award is fixed for the particular award and, absent modification, is not revised with subsequent changes in market prices of our common shares or other assumptions used for purposes of the valuation.

Tax Considerations

Prior to implementation of a compensation program and awards under the program, we evaluate the federal income tax consequences, both to us and to our executives, of the program and awards. Before approving a program, our Compensation Committee receives an explanation from our outside professionals as to the expected tax treatment of the program and awards under the program.

Consideration of Prior Year Compensation

The primary focus of our Compensation Committee in setting executive compensation is the executive’s current level of compensation, including recent awards of long-term incentives, in the context of current levels of compensation for similarly situated executives at peer companies, taking into account the executive’s

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2020 PROXY STATEMENT

performance and our corporate performance. The Committee has not adopted a formulaic approach for considering amounts realized by an executive from prior equity-based awards.

Compensation Committee Report

The Committee has reviewed and discussed the Compensation Discussion and Analysis with our management, which has the responsibility for preparing the Compensation Discussion and Analysis. Based upon this review and discussion, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in our proxy statement for our 2020 annual meeting of shareholders.

Submitted by:

James C. Diggs (Chair)

Wyche Fowler

Michael J. Joyce

Charles P. Pizzi


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Compensation Tables and Related Information

The following tables and footnotes set forth information, for the three most recent fiscal years, concerning compensation awarded to, earned by or paid to: (i) our President and Chief Executive Officer, (ii) our Executive Vice President and Chief Financial Officer and (iii) each of our three other most highly compensated executive officers in 2019 who were serving as executive officers at December 31, 2019 (our “named executive officers”).

Summary Compensation Table

Current Executive
Name and
Principal Position

Year

Salary
(1)

Share Awards
(2)

Non-Equity Incentive Plan Compensation

(3)

All Other
Compensation
(4)

Total

Gerard H. Sweeney
President and Chief
Executive Officer

2019

$750,000

$2,867,485

$1,650,000

$67,701(5)

$5,335,186

2018

$741,667

$2,249,994

$1,545,000

$14,791

$4,551,452

2017

$700,000

$2,100,002

$1,820,000

$14,639

$4,634,641

Thomas E. Wirth
Executive Vice
President, Chief
Financial Officer

2019

$445,833

$1,007,264

$495,000

$5,040(6)

$1,953,137

2018

$422,833

$850,001

$437,750

$5,970

$1,716,554

2017

$410,000

$599,999

$475,000

$5,820

$1,490,819

H. Jeffrey DeVuono
Executive Vice
President and Senior
Managing Director

2019

$408,333

$657,994

$451,000

$5,040(6)

$1,522,367

2018

$398,333

$599,999

$412,000

$5,970

$1,416,302

2017

$388,333

$569,999

$449,000

$5,820

$1,413,152

George D. Johnstone
Executive Vice
President, Operations

2019

$365,625

$530,940

$403,000

$5,040(6)

$1,304,605

2018

$357,292

$448,435

$369,513

$5,970

$1,181,210

2017

$347,767

$420,764

$402,500

$5,820

$1,176,851

William D. Redd
Executive Vice
President and Senior
Managing Director

2019

$370,167

$606,116

$412,000

$5,040(6)

$1,393,323

2018

$344,333

$432,503

$356,380

$5,970

$1,139,186

2017

$333,333

$400,012

$387,000

$5,820

$1,126,165

 

(1)

Executives are eligible to defer a portion of their salaries under our Nonqualified Deferred Compensation Plan. The amounts shown in this column have not been reduced by any deferrals under the Nonqualified Deferred Compensation Plan. Amounts deferred in 2019 are shown in the Nonqualified Deferred Compensation table below.

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2020 PROXY STATEMENT

(2)

This column represents the grant date fair value of Share Awards computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. Share Awards consist of (i) restricted common share rights and (ii) awards of performance units. A portion of the amounts shown in this column reflects restricted common shares rights granted on February 21, 2019 in recognition of 2018 performance. The grant date fair value of each restricted common share right awarded on February 21, 2019 was equal to the closing price on New York Stock Exchange on the award date ($15.61). The grant date fair value for the performance units awarded on February 21, 2019 was $21.65 and was determined using a Monte Carlo simulation probabilistic valuation model. We assumed volatility of 20.2%, which was calculated based on the volatility of our share price over the preceding six years, using weekly share price observations (average peer volatility over the same period was 21.4%). Our actual total shareholder return from the beginning of the performance period through the grant date was 15.9%, which was calculated using a 30-day average share price as the beginning share price and the share price on the grant date as the ending share price (average shareholder return for the index for the same period was 9.2%).

The amounts listed in this column include the following amounts for performance-based restricted share units awarded in 2019: for Mr. Sweeney, $1,633,124; for Mr. Wirth, $633,154; for Mr. DeVuono, $412,043; for Mr. Johnstone, $331,959; and for Mr. Redd, $376,883. Per SEC rules, the values of these units are reported in this column based on their probable outcomes at the grant date. However, the terms of the units permit additional shares to be earned based on performance. The grant date value of the maximum number of common shares that may be earned under the units was $3,266,249 for Mr. Sweeney, $1,266,309 for Mr. Wirth, $824,086 for Mr. DeVuono, $663,919 for Mr. Johnstone, and $753,766 for Mr. Redd.

Similarly, the amounts listed in this column also include the following amounts in respect of restricted common share rights awarded in 2019 that include an outperformance modifier which could increase the number of shares issuable under the award:  for Mr. Sweeney, $804,368; for Mr. Wirth, $311,857; for Mr. DeVuono, $202,946; for Mr. Johnstone, $163,499; and for Mr. Redd, $185,619. Per SEC rules, the values of these restricted common share rights are reported based on their grant date fair values, which reflect that the achievement of the outperformance goals was not considered probable on the grant date. The grant date value of the maximum number of common shares that may be earned under these awards was $2,413,103 for Mr. Sweeney, $935,570 for Mr. Wirth, $608,837 for Mr. DeVuono, $490,497 for Mr. Johnstone, and $556,856 for Mr. Redd.

Finally, the amounts listed in this column also include the following amounts in respect of restricted common share rights awarded in 2019 that do not include an outperformance modifier: for Mr. Sweeney, $429,993; for Mr. Wirth, $62,253; for Mr. DeVuono, $43,006; for Mr. Johnstone, $35,482; and for Mr. Redd, $43,614.  As further discussed in the proxy statement for our 2019 Annual Meeting of Shareholders, these awards vest over two years and were issued in respect of 2018 performance.

(3)

These amounts reflect annual incentives actually earned in cash. Executives are eligible to defer a portion of the amounts earned into our Deferred Compensation Plan.

(4)

Amounts in this column do not include dividends paid on unvested restricted common shares rights because the dollar value of dividends has been factored into the grant date fair value of the rights.

(5)

Represents for 2019 (i) $5,040 in employer matching and profit sharing contributions to our 401(k) retirement and profit sharing plan and deferred compensation plan; (ii) $53,843 in life insurance premiums; and (iii) $8,818 from participation in the Employee Share Purchase Plan.

(6)

Represents for 2019 $5,040 in employer matching and profit sharing contributions to our 401(k) retirement and profit sharing plan and deferred compensation plan.


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Grants of Plan-Based Awards

Current Executive
Name

Grant
Type

Grant
Date

Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards ($) (1)

Estimated Possible Payouts Under Equity Incentive

Plan Awards (#) (2)

All Other

Share

Awards:

Number of

Shares (#)

Grant Date

Fair Value

of Share

and Option

Awards (3)

Threshold

Target

Maximum

Threshold

Target

Maximum

Gerard H. Sweeney

Annual Incentive

n/a

$0

$1,500,000

$2,625,000

 

 

 

 

 

Restricted
Common
Share Rights(4)

2/21/19

 

 

 

 

 

 

27,546

$429,993

Performance Units

2/21/19

 

 

 

37,717

75,433

150,866

 

$1,633,124

Restricted
Common
Share Rights(5)(6)

2/21/19

 

 

 

 

 

 

51,529

$804,368

Thomas E. Wirth

Annual Incentive

n/a

$0

$450,000

$787,500

 

 

 

 

 

Restricted
Common
Share Rights(4)

2/21/19

 

 

 

 

 

 

3,988

$62,253

Performance Units

2/21/19

 

 

 

14,623

29,245

58,490

 

$633,154

Restricted
Common
Share Rights(5)(6)

2/21/19

 

 

 

 

 

 

19,978

$311,857

H. Jeffrey DeVuono

Annual Incentive

n/a

$0

$410,000

$717,500

 

 

 

 

 

Restricted
Common
Share Rights(4)

2/21/19

 

 

 

 

 

 

2,755

$43,006

Performance Units

2/21/19

 

 

 

9,516

19,032

38,064

 

$412,043

Restricted
Common
Share Rights(5)(6)

2/21/19

 

 

 

 

 

 

13,001

$202,946

George D. Johnstone

Annual Incentive

n/a

$0

$367,000

$642,250

 

 

 

 

 

Restricted
Common
Share Rights(4)

2/21/19

 

 

 

 

 

 

2,273

$35,482

Performance Units

2/21/19

 

 

 

7,667

15,333

30,666

 

$331,959

Restricted
Common
Share Rights(5)(6)

2/21/19

 

 

 

 

 

 

10,474

$163,499

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William D. Redd

Annual Incentive

n/a

$0

$375,000

$656,250

 

 

 

 

 

Restricted
Common
Share Rights(4)

2/21/19

 

 

 

 

 

 

2,794

$43,614

Performance Units

2/21/19