Proxy Statement (Form DEF 14A)
SECURITIES AND EXCHANGE COMMISSION
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 under §240.14a-12 |
(
(
Payment of Filing Fee (Check all boxes that apply):
| ☒ | No fee required. | |
| ☐ | Fee paid previously with preliminary materials. | |
| ☐ | Fee paid on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
CHAIRMAN'S LETTER
Dear Stockholder:
On behalf of the Board of Directors of
We believe that the online tools we have selected will facilitate stockholder communication, allowing stockholders to communicate with us in advance of, and during, the Annual Meeting. During the live Q&A session of the Annual Meeting, we may answer questions as they come in and address those asked in advance, to the extent relevant to the business of the Annual Meeting, as time permits.
Both stockholders of record and street name stockholders will be able to attend the Annual Meeting via live audio webcast, submit their questions during the meeting, and vote their shares electronically at the Annual Meeting.
If you are a registered holder, your virtual control number will be on your Notice of Internet Availability of Proxy Materials or proxy card.
If you hold your shares beneficially through a bank or broker, you must provide a legal proxy from your bank or broker during registration, and you will be assigned a virtual control number in order to vote your shares during the Annual Meeting.
If you are unable to obtain a legal proxy to vote your shares, you will still be able to attend the Annual Meeting (but will not be able to vote your shares at the Annual Meeting) so long as you demonstrate proof of stock ownership. Instructions on how to connect and participate via the Internet, including how to demonstrate proof of stock ownership, are posted athttps://viewproxy.com/gmre/2025/. On the day of the Annual Meeting, you may only vote during the meeting by e-mailing a copy of your legal proxy to virtualmeeting@viewproxy.comin advance of the meeting.
We look forward to seeing you at the Annual Meeting.
| Sincerely, | |
| Chairman of the Board, Chief Executive Officer and President |
NOTICE OF 2025 ANNUAL MEETING OF STOCKHOLDERS
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held Virtually on
The Proxy Statement and 2024 Annual Report are available online athttps://www.viewproxy.com/GMRE/2025and in the "Investor Relations" section of our website at http://www.globalmedicalreit.com.
The 2025 Annual Stockholder Meeting (the "Annual Meeting") of
Items of Business
As a stockholder, you will be asked to:
| 1. | elect seven nominees to serve as directors on our Board of Directors (our "Board of Directors"), each to serve until the next annual meeting of stockholders and until her or his successor is duly elected and qualifies; |
| 2. | consider and vote on an advisory resolution to approve named executive officer compensation as described in the Company's Proxy Statement for the Annual Meeting; |
| 3. | consider and vote on the ratification of the appointment of |
| 4. | transact such other business as may properly be brought before the Annual Meeting and at any adjournment or postponement thereof. |
Record Date
The Board of Directors has fixed the close of business on
Proxy Voting
You may authorize your proxy on the Internet or by phone. For a beneficial holder to vote at the meeting, you must submit a copy of your legal proxy tovirtualmeeting@viewproxy.comin advance of the meeting. We encourage you to instruct us on the Internet as to the authorization of your proxy. Instructions for authorizing your vote are contained on the Notice of Internet Availability. If for any reason you should decide to revoke your proxy, you may do so at any time prior to its exercise at the Annual Meeting.
Virtual Meeting
To attend the meeting, you must register at https://web.viewproxy.com/GMRE/2025 by
As permitted by the
In addition, any stockholder may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. Choosing to receive future proxy materials by email will save the Company the cost of printing and mailing documents to stockholders and will reduce the impact of annual meetings on the environment. A stockholder's election to receive proxy materials by email will remain in effect until the stockholder terminates it.
We look forward to speaking with you at the meeting.
| On behalf of the Board of Directors, | ||
| General Counsel and Secretary |
PROXY STATEMENT
This proxy statement, including the information incorporated by reference herein (collectively, this "Proxy Statement"), provides information about the 2025 Annual Meeting of Stockholders (the "Annual Meeting") of
| Meeting Information | |
| Date: | |
| Time: | |
| Virtual Meeting: | Register at: https://web.viewproxy.com/GMRE/2025 |
| Record Date: | Close of Business on |
| How to Vote |
| Your vote is important. You may authorize your proxy in advance of the meeting via the Internet, by telephone or by mail, or you may vote by attending and voting online at the 2025 Annual Meeting of Stockholders. Please refer to the Notice of Internet Availability, proxy card or voter instruction form for detailed voting instructions. |
The Notice of Internet Availability and this Proxy Statement and form of proxy were first made available to stockholders on the Internet on
| Voting Items | Board Vote Recommendation |
| Elect seven nominees to serve as directors on our Board of Directors (our "Board of Directors" or our "Board"), each to serve until the next annual meeting of stockholders and until her or his successor is duly elected and qualifies. See "Proposal 1 - Election of Directors." | FOR each nominee |
| Consider and vote on an advisory resolution to approve named executive officer ("NEO") compensation as described in the Proxy Statement. See "Proposal 2 - Advisory Vote on Named Executive Officer Compensation." | FOR this proposal |
| Consider and vote on the ratification of the appointment of |
FOR this proposal |
Table of Contents
CONTACT INFORMATION AND GENERAL INFORMATION
The Board of Directors of
The mailing address of our principal executive office is c/o
Pursuant to rules adopted by the
The
Once given, a stockholder's consent will remain in effect until he or she revokes it by notifying us. If you revoke your consent, we will begin sending you individual copies of future mailings of these documents within 30 days after we receive your revocation notice.
Stockholders of record who elect to participate in householding may also request a separate copy of future proxy statements and annual reports by contacting us at the address and main telephone number above.
Institutions that hold shares in street name for two or more beneficial owners with the same address are permitted to deliver a single proxy statement and annual report to that address.
Any such beneficial owner can request a separate copy of this Proxy Statement or the Company's Annual Report on Form 10-K for the fiscal year ended
No person is authorized to give any information or to make any representation not contained in this Proxy Statement and, if given or made, you should not rely on that information or representation as having been authorized by us. The delivery of this Proxy Statement does not imply that the information herein has remained unchanged since the date of this Proxy Statement.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
When and Where is the Annual Meeting?
The Annual Meeting will be held
What is the Purpose of the Annual Meeting?
At the Annual Meeting, stockholders will vote upon matters described in the Notice of Annual Meeting and this Proxy Statement. In addition, once the business of the Annual Meeting is concluded, members of management will respond to questions raised by stockholders, as time permits.
Why are you holding the Annual Meeting in a virtual format?
In accordance with our recent practice and to maintain ease of access for our stockholders, the Annual Meeting will be held in a virtual meeting format only. We have designed our virtual format to enhance, rather than constrain, stockholder access, participation, and communication. For example, the virtual format allows stockholders to communicate with us in advance of, and during, the Annual Meeting so they can ask questions of our Board or management. During the live Q&A session of the Annual Meeting, we may answer questions as they come in and address those asked in advance, to the extent relevant to the business of the Annual Meeting, as time permits.
Please visithttps://web.viewproxy.com/GMRE/2025 to register to attend the Annual Meeting.
ALL REGISTRATIONS MUST BE RECEIVED BY
| ● | If you hold your shares in your name and have received a Notice of Internet Availability or proxy card, please click "Registration for Registered Holders" and enter your name, phone number, e-mail address and indicate if you plan to vote at the meeting. |
| ● | If you hold your shares through a bank or broker, please click "Registration for Beneficial Holders" and enter your name, phone number, e-mail address and indicate if you plan to vote at the meeting. Then please upload or email a copy of your legal proxy that you have obtained from your bank or broker to virtualmeeting@viewproxy.com. |
| ● | Beneficial holders must submit a copy of their legal proxy from their bank or broker if they wish to vote their shares at the Annual Meeting. |
| ● | If a beneficial holder wants to attend the meeting and not vote, they will need to provide proof of ownership (see below "How Do I Demonstrate Proof of Stock Ownership?") during registration. |
How Do I Demonstrate Proof of Stock Ownership?
| ● | If you are a registered holder, the proof of your stock ownership is your name and address as it appears on the proxy card or Notice of Internet Availability you have received. Our team will crosscheck this with a list of all registered holders to confirm your stock ownership. |
| ● | If you are a beneficial holder (meaning, you hold your shares at a bank or broker), your proof will be the copy of your legal proxy that you obtain from your bank or broker, a copy of your voter instruction form, proxy card, Notice of Internet Availability, or current broker statement. Please upload or email proof of stock ownership to virtualmeeting@viewproxy.com. |
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What is the Difference Between a Stockholder of Record and a Beneficial Owner of our Common Stock Held in Street Name?
Stockholder of Record. If your shares are registered directly in your name with our transfer agent,
Beneficial Owner of Stock Held in Street Name. If your shares are held in an account at a broker, bank or other nominee, then you are the beneficial owner of those shares in "street name," and the Notice of Internet Availability has been forwarded to you by your broker, bank or other nominee who is considered the stockholder of record with respect to those shares. As a beneficial owner, you have the right to instruct your broker, bank or other nominee on how to vote the shares held in your account. Those instructions are contained in a "vote instruction form."
I've Submitted My Registration - What Happens Now?
| ● | A member of our team will review and confirm your registration. |
| ● | If you are a beneficial holder and want to attend the virtual Annual Meeting and not vote, you will need to provide proof of stock ownership (see "How Do I Demonstrate Proof of Stock Ownership?"). |
| ● | An e-mail will be sent with the link to attend the Annual Meeting. |
| ● | Two days prior to the meeting, you will receive the password that you will need to attend the virtual Annual Meeting. |
| ● | You will need the password to attend the virtual Annual Meeting. |
| ● | If you have indicated that you will be voting at the virtual Annual Meeting, and you are a registered holder, your virtual control number is on your Proxy Card or Notice of Internet Availability. You will need your virtual control number to vote your shares during the virtual Annual Meeting. |
| ● | If you are a beneficial holder and want to vote at the virtual Annual Meeting, you must upload a copy of your legal proxy which you need to obtain from your bank or broker and then a virtual control number will be e-mailed to you. You will need your virtual control number to vote your shares during the virtual Annual Meeting. |
Who can Attend the Annual Meeting?
All record owners of shares of our common stock, par value
How Do I Attend the Annual Meeting?
If you have registered for the Annual Meeting at:https://web.viewproxy.com/GMRE/2025, please refer to your meeting invitation e-mail for your unique join link. Please click that link and use the password that will be e-mailed to you two days prior to the Annual Meeting. This will give you access to the
Where Can I Find My Virtual Control Number?
| ● | You first must register to attend the meeting at: https://web.viewproxy.com/GMRE/2025. |
| ● | If you have indicated that you will be voting at the meeting, and you are a registered holder, your virtual control number is on your proxy card or Notice of Internet Availability. |
| ● | If you are a beneficial holder and want to vote at the meeting, you must upload a copy of your legal proxy which is obtained from your bank or broker and then a virtual control number will be e-mailed to you. |
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Who
You may vote if you were the record owner of shares of our common stock at the close of business on
How Do I Vote?
There are four ways to vote, either by authorizing a proxy or voting at the Annual Meeting:
| ● | During the Meeting. See "How Do I Vote During the Meeting?" below. |
| ● | Via the Internet. You may authorize a proxy via the Internet by following the instructions provided in the Notice of Internet Availability. |
| ● | By Phone. You may authorize a proxy via telephone by following the instructions provided in the Notice of Internet Availability. |
| ● | By Mail. If you requested to receive printed proxy materials, you can also authorize a proxy by mail pursuant to instructions provided on the proxy card. |
How Do I Vote During the Meeting?
During the Annual Meeting, please visitwww.AALvote.com/GMRE to vote your shares during the meeting while the polls are open. You will need your Virtual Control Number to vote your shares.
| ● | If you have indicated that you will be voting at the meeting, and you are a registered holder, your virtual control number is on your proxy card or Notice of Internet Availability. |
| ● | If you are a beneficial holder and want to vote at the meeting, you must upload a copy of your legal proxy which is obtained from your bank or broker and then a virtual control number will be e-mailed to you. |
How Do I Participate In the Annual Meeting?
We are hosting the Annual Meeting through a virtual format only. You will not be able to attend the meeting in person. You will be able to attend the Annual Meeting via live audio webcast, submit your questions during the meeting, and vote your shares electronically at the Annual Meeting. The Annual Meeting will begin promptly at
As part of the Annual Meeting, we will hold a Q&A session, during which we intend to answer questions submitted during the meeting in accordance with the Annual Meeting procedures which are pertinent to the Company and the meeting matters, as time permits. Questions and answers will be grouped by topic and substantially similar questions will be grouped and answered once.
If you plan to attend the Annual Meeting virtually, please be sure that you have already registered to attend the Annual Meeting. If your registration has been accepted and you are not able to access the meeting, be sure that you have downloaded the required software. If you are still encountering any difficulties accessing the virtual meeting, please emailvirtualmeeting@viewproxy.com.
What If I Hold Multiple Positions and Have Multiple Virtual Control Numbers?
You will only need the password to access the meeting, however you will need to use each virtual control number to vote each position.
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What am I voting on?
Our Board of Directors is soliciting your vote for:
| (1) | the election of seven directors (each to serve until the next annual meeting of stockholders and until her or his successor is duly elected and qualifies); |
| (2) | an advisory resolution to approve NEO compensation as described in the Proxy Statement; |
| (3) | the ratification of the appointment of Deloitte as our independent registered public accounting firm for the year ending |
| (4) | any other business that properly comes before the Annual Meeting and any adjournment or postponement thereof. |
What are the Board of Directors' recommendations?
Our Board of Directors recommends you vote:
| (1) | "FOR" the election of each nominee named in this Proxy Statement (see Proposal No. 1); |
| (2) | "FOR" the advisory resolution approving NEO compensation (see Proposal No. 2); and |
| (3) | "FOR" ratification of the appointment of Deloitte as our independent registered public accounting firm for the year ending |
How many votes do I have?
You are entitled to one vote for each whole share of our common stock you held as of the close of business on
How are proxies voted?
All shares represented by valid proxies received prior to the Annual Meeting will be voted and, where a stockholder specifies by means of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the stockholder's instructions. If no instructions are given in a duly authorized proxy, shares will be voted in accordance with the Board's recommendations.
Can I change my vote after I have voted?
You may revoke your proxy and change your vote at any time before the vote at the Annual Meeting. You may authorize your proxy to vote again on a later date prior to the Annual Meeting via the Internet or phone (in which case only your latest Internet proxy or phone proxy submitted prior to the Annual Meeting will be counted), by signing and returning a new proxy card or vote instruction form with a later date, or by attending the Annual Meeting and voting virtually. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request that your prior proxy be revoked by delivering a written notice of revocation to the Company's Secretary prior to the Annual Meeting.
Will my shares be voted if I do not provide my proxy?
It depends on whether you hold your shares in your own name or in the name of a bank or brokerage firm. If you hold your shares directly in your own name, they will not be voted unless you provide a proxy or vote virtually at the Annual Meeting.
Brokerage firms generally have the authority to vote customers' non-voted shares on certain "routine" matters. If your shares are held in the name of the brokerage firm, the brokerage firm can vote your shares for the ratification of Deloitte as our registered independent public accounting firm for the year ending
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What constitutes a quorum for the Annual Meeting?
As of the close of business on the record date for the Annual Meeting, there were 66,878,728 shares of our common stock issued and outstanding and entitled to vote at the Annual Meeting. In order to conduct the Annual Meeting, a majority of the votes entitled to be cast must be present in person, including virtually, or by proxy. This is referred to as a "quorum." If you submit a properly executed proxy card or vote on the Internet or by phone, you will be considered part of the quorum. Abstentions and broker "non-votes" will be counted as present and entitled to vote for purposes of determining a quorum. A broker "non-vote" occurs when a bank, broker or other nominee whoholds shares for another person has not received voting instructions from the owner of the shares and, under the applicable rules, does not have discretionary authority to vote on a matter. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. No business may be conducted at the Annual Meeting if a quorum is not present.
What vote is required to approve an item of business at the Annual Meeting?
Election of Directors (Proposal No. 1). The affirmative vote of a majority of the votes cast at the Annual Meeting and at which a quorum is present is required to elect a director. For purposes of this vote, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the results of the vote for this proposal, although they will be considered present for the purpose of determining the presence of a quorum.
Advisory Vote on NEO Compensation (Proposal No. 2). The affirmative vote of a majority of the votes cast at the Annual Meeting and at which a quorum is present is required to approve this proposal. For purposes of this vote, abstentions and broker-non-votes will not be counted as votes cast and will have no effect on the result of the vote for this proposal, although abstentions and broker non-votes will be considered present for the purpose of determining the presence of a quorum.
Ratification of the Appointment of Deloitte (Proposal No. 3). The affirmative vote of a majority of the votes cast at the Annual Meeting and at which a quorum is present is required to approve this proposal. For purposes of this vote, abstentions will not be counted as votes cast and will have no effect on the result of the vote for this proposal, although abstentions will be considered present for the purpose of determining the presence of a quorum. Because brokers are entitled to vote on Proposal 3 without specific instructions from beneficial owners, there will be no broker non-votes on this matter.
Where can I find the voting results of the Annual Meeting?
The Company intends to announce preliminary voting results at the Annual Meeting and disclose final results in a Current Report on Form 8-K filed with the
How can a stockholder propose business to be brought before next year's annual meeting?
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we must receive any stockholder proposals intended to be presented at our 2026 annual meeting of stockholders on or before
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How are proxies solicited?
We are soliciting proxies by furnishing this Proxy Statement and proxy card to our stockholders. The costs and expenses of soliciting proxies from stockholders will be paid by the Company. Employees, officers, and directors of the Company may also solicit proxies by email, telephone or in person, without additional compensation for such activities. In addition, we will, upon request, reimburse brokerage houses and other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation material to the beneficial owners of common stock.
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OVERVIEW OF 2024 PERFORMANCE
As described in more detail below, short-term interest rates decreased during the second half of 2024, causing the interest rate on our floating-rate indebtedness to decrease. However, our common stock price decreased towards the end of the year, which increased our cost of equity capital, tempering any positive changes to our cost of capital resulting from reduced short-term interest rates. Despite these cost of capital challenges, the Company was able to acquire an
Federal Reserve Begins Lowering the Federal Funds Rate in
During 2024, the
The decreases in the Federal Funds Rate in 2024 led to decreases in other interest rates, including the reference rate for our floating rate debt, the one-month Secured Overnight Financing Rate ("SOFR"). The chart below illustrates the changes in one-month SOFR during 2024.
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As a result of decreases in short term interest rates during 2024, the weighted average interest rate on our indebtedness decreased from 3.83% as of
Asset Acquisitions
Despite the Company's cost of capital challenges in 2024, it was able to purchase and place under contract to purchase an aggregate of
| ● | a portfolio of 15 healthcare facilities for an aggregate purchase price of |
| ● | a portfolio of five healthcare facilities for an aggregate purchase price of |
The Company believes the acquisition of these two portfolios demonstrates its ability to source accretive, high-quality deals despite its elevated cost of capital. The Company's obligations to close on the remaining two properties in the Five-Property Portfolio are subject to certain customary terms and conditions. Accordingly, there is no assurance that the Company will close the remainder of this acquisition on a timely basis, or at all.
Sustainability and
Our business values integrate environmental sustainability, social responsibility, and strong governance practices throughout our Company. Our Board's approach to these practices is viewed through the lens of reducing and controlling the Company's risk profile.
Our Board continues to lead our sustainability efforts, and our Board has a standing committee focused on such efforts. The primary purpose of this committee is to assist the Board in fulfilling our responsibilities to provide oversight and support of our efforts and goals regarding sustainability matters by overseeing: (1) our general sustainability strategy and policies as set by our management, (2) communications with our employees, investors, and other stakeholders with respect to sustainability matters, (3) developments relating to, and improving our understanding of, sustainability matters, (4) our compliance with certain sustainability-related legal and regulatory requirements, and (5) coordination with other Board committees on sustainability matters of common import.
In
Environmental Sustainability
We take climate change and the risks associated with climate change seriously-both physical and transitional. We utilized
We utilize the ENERGY STAR platform to collect and track our energy consumption data and have identified properties that are strong candidates for the ENERGY STAR certificate program. In 2022, we earned an ENERGY STAR certification for our
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We assess energy efficiency and sustainability when evaluating investment opportunities. We utilize utility and energy audits that are performed by third-party engineering consultants during the due diligence phase of our acquisitions. The energy consumption data that we collect is used to calculate our facilities' carbon emission levels.
We continue to improve and expand our efforts in the corporate sustainability arena through tenant outreach and data collection to benchmark our portfolio's energy consumption and efficiency. We improved our overall GRESB score to 57 in 2024. The scores reflect activity for the previous year. Since we began receiving a GRESB score in 2021, we have improved our score by 15 points.
Social Responsibility
Our commitment to employee engagement remains a high priority. Building on the findings from our employee engagement survey, we continue to emphasize employee work effectiveness, growth and professional development.
Governance
In addition to our
We are a member of the
We believe we offer a competitive pay and benefits package, with nearly all our employees participating in our equity incentive plans. We also foster the development of our employees' expertise and skillsets, and encourage our employees to build new skill sets, such as in the sustainability space. We have established policies that are designed to provide a safe, harassment-free work environment and to foster a corporate culture based on principles of equal employment opportunity. As a result, we believe our employees are committed to building strong, innovative and long-term relationships with each other and with our tenants. Our employees at our corporate office are permitted to work remotely.
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PROPOSAL 1- ELECTION OF DIRECTORS
Directors and Executive Officers
The following table provides information about the individuals nominated for election as directors at the Annual Meeting and our executive officers as of the date of this Proxy Statement.
| Age | Position | |||
| 67 | Chairman of the Board, Chief Executive Officer and President | |||
| 59 | Chief Financial Officer and Treasurer | |||
| 49 | Chief Investment Officer | |||
| 52 | Chief Operating Officer | |||
| 48 | General Counsel and Secretary | |||
| Henry Cole† | 80 | Director | ||
| 48 | Director | |||
| Ronald Marston† | 82 | Director | ||
| Zhang Huiqi | 35 | Director | ||
| Lori Wittman† | 66 | Director | ||
| Paula Crowley† | 70 | Director |
| † | This individual is independent in accordance with the listing standards of the |
Nominees for Election as Directors
The Board is currently comprised of seven directors and the Board has nominated each of the individuals named below for election to the Board to serve until the 2026 annual meeting of stockholders and until a successor is elected and qualifies. This section gives information about the nominees for election as directors: Mr.
The Board of Directors recommends a vote FOR the nominees (Proposal 1 on the proxy card).
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Biographical Information for Nominees for Director
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13
Zhang Huiqi. Director since
Prior to
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Biographical Information for Executive Officers
Our executive officers are
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below describes the beneficial ownership of shares of our common stock as of
| ● | each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock; |
| ● | each director and each NEO; and |
| ● | all our directors and executive officers as a group. |
Except as noted in the footnotes, each person named in the following table directly owns our common stock and has sole voting and investment power. Unless otherwise indicated, the address of each named person is c/o
| 5% Beneficial Owners | Number of Shares Beneficially Owned(1) |
Percentage of Shares(2) |
||||||
| 6,137,137 | 9.2 | % | ||||||
| 5,241,267 | 7.8 | % | ||||||
| 3,715,611 | 5.6 | % | ||||||
| Executive Officer and Directors | Number of Shares Beneficially Owned |
Percentage of Shares |
||||||
| 677,960 | 1.0 | % | ||||||
| 309,277 | * | |||||||
| 338,607 | * | |||||||
| 215,178 | * | |||||||
| 214,369 | * | |||||||
| Zhang Huiqi(11) | 3,745,611 | 5.6 | % | |||||
| 42,424 | * | |||||||
| 42,522 | * | |||||||
| 34,692 | * | |||||||
| 28,747 | * | |||||||
| 28,747 | * | |||||||
| All executive officers and directors as a group (11 people) | 5,678,134 | 8.5 | % | |||||
| * | Represents less than 1% |
| (1) | Includes the total number of shares of common stock issuable upon redemption of operating partnership units ("OP Units") and long-term incentive plan units under the 2016 Plan (as defined below) (the "LTIP Units") in |
| (2) | The total number of shares of common stock outstanding used in calculating the percentage ownership of each person assumes that the vested LTIP Units held by such person, directly or indirectly, are redeemed for shares of common stock and none of the vested LTIP Units held by other persons are redeemed for shares of common stock. |
| (3) | Based on a Schedule 13G/A filed by |
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| (4) | Based on a Schedule 13G/A filed by |
| (5) | Huang Yanping is the sole settlor, protector and one of the beneficiaries of the |
| (6) | Includes 43,490 shares of common stock and 634,470 vested LTIP Units convertible into shares of common stock on a one-for-one basis subject to certain conditions. |
| (7) | Includes 309,277 vested LTIP Units convertible into shares of common stock on a one-for-one basis subject to certain conditions. |
| (8) | Includes 338,607 vested LTIP Units convertible into shares of common stock on a one-for-one basis subject to certain conditions. |
| (9) | Includes 500 shares of common stock and 214,678 vested LTIP Units convertible into shares of common stock on a one-for-one basis subject to certain conditions. |
| (10) | Includes 214,369 vested LTIP Units convertible into shares of common stock on a one-for-one basis subject to certain conditions. |
| (11) | The amount beneficially owned by |
| (12) | Includes 7,732 shares of common stock and 34,692 vested LTIP Units convertible into shares of common stock on a one-for-one basis subject to certain conditions. |
| (13) | Includes 7,830 shares of common stock and 34,692 vested LTIP Units convertible into shares of common stock on a one-for-one basis subject to certain conditions. |
| (14) | Includes 34,692 vested LTIP Units convertible into shares of common stock on a one-for-one basis subject to certain conditions. |
| (15) | Includes 28,747 vested LTIP Units convertible into shares of common stock on a one-for-one basis subject to certain conditions. |
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CORPORATE GOVERNANCE
Board and Annual Stockholders' Meetings
The Board of Directors meets regularly to review significant developments affecting us and to act on matters requiring its approval. The Board held 13 meetings in 2024. All the Company's directors serving at the time of the 2024 annual meeting attended the 2024 annual meeting. Our corporate governance guidelines provide that all Board members are expected to attend our annual meeting of stockholders. In 2024 no director attended fewer than 75% of the aggregate total number of meetings of the Board of Directors or of the committees on which they served during 2024.
Committees of the Board of Directors
The Board of Directors has established an Audit Committee, a
Audit Committee. Beginning on
The Audit Committee held six meetings in 2024. The primary purpose of the Audit Committee is to assist the Board in fulfilling its legal and fiduciary obligations with respect to matters involving the accounting, auditing, financial reporting and internal control functions of the Company and its subsidiaries, including, without limitation, assisting the Board's oversight of (i) the integrity of the Company's financial statements, (ii) the Company's compliance with legal and regulatory requirements, (iii) the Company's cybersecurity risk management processes, (iv) the independent auditor's qualifications and independence and (v) the performance of the Company's independent auditors and the Company's internal audit function.
Nominating and Corporate Governance Committee. Beginning on
Compensation Committee. Beginning on
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The Compensation Committee held six meetings in 2024. The primary purpose of the Compensation Committee is to assist the Board in discharging its responsibilities relating to the (i) compensation by the Company of the Company's directors, officers and other key employees and (ii) review, approval and administration of compensation plans and programs and other benefit plans (the "Plans"). The Compensation Committee has overall responsibility for evaluating and recommending changes to the compensation plans, policies and programs of the Company and approving and recommending to the
ESG Committee. Beginning on
The ESG Committee held four meetings in 2024. The primary purpose of the ESG Committee is to provide oversight and support of the Company's efforts and goals regarding sustainability matters through overseeing: (i) the Company's general sustainability strategy and policies as set by Company management, (ii) communications with Company employees, investors, and other stakeholders with respect to sustainability matters, (iii) developments relating to, and improving the Company's understanding of, sustainability matters, (iv) the Company's compliance with certain sustainability-related legal and regulatory requirements, and (v) coordination with other Board committees on sustainability matters of common import.
Code of Business Conduct and Ethics
The Board has established a Code of Business Conduct and Ethics that applies to our officers, directors, and employees when such individuals are acting for or on our behalf. A current copy of the Code of Business Conduct and Ethics can be found on our website atwww.globalmedicalreit.com. Any waiver of the Code of Business Conduct and Ethics may be made only by the Board of Directors or a committee of the Board of Directors and will be promptly disclosed to stockholders in accordance with applicable
We intend to comply with the requirements of Item 5.05 of Form 8-K regarding amendments to and waivers under the Code of Business Conduct and Ethics applicable to our principal executive officer and principal financial officer by providing such information on our website within four business days after effecting any amendment to, or granting any waiver under, that code, and we will maintain such information on our website for at least twelve months. The information found on, or accessible through, our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document we file with or furnish to the
Insider Trading Policy
The Company has adopted an insider trading policy governing the purchase, sale, and/or other dispositions of the Company's securities by directors, officers, and employees, and the Company itself, that is reasonably designed to promote compliance with insider trading laws, rules and regulations, and NYSE listing standards.
Corporate Governance Guidelines
The Board has adopted Corporate Governance Guidelines, which provide the framework for our governance and represent our Board's current views with respect to selected corporate governance issues considered to be of significance to our stockholders. A current copy of the Corporate Governance Guidelines can be found on our website atwww.globalmedicalreit.com.
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Board Equity Ownership Policy
All independent directors receive a certain portion of their compensation in LTIP Units to align the interests of the Board with those of the Company's stockholders. Our Board Equity Ownership Policy states that as of
Availability of Corporate Governance Materials
Stockholders may view our corporate governance materials, including the charters of our Audit Committee, our Compensation Committee, our
Board Leadership Structure
The Board has the authority to select the leadership structure it considers appropriate for us. In making leadership structure determinations, the Board considers many factors, including the specific needs of our business and what is in the best interests of our stockholders. Our current leadership structure consists of a combined Chairman of the Board and Chief Executive Officer position, a Lead Independent Director, an active and involved Board of Directors, a majority of whom are independent, and Board committees chaired by independent directors. The Board does not have a fixed policy regarding whether the same person should serve as both the Chief Executive Officer and Chairman of the Board, and the Board believes that flexibility on this point best serves our Company by allowing us to employ a leadership structure that is most appropriate under the circumstances at any given time.
Lead Independent Director
Beginning on
Board's Role in Risk Oversight
The Board provides oversight of our risk management processes. Management identifies and prioritizes material risks, and each prioritized risk is referred to a Board committee or the full
The Board believes an effective risk management system will (1) timely identify the material risks that we face; (2) communicate necessary information with respect to material risks to our principal executive officer or principal financial officer and, as appropriate, to our Board or relevant board committee; (3) implement appropriate and responsive risk management strategies consistent with our risk profile; and (4) integrate risk management into management and our Board's decision-making.
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Corporate Sustainability and Social Responsibility
Our business values integrate environmental sustainability, social responsibility, and strong governance practices throughout our Company. See "Overview of 2024 Performance-Sustainability and
Report of the Audit Committee
Our Audit Committee operates under a written charter adopted by the Board. Our Audit Committee is responsible for providing oversight of the independent audit process and the independent auditors, reviewing our financial statements and the financial statements of our subsidiaries and discussing them with management and the independent auditors, reviewing and discussing with management and the independent auditors the adequacy and effectiveness of our internal accounting and disclosure controls and procedures, and providing oversight of legal and regulatory compliance and ethics programs. The Audit Committee communicates regularly with our management, including our Chief Financial Officer, our internal auditors and with our independent auditors. The Audit Committee is also responsible for conducting an appropriate review of and pre-approving all related person transactions in accordance with applicable standards of the NYSE and evaluating the effectiveness of the Audit Committee charter at least annually.
To comply with the Sarbanes-Oxley Act of 2002, as amended, the Audit Committee has adopted a policy that pre-approves specified audit and tax-related services to be provided by our independent auditors. The policy forbids our independent auditors from providing the services enumerated in Section 201(a) of the Sarbanes-Oxley Act.
In performing all of these functions, the Audit Committee acts only in an oversight capacity. The Audit Committee reviews our quarterly and annual reporting on Form 10-Q and Form 10-K prior to filing with the
When our audited consolidated balance sheets as of
Based on the reviews and discussions described above, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in our 2024 Annual Report for filing with the
The Audit Committee's report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate the information contained in the report by reference, and it shall not be deemed filed under such acts.
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Nominations of Directors
Pursuant to its charter, the responsibilities of the
In addition to the qualification criteria above, the
We urge any stockholder who intends to recommend a director candidate to the
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We must receive any nomination for director intended to be presented at our 2026 annual meeting of stockholders not earlier than
Communications with the Board of Directors
The Board of Directors has established a process for stockholders and interested parties to send communications to the Board. Stockholders and other interested parties may communicate with the Board as a group or individually in writing to: The Board of Directors of
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PROPOSAL 2 - ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
Section 14A of the Exchange Act provides our stockholders with an advisory vote to approve our NEO compensation. This advisory vote gives our stockholders the opportunity to express their views on the compensation of our NEOs. Although this vote is advisory and is not binding, the Board and the Compensation Committee plan to take into consideration the outcome of the vote when making future executive compensation decisions.
As described in detail under "Compensation Discussion and Analysis," we believe that our compensation program is designed to align the interests of management with those of our stockholders, apply a pay-for-performance philosophy and attract and retain top management talent. Our
Voting and Effect of Vote
We are requesting your non-binding, advisory vote on the following resolution:
"RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed in the Proxy Statement for the 2025 Annual Meeting pursuant to the compensation disclosure rules of the
You may vote FOR, AGAINST or ABSTAIN on this Proposal 2. Because your vote is advisory, it will not be binding on the Company, the Board or the Compensation Committee and will not overrule any decision by the Board or require the Board to take any action. However, the Board values our stockholders' views on executive compensation matters and will consider the outcome of this vote when deliberating future executive compensation decisions for our NEOs.
Board Recommendation
As noted in the Compensation Discussion and Analysis, the Compensation Committee believes its 2024 compensation decisions will benefit stockholders for short-term and long-term Company performance, and the compensation paid to the NEOs for 2024 was reasonable and appropriate.
The Board of Directors recommends a vote FOR the advisory resolution to approve the compensation paid to the Company's NEOs (Proposal 2 on the proxy card).
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COMPENSATION DISCUSSION AND ANALYSIS
Overview
Named Executive Officers
This section of the proxy statement explains the type and amount of compensation awarded to the Company's NEOs in 2024, as well as the principles and processes that the Compensation Committee and Board follow in determining such compensation. The NEOs consist of the Company's Chief Executive Officer, Chief Financial Officer, and the Company's three other most highly paid executive officers as of
The NEOs for 2024 are as follows:
| Position | ||
| Chairman, Chief Executive Officer, and President | ||
| Chief Financial Officer and Treasurer | ||
| Chief Investment Officer | ||
| Chief Operating Officer | ||
| General Counsel and Corporate Secretary |
Summary of 2024 Compensation
Compensation Process and Overview
Farient provided the Compensation Committee with a market-based compensation benchmarking analysis summarizing the compensation practices among the Company's peers, including with respect to base salary, annual target incentive plan amounts and long-term target equity compensation opportunities.
We previously entered into Employment Agreements with three of our current NEOs (Messrs. Busch, Kiernan, and Leon) (such agreements, collectively, the "Employment Agreements").
Compensation Philosophy
Our compensation philosophy is to balance providing competitive compensation to attract and retain talented employees with our goal of providing attractive returns to our stockholders. We implement our philosophy by providing attractive salaries and incentive compensation opportunities but link such incentive compensation opportunities to short (annual) and long-term (three-year) operating and stockholder retugoals. The table below summarizes some key features of our compensation program:
| What We Do |
| ● | Tie annual incentive compensation to the achievement of pre-established corporate goals and individual performance. | |
| ● | Provide long-term incentive compensation in the form of performance-based LTIP Units with performance tied to total stockholder returns and relative stockholder returns. | |
| ● | Align compensation with stockholder returns through long-term incentive awards. | |
| ● | Use peer groups when setting compensation. |
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| ● | Maintain director and executive stock ownership guidelines. |
| ● | Maintain a Clawback Policy that applies to all executive officers. |
| ● | Include "double-trigger" change-in-control provisions in our employment agreements and severance plan. |
| ● | Use an independent compensation consultant. |
| What We Do Not Do |
| ● | Provide excessive perquisites to our executive officers. |
| ● | Allow for "single-trigger" change-in-control cash payments. |
| ● | Provide tax gross-ups. |
| ● | Allow hedging of the Company's stock. |
| ● | Allow pledging of the Company's stock as collateral for loans or in a margin account. |
Role of the Compensation Committee
The Compensation Committee approves and recommends to the Board all forms of compensation for our NEOs. The Compensation Committee regularly reviews the Company's executive compensation and monitors best practices concerning executive compensation.
Compensation Committee meetings are regularly attended by committee members and are periodically attended by our Chief Executive Officer and/or Chief Financial Officer to provide the committee with certain information and answer questions so that the committee can make informed decisions and recommendations. Meetings may be attended by other executives and advisors as appropriate. The committee also meets in executive sessions without members of management or other attendees present. The Chair of the Compensation Committee reports to the Board on the committee's decisions concerning, among other things, compensation of the executive officers.
The Compensation Committee reviews and discusses with management this Compensation Discussion and Analysis section of the Proxy Statement and reaches a determination, on an annual basis, whether to recommend to the Board that this Compensation Discussion and Analysis section of the Proxy Statement be included in the Company's annual proxy statement or annual report on Form 10-K, as required by the
Role of the Compensation Consultant
The Compensation Committee retains its own independent compensation consultant who reports directly to the Compensation Committee. The independent compensation consultant's engagement includes reviewing and advising on material aspects of the Company's annual incentives and equity compensation. In 2024, the Compensation Committee engaged Farient to provide analysis and recommendations regarding (1) annual salaries and annual and long-term incentive compensation for our executive management team, and (2) the director compensation program for independent members of our Board of Directors. Farient reported directly to the Compensation Committee and did not perform and does not currently provide any other services to management or the Company. The Compensation Committee determined that Farient was independent pursuant to the Compensation Committee charter.
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From time to time, our compensation consultant communicates with our Chief Executive Officer to discuss different elements and weightings of compensation and best practices and trends in executive compensation.
While the Compensation Committee considers our compensation consultant's input and advice, it uses its own independent judgment in making final decisions concerning compensation paid to the directors and executive officers. The Compensation Committee has the full authority to retain and terminate the services of our compensation consultant as it deems necessary or appropriate.
After reviewing information provided by Farient regarding its independence and considering the relevant independence factors pursuant to applicable
Compensation Committee determined that no conflicts of interest existed in connection with the services Farient performed for the Company in 2024.
Role of the Chief Executive Officer
Our Chief Executive Officer participates in the compensation determination process by consulting with the Board and the Compensation Committee on matters related to compensation, and by making compensation recommendations for our NEOs. These recommendations are based upon information provided by our compensation consultant, his assessment of each NEO's performance and contributions to the Company's performance, and other considerations, including employee retention. The Compensation Committee considers this information, but approves and recommends that the Board approve, based on its own independent judgment, the amounts payable to our NEOs.
Peer Companies and Competitive Positioning
The Compensation Committee, with input and recommendations from our compensation consultant, establishes the Company's peer group on an annual basis. The Compensation Committee uses the peer group for compensation benchmarking and general comparison purposes. The peer group comprises companies selected on various criteria including criteria recommended by our compensation consultant, including size and market capitalization. Our compensation consultant evaluates the continued appropriateness of each company in the peer group on an annual basis and recommends to the Compensation Committee additions and/or deletions from the prior year's peer group as may be warranted. For fiscal year 2024, the Company's peer group consisted of the following companies (collectively, the "Peer Companies"):
Peer Companies
| Company | Implied Market Cap(1) | |||
| $ | 4.4 billion | |||
| $ | 0.8 billion | |||
| $ | 1.0 billion | |||
| $ | 5.0 billion | |||
| $ | 0.2 billion | |||
| $ | 0.5 billion | |||
| $ | 1.2 billion | |||
| $ | 1.3 billion | |||
| $ | 1.7 billion | |||
| $ | 1.6 billion | |||
| $ | 3.1 billion | |||
| $ | 1.2 billion | |||
| $ | 0.8 billion |
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Peer Companies
| Company | Implied Market Cap(1) | |||
| $ | 4.1 billion | |||
| $ | 1.0 billion | |||
| $ | 0.7 billion |
| (1) | As of |
To assist the Compensation Committee in its determination of executive compensation, our compensation consultant prepares an independent analysis of key size and performance indicators such as revenue, market capitalization, and total stockholder retucompared to the Peer Companies. This analysis is provided to the Compensation Committee so it has sufficient information on the competitiveness of pay in the context of our performance compared with that of the Peer Companies.
Our compensation consultant also delivers a benchmarking analysis of the compensation paid to our NEOs and to our directors to the Compensation Committee. This analysis compares annual and long-term incentive awards and total compensation to compensation components of the Peer Companies and provides general guidance for future compensation levels. While the Compensation Committee uses this analysis to help frame its decisions on compensation, it uses its collective judgment in determining executive compensation.
The Compensation Committee does not target a specific market position relative to the Peer Companies for the compensation elements of executive officers but seeks to pay competitively and takes into consideration the relative positioning compared to the Peer Companies in making compensation decisions. The Compensation Committee exercises discretion in making compensation decisions based on the following inputs: its understanding of market conditions, its understanding of competitive pay analysis, recommendations from the Chief Executive Officer regarding the executive officers, the need to retain executive talent, the Compensation Committee's overall evaluation of each executive's performance, and our overall compensation strategy, among other factors.
Anti-Pledging and Anti-Hedging Policy
The Company has an anti-pledging and anti-hedging policy that prohibits the Company's directors, officers, employees, and certain other related parties from:
| ● | Pledging the Company's securities as collateral for a loan or holding Company securities in a margin account; and |
| ● | Engaging in any hedging transactions against future declines in the market value of the Company's stock or transactions that could reduce the economic risk of holding the Company's equity securities, including: short sales; buying or selling puts or calls; buying financial instruments designed to hedge or offset any decrease in the market value |
Clawback Policy
We adopted the
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Executive Equity Ownership Policy
Our Executive Equity Ownership Policy states that by
| ● | Chief Executive Officer - five times annual base salary. | |
| ● | Chief Financial Officer - three times annual base salary. | |
| ● | All other Executive Officers - one times annual base salary. | |
Elements of 2024 Executive Compensation
Our NEO compensation is comprised of three primary components:
| ● | Base salary; | |
| ● | Annual incentive plan awards; and | |
| ● | Long-term incentive plan awards. | |
Below is a description of each primary component of our NEO compensation.
Base Salary. Our Compensation Committee believes that payment of a competitive base salary is a necessary element of any compensation program that is designed to attract and retain talented and qualified executives. Subject to our existing contractual obligations, we expect our Compensation Committee to consider base salary for our NEOs annually as part of our performance review process, as well as upon any promotion or other change in job responsibility. The goal of our base salary program is to provide such salaries and payments at a level that allows us to attract and retain qualified executives while preserving significant flexibility to recognize and reward individual performance with other elements of the overall compensation program. Base salary levels also affect the annual cash incentive compensation because the annual bonus target opportunity of each NEO is expressed as a percentage of base salary. The 2024 annual base salaries for our NEOs remained unchanged from 2023 and are set forth in the table below:
| Annual Base Salary | ||||
| $ | 700,000 | |||
| $ | 400,000 | |||
| $ | 375,000 | |||
| $ | 325,000 | |||
| $ | 290,000 | |||
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2024 Annual Incentive Plan. The Compensation Committee intends to make a meaningful portion of our NEOs' annual compensation contingent on achieving certain Company performance targets and individual goals. To that end, we maintain an annual incentive program whereby awards may be earned based on achievement of performance metrics (the "2024 Annual Incentive Plan"). Awards granted pursuant to our annual incentive program are settled 60% in cash and 40% in LTIP Units and are granted under the
| NEO | Cash Award (Target) |
LTIP Award (Target) |
Total Award (Target) |
|||||||||
| $ | 420,000 | $ | 280,000 | $ | 700,000 | |||||||
| $ | 240,000 | $ | 160,000 | $ | 400,000 | |||||||
| $ | 225,000 | $ | 150,000 | $ | 375,000 | |||||||
| $ | 156,000 | $ | 104,000 | $ | 260,000 | |||||||
| $ | 139,200 | $ | 92,800 | $ | 232,000 | |||||||
Target awards under our 2024 Annual Incentive Plan consisted of the following five performance metrics: (i) average portfolio occupancy (15%), (ii) AFFO/share targets (25%), (iii) average debt-to-assets ratio (25%), (iv) acquisitions (15%) and (v) individual performance (20%). Each component is described in more detail below:
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| Quarter-End Average Portfolio Occupancy (15% of 2024 Annual Incentive Plan): | Reason for Inclusion in Plan: Given the improved acquisition market but continued high cost-of-capital environment that existed in 2024, the Compensation Committee in 2024 decided to continue inclusion of the occupancy component but at a reduced percentage than in 2023. During a year of improving acquisition growth, the Compensation Committee thought it was important to continue to incentivize management to maintain the integrity of the Company's existing property portfolio but also allow for the reinstitution of the acquisition component into the 2024 Annual Incentive Plan. Additionally, despite an improved acquisitions environment in 2024, many investors continue to focus on the Company's portfolio occupancy as one measure to ensure protection of the Company's revenue stream. |
| Award Levels: | ||
| ● | Threshold: 96% (50% of target) | |
| ● | Target: 96.5% (100% of target) | |
| ● | Maximum: 97% (150% of target) | |
| 2024 Results: 96.3% | ||
| Percent of Overall Target Amount Received: 12% | ||
| Full-Year Adjusted Funds from Operations ("AFFO") per share, as reported by the Company in its 2024 Annual Report on Form 10-K(1) (25% of 2024 Annual Incentive Plan): | Reason for Inclusion in Plan: The Compensation Committee considers the Company's AFFO growth to be an important factor in the Company's profitability and its ability to support its dividend.
Award Levels: |
| ● | Threshold: |
|
| ● | Target: |
|
| ● | Maximum: |
|
| 2024 Results: |
||
| Percent of Overall Target Amount Received: 0% | ||
| Quarter-End Average Debt-to-Assets (Leverage) Ratio (25% of 2024 Annual Incentive Plan): | Reason for Inclusion in Plan: In establishing this component of the plan, the Compensation Committee focused on the need to prudently manage the Company's balance sheet during 2024. |
| Award Levels: | ||
| ● | Threshold: 45% (50% of target) | |
| ● | Target: 44.5% (100% of target) | |
| ● | Maximum: 42.5% (150% of target) | |
| 2024 Results: 44.2% | ||
| Percent of Overall Target Amount Received: 26.9% | ||
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| Acquisition Activity (15% of 2024 Annual Incentive Plan): | Reason for Inclusion in Plan: The Compensation Committee considers acquisition growth to be an important factor in the overall growth of the Company. The Committee added this component back into the annual incentive program given the Company's expected acquisition growth and the improved acquisition market as a whole. Acquisition growth is vital to the Company's long-term earnings potential. Further, we expect acquisition growth to result in greater investor interest in our common stock and a lower cost of capital. |
| Award Levels: | ||
| ● | Threshold: |
|
| ● | Target: |
|
| ● | Maximum: |
|
| 2024 Results: |
||
| Percent of Overall Target Amount Received: 22.5% | ||
| Individual Performance (20% of 2024 Annual Incentive Plan): |
Reason for Inclusion in Plan: In addition to the quantitative criteria of the 2024 Annual Incentive Plan, the Compensation Committee considers it important to measure each NEO's individual contributions to the Company's overall performance based on such NEO's position and responsibilities. Award Levels: Individually determined in the discretion of the Compensation Committee based upon an evaluation of the individual performance of each NEO against certain established qualitative performance goals. |
| (1) | We compute AFFO by modifying Funds From Operations, which we calculate in accordance with standards established by the |
The table below summarizes the earned cash awards, dollar value of earned LTIP Units and the actual number of earned LTIP Units for each NEO pursuant to the 2024 Annual Incentive Plan. In
| NEO | Amount of Cash Award | Dollar Value of Earned LTIP Units |
Number of Earned LTIP Units |
|||||||||
| $ | 341,796 | $ | 227,864 | 23,613 | ||||||||
| $ | 195,312 | $ | 130,208 | 13,493 | ||||||||
| $ | 183,105 | $ | 122,070 | 12,650 | ||||||||
| $ | 126,953 | $ | 84,635 | 8,770 | ||||||||
| $ | 113,281 | $ | 75,521 | 7,826 | ||||||||
Earned LTIP Units listed above are subject to forfeiture restrictions that will lapse in the following amounts and on the following vesting dates subject to the continuous service of the NEO through and on the applicable vesting date:
| ● | 50% of the earned LTIP Units became vested on |
|
| ● | 50% of the earned LTIP Units become vested on |
|
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For all time-based and performance-based equity awards held by the NEOs and described herein, vesting is accelerated (subject to pro-ration for performance-based awards as described in the "Potential Payments Upon Termination or Change of Control" section below) in the event of a termination of the NEO's position without "Cause" or for "Good Reason" (as defined in the relevant employment agreement, plan, or award agreements), due to death or disability, due to the NEO's retirement or upon a "Change-in-Control" (as defined in the relevant employment agreement, plan, or award agreements) of the Company. For Messrs. Kiernan and Leon, vesting is also accelerated upon a non-renewal by the Company of their respective employment agreements. With respect to
2024 Long-Term Equity Incentive Plan. In addition to our 2024 Annual Incentive Plan, the Company has established long-term equity incentive plans pursuant to which we grant equity awards under the 2016 Plan that are designed to reward our NEOs for achievements based on long-term stockholder returns. We believe a combination of both an annual and long-term performance plan helps incentivize our NEOs to achieve our short-term operational goals without sacrificing long-term stockholder value. Equity awards made to our NEOs in 2024 pursuant to the 2016 Plan (our "2024 Long-Term Equity Incentive Plan") were made in the form of LTIP Units and were divided into two components: (i) a time-based vesting component (50% of the aggregate award), and (ii) a performance-based component (50% of the aggregate award). LTIP Units issued pursuant to the time-based component vest in full on the third anniversary of the grant date (i.e., no ratable vesting).
The performance-based component of the plan is further broken out into two performance metrics as follows: (i) an Absolute Total Stockholder Retucomponent (50% of the performance-based award) and (ii) a Relative Total Stockholder Retucomponent (50% of the performance-based award).
The table below provides a summary of the rationale and vesting terms of the 2024 Long-Term Equity Incentive Plan:
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| Time-based Vesting Component (50%): | Reason for Inclusion in Plan: The primary purpose of this component is to attract and retain qualified personnel, including our NEOs. The Compensation Committee also believes these awards are necessary to remain competitive with our Peer Companies. | |
| Vesting Schedule (based on grant date): | ||
| ● | Third anniversary: 100% of total award | |
| Performance-based Vesting Component - Absolute Total Stockholder Retu("TSR") (25%): | Reason for Inclusion in Plan: To incentivize our NEOs to build long-term value for our stockholders, the Compensation Committee considers it important to make a significant portion of each NEO's compensation contingent on total returns achieved by our stockholders over a long-term period. | |
| Performance Period: Three years from grant date | ||
| Award Levels: | ||
| ● | Threshold (50% of Target Award): 15% total return | |
| ● | Target (100% of Target Award): 24% total return | |
| ● | Maximum (200% of Target Award): 36% or greater total return | |
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| Performance-based Vesting Component-Relative TSR (25%): | Reason for Inclusion in Plan: Similar to the Absolute TSR component except compared to the companies included in the Dow Jones |
|
| Performance Period: Three years from grant date | ||
| Award Levels: | ||
| ● | Threshold (50% of Target Award): 35th percentile of the Index Companies | |
| ● | Target (100% of Target Award): 55th percentile of the Index Companies | |
| ● | Maximum (200% of Target Award): 75th percentile of the Index Companies | |
The Absolute TSR Component will be forfeited in its entirety if the TSR is less than 15%. If the TSR is between 15% and 24%, or between 24% and 36%, the percentage of the Absolute TSR Component earned will be determined using linear interpolation as between those tiers, respectively.
The Relative TSR Component will be forfeited in its entirety if the Relative Performance is below the 35th percentile of the Index Companies. If the Relative Performance is between the 35th percentile and 55th percentile of the Index Companies, or between the 55th percentile and 75th percentile of the Index Companies, the percentage of the Relative TSR Component earned will be determined using linear interpolation as between those tiers, respectively.
The following table lists the 2024 Long-Term Incentive Plan target awards granted to our NEOs on
| 2024 Time-Based Awards | 2024 Performance-Based Awards | |||||||||||||||||||
| NEO | Value | Number of Units(1) |
Value | Number of Units(2) |
Total Value | |||||||||||||||
| $ | 600,000 | 62,176 | $ | 600,000 | 64,034 | $ | 1,200,000 | |||||||||||||
| $ | 375,000 | 38,860 | $ | 375,000 | 40,021 | $ | 750,000 | |||||||||||||
| $ | 375,000 | 38,860 | $ | 375,000 | 40,021 | $ | 750,000 | |||||||||||||
| $ | 210,000 | 21,762 | $ | 210,000 | 22,412 | $ | 420,000 | |||||||||||||
| $ | 200,000 | 20,725 | $ | 200,000 | 21,345 | $ | 400,000 | |||||||||||||
| (1) | The number of target LTIP Units comprising each 2024 Time-Based Award was determined by dividing the grant date target value by the average closing price of the Company's common stock on the NYSE for the 15 trading days prior to, and including, the grant date, or |
| (2) | The number of target LTIP Units comprising each 2024 Performance-Based Award was determined by an independent valuation consultant using a Monte Carlo simulation. |
As soon as practicable following the 2024 Long-Term Valuation Date, the Compensation Committee will determine the number of LTIP Units earned by each NEO under both the Absolute TSR Component and the Relative TSR Component. Any LTIP Units subject to a 2024 Performance-Based Award that are not earned as set forth above will be forfeited, and the NEO will have no right in or to any such unearned and unissued LTIP Units after it is determined that they were not earned.
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LTIP Units that have been earned based on performance as provided above are subject to forfeiture restrictions that will lapse in the following amounts and on the following vesting dates subject to the continuous service of the respective NEO through and on the applicable vesting date:
| (i) | 50% of the earned LTIP Units become vested as of the 2024 Long-Term Valuation Date; and |
| (ii) | 50% of the earned LTIP Units become vested on the first anniversary of the 2024 Long-Term Valuation Date. |
For all time-based and performance-based equity awards held by the NEOs and described herein, vesting is accelerated (subject to pro-ration for performance-based awards as described in the "Potential Payments Upon Termination or Change of Control" section below) in the event of a termination of the NEO's position without "Cause" or for "Good Reason" (as defined in the relevant employment agreement, plan, or award agreements), due to death or disability, due to the NEO's retirement or upon a "Change-in-Control" (as defined in the relevant employment agreement, plan, or award agreements) of the Company. For Messrs. Kiernan and Leon, vesting is also accelerated upon a non-renewal by the Company of their respective employment agreements. With respect to
2021 Long-Term Performance Plan
On
The performance period for the 2021 Long-Term Performance Plan began on
Absolute RetuComponent. Pursuant to the 2021 Long-Term Performance Plan, 75% of the aggregate award was based on the absolute TSR of the Company during a three-year performance period. The number of LTIP Units earned by the NEOs pursuant to the absolute TSR component were as follows:
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Absolute Stockholder RetuComponent
| Hurdles | ||||||||||||||||||||||||||||
| Target | Threshold | Maximum | Total | % of Target | Final Payout | |||||||||||||||||||||||
| Award (# of | (50% of | (200% of | Company | Award | (# of LTIP | |||||||||||||||||||||||
| NEO | LTIP Units) | Target) | Target | Target) | Return(1) | Earned | Units) | |||||||||||||||||||||
| 9,085 | 21 | % | 27 | % | 33 | % | <21 | % | 0 | % | - | |||||||||||||||||
| 6,056 | 21 | % | 27 | % | 33 | % | <21 | % | 0 | % | - | |||||||||||||||||
| 6,662 | 21 | % | 27 | % | 33 | % | <21 | % | 0 | % | - | |||||||||||||||||
| 5,754 | 21 | % | 27 | % | 33 | % | <21 | % | 0 | % | - | |||||||||||||||||
| 5,754 | 21 | % | 27 | % | 33 | % | <21 | % | 0 | % | - | |||||||||||||||||
| (1) | Calculated based on the following metrics: |
| a. | The purchase of one share of the Company's common stock on the grant date of the awards at a purchase price equal to the average closing price of the Company's common stock over the five consecutive trading days prior to, and ending on, the effective date of the 2021 Long-Term Equity Incentive Plan (the "Baseline Value"). |
| b. | The full reinvestment of distributions or dividends declared on such share (without deductions for taxes or other charges) into the Company common stock at a price equal to (i) the closing price of the Company's common stock on the trading day immediately preceding the ex-dividend date for such dividend or distribution less (ii) the amount of such dividend or distribution. |
| c. | The sale of shares (the original share purchased plus additional shares purchased through the reinvestment of dividends or distributions as described in (b) above) at the end of the performance period at a price equal to the average closing price of the Company's common stock over the 15 consecutive trading days prior to, and ending on, the last day of the performance period. |
Relative Stockholder RetuComponent. Pursuant to the 2021 Long-Term Equity Incentive Plan, 25% of the award was based on the Company's relative TSR against the former SNL Healthcare REIT Index during a three-year performance period. The number of LTIP Units earned by the NEOs pursuant to the relative retucomponent were as follows:
Relative Stockholder RetuComponent
| Hurdles | ||||||||||||||||||||||||||||
| NEO | Target Award (# of LTIP Units) |
Threshold Percentile (50% of Target) |
Target Percentile |
Maximum Percentile (200% of Target) |
Company Percentile(1) |
% of Target Award Earned |
Final Payout (# of LTIP Units) |
|||||||||||||||||||||
| 3,028 | 35 | % | 55 | % | 75 | % | <35 | % | 0 | % | - | |||||||||||||||||
| 2,019 | 35 | % | 55 | % | 75 | % | <35 | % | 0 | % | - | |||||||||||||||||
| 2,221 | 35 | % | 55 | % | 75 | % | <35 | % | 0 | % | - | |||||||||||||||||
| 1,918 | 35 | % | 55 | % | 75 | % | <35 | % | 0 | % | - | |||||||||||||||||
| 1,918 | 35 | % | 55 | % | 75 | % | <35 | % | 0 | % | - | |||||||||||||||||
| (1) | Calculated by comparing the Company's absolute stockholder retu(as calculated pursuant to the Absolute RetuComponent of the 2021 Long-Term Equity Incentive Plan) against the returns of the companies in the former SNL Healthcare REIT Index (weighted by the market capitalization of each company in the index). |
Based on the total and relative returns of the Company's common stock during the performance period of the 2021 Long-Term Equity Incentive Plan, our NEOs were ultimately not awarded any LTIP Units under this plan.
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Distributions
Pursuant to the annual award agreements under the 2024 Annual Incentive Plan and the performance-based award agreements under the 2024 Long-Term Equity Incentive Plan, distributions equal to the dividends declared and paid by the Company accrued and will accrue during the applicable performance period on the target number of LTIP Units that the NEO could eaand are paid with respect to all of the earned LTIP Units at the conclusion of the applicable performance period, in cash or by the issuance of additional LTIP Units at the discretion of the Compensation Committee. Distributions on the LTIP Units issued pursuant to the time-based-vesting component of the awards under the 2024 Long-Term Equity Incentive Plan (i.e., 50% of aggregate awards under the 2024 Long-Term Equity Incentive Plan) are paid out currently, and, therefore, because these time-based LTIP Units were issued and outstanding as of the grant date (
Practices Related to the Grant of Certain Equity Awards in Relation to the Release of Material Nonpublic Information
We do not currently grant stock options or option-like equity awards to our NEOs, employees or directors; therefore, we do not currently have a formal practice or policy with respect to the grant of stock options or option-like awards. During 2024, we did not time the disclosure of material nonpublic information to affect the value of executive compensation awards granted to our NEOs, employees or directors.
Influence of Say on Pay Results on Executive Compensation Decisions
We provided stockholders with a "say-on-pay" advisory vote on executive compensation at the 2024 Annual Meeting of Stockholders. Approximately 94% of the votes cast on the say-on-pay proposal were cast "For" the approval of the compensation of our NEOs as disclosed in the proxy statement distributed in connection with the 2024 Annual Meeting of Stockholders. The Compensation Committee evaluated the results of the say-on-pay vote and considering the support for our executive compensation program, it did not make any significant changes to the executive compensation program and policies for fiscal year 2024 compensation based on the stockholder voting results. The Compensation Committee will continue to consider the outcome of future say-on-pay votes when making future compensation decisions for the NEOs.
In addition, we provided stockholders with a "say-on-frequency" advisory vote at the 2024 Annual Meeting of Stockholders to determine whether the say-on-pay advisory vote on executive compensation should occur every one, two, or three years. Approximately 95% of the votes cast on the say-on-frequency proposal were in favor of a vote every year. Based on the results of the say-on-frequency vote, the Board has determined to hold the say-on-pay vote annually.
Actions Taken Since Fiscal Year-End
Separation Agreement with
On
Compensation Committee Report
The Compensation Committee has reviewed and discussed the above Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company's 2024 Annual Report, and in this Proxy Statement for the 2025 Annual Meeting of Stockholders.
40
Submitted by the Compensation Committee of the Board of Directors.
Compensation Committee Interlocks and Insider Participation
No current or former member of the Compensation Committee is, or has been, one of our employees or officers. None of our executive officers currently serves, or during the past fiscal year has served, as a member of the Board of Directors or compensation committee of another entity that has one or more executive officers serving on our Board of Directors or Compensation Committee.
Risk Considerations in our Executive Compensation Program
The Compensation Committee has reviewed its compensation policies and practices with respect to employees of the Company, taking into consideration risk management practices and risk-taking incentives. Following such review, we determined that our compensation policies and practices for such employees do not create risks that are reasonably likely to have a material adverse effect on us.
Several features of the Company's equity compensation program and policies are designed to reduce the likelihood of excessive risk-taking by employees, including:
| ● | Our performance-based compensation is structured to reward both short-and long-term corporate performance; |
| ● | The payout amounts under our short-term and long-term incentives are capped; |
| ● | The Compensation Committee considers risk management when determining the portion of our 2024 Annual Incentive Plan earned for individual performance; and |
| ● | A Clawback Policy which subjects certain portions of our executives' pay to recoupment by the Company in the event of a Restatement (as defined in the Clawback Policy). |
41
SUMMARY COMPENSATION TABLE FOR 2024, 2023 AND 2022
The Summary Compensation Table below contains, in compliance with the reporting requirements of the
| Year | Salary | Stock Awards |
(1) | Non-Equity Incentive Plan Compensation |
(2) | All Other Compensation |
Total | ||||||||||||||||
| 2024 | $ | 700,000 | $ | 1,480,000 | (3) | $ | 341,796 | $ | - | $ | 2,521,796 | ||||||||||||
| Chief Executive Officer, Chairman | 2023 | $ | 700,000 | $ | 1,080,000 | $ | 401,100 | $ | - | $ | 2,181,100 | ||||||||||||
| 2022 | $ | 650,000 | $ | 860,000 | $ | 319,215 | $ | 10,000 | (4) | $ | 1,839,215 | ||||||||||||
| 2024 | $ | 400,000 | $ | 910,000 | (5) | $ | 195,312 | $ | - | $ | 1,505,312 | ||||||||||||
| Chief Financial Officer | 2023 | $ | 400,000 | $ | 760,000 | $ | 253,200 | $ | - | $ | 1,413,200 | ||||||||||||
| 2022 | $ | 375,000 | $ | 550,000 | $ | 184,163 | $ | - | $ | 1,109,163 | |||||||||||||
| 2024 | $ | 375,000 | $ | 900,000 | (6) | $ | 183,105 | $ | - | $ | 1,458,105 | ||||||||||||
| Chief Investment Officer | 2023 | $ | 375,000 | $ | 750,000 | $ | 214,875 | $ | - | $ | 1,339,875 | ||||||||||||
| 2022 | $ | 350,000 | $ | 540,000 | $ | 171,885 | $ | - | $ | 1,061,885 | |||||||||||||
| 2024 | $ | 325,000 | $ | 524,000 | (7) | $ | 126,953 | $ | - | $ | 975,953 | ||||||||||||
| Chief Operating Officer | 2023 | $ | 325,000 | $ | 454,000 | $ | 156,780 | $ | - | $ | 935,780 | ||||||||||||
| 2022 | $ | 300,000 | $ | 346,000 | $ | 117,864 | $ | - | $ | 763,864 | |||||||||||||
| 2024 | $ | 290,000 | $ | 492,800 | (8) | $ | 113,281 | $ | - | $ | 896,081 | ||||||||||||
| General Counsel & Corporate Secretary | 2023 | $ | 290,000 | $ | 442,800 | $ | 139,896 | $ | - | $ | 872,696 | ||||||||||||
| 2022 | $ | 275,000 | $ | 338,000 | $ | 114,642 | $ | - | $ | 727,642 | |||||||||||||
| (1) | Except with respect to awards issued under the performance-based portions of the Long-Term Equity Incentive Plans, which were based on a valuation determined by an independent consultant, the 2016 Plan award values disclosed in this summary compensation table are based on the average closing price per share on the 15 trading days prior to and including the date of grant, excluding the effect of estimated forfeitures, in accordance with |
| (2) | Represents amounts actually paid to our NEOs upon the settlement of the cash-based portion of the 2024 Annual Incentive Plan. |
| (3) | Consists of: (i) 29,016 LTIP Units awarded pursuant to our 2024 Annual Incentive Plan, which reflects the target level; the maximum number of LTIP Units that could be issued under the 2024 Annual Incentive Plan is 1.5 times the target number of units, which would result in a value of |
| (4) | In 2022, the Company made, at |
| (5) | Consists of: (i) 16,580 LTIP Units awarded pursuant to our 2024 Annual Incentive Plan, which reflects the target level; the maximum number of LTIP Units that could be issued under the 2024 Annual Incentive Plan is 1.5 times the target number of units, which would result in a value of |
| (6) | Consists of: (i) 15,544 LTIP Units awarded pursuant to our 2024 Annual Incentive Plan, which reflects the target level; the maximum number of LTIP Units that could be issued under the 2024 Annual Incentive Plan is 1.5 times the target number of units, which would result in a value of |
42
| (7) | Consists of: (i) 10,777 LTIP Units awarded pursuant to our 2024 Annual Incentive Plan, which reflects the target level; the maximum number of LTIP Units that could be issued under the 2024 Annual Incentive Plan is 1.5 times the target number of units, which would result in a value of |
| (8) | Consists of: (i) 9,617 LTIP Units awarded pursuant to our 2024 Annual Incentive Plan, which reflects the target level; the maximum number of LTIP Units that could be issued under the 2024 Annual Incentive Plan is 1.5 times the target number of units, which would result in a value of |
43
2024 GRANTS OF PLAN-BASED AWARDS TABLE
The following table presents information concerning each grant made to our NEOs in the fiscal year ended
| Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1) |
Estimated Future Payouts Under Equity Incentive Plan Awards(2) |
|||||||||||||||||||||||||||||||||
| Grant Date | Threshold($) | Target($) | Maximum($) | Threshold(#) | Target(#) | Maximum(#) | All Other Stock Awards: Number of Shares of Stock or Units(#)(3) |
Grant Date Fair Value of Stock Awards( |
||||||||||||||||||||||||||
| $ | 210,000 | $ | 420,000 | $ | 630,000 | 14,508 | 29,016 | 43,524 | $ | 280,000 | ||||||||||||||||||||||||
| 32,017 | 64,034 | 128,068 | $ | 600,000 | ||||||||||||||||||||||||||||||
| 62,176 | $ | 600,000 | ||||||||||||||||||||||||||||||||
| $ | $ | 240,000 | $ | 360,000 | 8,290 | 16,580 | 24,870 | $ | 160,000 | |||||||||||||||||||||||||
| 20,011 | 40,021 | 80,042 | $ | 375,000 | ||||||||||||||||||||||||||||||
| 38,860 | $ | 375,000 | ||||||||||||||||||||||||||||||||
| $ | $ | 225,000 | $ | 337,500 | 7,772 | 15,544 | 23,316 | $ | 150,000 | |||||||||||||||||||||||||
| 20,011 | 40,021 | 80,042 | $ | 375,000 | ||||||||||||||||||||||||||||||
| 38,860 | $ | 375,000 | ||||||||||||||||||||||||||||||||
| $ | $ | 156,000 | $ | 234,000 | 5,389 | 10,777 | 16,166 | $ | 104,000 | |||||||||||||||||||||||||
| 11,206 | 22,412 | 44,824 | $ | 210,000 | ||||||||||||||||||||||||||||||
| 21,762 | $ | 210,000 | ||||||||||||||||||||||||||||||||
| $ | $ | 139,200 | $ | 208,800 | 4,809 | 9,617 | 14,426 | $ | 92,800 | |||||||||||||||||||||||||
| 10,673 | 21,345 | 42,690 | $ | 200,000 | ||||||||||||||||||||||||||||||
| 20,725 | $ | 200,000 | ||||||||||||||||||||||||||||||||
| (1) | These columns show the threshold, target and maximum amount of cash that could be earned pursuant to the cash portion of the 2024 Annual Incentive Plan awards. The exact amount earned depends upon, among other things, the Company's financial performance, as described in the "Compensation Discussion and Analysis" section of this Proxy Statement. |
| (2) | These columns show the threshold, target and maximum number of shares of common stock that could be issued in connection with performance-based LTIP Units granted in 2024 under the Company's 2024 Annual Incentive Plan and 2024 Long-Term Equity Incentive Plan to each of the NEOs. The exact number of units to be issued depends upon, among other things, the Company's financial performance, as described in the "Compensation Discussion and Analysis" section of this Proxy Statement. |
| (3) | Reflects time-based awards granted under the 2024 Long-Term Equity Incentive Plan. |
| (4) | Reflects the grant date fair value of awards pursuant to the 2024 Annual Incentive Plan and the 2024 Long-Term Equity Incentive Plan determined in accordance with FASB ASC Topic 718, with the value of the performance-based portions of the awards reflected at the target level. Regarding assumptions underlying the valuation of these equity awards, please see Note 7 to our Financial Statements. |
See "Compensation Discussion and Analysis - Elements of 2024 Executive Compensation" for a description of the material terms of the awards granted under the plans discussed in the footnotes to the 2024 Grants of Plan-Based Awards table. Initially, all LTIP Units will not have full parity with our operating partnership's common units with respect to liquidating distributions.
44
Upon the occurrence of certain "book-up" events described in the partnership agreement, LTIP Units can, over time, achieve full parity with our operating partnership's common units for all purposes, and, therefore, accrete to an economic value equivalent to one share of common stock. If such parity is reached, vested LTIP Units may be redeemed for cash in an amount equal to the then fair market value of an equal number of shares of our common stock or converted into an equal number of shares of our common stock, as determined by us at our election.
Narrative Disclosure to Summary Compensation Table
We provide additional disclosure below of factors relating to the Summary Compensation Table, including descriptions of the Employment Agreements with Messrs. Busch, Kiernan, and Leon.
Employment Agreements
On
Term
Each of Messrs. Busch's, Kiernan's and Leon's Employment Agreement has a four-year term, with automatic renewals of additional successive one-year periods unless either party thereto provides at least 90 days' advance notice of non-renewal.
Duties
The Employment Agreements provide that Messrs. Busch, Kiernan and Leon are employed by a subsidiary of the Company and that (i)
Compensation
The Employment Agreements provide that Messrs. Busch, Kiernan and Leon receive initial annual base salaries of
Severance Payments and Severance Plan
The Employment Agreements also contain provisions that could provide severance payments and benefits to Messrs. Busch, Kiernan and Leon upon certain termination events. Those terms, as well as the terms of the Severance Plan of which
45
Non-Solicitation, Non-Competition, Intellectual Property, Confidentiality, and Non-Disparagement
The Employment Agreements provide that for (i) eighteen months (in the case of
The Employment Agreements also contain non-competition covenants that prohibit Messrs. Busch, Kiernan and Leon from having any ownership interest in a competitor within a designated market area, or engaging in or performing services for a competitor within a designated market area, if such services either are the same as or similar to (individually or in the aggregate) the services he performed for the Company during his employment, or are performed with respect to products or services of the competitor that are competitive with the products or services provided by the Company with which he was involved during his employment or about which he received confidential information during his employment.
Each Employment Agreement also contains covenants relating to the treatment of confidential information and intellectual property matters and restrictions on the ability of each of Messrs. Busch, Kiernan, and Leon on the one hand and the Company on the other hand to disparage the other.
46
OUTSTANDING EQUITY AWARDS AT 2024 FISCAL YEAR END
The following table presents information concerning equity-based awards for our NEOs that were outstanding as of
| Stock Awards | ||||||||||||||||||
| Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested( |
Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ( |
|||||||||||||||
| 128,289 | (2) | $ | 990,391 | 88,692 | (3) | $ | 684,702 | |||||||||||
| 85,462 | (4) | $ | 659,767 | 56,457 | (5) | $ | 435,848 | |||||||||||
| 84,058 | (6) | $ | 648,928 | 55,421 | (7) | $ | 427,850 | |||||||||||
| 49,692 | (8) | $ | 383,622 | 33,865 | (9) | $ | 261,438 | |||||||||||
| 48,037 | (10) | $ | 370,846 | 32,171 | (11) | $ | 248,360 | |||||||||||
| (1) | Based on the closing price of the Company's common stock on |
| (2) | Consists of: (i) 14,692 LTIP Units issued in connection with our 2023 Annual Incentive Plan that had not vested as of |
| (3) | Consists of 29,016 unearned LTIP Units as of |
| (4) | Consists of: (i) 9,275 LTIP Units issued in connection with our 2023 Annual Incentive Plan that had not vested as of |
| (5) | Consists of 16,580 unearned LTIP Units as of |
47
| (6) | Consists of: (i) 7,871 LTIP Units issued in connection with our 2023 Annual Incentive Plan that had not vested as of |
| (7) | Consists of 15,544 unearned LTIP Units as of |
| (8) | Consists of: (i) 5,743 LTIP Units issued in connection with our 2023 Annual Incentive Plan that had not vested as of |
| (9) | Consists of 10,777 unearned LTIP Units as of |
| (10) | Consists of: (i) 5,125 LTIP Units issued in connection with our 2023 Annual Incentive Plan that had not vested as of |
| (11) | Consists of 9,617 unearned LTIP Units as of |
48
2024 OPTION EXERCISES AND STOCK VESTED TABLE
The following table presents information concerning the vesting of LTIP Units for NEOs that occurred during 2024. None of the NEOs held stock options in 2024.
| Stock Awards | |||||||
| Number of Shares Acquired Upon Vesting(#) |
Value Realized on Vesting($) | ||||||
| 77,970 | (1) | $ | 708,638 | ||||
| 36,928 | (2) | $ | 337,300 | ||||
| 35,863 | (3) | $ | 326,990 | ||||
| 22,170 | (4) | $ | 202,851 | ||||
| 21,486 | (5) | $ | 196,388 | ||||
| (1) | Consists of: (i) 47,801 LTIP Units that vested on |
| (2) | Consists of: (i) 17,926 LTIP Units that vested on |
| (3) | Consists of: (i) 17,926 LTIP Units that vested on |
| (4) | Consists of: (i) 8,365 LTIP Units that vested on |
| (5) | Consists of: (i) 8,365 LTIP Units that vested on |
49
PENSION BENEFITS
We do not currently sponsor or maintain any plans that provide for specified retirement payments or benefits, such as tax-qualified defined benefit plans or supplemental executive retirement plans, for our NEOs.
NONQUALIFIED DEFERRED COMPENSATION
We do not currently sponsor or maintain any plans that provide for defined contribution or other deferrals of compensation on a basis that is not tax-qualified for our NEOs.
PAY RATIO DISCLOSURE
Pursuant to the Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose in this Proxy Statement the following information for the 2024 fiscal year:
| ● | the median of the annual total compensation of all employees of our Company (excluding our CEO); |
| ● | the annual total compensation of our CEO; and |
| ● | the ratio of the annual total compensation of our CEO to the median of the total annual compensation of all of our employees (excluding our CEO). |
Based on Item 402(u) and applicable
We selected
Under Item 402(u) and applicable
50
PAY-VERSUS-PERFORMANCE TABLE
As required by Item 402(v) of Regulation S-K, we are providing the following information regarding the relationship between executive compensation and our financial performance for each of the last five completed fiscal years. In determining the "compensation actually paid" to our NEOs, we are required to make various adjustments to amounts that have been previously reported in the Summary Compensation Table in previous years, as the
| Value of Initial Fixed Investment Based On: |
|||||||||||||||||||||||||||||||||
| Year | Summary Compensation Table Total for PEO( |
Compensation Actually Paid to PEO( |
Average Summary Compensation Table Total for Non-PEO NEOs( |
Average Compensation Actually Paid to Non-PEO NEOs( |
Total Shareholder Return( |
Total Shareholder Return( |
Net Income (in thousands)( |
Adjusted Funds From Operations (AFFO) per Share and Unit( |
|||||||||||||||||||||||||
| 2024 | $ | 2,521,796 | $ | 1,945,919 | $ | 1,208,863 | $ | 897,527 | $ | 86 | $ | 124 | $ | 6,692 | $ | 0.89 | |||||||||||||||||
| 2023 | $ | 2,181,100 | $ | 2,523,417 | $ | 1,140,388 | $ | 1,285,359 | $ | 112 | $ | 114 | $ | 21,734 | $ | 0.91 | |||||||||||||||||
| 2022 | $ | 1,839,215 | $ | (1,034,220 | ) | $ | 915,639 | $ | (538,467 | ) | $ | 88 | $ | 100 | $ | 19,996 | $ | 0.98 | |||||||||||||||
| 2021 | $ | 1,506,795 | $ | 2,867,359 | $ | 751,959 | $ | 1,308,522 | $ | 152 | $ | 132 | $ | 18,342 | $ | 0.95 | |||||||||||||||||
| 2020 | $ | 3,086,114 | $ | 3,182,518 | $ | 1,134,104 | $ | 1,101,882 | $ | 106 | $ | 92 | $ | (2,499 | ) | $ | 0.88 | ||||||||||||||||
| 1) | Represents the total amount from the Summary Compensation Table for each applicable year (each, a "covered year") for the PEO and the average of the total amounts of all non-PEO NEOs from the Summary Compensation Table for each covered year. Our PEO and the non-PEO NEOs for each applicable year are as follows: |
a) PEO:
i) 2024:
ii) 2023:
iii) 2022:
iv) 2021:
v) 2020:
b) Non-PEO NEOs:
i) 2024:
ii) 2023:
iii) 2022:
iv) 2021:
v) 2020:
| 2) | Compensation Actually Paid is calculated as follows for each covered year with respect to the PEO, the total of, and with respect to the Non-PEO NEOs, the total average for all non-PEO NEOs of: |
| a) | the total amount from the Summary Compensation Table; |
| b) | less the total amount from the "Stock Awards" column of the Summary Compensation Table (which represents the total grant date fair value for awards granted in that year); |
| c) | plus or minus |
51
| i) | for awards that were issued during the covered year and that remained outstanding as of the end of the covered year, the end of year fair value of such awards; |
| ii) | for awards that were issued prior to the covered year but that vested during the covered year, the difference in fair value from the end of the year prior to the covered year and the fair value as of the vesting date; |
| iii) | for awards that were issued prior to the covered year and that remained outstanding as of the end of the covered year, the difference in fair value from the end of the covered year and the end of the prior year of such awards; and |
| iv) | for awards that were granted in the covered year and vested in the covered year, the fair value of such awards as of the vesting date; |
| v) | for awards granted in years prior to the covered year that failed to meet the applicable vesting conditions during the covered year, the fair value of such awards as of the end of the prior year; and |
| vi) | the dollar value of any dividends or other earnings paid on awards in the covered year prior to the vesting date that are otherwise not included in the total compensation for the covered fiscal year. |
For our time-based vesting awards, we base our fair value calculations on the closing stock price of our common stock on the measurement date multiplied by the number of granted awards.
For our unearned annual performance-based awards, we base our fair value calculations on the closing stock price of our common stock on the measurement date multiplied by the number of target awards. For our earned annual performance-based awards, we base our fair value calculations on the closing stock price of our common stock on the measurement date multiplied by the number of awards earned. Because our NEOs may eafrom 50% to 150% of their target grants under our annual incentive plans, amounts for the same plan that may have been reported based on target amounts prior to such awards being earned may be reported based on amounts that are smaller or larger than the target amounts after being earned and converted into time-based vesting awards.
For our unearned long-term performance-based awards, we base our fair value calculations on a price per award that is determined by a Monte Carlo simulation, which is a generally accepted statistical technique used to simulate a range of possible future stock prices for the Company and the members of the Dow Jones
The following table provides a reconciliation of the Summary Compensation Table Total to Compensation Actually Paid to our PEO.
| Reconciliation of Summary Compensation Table Total to Compensation Actually Paid to PEO |
2024($) | 2023($) | 2022($) | 2021($) | 2020($) | |||||||||||||||
| Summary Compensation Table Total | 2,521,796 | 2,181,100 | 1,839,215 | 1,506,795 | 3,086,114 | |||||||||||||||
| Grant Date Fair Value of Awards Granted in Fiscal Year | (1,480,000 | ) | (1,080,000 | ) | (860,000 | ) | (540,000 | ) | (2,460,000 | ) | ||||||||||
| Fair Value at Fiscal Year End of Outstanding and Unvested Awards Granted in Fiscal Year | 915,418 | 1,180,242 | 345,509 | 779,176 | 3,066,062 | |||||||||||||||
| Change in Fair Value as of Vesting Date of Awards Granted in Prior Fiscal Years That Vested During Fiscal Year | 106,710 | 12,966 | (722,931 | ) | (133,027 | ) | (411,591 | ) | ||||||||||||
| Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Fiscal Years | (255,644 | ) | 114,468 | (1,859,250 | ) | 963,595 | (357,749 | ) | ||||||||||||
| Fair Value at Vesting of Awards Granted in Fiscal Year That Vested During Fiscal Year | - | - | - | - | - | |||||||||||||||
| Fair Value as of Prior Fiscal Year End of Awards Granted in Prior Years That Failed to Vest During Fiscal Year | (14,883 | ) | (12,851 | ) | - | - | - | |||||||||||||
| Dividends and Dividend Equivalent Rights Paid on Outstanding and Unvested Awards | 152,522 | 127,492 | 223,237 | 290,820 | 259,683 | |||||||||||||||
| Compensation Actually Paid | 1,945,919 | 2,523,417 | (1,034,220 | ) | 2,867,359 | 3,182,518 |
The following table provides a reconciliation of the Summary Compensation Table Total to Average Compensation Actually Paid to our Non-PEO NEOs.
| Reconciliation of Summary Compensation Table Total to Average Compensation Actually Paid to Non-PEO NEOs |
2024($) | 2023($) | 2022($) | 2021($) | 2020($) | |||||||||||||||
| Summary Compensation Table Total | 1,208,863 | 1,140,388 | 915,639 | 751,959 | 1,134,104 | |||||||||||||||
| Grant Date Fair Value of Awards Granted in Fiscal Year | (706,700 | ) | (601,700 | ) | (443,500 | ) | (304,500 | ) | (872,500 | ) | ||||||||||
| Fair Value at Fiscal Year End of Outstanding and Unvested Awards Granted in Fiscal Year | 435,543 | 652,529 | 174,043 | 446,471 | 1,082,614 | |||||||||||||||
| Change in Fair Value as of Vesting Date of Awards Granted in Prior Fiscal Years That Vested During Fiscal Year | 41,140 | 9,885 | (355,057 | ) | (127,320 | ) | (129,680 | ) | ||||||||||||
| Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Fiscal Years | (144,806 | ) | 39,427 | (933,128 | ) | 388,853 | (237,812 | ) | ||||||||||||
| Fair Value at Vesting of Awards Granted in Fiscal Year That Vested During Fiscal Year | - | - | - | - | - | |||||||||||||||
| Fair Value as of Prior Fiscal Year End of Awards Granted in Prior Years That Failed to Vest During Fiscal Year | (9,922 | ) | (9,359 | ) | - | - | - | |||||||||||||
| Dividends and Dividend Equivalent Rights Paid on Outstanding and Unvested Awards | 73,409 | 54,189 | 103,537 | 153,058 | 125,156 | |||||||||||||||
| Average Compensation Actually Paid | 897,527 | 1,285,359 | (538,467 | ) | 1,308,522 | 1,101,882 |
| 3) | Total Shareholder Retuand Peer Group Total Shareholder Retudiffer from prior year proxy disclosures due to an inadvertent miscalculation of these amounts in prior year disclosures. |
| 4) | Net income in 2020 included a one-time charge of |
| 5) | We compute AFFO by modifying Funds From Operations, which we calculate in accordance with standards established by the |
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The table below shows the relationships between the following: (i) the percentage difference in the amounts shown in the "Total" column of the Summary Compensation Table for our PEO and Compensation Actually Paid (as determined by the table above), (ii) the percentage difference in the average amount for our non-PEO NEOs and Compensation Actually Paid (as determined by the table above) and (iii) the total retuof our common stock, and (b) the total retuof the
| Year | % Change from PEO Summary Compensation Table and Actual Compensation Paid |
% Change from Non-PEO NEO Summary Compensation Table and Non-PEO NEO Actual Compensation Paid |
Company TSR (%)(1) | TSR (%)(1) |
||||||||||||
| 2024 | -23 | % | -26 | % | -14 | % | 24 | % | ||||||||
| 2023 | 16 | % | 13 | % | 12 | % | 14 | % | ||||||||
| 2022 | -156 | % | -159 | % | -13 | % | 0 | % | ||||||||
| 2021 | 90 | % | 74 | % | 52 | % | 32 | % | ||||||||
| 2020 | 3 | % | 13 | % | 6 | % | -8 | % | ||||||||
| (1) | Total Shareholder Retuand Peer Group Total Shareholder Retudiffer from prior year proxy disclosures due to an inadvertent miscalculation of these amounts in prior year disclosures. |
The table below shows the relationships between the following: (i) the percentage differences in the amounts shown in the "Total" column of the Summary Compensation Table for our PEO and the average amount for our non-PEO NEOs versus Compensation Actually Paid to such PEO and non-PEO NEOs (as determined by the table above) and (ii) (a) the Company's Net Income and (b) AFFO:
| Year | % Change from PEO Summary Compensation Table and Actual Compensation Paid |
% Change from Non-PEO NEO Summary Compensation Table and Non-PEO NEO Actual Compensation Paid |
% Change in Net Income | % Change in AFFO | ||||||||||||
| 2024 | -23 | % | -26 | % | -69 | % | -2 | % | ||||||||
| 2023 | 16 | % | 13 | % | 9 | % | -7 | % | ||||||||
| 2022 | -156 | % | -159 | % | 9 | % | 3 | % | ||||||||
| 2021 | 90 | % | 74 | % | 59 | % | 8 | % | ||||||||
| 2020 | 3 | % | 13 | % | 20 | %(1) | 17 | % | ||||||||
| (1) | For comparative purposes, we added back the one-time management internalization expense of |
The following table provides a list of the most important financial measures that the Company used to measure NEO performance-based compensation for 2024:
| AFFO per share | Occupancy Rate | Debt-to-Assets (Leverage) Ratio |
See "Compensation, Discussion and Analysis-Summary of 2024 Compensation-Elements of Executive Compensation-Annual Incentive Plan," for a more detailed description of how the financial measures above are used to measure NEO performance-based compensation for 2024.
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
The following section describes potential payments and benefits to the NEOs under the Company's compensation and benefit plans and arrangements upon termination of employment or a change of control of the Company.
The Employment Agreements (with respect to Messrs. Busch, Kiernan and Leon) and Severance Plan (with respect to
As noted above, on
Severance Provisions of the Employment Agreements
The Employment Agreements provide that if Messrs. Busch's, Kiernan's, or Leon's employment is terminated by the Company without "Cause" or by him for "Good Reason" (as those terms are defined in the Employment Agreements), subject to him executing and not revoking a release of claims, he will receive the following severance entitlements:
| (1) | two times (in the case of |
a. his base salary; and
b. the greater of:
| i. | his annual bonus earned in the calendar year preceding the year of termination, or |
| ii. | his target bonus for the year of termination; |
| (2) | a prorated annual bonus for the year of termination (the "Termination Bonus Payment"); |
| (3) | all outstanding time-based equity-based awards vest ("Accelerated Vesting"), and performance-based equity awards will remain outstanding and eligible to vest if and to the extent the applicable performance-based vesting conditions are satisfied, subject to any pro-ration that is consistent with the terms of other equity-based awards subject to performance-based vesting which were granted to him under the 2016 Plan prior to the effective date of his Employment Agreement ("Ongoing Vesting"); and (i) in the case of |
54
Subject to certain restrictions in each Employment Agreement, the severance described in (1) above is paid in installments over 24 months (in the case of
For purposes of the Employment Agreements:
| (1) | "Good Reason" means, in summary, (i) a material diminution in the executive's title, authority, responsibilities or base salary (including, in the case of |
| (2) | "Cause" means, in summary, the executive's (i) material breach of the Employment Agreement or any other written agreement between the Company (or its subsidiaries) and the executive, (ii) material breach of any workplace law or the Company (or its subsidiaries) written policies and codes of conduct, (iii) commission of an act of fraud, theft, dishonesty, embezzlement or breach of fiduciary duty related to the Company (or its subsidiaries) or the performance of his duties under the Employment Agreement, (iv) commission of an act of gross negligence or willful misconduct related to the Company (or its subsidiaries) or the performance of his duties under the Employment Agreement, which results in material and demonstrable damage to the Company (or its subsidiaries), (v) conviction of, or plea of guilty or nolo contendere to, a felony (or state law equivalent) or any crime of involving moral turpitude or the indictment of executive of any felony (or state law equivalent) of any crime involving moral turpitude, which is not discharged or otherwise resolved within 18 months, (vi) willful failure or refusal, other than due to disability, to perform his obligations under the Employment Agreement or to follow any lawful directive from the Board or (vii) violation of certain of the restrictive covenants contained in the Employment Agreement. |
| (3) | "Change-in-Control" means, in summary, the occurrence of (i) the sale, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the Company's properties or assets, (ii) a change in the majority of the Board, (iii) acquisition of 50% of more of the voting power of the Company's stock, or (iv) the consummation of a reorganization, merger, consolidation, statutory share exchange or similar transaction after which the Company's stockholders do not own, directly or indirectly, more than 50% of the voting power of the surviving entity's (or a parent entity's) stock. |
Upon the death or disability (as defined in the Employment Agreements) of Messrs. Busch, Kiernan or Leon, the executive (or the executive's estate in the case of death) shall be eligible to receive: (i) the Termination Bonus Payment, (ii) Accelerated Vesting of all outstanding time-based, equity-based awards, (iii) Ongoing Vesting of all outstanding performance-based, equity-based awards, and (iv) the applicable COBRA Subsidy.
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Severance Plan
The Company maintains a Severance Plan, which provides specified benefits to employees (except Messrs. Busch, Kiernan, and Leon) in the event of their termination of employment from the Company. Under the Severance Plan, in the event of a qualifying termination of employment of a plan participant, the participant will be entitled to receive severance pay in accordance with the following matrix:
| Participant Level | Termination other than for "Cause" | Termination upon a Change-in-Control(1) | Termination due to death or Disability | ||||||
| Level One | ● | 1x Annual Base Salary; | ● |
2x sum of: o Base salary; and o Target bonus for the year of termination. |
● | A pro-rata bonus for the year of termination, based on actual performance; | |||
| ● | All unvested equity-based awards granted under the 2016 Plan shall be eligible to vest in accordance with the terms of the applicable award agreement; and | ● | Immediate vesting of all unvested, time- based LTIP Units; | ● | 12-month COBRA subsidy (or similar payment); and | ||||
| ● | 12 months COBRA subsidy (or similar payment) | ● | performance awards remain outstanding and eligible to vest in accordance with the terms of the applicable award agreement; and | ● | All unvested equity-based awards granted under the 2016 Plan shall be eligible to vest in accordance with the terms of the applicable award agreement. | ||||
| ● | 18-month COBRA subsidy (or similar payment) | ||||||||
| Level Two | ● | up to six months of Base Salary; | ● | Up to 1x Annual Base Salary | ● | All unvested equity-based awards granted under the 2016 Plan shall be eligible to vest in accordance with the terms of the applicable award agreement. | |||
| ● | All unvested equity-based awards granted under the 2016 Plan shall be eligible to vest in accordance with the terms of the applicable award agreement; and | ● | Immediate vesting of all unvested, time-based LTIP Units; | ||||||
| ● | Up to six months of COBRA subsidy (or similar payment) | ● | performance awards remain outstanding and eligible to vest in accordance with the terms of the applicable award agreement; and | ||||||
| ● | up to 12-month COBRA subsidy (or similar payment) | ||||||||
| 1) | to receive severance in connection with a change-in-control, a Level One participant must be terminated within six months prior to, or 12 months following, a change-in-control; a Level Two participant must be terminated within 12 months following a change-in-control. |
For purposes of the Severance Plan, the terms "cause" and "change-in-control" generally have the same definitions as those terms in the Employment Agreements. The Severance Plan does not provide for severance payments upon a termination by the participant for "good reason".
In addition, the Company may authorize discretionary severance payments, which are unknown at this time, to its NEOs upon termination.
Time-Based LTIP Awards
The Company's benefit plans and award agreements generally refer to the terms and conditions of the Employment Agreements and Severance Plan with respect to accelerated vesting upon certain events. However, with respect to
56
"Good Reason" generally means: (i) a material diminution in the NEO's base salary; (ii) a material diminution or adverse change in the NEO's title, duties or authority; (iii) a material breach by the Company or the
Annual and Long-Term Performance-Based Incentive Awards
Qualified Termination - Earned LTIP Units will generally vest upon the date of a qualified termination (generally, a termination without cause, by executive for good reason, as a result of death or disability or retirement). Forfeiture restrictions are removed in the event of a termination of the executive's position without "Cause" or for "Good Reason" or as a result of the executive's retirement, although transfer and redemption restrictions remain until such dates as such executive's awards would have vested absent such termination or retirement.
With respect to any unearned LTIP Units as of the date of a qualified termination, the relevant performance metrics will be evaluated on the original valuation date for each plan as if such termination had not occurred and then, with respect to LTIP Units then earned, a partial service factor will be applied to determine that actual number of LTIP Units to issue to the NEO.
Change-in-Control - Upon a Change-in-Control, with respect to the Annual Incentive Plan Awards, (i) if a Change-in-Control had occurred prior to the first anniversary of the effective date of the plan, the performance goals related to such plan would have been pro-rated based on the effective date of the Change-in-Control and the number of resulting earned LTIP Units would have been pro-rated based on the effective date of the Change-in-Control and (ii) if a Change-in-Control occurs after the first anniversary of the effective date of the plan, the performance goals will be measured as if such Change-in-Control had not occurred and the amount of earned LTIP Units will be determined accordingly.
With respect to the Long-Term Equity Incentive Plan Awards, (i) if a Change-in-Control occurs prior to the third anniversary of the effective date of the plan, the performance goals related to such plan would have been pro-rated based on the effective date of the Change-in-Control and the number of resulting earned LTIP Units would have been pro-rated based on the effective date of the Change-in-Control and (ii) if a Change-in-Control occurs after the third anniversary of the effective date of the plan, the performance goals will be measured as if such Change-in-Control had not occurred and the amount of earned LTIP Units will be determined accordingly.
Any earned LTIP Units issued upon a Change-in-Control as described above will be subject to the same vesting schedule as if the Change-in-Control had not occurred except that, if a qualified termination occurs within six months prior to, or 12 months following, such Change-in-Control, all earned LTIP Units shall immediately vest upon such termination.
57
Severance and Change-in-Control Payment Table as of
The following tables represent the payments due to our NEOs in the event that termination or change-in-control payments would have been triggered under our compensation arrangements on
| Benefit | Death/Disability($) | Company Non-Renewal($) |
Termination By Company Without Cause($) |
Termination by Executive for Good Reason($) |
Change-in- Control Termination($) |
|||||||||||||||||
| Cash Severance | 700,000 | (1) | 3,500,000 | (4) | 3,500,000 | (4) | 3,500,000 | (4) | 4,900,000 | (6) | ||||||||||||
| LTIP Units Vesting | 990,399 | (2) | 990,399 | (2) | 990,399 | (2) | 990,399 | (2) | 990,399 | (7) | ||||||||||||
| Other | 14,580 | (3) | 14,580 | (3) | 14,580 | (3) | 14,580 | (3) | 14,580 | (8) | ||||||||||||
| Total | 1,704,979 | 4,504,979 | 4,504,979 | 4,504,979 | 5,904,979 | |||||||||||||||||
| Cash Severance | 400,000 | (1) | 1,200,000 | (4) | 1,200,000 | (4) | 1,200,000 | (4) | 2,000,000 | (6) | ||||||||||||
| LTIP Units Vesting | 659,759 | (2) | 659,759 | (2) | 659,759 | (2) | 659,759 | (2) | 659,759 | (7) | ||||||||||||
| Other | 15,996 | (3) | 15,996 | (3) | 15,996 | (3) | 15,996 | (3) | 23,994 | (8) | ||||||||||||
| Total | 1,075,754 | 1,875,754 | 1,875,754 | 1,875,754 | 2,683,752 | |||||||||||||||||
| Cash Severance | 375,000 | (1) | 1,125,000 | (4) | 1,125,000 | (4) | 1,125,000 | (4) | 1,875,000 | (6) | ||||||||||||
| LTIP Units Vesting | 648,928 | (2) | 648,928 | (2) | 648,928 | (2) | 648,928 | (2) | 648,928 | (7) | ||||||||||||
| Other | 15,996 | (3) | 15,996 | (3) | 15,996 | (3) | 15,996 | (3) | 23,994 | (8) | ||||||||||||
| Total | 1,039,924 | 1,789,924 | 1,789,924 | 1,789,924 | 2,547,922 | |||||||||||||||||
| Cash Severance | 109,287 | (1) | N/A | 694,287 | (5) | - | 1,279,287 | (6) | ||||||||||||||
| LTIP Units Vesting | 451,329 | (2) | N/A | 451,329 | (2) | 451,329 | (2) | 451,329 | (7) | |||||||||||||
| Other | 10,152 | (3) | N/A | 10,152 | (3) | - | 15,228 | (8) | ||||||||||||||
| Total | 570,768 | N/A | 1,155,768 | 451,329 | 1,745,844 | |||||||||||||||||
| Cash Severance | 97,518 | (1) | N/A | 619,518 | (5) | - | 1,141,518 | (6) | ||||||||||||||
| LTIP Units Vesting | 431,257 | (2) | N/A | 431,257 | (2) | 431,257 | (2) | 431,257 | (7) | |||||||||||||
| Other | 15,996 | (3) | N/A | 15,996 | (3) | - | 23,994 | (8) | ||||||||||||||
| Total | 544,771 | N/A | 1,066,771 | 431,257 | 1,596,769 | |||||||||||||||||
| (1) | Represents executive's annual bonus for the year of a termination due to death or disability (assuming the discretionary component of the 2024 Annual Incentive Plan was earned at the target level), pro-rated for the number of days he/she was employed by the Company during that year. |
| (2) | Represents (i) all unvested, time-based equity awards outstanding as of December 31, 2024, (ii) For |
| (3) | Represents COBRA payments for (i) a maximum of 18 months with respect to |
| (4) | For |
58
| (5) | Represents a payment equal to one times the executive's annual base salary. Pursuant to the Severance Plan, |
| (6) | For |
| (7) | Consists of (i) all unvested, time-based equity awards outstanding as of December 31, 2024, (ii) for |
| (8) | Represents COBRA payments for (i) a maximum of 18 months with respect to Messrs. Busch, Kiernan and Leon and (ii) a maximum of 12 months with respect to |
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table sets forth information as of December 31, 2024, with respect to compensation plans under which our equity securities are authorized for issuance, specifically, the 2016 Plan. We have no such plans that were not approved by security holders.
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) |
Weighted-average exercise price of our outstanding options, warrants and rights (b) |
Number of securities reflected in column (a) (c) |
|||||||
| Equity compensation plans approved by security holders | 3,095,552 | (1) | N/A | 2,136,845 | ||||||
| Equity compensation plans not approved by security holders | - | N/A | - | |||||||
| Total | 3,095,552 | N/A | 2,136,845 | |||||||
| (1) | Represents outstanding LTIP Units, which are a separate non-voting class of limited partnership interests structured as profits interests. The LTIP Units, subject to certain forfeiture provisions, may be redeemed into either, at the election of the Company, (i) shares of our common stock on a one-for-one basis or (ii) cash. |
59
COMPENSATION OF DIRECTORS
For 2024, each of our independent directors received an annual cash retainer of $55,000. Our lead independent director received an additional cash retainer of $25,000. The Chair of the Audit Committee received an additional annual cash retainer of $20,000 and each other member of the Audit Committee received an additional annual cash retainer of $10,000. The Chair of the Compensation Committee received an additional annual cash retainer of $15,000 and each other member of the Compensation Committee received an additional annual cash retainer of $7,500. The Chair of the Nominating and Corporative Governance Committee received an additional annual cash retainer of $15,000 and each other member of the Nominating and Corporate Governance Committee received an additional annual cash retainer of $7,500. The Chair of the ESG Committee received an additional annual cash retainer of $15,000 and each other member of the ESG Committee received an additional annual cash retainer of $7,500.
For 2024, each of our independent directors also received an annual equity-based award in an amount equal to $80,000. The equity-based compensation paid to our independent directors in 2024 consisted of time-based LTIP Units. The LTIP Units generally vest on the first anniversary of the grant date.
The following table summarizes the compensation we paid to our independent directors in 2024.
| Fee Earned or Paid in Cash($)(1) |
Stock Awards($)(2) | All Other Comp($) | Total($) | |||||||||||||
| $ | 105,000 | $ | 80,000 | - | $ | 185,000 | ||||||||||
| $ | 77,500 | $ | 80,000 | - | $ | 157,500 | ||||||||||
| $ | 77,500 | $ | 80,000 | - | $ | 157,500 | ||||||||||
| Zhang Huiqi(4) | - | - | - | - | ||||||||||||
| $ | 90,000 | $ | 80,000 | - | $ | 170,000 | ||||||||||
| $ | 80,000 | $ | 80,000 | - | $ | 160,000 | ||||||||||
| (1) | Represents annual retainer fees earned during 2024. |
| (2) | The number of LTIP Units comprising each LTIP grant for the stated stock award dollar value was based on a price of $8.59 per LTIP unit, which was the 10-day volume weighted average price of the Company's common stock as of May 15, 2024, the date of grant. The stock award values disclosed in this director compensation table are based on market values of the Company's common stock at the time of grant, which differ from the values calculated in accordance with GAAP as reported in the Company's audited historical financial statements included in the Company's 2024 Annual Report. See Note 7 - Stock-Based Compensation in our 2024 Annual Report. |
| (3) | As of December 31, 2024, this director had 9,316 unvested LTIP Units. |
Our Board of Directors may revise our directors' compensation in its discretion.
60
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
General
Each of our directors, director nominees and executive officers is required to complete an annual disclosure questionnaire and report all transactions with us in which they and their immediate family members had or will have a direct or indirect material interest with respect to us. The Nominating and Corporate Governance Committee generally reviews any past or proposed transactions between our Company and related persons (as such term is defined in Item 404 of Regulation S-K). If we believe a transaction is significant to us and raises particular conflict of interest issues, the Audit Committee will discuss the matter with legal or other appropriate counsel to evaluate and approve the transaction.
Mr.
Mr.
Mr.
Approval of Transactions with Related Persons
The Board of Directors has adopted a written related persons transactions policy, to be followed in connection with all related person transactions involving the Company. Prior to entering into a related person transaction, the Audit Committee reviews the material facts of the transaction and either approves or disapproves of the entry intothe transaction, subject to certain exceptions described in the policy. If advance Audit Committee approval is not feasible, then the transaction is considered and ratified (if the Audit Committee determines it to be appropriate) at the Audit Committee's next regularly scheduled meeting. In determining whether to approve or ratify a transaction, the Audit Committee will take into account, among other factors it deems appropriate, (1) whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, (2) the extent of the related person's interest in the transaction and (3) whether the transaction is material to the Company.
Under our Nominating and Corporate Governance Committee charter, the Nominating and Corporate Governance Committee is also responsible for reviewing and approving in advance any related party transactions, other than related party transactions which have been preapproved pursuant to preapproval guidelines or rules established by the Nominating and Corporate Governance Committee or the Board.
Each of our Nominating and Corporate Governance Committee and our Audit Committee ratified Mr.
61
PROPOSAL 3- RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We are asking our stockholders to ratify the appointment of Deloitte as our independent registered public accounting firm for 2025. Although the ratification is not required by our bylaws or other governing documents, the Board is submitting the selection of Deloitte to our stockholders for ratification as a matter of good corporate practice. Even if the stockholders do ratify the appointment, our Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it believes that such a change would be in the best interest of us and our stockholders.
We expect that a representative of Deloitte will be present virtually at the Annual Meeting, will be given the opportunity to make a statement if he or she so desires and will be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR the ratification of the appointment of Deloitte as our independent registered public accounting firm for 2025 (Proposal 3 on the proxy card).
FeesPaid to Our Independent Registered Public Accounting Firm
The following is a summary of the fees incurred by the Company with Deloitte for professional services rendered for the years ended December 31, 2024 and 2023.
|
Year Ended December 31, 2024 |
Year Ended December 31, 2023 |
|||||||
| Audit Fees | $ | 657,412 | $ | 631,497 | ||||
| Audit -Related Fees | $ | 155,000 | $ | 250,000 | ||||
| Tax Fees | - | - | ||||||
| All Other Fees | $ | 1,895 | $ | 1,895 | ||||
| Total | $ | 814,307 | $ | 883,392 | ||||
Audit Fees
"Audit Fees" consist of fees and expenses billed for professional services rendered for the audit of the consolidated financial statements, audit of management's assessment of internal controls, review of the interim consolidated financial statements, review of registration statements and services that are normally provided by accountants in connection with statutory and regulatory filings or engagements.
Audit-Related Fees
"Audit-Related Fees" consist of fees and expenses for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements that are not "Audit Fees.", including, but not limited to, the preparation of comfort letters.
Tax Fees
"Tax Fees" consist of fees and related expenses billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal and state tax compliance, tax planning and structuring and research and assistance.
AllOther Fees
"All Other Fees" consist of fees and expenses for products and services that are not "Audit Fees," "Audit-Related Fees" or "Tax Fees."
62
Pre-Approval Policy
All audit, tax and other services provided to us are reviewed and pre-approved by the Audit Committee. All fees paid to Deloitte in 2024 and 2023 described above were approved by the Audit Committee.
63
OTHER MATTERS
We do not know of any other matters to come before the Annual Meeting. If, however, any other matters do come before the Annual Meeting, it is the intention of the persons designated as proxies to vote in accordance with their discretion on such matters.
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|
PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. (Continued and to be marked, dated, and signed on other side) PROXY GLOBAL MEDICAL REIT INC. Proxy for Annual Meeting of Stockholders on May 14, 2025 Solicited on Behalf of the Board of Directors The undersigned hereby appoints |
|
PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. DO NOT PRINT IN THIS AREA (Stockholder Name & Address Data) The Board of Directors recommends that you vote "FOR" each of the nominees for directors in proposal 1, and "FOR" proposals 2 and 3. Proposal 1. To elect each of the following nominees to serve as director until the next annual meeting of stockholders and until her or his successor is duly elected and qualifies. Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) ☐ VIRTUAL CONTROL NUMBER Proposal 2. Advisory vote to approve the compensation of the Company's named executive officers as described in the accompanying Proxy Statement. FOR ☐ AGAINST ☐ ABSTAIN ☐ Proposal 3. To ratify the appointment of |
Attachments
Disclaimer
Proxy Statement (Form DEF 14A)
Additional Proxy Soliciting Materials (Form DEFA14A)
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