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TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant | Filed by a Party other than the Registrant |
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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 |
The RMR Group Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | ||||||||
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Notice of 20202021 Annual Meeting
of Shareholders and Proxy Statement
Wednesday,Thursday, March 11, 20202021 at 9:30 a.m., Eastern time
Two Newton Place, 255 Washington Street, Suite 100, Newton, Massachusetts 02458Live Webcast Accessible at
https://www.viewproxy.com/rmrgroup/2021/
LETTER TO OUR SHAREHOLDERS FROM YOUR BOARD OF DIRECTORS
Dear Fellow Shareholders:
Please join us for our annual meeting2021 Annual Meeting of Shareholders, which will be held virtually at 9:30 a.m. on Wednesday,Thursday, March 11, 2020.2021. The business to be conducted at the meeting is explained in the attached Notice of Meeting and Proxy Statement. We believe furnishing these materials over the internet expedites shareholders' receipt of these important materials while lowering costcosts and reducing the environmental impact of our annual meeting.
Please be assured that ourYour Board takes seriously our role in the oversight of our Company's long term business strategy, which is the best path to long term value creation for you, our shareholders. Last2020 was a challenging year across all sectors; however, we continued to improve margins. Becauseare proud that our Company successfully navigated the challenges we faced. Some of our solid operating results, wesuccesses and accomplishments include:
In 2019, our majority owned operating subsidiary, The RMR Group LLC, received the Real Estate Management Excellence Award for Employee & Leadership Development from the Institute of Real Estate Management; was ranked 75thManagement.
We continue to monitor changing events and circumstances with an eye to managing for the global good, mitigating the negative impact on Fortune Magazine's list of 100 fastest growing companies;our business and was selected as an ENERGY STAR® Partner ofbest positioning us for stability and recovery when the Year.pandemic is behind us.
We thank you for your investment in The RMR Group Inc.our Company and for the confidence you put in this Board to oversee your interests in our business.
January 16, 202014, 2021
Jennifer B. Clark Ann Logan Rosen Plevneliev Adam D. Portnoy Jonathan Veitch Walter C. Watkins, Jr. |
NOTICE OF 20202021 ANNUAL MEETING OF SHAREHOLDERS OF THE RMR GROUP INC.
Wednesday, March 11, 2020
9:30 a.m., Eastern time
Two Newton Place, 255 Washington Street, Suite 100Newton, Massachusetts 02458
ITEMS OF BUSINESS
RECORD DATE
You can vote if you were a shareholder of record as of the close of business on January 9, 2020.
PROXY VOTING
Shareholders as of the record date are invited to attend the 2020 Annual Meeting. If you cannot attend in person, please vote in advance of the 2020 Annual Meeting by using one of the methods described in the accompanying Proxy Statement.
January 16, 2020Newton, Massachusetts
By Order of the Board of Directors,Jennifer B. ClarkManaging Director, Executive Vice President,General Counsel and Secretary
Please sign and return the proxy card or voting instruction form or use telephone or internet methods to authorize a proxy in advance of the 2020 Annual Meeting. See the "Proxy Materials and Voting Information" section on page 32 for information about how to authorize a proxy by telephone or internet or how to attend the 2020 Annual Meeting and vote your shares in person.
| Location: Live Webcast Accessible at https://www.viewproxy.com/rmrgroup/2021/ Date: Thursday, March 11, 2021 Time: 9:30 a.m., Eastern time | Agenda: • Elect the Director nominees identified in the accompanying Proxy Statement to our Board of Directors; • Ratify the appointment of Deloitte & Touche LLP as our independent auditors to serve for the 2021 fiscal year; and • Transact such other business as may properly come before the meeting and at any postponements or adjournments of the meeting. | ||
Record Date: You can vote if you were a shareholder of record as of the close of business on January 6, 2021. | ||||
Attending the Annual Meeting: Due to the public health impact of the COVID-19 pandemic and to protect the health and well-being of our shareholders, directors and employees, the Annual Meeting will be a completely virtual meeting of shareholders, which will be conducted exclusively by webcast. No physical meeting will be held. | ||||
• Record Owners: If you are a shareholder as of the record date who holds shares directly, you may participate in the Annual Meeting via internet webcast by visiting the following website and following the registration and participation instructions contained therein: https://www.viewproxy.com/rmrgroup/2021/. Please have the control number located on your proxy card or voting information form available. | ||||
• Beneficial Owners: If you are a shareholder as of the record date who holds shares indirectly through a brokerage firm, bank or other nominee, you must register in advance to attend our Annual Meeting. You will need to present evidence of your beneficial ownership of shares. You will not be able to vote your shares at the Annual Meeting without a legal proxy. Beneficial owners should complete the registration process at least three days in advance of our Annual Meeting to ensure that all documentation and verifications are in order. | ||||
Please see the accompanying Proxy Statement for additional information. | ||||
By Order of our Board of Directors, | ||||
Jennifer B. Clark Managing Director, Executive Vice President, General Counsel and Secretary | ||||
January 14, 2021 |
TABLE OF CONTENTS
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PLEASE VOTE | 1 | |||
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Board Composition | ||||
Sustainability | 2 | |||
Key Responsibilities of | 4 | |||
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Director Independence | ||||
Executive Sessions of Independent Directors | ||||
Board Leadership Structure | ||||
Code of Business Conduct and Ethics and Committee Governance | 7 | |||
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Communications with Our Board | 8 | |||
Shareholder Nominations and Other Proposals | 8 | |||
PROPOSAL 1: ELECTION OF DIRECTORS | 10 | |||
Directors and Director Nominees to be Elected at | ||||
Executive Officers | ||||
BOARD COMMITTEES | ||||
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BOARD MEETINGS | ||||
DIRECTOR COMPENSATION | ||||
Compensation of Directors | ||||
Fiscal Year | 19 | |||
OWNERSHIP OF OUR EQUITY SECURITIES | 20 | |||
Directors and Executive Officers | 20 | |||
Principal Shareholders | 21 | |||
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | 21 | |||
EXECUTIVE COMPENSATION | 22 | |||
Summary Compensation Table | 22 | |||
Potential Payments upon Termination or Change in Control | 27 | |||
Fiscal Year | ||||
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF | 29 | |||
Audit Fees and All Other Fees | ||||
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent | ||||
Other Information | ||||
REPORT OF | ||||
FREQUENTLY ASKED QUESTIONS | ||||
RELATED PERSON TRANSACTIONS | ||||
OTHER INFORMATION | ||||
ANNEX A—CERTAIN RELATED PERSON TRANSACTIONS | A-1 |
PROXY STATEMENT
Our Board of Directors (our "Board") of The RMR Group Inc. (the "Company," "we," "us" or "our") is furnishing this proxy statement and accompanying proxy card (or voting instruction form) to you in connection with the solicitation of proxies by our Board for our 2021 annual meeting of shareholders. Due to the public health impact of the COVID-19 pandemic and to protect the health and well-being of our shareholders, directors and employees, our annual meeting will be held virtually via live webcast on Thursday, March 11, 2021, at 9:30 a.m., Eastern time, subject to any adjournments or postponements thereof (the "2021 Annual Meeting"). We are first making these proxy materials available to shareholders on or about January 14, 2021.
Only owners of record of shares of common stock of our Company as of the close of business on January 6, 2021, the record date for our 2021 Annual Meeting, are entitled to notice of, and to vote at, the meeting and at any postponements or adjournments of the meeting. Holders of shares of our Class A Common Stock ("Class A Common Shares") are entitled to one vote for each Class A Common Share held on the record date, holders of shares of our Class B-1 Common Stock ("Class B-1 Common Shares") are entitled to ten votes for each Class B-1 Common Share held on the record date and holders of shares of our Class B-2 Common Stock ("Class B-2 Common Shares," and, together with Class A Common Shares and Class B-1 Common Shares, "Common Shares") are entitled to ten votes for each Class B-2 Common Share held on the record date. Holders of our Class A Common Shares, Class B-1 Common Shares and Class B-2 Common Shares will vote as a single class on all matters at our 2021 Annual Meeting. Our Class A Common Shares are listed on The Nasdaq Stock Market LLC ("Nasdaq"). On January 6, 2021, there were 15,395,641 Class A Common Shares, 1,000,000 Class B-1 Common Shares and 15,000,000 Class B-2 Common Shares issued and outstanding.
The mailing address of our principal executive office is Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR OUR 2021 ANNUAL
MEETING TO BE HELD ON THURSDAY, MARCH 11, 2021.
The Notice of 2021 Annual Meeting, Proxy Statement and Annual Report to Shareholders for the fiscal year ended September 30, 2020 are available at www.proxyvote.com.
It is very important that youPlease vote to play a part in the future of our Company. Thefuture. Nasdaq Stock Market LLC rules do not allow a broker, bank or other nominee who holds shares on your behalf to vote on nondiscretionary matters without your instructions.
PROPOSALS THAT REQUIRE YOUR VOTE
PROPOSAL | MORE INFORMATION | BOARD RECOMMENDATION | VOTES REQUIRED FOR APPROVAL | |||||||
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1 | Election of Directors | Page 10 | FOR | Plurality of all votes cast | ||||||
2 | Ratification of independent | Page 29 | FOR | Majority of all votes | ||||||
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You can vote in advance in one of three ways:
via the internet | Visitwww.proxyvote.com and enter your 16 digit control number provided in your Notice Regarding the Availability of Proxy Materials, proxy card or voting instruction form before 11:59 p.m., Eastern time, on March 10, | |
by phone | Call 1-800-690-6903 if you are a shareholder of record and 1-800-454-8683 if you are a beneficial owner before 11:59 p.m., Eastern time, on March 10, | |
by mail | Sign, date and return your proxy card if you are a shareholder of record or voting instruction form if you are a beneficial owner to authorize a proxyBY |
If the meeting is postponed or adjourned, these times will be extended to 11:59 p.m., Eastern time, on the day before the reconvened meeting.
PLEASE VISIT:www.proxyvote.com
THE RMR GROUP INC. 20202021 Proxy Statement 1
January 16, 2020
The Board of Directors (the "Board") of The RMR Group Inc., a Maryland corporation (the "Company," "we," "us" or "our"), is furnishing this proxy statement and accompanying proxy card (or voting instruction form) to you in connection with the solicitation of proxies by the Board for the 2020 annual meeting of shareholders of the Company. The meeting will be held at Two Newton Place, 255 Washington Street, Suite 100, Newton, Massachusetts 02458 on Wednesday, March 11, 2020, at 9:30 a.m., Eastern time, and any postponements or adjournments thereof (the "2020 Annual Meeting"). We are first making these proxy materials available to shareholders on or about January 16, 2020.
Only owners of record of shares of common stock of the Company as of the close of business on January 9, 2020, the record date for the meeting, are entitled to notice of, and to vote at, the meeting and at any postponements or adjournments of the meeting. Holders of shares of our Class A Common Stock ("Class A Common Shares") are entitled to one vote for each Class A Common Share held on the record date, holders of shares of our Class B-1 Common Stock ("Class B-1 Common Shares") are entitled to ten votes for each Class B-1 Common Share held on the record date and holders of shares of our Class B-2 Common Stock ("Class B-2 Common Shares," and, together with Class A Common Shares and Class B-1 Common Shares, "Common Shares") are entitled to ten votes for each Class B-2 Common Share held on the record date. Holders of our Class A Common Shares, Class B-1 Common Shares and Class B-2 Common Shares will vote as a single class on all matters at the 2020 Annual Meeting of Shareholders. Our Class A Common Shares are listed on The Nasdaq Stock Market LLC ("Nasdaq"). On January 9, 2020, there were 15,300,302 Class A Common Shares, 1,000,000 Class B-1 Common Shares and 15,000,000 Class B-2 Common Shares issued and outstanding.
The mailing address of our principal executive office is Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2020 ANNUALMEETING TO BE HELD ON WEDNESDAY, MARCH 11, 2020.
The Notice of 2020 Annual Meeting, Proxy Statement and Annual Report to Shareholders for the year ended September 30, 2019 are available atwww.proxyvote.com.
2 THE RMR GROUP INC. 2020 Proxy Statement
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
Board Composition |
We are currently governed by a fivesix member Board of Directors. Ensuring theour Board is comprised of Directors who bring diverse viewpoints and perspectives, exhibit a variety of skills, professional experience and backgrounds and effectively represent the long-term interests of shareholders is a top priority of theour Board and theour Nominating and Governance Committee. Our Board recently added Jonathan Veitch in June 2020 as an Independent Director to expand and refresh our Board's composition for several reasons, including to increase the ratio of Independent Directors to Managing Directors and to create more skill mix.
THE BOARD BELIEVES THAT ITS MEMBERS SHOULD:
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We understand the importance of leading a sustainable business and regularly consider ways to improve our internal culture and the communities in which we operate. This year, we are proud to have published our inaugural sustainability report, which can be found at https://www.rmrgroup.com/corporate-sustainability/default.aspx#sustain-report.In addition,this "Sustainability" section, unless the Board has determinedcontext requires otherwise, references to "we," "us" and "our" refer to The RMR Group Inc. and The RMR Group LLC ("RMR LLC"). Highlights of our Environmental, Social and Governance ("ESG") strategies are as follows:
Environmental. We understand the importance of environmental sustainability and seek to mitigate the impact of the properties we manage through strategies and best practices that enhance competitiveness and optimize operational efficiency. We have incorporated specific sustainability objectives into our overall business strategy and portfolio management through the Board,following programs:
We received the ENERGY STAR® Partner of the Year Award in 2019 and 2020 for our outstanding efforts as a whole, should striveService and Product Provider in executing ENERGY STAR related activities at buildings we manage on behalf of our client companies.
Social. We believe the foundation of our success begins with ensuring our employees are given the opportunity to participate in first-in-class benefits programs and competitive salaries. We aim to attract professionals that seek out and capture synergies throughout the organization and their personal lives while advancing social and environmental stewardship.
2 THE RMR GROUP INC. 2021 Proxy Statement
We are an equal opportunity employer, with all qualified applicants receiving consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability or protected veteran status. Throughout our organization, including our Board, we are committed to racial equality and fostering a culture of diversity and inclusion. We have made diversity and inclusion an important part of our hiring, retention and development programs. As of September 30, 2020, 34% and 27% of our approximately 600 employees were female and non-white, respectively.
We also prioritize on-going education and training for all employees across our organization as follows:
In 2020, we were recognized by The Boston Globe as a "Top Place to Work", by Fortune magazine as one or more of the following professional skills or experiences can assist in meeting this goal:
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The Nominating and Governance Committee and"100 Fastest Growing Companies", by the Board consider the qualifications, characteristics and skills of Directors and Director candidates individually and in the broader contextEnvironmental Protection Agency (EPA) as an "ENERGY STAR Partner of the Board's overall composition when evaluating potential nomineesYear", by Boston Business Journal as the "Fastest Growing Middle Market Company in Massachusetts," and we ranked 9th on Commercial Property Executive's Top Commercial Property Management Companies. Last year, we also received the Real Estate Management Excellence Award for election as Director.
Employee & Leadership Development from the Institute of Real Estate Management.
THE RMR GROUP INC. 20202021 Proxy Statement 3
Governance.
To learn more about our sustainability initiatives, visit www.rmrgroup.com/corporate-sustainability.
Key Responsibilities of |
Oversight of Strategy | Oversight of Risk | Succession Planning | ||||||||||
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Business strategy is a key focus
Company management is charged with executing business strategy and provides regular performance updates to |
Board committees, which meet regularly and report back to
Company management is charged with managing risk, through robust internal processes and effective internal controls. |
In the event of a succession, | ||||||||||
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4 THE RMR GROUP INC. 2021 Proxy Statement
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TheOur Board is elected by shareholders to oversee the Company'sour business and long term strategy. As part of fulfilling its responsibilities, theour Board oversees the safeguarding of the Company'sour assets, the maintenance of appropriate financial and other internal controls and the Company'sour compliance with applicable laws and regulations. Inherent in these responsibilities is theour Board's understanding and oversight of the various risks the Company faces. Thewe face. Our Board considers that risks should not be viewed in isolation and should be considered in virtually every business decision and as part of the Company'sour business strategy.
TheOur Board oversees risk as part of its general oversight of theour Company. Oversight of risk is addressed as part of various Board and Board committee activities and through regular and special Board and Board committee meetings. TheOur day to day business of the Company is conducted by our management, and our management isand our Director of Internal Audit are responsible for incorporating risk management in itstheir activities. The Company'sOur Director of Internal Audit reports to theour Audit Committee and provides the Companyus with advice and assistance with the Company'sour risk management function.
In discharging their oversight responsibilities, theour Board and Board committees review regularly a wide range of reports provided to them by management, internal audit and service providers provide, including:
4 THE RMR GROUP INC. 2020 Proxy Statement
TheOur Board and Board committees discuss these matters among themselves and with our management, of the Company, theour Director of Internal Audit, legal counsel, the Company'sour independent auditors and other professionals, as appropriate.
TheOur Audit Committee takes a leading role in helping theour Board fulfill its responsibilities for oversight of the Company'sour financial reporting, internal audit function, risk management, including cybersecurity, and the Company'sour compliance with legal and regulatory requirements. TheOur Board and Audit Committee review periodic reports from the Company'sour independent auditors regarding potential risks, including risks related to the Company'sour internal control over financial reporting. TheOur Audit Committee also reviews, approves and oversees an internal audit plan developed by the Company'sour Director of Internal Audit with the goal of helping the Companyus systematically evaluate the effectiveness of itsour risk management, control and governance processes on an annual basis. The Audit Committee considers risks relating to cybersecurity, receiving regular reports from management regarding cybersecurity risks and countermeasures being undertaken or considered by the Company, including updates on the internal and external cybersecurity landscape and relevant technical developments. TheOur Audit Committee meets at least quarterly and reports its findings to theour Board. TheOur Audit Committee also meets periodically with the Company'sour Director of Internal Audit to review the results of the Company'sour internal audits, and directs or recommends to theour Board actions or changes it determines appropriate to enhance or improve the effectiveness of the Company'sour risk management. The
Our Audit Committee considers risks related to cybersecurity and receives regular reports from our management regarding cybersecurity risks and countermeasures being undertaken or considered by us, including updates on the internal and external cybersecurity landscape and relevant technical developments.
Our Compensation Committee whose duties are detailed in its charter, among other duties, reviews the goals and objectives of our executive compensation program; reviews and approves annually the compensation paid by us to each of our executive officers; reviews and considers the incentives and risks associated with our compensation policies and practices; and evaluates the performance of the Company'sour Director of Internal Audit. Also, theour Compensation Committee and theour Board consider that the Company haswe have a share award program that requires share awards to executive officers to vest over a period of years. The Company believesWe believe that
THE RMR GROUP INC. 2021 Proxy Statement 5
the use of share awards vesting over time rather than stock options mitigates the incentives for the Company'sour management to undertake undue risks and encourages our management to make longer term and appropriately risk balanced decisions.
It is not possible to identify all of the risks that may affect the Companyus or to develop processes and controls to eliminate all risks and their possible effects, and processes and controls employed to address risks may be limited in their effectiveness. Moreover, it is necessary for the Companyus to bear certain risks to achieve itsour objectives. As a result of the foregoing and other factors, the Company'sour ability to manage risk is subject to substantial limitations.
To learn more about the risks facing the Company,we face, you can review the matters discussed in Part I, "Item 1A. Risk Factors" and "Warning Concerning Forward Looking Statements" in our Annual Report to Shareholders for the fiscal year ended September 30, 2019 ("Annual2020 (the "Annual Report"). The risks described in the Annual Report are not the only risks facing the Company.we face. Additional risks and uncertainties not currently known or that may currently be deemed to be immaterial also may materially adversely affect the Company'sour business, financial condition or results of operations in future periods.
Director Independence |
Under the corporate governance listing standards of the Nasdaq, to be considered independent:
TheOur Board is comprised of fivesix Directors, including threefour Independent Directors and two Managing Directors. Under our bylaws, so long as the number of directors is less than five, at least one director must meet the qualifications of a Managing Director and, so long as the number of directors is five or greater, at least two directors must meet the qualifications of a Managing Director. As set forth in our Bylaws, Independent Directors are Directors who are not employees of theour Company or any of itsour subsidiaries, are not involved in the Company'sour or itsour subsidiaries' day to day activities and are persons
THE RMR GROUP INC. 2020 Proxy Statement 5
who qualify as independent under the applicable rules of the Nasdaq and the SEC.Securities and Exchange Commission ("SEC"). As set forth in our Bylaws, Managing Directors are Directors who are not Independent Directors and who have been employees of theour Company or any of itsour subsidiaries or involved in the our day to day activities, ofor the Company,activities of any of itsour subsidiaries or any of their predecessors for at least one year prior to such Director's election.
TheOur Board affirmatively determines whether Directors have a direct or indirect material relationship with the Company,us, including the Company'sour subsidiaries, other than serving as the Company'sour Directors or directors of the Company'sour subsidiaries. In making independence determinations, theour Board observes the Nasdaq and SEC criteria, as well as the criteria set forth in our governing documents. When assessing a Director's relationship with the Company, theus, our Board considers all relevant facts and circumstances, not merely from the Director's standpoint, but also from that of the persons or organizations with which the Director has an affiliation. Based on this review, theour Board has determined that Ann Logan, Rosen Plevneliev, Jonathan Veitch and Walter C. Watkins, Jr. currently qualify as independent directors under applicable Nasdaq and SEC criteria and as Independent Directors under our governing documents. In making these independence determinations, theour Board reviewed and discussed additional information provided by the Directorsus and the CompanyDirectors with regard to each of the Directors' relationships with the Companyus and itsour affiliates and those companies to which the Companywe or itsour affiliates provide management or advisory services. Theservices, as applicable. Our Board has concluded that none of these threefour Directors possessed or currently possesses any relationship that could impair his or her judgment in connection with his or her duties and responsibilities as a Director of our Company or that could otherwise be a direct or indirect material relationship under applicable Nasdaq and SEC standards.
6 THE RMR GROUP INC. 2021 Proxy Statement
Executive Sessions of Independent Directors |
Pursuant to the Company'sour Governance Guidelines, our Independent Directors are expected to meet in regularly scheduled meetings at which only Independent Directors are present. Our Independent Directors also meet separately with the Company'sour officers, with the Company'sour Director of Internal Audit and with the Company'sour independent auditors. The presiding Director for purposes of leading Independent Director sessions will be the Chair of theour Audit Committee, unless the Independent Directors determine otherwise.
Board Leadership Structure |
All Directors play an active role in overseeing the Company'sour business both at theour Board and committee levels. As set forth in the Company'sour Governance Guidelines, the core responsibility of our Directors is to exercise sound, informed and independent business judgment in overseeing theour Company and itsour strategic direction. Our Directors are skilled and experienced leaders and currently serve or have served as members of senior management in public and private for profit and nonprofit organizations, and also have served as government officials.officials and in academia. Our Directors may be called upon to provide solutions to various complex issues and are expected to, and do, ask hard questions of the Company'sour officers and advisers. TheOur Board is small, which facilitates informal discussions and communication from our management to theour Board and among Directors. We do not have a ChairmanChair of the Board or a lead Independent Director.
Our Chief Financial Officer and Treasurer and our Director of Internal Audit regularly attend Board and Board committee meetings. Special meetings of theour Board may be called at any time by the President or by a majority of the Directors then in office. Our Managing Directors, in consultation with the Company'sour management and theour Director of Internal Audit, set the agenda for Board meetings. Other Directors may suggest agenda items as well. Discussions at Board meetings are led by the Managing Director, or the Independent Director or a member of management who is most knowledgeable on a subject.
ThreeFour of our Directors are independent under the applicable Nasdaq and SEC criteria and our governing documents. All of the members of theour Audit Committee, Nominating and the Equity Plan Committee, which is a subcommittee of our CompensationGovernance Committee and as of January 15, 2020, all of the members of the Compensation Committee and the Nominating and Governance Committee are independent under the applicable listing requirements and rules of the Nasdaq and other applicable laws, rules and regulations, including those of the SEC. As set forth in our governing documents, two of our Directors are Managing Directors, persons who have been employees of theour Company or any of itsour subsidiaries or involved in our day to day activities or in the day to day activities of the Company, any of itsour subsidiaries or any of their predecessors for at least one year prior to such Director's election.
6 THE RMR GROUP INC. 2020 Proxy Statement
Code of Business Conduct and Ethics and Committee Governance |
TheOur Board is committed to corporate governance that promotes the long term interests of our shareholders. TheOur Board has established Governance Guidelines that provide a framework for effective governance. TheOur Board regularly reviews developments in corporate governance and updates our Governance Guidelines and other governance materials as it deems necessary and appropriate.
The Company hasWe have also adopted a Code of Business Conduct and Ethics (the "Code") to, among other things, provide guidance to our Directors, officers and employees to ensure compliance with applicable laws and regulations.
TheOur Board has an Audit Committee, Compensation Committee (including an Equity Plan Committee) and Nominating and Governance Committee. TheOur Audit Committee, Compensation Committee and Nominating and Governance Committee each have each adopted a written charter, and each Board committee reviews its written charter on an annual basis to consider whether any changes are required.
Our Audit Committee is comprised entirely of Independent Directors under applicable Nasdaq rules who also meet the independence criteria applicable to audit committees under the Sarbanes Oxley Act and the SEC's implementing rules under that law.
Effective as of January 15, 2020, our Compensation Committee and Nominating and Governance Committee are also comprised entirely of Independent Directors. Our Equity Plan Committee currently operates under the charter
THE RMR GROUP INC. 2021 Proxy Statement 7
We are a "controlled company" under the rules of the Nasdaq because Adam Portnoy holds more than 50% of our voting power; therefore,power. Although that would allow our Compensation Committee and Nominating and Governance Committee may, and do,to include Independent Directors and Managing Directors, both committees are comprised solely of Independent Directors.
Our corporate governance materials are available for review in the governance section of our website, including our Governance Guidelines, the charter for each Board committee, the Code and information about how to report concerns or complaints about accounting, internal accounting controls or auditing matters and any violations or possible violations of the Code and how to communicate with our Directors, individually or as a group. To access these documents on the Company'sour website visitwww.rmrgroup.com.
Our Insider Trading Policies and Procedures expressly prohibit members of our Board and our officers from engaging in hedging transactions involving our securities and those of any public company to which RMR LLC or its affiliates provide management services.
Nominations for Directors |
TheOur Nominating and Governance Committee is responsible for identifying and evaluating nominees for Director and for recommending to theour Board nominees for election at each annual meeting of shareholders. TheOur Nominating and Governance Committee may consider candidates suggested by the Company'sour Directors, officers or shareholders or by others. Shareholders who would like to recommend a nominee for the position of Director should submit their recommendations in writing by mail to the Chair of theour Nominating and Governance Committee, c/o The RMR Group Inc., Secretary, at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or by email to secretary@rmrgroup.com. Any such recommendation shallshould include a description of the candidate's qualifications for Board service, the candidate's written consent to be considered for nomination and to serve if nominated and elected, as well as the addresses and telephone numbers for contacting the shareholder and the candidate for more information. TheOur Nominating and Governance Committee may request additional information about the shareholder recommended nominee or about the shareholder recommending the nominee. Recommendations by shareholders will be considered by theour Nominating and Governance Committee in its discretion using the same criteria as other candidates it considers.
THE RMR GROUP INC. 2020 Proxy Statement 7
Communications with |
TheOur Board has established a process to facilitate communication by shareholders and other interested parties with Directors. Communications should be addressed to Directors in care of the Secretary, The RMR Group Inc., Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or by email to secretary@rmrgroup.com.
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We understand the importance of leading a sustainable business and regularly consider ways to improve our internal culture and the communities in which we operate. Our sustainability strategies are primarily implemented by our majority owned operating subsidiary, The RMR Group LLC ("RMR LLC"), which overlaps the following core values onto its business programs:
To learn more about our sustainability initiatives, visitwww.rmrgroup.com/corporate-sustainability.
Shareholder Nominations and Other Proposals |
Deadline to Submit Nominations and Proposals for the 20212022 Annual Meeting of Shareholders for Purposes of Rule 14a-4(c)(1): To be timely for purposes of Rule 14a-4(c)(1) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), shareholder nominations and proposals intended to be made at the 20212022 annual meeting of shareholders must be received by the Companyus not later than December 2, 2020;November 30, 2021; provided, that, if the date of the 20212022 annual meeting of shareholders is more than 30 days earlier or later than March 11, 2021,2022, then a shareholder's notice must be so delivered a reasonable time before the Company sends itswe send our proxy materials for the 20212022 annual meeting of shareholders to itsour shareholders.
8 THE RMR GROUP INC. 2020 Proxy Statement
Deadline to Submit Proposals for the 20212022 Annual Meeting of Shareholders for Purposes of Rule 14a-8: Shareholder proposals pursuant to Rule 14a-8 under the Exchange Act must be received at the Company'sour principal
8 THE RMR GROUP INC. 2021 Proxy Statement
executive officesoffice on or before September 18, 202016, 2021 in order to be eligible to be included in the proxy statement for the 20212022 annual meeting of shareholders; provided, that, if the date of the 20212022 annual meeting of shareholders is more than 30 days before or after March 11, 2021,2022, such a proposal must be submitted within a reasonable time before the Company beginswe begin to print itsour proxy materials. Under Rule 14a-8, the Company iswe are not required to include shareholder proposals in itsour proxy materials in certain circumstances or if conditions specified in the rule are not met.
THE RMR GROUP INC. 20202021 Proxy Statement 9
PROPOSAL 1: ELECTION OF DIRECTORS
Upon the recommendation of theour Nominating and Governance Committee, theour Board has nominated Jennifer B. Clark and Adam D. Portnoy for election as Managing Directors and Ann Logan, Rosen Plevneliev, Jonathan Veitch and Walter C. Watkins, Jr. for election as Independent Directors. Each Director nominee currently serves on theour Board. If elected, each nominee would serve until the Company's 2021our 2022 annual meeting of shareholders and until his or her successor is duly elected and qualifies, subject to the individual's earlier death, resignation, retirement, disqualification or removal.
We expect that each nominee for election as a Director will be able to serve if elected. However, if a nominee should become unable or unwilling to serve, proxies may be voted for the election of a substitute nominee designated by theour Board.
AssumingDirector Criteria, Qualifications, Experience and Tenure
Our Board performs an assessment of the skills and the experience needed to properly oversee the interests of the Company. Generally, our Board reviews both the short- and long-term strategies of the Company to determine what current and future skills and experience are required of our Board in exercising its oversight function and in the context of our strategic priorities. Our Nominating and Governance Committee and our Board consider the qualifications, characteristics and skills of Directors and Director candidates individually and in the broader context of our Board's overall composition when evaluating potential nominees for election as Director.
Our Board believes that its members should:
• exhibit high standards of integrity and ethics; • have business acumen, practical wisdom, ability to exercise sound judgment in a congenial manner and be able to make independent analytical inquiries; • have a strong record of achievements; • have knowledge of the asset management industry, commercial real estate ("CRE") industry and real estate investment trusts ("REITs"); | • have diverse perspectives, backgrounds and experiences, including professional background, gender, ethnicity, nationality and skills; and • be committed to serve on our Board over a period of years in order to develop knowledge about our operations and have sufficient time and availability to devote to Board and committee matters. |
10 THE RMR GROUP INC. 2021 Proxy Statement
In addition, our Board has determined that our Board, as a quorum is present atwhole, should strive to have the right mix of characteristics and skills necessary to effectively perform its oversight responsibilities. Our Board believes that Directors with one or more of the following professional skills or experiences can assist in meeting this goal:
• work experience with a proven record of success in his or her field; • risk oversight/management expertise; • accounting and finance, including a high level of financial literacy and understanding of the impact of financial market trends on the real estate industry; • operating business and/or transactional experience; • management/leadership experience; • knowledge of our historical business activities; • familiarity with client company sectors; | • familiarity with the public capital markets; • experience at a strategic or policymaking level in a business, government, non-profit or academic organization of high standing; • service on other public company boards and committees; • qualifying as a Managing Director in accordance with the requirements of our governing documents; and • qualifying as an Independent Director in accordance with the requirements of the Nasdaq, the SEC and our governing documents. |
A plurality of all the votes cast is required to elect a Director at the 2020our 2021 Annual Meeting.
The names, principal occupations and certain other information and the nominees for Directors, as well as a summary of the key experiences, qualifications, attributes and skills that led theour Nominating and Governance Committee and theour Board to conclude that such persons are currently qualified to serve as Directors, are set forth on the following pages.
TheOur Board of Directors recommends a vote "FOR" the election of all Director nominees.
10 THE RMR GROUP INC. 20202021 Proxy Statement11
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| | | | | Jennifer B. Clark Age: 59 Managing Director since 2018 Term: Term expiring at our 2021 Annual Meeting | | | | Board Committees: None | | | | Other RMR Managed Public Company Boards(1): • Diversified Healthcare Trust (since 2018) • Five Star Senior Living Inc. (since 2020) Other Non-RMR Managed Public Company Boards: None | | | |||||||||||
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| | Ms. Clark has been our Executive Vice President, General Counsel and Secretary since shortly after our formation in 2015. Ms. Clark joined RMR LLC in 1999 as a vice president; she became a senior vice president in 2006, an executive vice president and general counsel in 2008 and secretary in 2015. Ms. Clark serves as secretary of Diversified Healthcare Trust, | | | | Specific Qualifications, Attributes, Skills and Experience: •
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| | | | | Ann Logan Age: 66 Independent Director since 2015 Term: Term expiring at our 2021 Annual Meeting | | | | Board Committees: • Audit (Chair) • Compensation • Nominating and Governance | | | | Other RMR Managed Public Company Boards(1): None Other Non-RMR Managed Public Company Boards: None | | | |||||||||||
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| | Ms. Logan was previously employed in various executive capacities at Fannie Mae, a U.S. Government sponsored enterprise with various classes of publicly owned securities, including as executive vice president of the single family mortgage business from 1998 to 2000 and as executive vice president and chief credit officer from 1993 to 1998. Since her employment at Fannie Mae, Ms. Logan has been involved in a number of nonprofit organizations, including serving on the boards of The Washington School for Girls and Georgetown Preparatory School, and she currently serves as chair of the board of trustees of Bryn Mawr College. Ms. Logan previously served from 2005 to 2010 as a member of the board of directors of PHH Corporation, a New York Stock Exchange listed company providing real estate mortgage and automotive fleet services, where she was chair of the risk management committee and served on the audit and compensation committees. | | | | Specific Qualifications, Attributes, Skills and Experience: •
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THE RMR GROUP INC. 2020 Proxy Statement 11
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| | | | | Rosen Plevneliev Age: 56 Independent Director since 2017 Term: Term expiring at our 2021 Annual Meeting | | | | Board Committees: • Audit • Compensation • Nominating and Governance (Chair) | | | | Other RMR Managed Public Company Boards(1): None Other Non-RMR Managed Public Company Boards: None | | | |||||||||||
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Mr. Plevneliev is the former president of the Republic of Bulgaria, having served from January 22, 2012 to January 22, 2017. From 2009 to 2011, he served as Bulgaria's Minister of Regional Development and Public Works, overseeing the country's infrastructure, communications and development projects. Prior to government service, Mr. Plevneliev was a partner and chief executive officer of IRIS International Ltd, a construction management firm that he founded in 1990, and managed several prominent projects in Germany and Bulgaria, including the Reichstag, Munich Airport and the Sofia Business Park, the first business park in Bulgaria and the largest office park in southeastern Europe. Mr. Plevneliev is a former member of the board of directors of the American Chamber of Commerce in Bulgaria, the board of the Confederation of Employers and Industrialists in Bulgaria and the board of the "For Our Children" Foundation. | | | | Specific Qualifications, Attributes, Skills and Experience: •
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THE RMR GROUP INC. 2021 Proxy Statement 13
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| | | | | Adam D. Portnoy Age: 50 Managing Director since 2015 Term: Term expiring at our 2021 Annual Meeting | | | | Board Committees: None | | | | Other RMR Managed Public Company Boards(1): • Diversified Healthcare Trust (since 2007) • Service Properties Trust (since 2007) • Office Properties Income Trust (since 2009) • RMR Mortgage Trust, including its predecessor funds (formerly known as RMR Real Estate Income Fund, since 2009) • Tremont Mortgage Trust (since 2017) • Industrial Logistics Properties Trust (since 2017) • Five Star Senior Living Inc. (since 2018) • TravelCenters of America Inc. (since 2018) Other Non-RMR Managed Public Company Boards: None | | | |||||||||||
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| | Mr. Portnoy has been our President and Chief Executive Officer since shortly after our formation in 2015. Mr. Portnoy has been the president and chief executive officer of RMR LLC since 2005 and was a director of RMR LLC from 2006 until June 5, 2015 when RMR LLC became a majority owned subsidiary of | | | | Specific Qualifications, Attributes, Skills and Experience: •
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12 THE RMR GROUP INC. 2020 Proxy Statement
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14 THE RMR GROUP INC. 2021 Proxy Statement
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| | | | | Jonathan Veitch Age: 61 Independent Director since 2020 Term: Term expiring at our 2021 Annual Meeting | | | | Board Committees: • Audit • Compensation • Nominating and Governance | | | | Other RMR Managed Public Company Boards(1): None Other Non-RMR Managed Public Company Boards: None | | | |||||||||||
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| | Mr. Veitch served as President of Occidental College ("Occidental"), a nationally-recognized private liberal arts college, and as a member of the board of trustees of Occidental and a member of the audit committee of the board, from 2009 to June 2020. Prior to becoming President of Occidental, Mr. Veitch held various leadership and management positions with The New School since 1996. Mr. Veitch has received numerous grants and awards in academia, and he has authored numerous publications and articles. Mr. Veitch holds a doctorate in American History from Harvard University. | | | | Specific Qualifications, Attributes, Skills and Experience: • Professional skills and experience in governance matters; • Management experience and demonstrated leadership ability; • Identifies as male; and • Qualifying as an Independent Director
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| | | | | Walter C. Watkins, Jr. Age: 74 Independent Director since 2015 Term: Term expiring at our 2021 Annual Meeting | | | | Board Committees: • Audit • Compensation (Chair) • Nominating and Governance | | | | Other RMR Managed Public Company Boards(1): None Other Non-RMR Managed Public Company Boards: None | | | |||||||||||
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| | Mr. Watkins is the principal of WCW Enterprises, LLC, which he founded in 2000 to provide business consulting services and manage certain private investments. Prior to founding WCW Enterprises, Mr. Watkins served in various executive capacities at Bank One Corporation (the successor to First Chicago NBD, NBD Bancorp and National Bank of Detroit) from 1968 to 2000, including serving as executive vice president and president of Bank One, Michigan. As executive vice president, he was responsible for middle market banking in Michigan, Ohio and Kentucky, from 1998 to 2000. As president of Bank One, Michigan, he was the bank's primary public spokesman, community liaison and business coordinator for the state of Michigan. Mr. Watkins served as the chief development officer for the City of Detroit from 2002 to 2006 and the interim chief executive officer of Detroit Regional Convention Facility Authority from 2009 to 2010. Mr. Watkins is a member of the board of directors of Omega Psi Phi Fraternity Federal Credit | | | | Specific Qualifications, Attributes, Skills and Experience: •
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• Qualifying as an Independent Director in accordance with the requirements of the Nasdaq, the SEC and our Bylaws. | |
THE RMR GROUP INC. 2020 Proxy Statement 13
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The Company's executive officers serve at the discretion of the Board. There are no family relationships among any of the Company's Directors or executive officers.
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THE RMR GROUP INC. 2021 Proxy Statement 15
Our executive officers serve at the discretion of our Board. There are no family relationships among any of our Directors or executive officers.
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| | | | | Adam D. Portnoy Age: 50 | | | | President and Chief Executive Officer of
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| | | | | Jennifer B. Clark Age: 59 | | | | Executive Vice President, General Counsel and Secretary of our Company since 2015 Executive Vice President and General Counsel of RMR LLC since 2008 | | | |||||||||
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| | Ms. Clark's background and qualifications are described above. | | |
14 THE RMR GROUP INC. 2020 Proxy Statement
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| | | | | Matthew P. Jordan Age: 45 | | | | Executive Vice President of Chief Financial Officer and Treasurer of Executive Vice President, Chief Financial Officer and Treasurer of RMR LLC since 2017
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| | Mr. Jordan joined RMR LLC in April 2012 as chief accounting officer; he became senior vice president, chief financial officer and treasurer of RMR LLC in November 2012; and he became an executive vice president, chief financial officer and treasurer of RMR LLC in October 2017. Mr. Jordan | |
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| | | | | Jennifer F. (Francis) Mintzer Age: 56 | | | | Executive Vice President of RMR LLC since 2020 | | | |||||||||
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| | Ms. Francis joined RMR LLC in 2006 and became a senior vice president of RMR LLC in 2014 and an executive vice president of RMR LLC in 2020. Ms. Francis is responsible for the asset management division of RMR LLC, which includes asset management and leasing activities at all RMR LLC managed properties as well as asset management for the senior living and hotel properties owned by RMR LLC's managed REITs. Ms. Francis has been the president and chief operating officer of Diversified Healthcare Trust since 2018. Prior to joining RMR LLC, Ms. Francis was a partner at CBRE/NE Partners, where she performed brokerage and corporate advisory services for a number of large corporate clients on their national commercial real estate portfolios. Previously, Ms. Francis was a vice president at The Gunwyn Company where she was responsible for the asset management of a portfolio of commercial, retail and residential assets. Ms. Francis has over 30 years of experience working in the commercial real estate industry. She is on the executive board of the American Seniors Housing Association (ASHA), a member of the National Association of Industrial and Office Properties (NAIOP) and a member of the Commercial Real Estate Women (CREW). | | | ||||||||||||||||
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| | | | | John G. Murray Age: 60 | | | | Executive Vice President of RMR LLC since 2001 | | | |||||||||
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| | Mr. Murray has served in various capacities with RMR LLC and its affiliates since 1993, including as an executive vice president of RMR LLC since 2001 and as a senior vice president of RMR LLC from 1993 to 2001. Mr. Murray has been a managing trustee | |
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| | | | | Jonathan M. Pertchik Age: 54 | | | | Executive Vice President of RMR LLC since 2019 | | | |||||||||
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| | Since December 2019, Mr. Pertchik has been an executive vice president of RMR LLC and chief executive officer and a managing director of TA. Prior to joining RMR LLC, Mr. Pertchik served as the chief executive officer of InTown Suites, Inc., a leading provider of economy, extended stay living, from July 2014 to April 2019. From February 2013 to June 2014, Mr. Pertchik served as the chief executive officer of ST Residential, LLC, an owner and manager of luxury condominiums, apartment projects, hotels, and office and retail spaces, where he had previously served as chief operating officer from March 2010 to February 2013. Prior to joining ST Residential, Mr. Pertchik held various executive management positions at WCI Communities, a luxury homebuilder and developer from 2007 to January 2010, and had been a senior vice president | | | ||||||||||||||||
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16 THE RMR GROUP INC. 20202021 Proxy Statement17
Members Ann Logan (Chair) Rosen Plevneliev Jonathan Veitch(1) Walter C. Watkins, Jr.
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Members Walter C. Watkins, Jr. (Chair) Ann Logan Rosen Plevneliev
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THE RMR GROUP INC. 2020 Proxy Statement 17
Members Rosen Plevneliev (Chair)
Ann Logan
Walter C. Watkins, Jr. 2 meetings in the fiscal year ended September 30, |
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18 THE RMR GROUP INC. 2021 Proxy Statement
In the fiscal year 2019, the2020, our Board held six meetings. In the fiscal year 2019,2020, each then Director attended 75% or more of the aggregate of all meetings of theour Board and the committees on which he or she served or that were held during the period in which the Director served as a Director or committee member. The Company'sOur policy with respect to Board members' attendance at meetings of theour Board and annual meetings of shareholders can be found in the Company'sour Governance Guidelines, the full text of which appears at the Company'sour website,www.rmrgroup.com.
TheOur Board of Directors believes that competitive compensation arrangements are necessary to attract and retain qualified Independent Directors. On April 3, 2019, the Board approved changes to the compensation arrangements for the Independent Directors, including eliminating meeting fees with respect to meetings of the Board and its committees in favor of increased annual retainers, which the Board believes is consistent with market practice. Under the currently effective Director compensation arrangements, each Independent Director received an annual fee of $85,000 for services as a Director. The annual fee for any new Independent Director is prorated for the initial year. Each Independent Director and Managing Director received an award of 2,5003,000 Class A Common Shares in fiscal year 2019.2020.
Each Independent Director who served as a committee chair of the Board'sour Audit, Compensation or Nominating and Governance Committees received an additional annual fee of $17,500, $12,500 and $12,500, respectively. Directors were reimbursed for travel expenses they incurred in connection with their duties as Directors and for out of pocket costs they incurred in connection with their attending certain continuing education programs, if any.
18 THE RMR GROUP INC. 2020 Proxy Statement
The following table details the total compensation of the Directors for the fiscal year ended September 30, 20192020 for services as a Director.
Name | | Fees Earned or Paid in Cash(1) | | Stock Awards(2) | | All Other Compensation | | Total | | | Fees Earned or Paid in Cash(1) | | Stock Awards(2) | | All Other Compensation | | Total | | ||||||||||
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Jennifer B. Clark(3) | | | $— | | | $156,875 | | $— | | $156,875 | | | | $— | | | $93,840 | | $— | | $93,840 | | ||||||
Ann Logan | | | 111,250 | | | 156,875 | | — | | 268,125 | | | | 102,500 | | | 93,840 | | — | | 196,340 | | ||||||
Rosen Plevneliev | | | 106,250 | | | 156,875 | | — | | 263,125 | | | | 97,500 | | | 93,840 | | — | | 191,340 | | ||||||
Adam D. Portnoy(3) | | | — | | | 156,875 | | — | | 156,875 | | | | — | | | 93,840 | | — | | 93,840 | | ||||||
Jonathan Veitch | | | 60,781 | | | 94,980 | | — | | 155,761 | | |||||||||||||||||
Walter C. Watkins, Jr. | | | 106,250 | | | 156,875 | | — | | 263,125 | | | | 97,500 | | | 93,840 | | — | | 191,340 | | ||||||
| | | | | | | | | | | | | | | | | | |
THE RMR GROUP INC. 20202021 Proxy Statement 19
OWNERSHIP OF OUR EQUITY SECURITIES OF THE COMPANY
The following table sets forth information regarding the beneficial ownership of thenthe outstanding Common Shares by each person the Company knowswe know to be the beneficial owner of more than 5% of the respective classes of Common Shares, each Director and Director Nominee, each of our named executive officers, and our Directors and executive officers as a group, all as of January 9, 2020.6, 2021. Unless otherwise noted, to the Company'sour knowledge, voting power and investment power in Class A Common Shares are exercisable solely by the named person, all percentages of ownership for Class A Common Shares are based on approximately 15,300,30215,395,641 Class A Common Shares outstanding as of January 9, 2020,6, 2021, and the principal business address of the named beneficial owner is Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
Class A Common Shares* | Class B-1 Common Shares | Class B-2 Common Shares | Combined Voting Power | Class A Common Shares* | Class B-1 Common Shares | Class B-2 Common Shares | Combined Voting Power | |||||||||||||||||||||||||||||||||||||
Name of Beneficial Owner | Number | % | Number | % | Number | % | % | Number | % | Number | % | Number | % | % | ||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
ABP Trust | | 1,090,564 | (1) | | 7.1 | % | | 1,000,000 | | 100.0 | % | | 15,000,000 | | 100.0 | % | | 91.3% | | 1,090,564 | (1) | | 7.1 | % | | 1,000,000 | | 100.0 | % | | 15,000,000 | | 100.0 | % | | 91.3% | ||||||||
Directors, Director Nominees and Executive Officers: | ||||||||||||||||||||||||||||||||||||||||||||
Adam D. Portnoy | | 1,144,502 | (1)(2) | | 7.5 | % | | 1,000,000 | (2) | | 100.0 | % | | 15,000,000 | (2) | | 100.0 | % | | 91.4% | | 1,157,502 | (1)(2) | | 7.5 | % | | 1,000,000 | (2) | | 100.0 | % | | 15,000,000 | (2) | | 100.0 | % | | 91.3% | ||||
Jennifer B. Clark | 20,774 | ** | % | — | — | — | — | **% | 26,716 | ** | % | — | — | — | — | **% | ||||||||||||||||||||||||||||
Matthew P. Jordan | | 17,201 | | ** | % | | — | | — | | — | | — | | **% | |||||||||||||||||||||||||||||
John G. Murray | 14,787 | ** | % | — | — | — | — | **% | | 17,729 | | ** | % | | — | | — | | — | | — | | **% | |||||||||||||||||||||
David M. Blackman | | 14,699 | | ** | % | | — | | — | | — | | — | | **% | |||||||||||||||||||||||||||||
Ann Logan | 10,462 | ** | % | — | — | — | — | **% | 14,103 | ** | % | — | — | — | — | **% | ||||||||||||||||||||||||||||
Walter C. Watkins, Jr. | | 9,000 | | ** | % | | — | | — | | — | | — | | **% | | 12,000 | | ** | % | | — | | — | | — | | — | | **% | ||||||||||||||
Rosen Plevneliev | 6,375 | ** | % | — | — | — | — | **% | 8,925 | ** | % | — | — | — | — | **% | ||||||||||||||||||||||||||||
All executive officers and directors as a group (9 persons) | | 1,237,800 | (1) | | 8.1 | % | | 1,000,000 | | 100.0 | % | | 15,000,000 | | 100 | % | | 91.4% | ||||||||||||||||||||||||||
Jonathan Veitch | | 3,000 | | ** | % | | — | | — | | — | | — | | **% | |||||||||||||||||||||||||||||
All executive officers and directors as a group (10 persons) | 1,274,016 | (1) | 8.3 | % | 1,000,000 | 100.0 | % | 15,000,000 | 100 | % | 91.4% | |||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
20 THE RMR GROUP INC. 20202021 Proxy Statement
Set forth in the table below is information about the number of Class A Common Shares held by persons not listed above that the Company knowswe know to be the beneficial owners of more than 5.0% of the outstanding Class A Common Shares.
Name and Address | Aggregate Number of Shares Beneficially Owned* | Percent of Outstanding Shares** | Additional Information | Aggregate Number of Shares Beneficially Owned* | Percent of Outstanding Shares** | Additional Information | ||||||||||
| | | | | | | | | | | | | | | ||
The Vanguard Group, Inc. | | 2,039,460 | | 13.33 | % | Based on a Schedule 13G filed with the SEC on July 10, 2019 by Vanguard reporting that, at June 28, 2019 Vanguard beneficially owned 2,039,460 Class A Common Shares and had sole voting power over 16,685 Class A Common Shares, shared voting power over 236 Class A Common Shares, sole dispositive power over 2,023,353 Class A Common Shares and shared dispositive power over 16,107 Class A Common Shares. | | 2,307,158 | | 15.0 | % | Based on a Schedule 13G/A filed with the SEC on February 11, 2020 by Vanguard reporting that, at December 31, 2019 Vanguard beneficially owned 2,307,158 Class A Common Shares and had sole voting power over 32,607 Class A Common Shares, shared voting power over 1,036 Class A Common Shares, sole dispositive power over 2,276,211 Class A Common Shares and shared dispositive power over 30,947 Class A Common Shares. | ||||
BlackRock, Inc. | 1,251,742 | 8.1 | % | Based on a Schedule 13G filed with the SEC on February 7, 2020 by BlackRock reporting that, at December 31, 2019, BlackRock beneficially owned 1,251,742 Class A Common Shares and had sole voting power over 1,193,864 Class A Common Shares and sole dispositive power over 1,251,742 Class A Common Shares. | ||||||||||||
Hawk Ridge Capital Management, L.P. | | 769,980 | | 5.0 | % | Based on a Schedule 13G filed with the SEC on February 12, 2020 by Hawk Ridge reporting that, at January 3, 2020 Hawk Ridge beneficially owned 769,980 Class A Common Shares and had shared voting power over 769,980 Class A Common Shares. | ||||||||||
| | | | | | | | | | | | | | |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Adam Portnoy, a Managing Director and our President and Chief Executive Officer, previously served during the fiscal year ended September 30, 2019 and until January 15, 2020 as a member of our Compensation Committee. The executive compensation of Adam Portnoy was previously determined by a subcommittee of theour Compensation Committee comprised of the then-current Independent Director members of the Committee.Directors, which subcommittee was dissolved on March 11, 2020. For more information regarding Adam Portnoy's relationship with us and our client companies, see "Related Person Transactions."
THE RMR GROUP INC. 20202021 Proxy Statement 21
The following tablesWe are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, and footnotes summarizeexpect to remain an emerging growth company until September 30, 2021. Although we are eligible as an emerging growth company to take advantage of certain reduced public company reporting requirements, including reduced disclosure obligations regarding executive compensation in our proxy statement, we have elected to disclose the total compensation of our principal executive officer and our four other most highly compensated executive officers based on compensation we provided for the fiscal year ending September 30, 2020, who were serving as executive officers as of September 30, 2019, or2020. For purposes of this section only, these five executive officers are referred to as our "named executive officers."
The following tables and footnotes summarize the total compensation of our named executive officers. The compensation set forth below includes compensation paid by us and compensation paid by our client companies to our named executive officers.
Summary Compensation Table |
Name and Principal Position | | Fiscal Year | | Salary | | Bonus(1) | | Stock Awards(2) | | All Other Compensation(3) | | Total | | | Fiscal Year | | Salary | | Bonus(1) | | Stock Awards(2) | | All Other Compensation(3) | | Total | | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | |||||||||||||||||||||||||||||||||||||||||||||
Adam D. Portnoy | | 2019 | | | $325,000 | | | $2,675,000 | | | $914,465 | | | $31,891 | | $3,946,356 | | | 2020 | | | $350,000 | | | $2,675,000 | | | $693,330 | | | $38,683 | | $3,757,013 | | ||||||||||||
Managing Director, President and Chief Executive Officer | | 2018 | | | 300,000 | | | 2,650,000 | | | 1,497,725 | | | 22,000 | | 4,469,725 | | | 2019 | | | 325,000 | | | 2,675,000 | | | 914,465 | | | 31,891 | | 3,946,356 | | ||||||||||||
Jennifer B. Clark | | 2019 | | | $325,000 | | | $2,675,000 | | | $1,432,925 | | | $107,727 | | $4,540,652 | | | 2020 | | | $350,000 | | | $2,675,000 | | | $1,091,920 | | | $97,096 | | $4,214,016 | | ||||||||||||
Managing Director, Executive Vice President, General Counsel and Secretary | | 2018 | | | 300,000 | | | 2,650,000 | | | 1,601,605 | | | 127,893 | | 4,679,498 | | | 2019 | | | 325,000 | | | 2,675,000 | | | 1,432,925 | | | 107,727 | | 4,540,652 | | ||||||||||||
John G. Murray | | 2019 | | | $325,000 | | | $2,000,000 | | | $1,557,953 | | | $32,127 | | $3,915,080 | | | 2020 | | | $350,000 | | | $2,000,000 | | | $1,218,325 | | | $91,712 | | $3,660,037 | | ||||||||||||
Executive Vice President | | 2018 | | | 300,000 | | | 1,300,000 | | | 1,018,740 | | | 29,424 | | 2,648,164 | | | 2019 | | | 325,000 | | | 2,000,000 | | | 1,557,953 | | | 67,919 | | 3,950,872 | | ||||||||||||
David M. Blackman | | 2019 | | | $325,000 | | | $2,000,000 | | | $1,477,898 | | | $44,227 | | $3,847,125 | | | 2020 | | | $350,000 | | | $2,000,000 | | | $1,129,675 | | | $96,260 | | $3,575,935 | | ||||||||||||
Executive Vice President | | 2018 | | | 300,000 | | | 1,350,000 | | | 1,201,085 | | | 38,480 | | 2,889,565 | | |||||||||||||||||||||||||||||
Former Executive Vice President | | 2019 | | | 325,000 | | | 2,000,000 | | | 1,477,898 | | | 73,018 | | 3,875,916 | | |||||||||||||||||||||||||||||
Matthew P. Jordan | | 2019 | | | $325,000 | | | $1,300,000 | | | $1,112,958 | | | $42,646 | | $2,780,604 | | | 2020 | | | $350,000 | | | $1,300,000 | | | $900,980 | | | $74,379 | | $2,625,359 | | ||||||||||||
Executive Vice President, Chief Financial Officer and Treasurer | | 2018 | | | 300,000 | | | 850,000 | | | 660,165 | | | 34,900 | | 1,845,065 | | | 2019 | | | 325,000 | | | 1,300,000 | | | 1,112,958 | | | 42,646 | | 2,780,604 | | ||||||||||||
| |
The amounts presented in this column include shares of our client companies awarded to our named executive officers for services as a managing trustee, managing director or named executive officer of a client company.
22 THE RMR GROUP INC. 2021 Proxy Statement
The following table shows the total shares awarded by us and our public client companies to our named executive officers, including for services as a managing trustee, managing director or named executive officer of a client company, in fiscal year 2019,2020, including vested and unvested portions of each award. Share awards listed for FVE and TA have been adjusted for the one-for-ten and one-for-five, respectively, reverse stock splits that were affected by FVE and TA as of September 30, 2019 and
22 THE RMR GROUP INC. 2020 Proxy Statement
August 1, 2019, respectively. Share awards listed for OPI have been adjusted for the one-for-four reverse share split that was affected by OPI as of December 31, 2018.
| Name | | Company | | Grant Date | | Number of Shares | | Grant Date Fair Value of Share Awards(a) | | Name | | Company | | Grant Date | | Number of Shares | | Grant Date Fair Value of Share Awards(a) | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | ||||||||||||||||||||||||||
| Adam D. Portnoy | | RMR | | 9/18/2019 | | 10,000 | | | $459,900 | | Adam D. Portnoy | | RMR | | 9/17/2020 | | 10,000 | | | $297,900 | | ||||||
| | | RMR | | 4/3/2019 | | 2,500 | | | 156,875 | | | | RMR | | 3/11/2020 | | 3,000 | | | 93,840 | | ||||||
| | | DHC | | 5/21/2019 | | 3,000 | (b) | | 23,850 | | | | DHC | | 5/19/2020 | | 10,000 | (b) | | 29,400 | | ||||||
| | | ILPT | | 6/3/2019 | | 3,000 | (b) | | 56,190 | | | | ILPT | | 5/28/2020 | | 3,500 | (b) | | 65,695 | | ||||||
| | | OPI | | 5/29/2019 | | 3,000 | (b) | | 71,910 | | | | OPI | | 5/27/2020 | | 3,500 | (b) | | 93,135 | | ||||||
| | | SVC | | 6/13/2019 | | 3,000 | (b) | | 74,010 | | | | SVC | | 6/10/2020 | | 5,000 | (b) | | 54,000 | | ||||||
| | | FVE | | 6/11/2019 | | 1,250 | (b) | | 6,750 | | | | FVE | | 6/9/2020 | | 5,000 | (b) | | 20,300 | | ||||||
| | | TA | | 5/23/2019 | | 2,000 | (b) | | 33,900 | | | | TA | | 5/21/2020 | | 3,000 | (b) | | 33,300 | | ||||||
| | | TRMT | | 4/24/2019 | | 3,000 | (b) | | 31,080 | | | | TRMT | | 5/13/2020 | | 3,000 | (b) | | 5,760 | | ||||||
| | | | | | | | | | | | | | | | | | | | | | | ||||||
| | | | | | | | | | $914,465 | | | | | | | | | | | $693,330 | | ||||||
| Jennifer B. Clark | | RMR | | 9/18/2019 | | 5,000 | | | $229,950 | | Jennifer B. Clark | | RMR | | 9/17/2020 | | 5,000 | | | $148,950 | | ||||||
| | RMR | | 4/3/2019 | | 2,500 | | | 156,875 | | | RMR | | 3/11/2020 | | 3,000 | | | 93,840 | | ||||||||
| | DHC | | 9/18/2019 | | 20,000 | | | 174,200 | | | DHC | | 9/17/2020 | | 30,000 | | | 113,100 | | ||||||||
| | DHC | | 5/21/2019 | | 3,000 | (b) | | 23,850 | | | DHC | | 5/19/2020 | | 10,000 | (b) | | 29,400 | | ||||||||
| | ILPT | | 9/18/2019 | | 10,000 | | | 216,900 | | | ILPT | | 9/17/2020 | | 10,000 | | | 226,500 | | ||||||||
| | OPI | | 9/18/2019 | | 10,000 | | | 298,700 | | | OPI | | 9/17/2020 | | 10,000 | | | 230,400 | | ||||||||
| | SVC | | 9/18/2019 | | 10,000 | | | 250,300 | | | SVC | | 9/17/2020 | | 20,000 | | | 168,800 | | ||||||||
| | FVE | | 12/11/2018 | | 1,500 | | | 5,280 | | | FVE | | 6/9/2020 | | 5,000 | (b) | | 20,300 | | ||||||||
| | TA | | 11/28/2018 | | 2,400 | | | 54,120 | | | FVE | | 2/26/2020 | | 2,000 | (b) | | 9,700 | | ||||||||
| | TRMT | | 9/18/2019 | | 5,000 | | | 22,750 | | | FVE | | 12/11/2019 | | 2,000 | | | 9,000 | | ||||||||
| | | | | | | | | | | | | TA | | 12/4/2019 | | 3,000 | | | 27,330 | | |||||||
| | | | | | $1,432,925 | | | TRMT | | 9/17/2020 | | 5,000 | | | 14,600 | | |||||||||||
| | | | | | | | | | | | | | | | | | |||||||||||
| John G. Murray | | RMR | | 9/18/2019 | | 5,000 | | | $229,950 | | | | | | | $1,091,920 | | ||||||||||
| | | DHC | | 9/18/2019 | | 10,000 | | | 87,100 | | | | | | | | |||||||||||
| | | ILPT | | 9/18/2019 | | 15,000 | (b) | | 325,350 | | John G. Murray | | RMR | | 9/17/2020 | | 5,000 | | | $148,950 | | ||||||
| | | ILPT | | 6/3/2019 | | 3,000 | (b) | | 56,190 | | | | DHC | | 9/17/2020 | | 20,000 | | | 75,400 | | ||||||
| | | ILPT | | 12/12/2018 | | 3,000 | (b) | | 60,900 | | | | ILPT | | 9/17/2020 | | 15,000 | (b) | | 339,750 | | ||||||
| | | OPI | | 9/18/2019 | | 10,000 | | | 298,700 | | | | ILPT | | 5/28/2020 | | 3,500 | (b) | | 65,695 | | ||||||
| | | SVC | | 9/18/2019 | | 15,000 | (b) | | 375,450 | | | | OPI | | 9/17/2020 | | 10,000 | | | 230,400 | | ||||||
| | | SVC | | 6/13/2019 | | 3,000 | (b) | | 74,010 | | | | SVC | | 9/17/2020 | | 30,000 | (b) | | 253,200 | | ||||||
| | | FVE | | 12/11/2018 | | 140 | | | 493 | | | | SVC | | 6/10/2020 | | 5,000 | (b) | | 54,000 | | ||||||
| | | TA | | 11/28/2018 | | 1,200 | | | 27,060 | | | | FVE | | 12/11/2019 | | 2,000 | | | 9,000 | | ||||||
| | | TRMT | | 9/18/2019 | | 5,000 | | | 22,750 | | | | TA | | 12/4/2019 | | 3,000 | | | 27,330 | | ||||||
| | | | | | | | | | | | | | TRMT | | 9/17/2020 | | 5,000 | | | 14,600 | | ||||||
| | | | | | | | | | $1,557,953 | | | | | | | | | | | | | ||||||
| | | | | | | | | | | | | | | | $1,218,325 | | |||||||||||
| David M. Blackman | | RMR | | 9/18/2019 | | 5,000 | | | $229,950 | | | | | | | | |||||||||||
| | DHC | | 9/18/2019 | | 10,000 | | | 87,100 | | David M. Blackman | | RMR | | 9/17/2020 | | 5,000 | | | $148,950 | | |||||||
| | ILPT | | 9/18/2019 | | 10,000 | | | 216,900 | | | DHC | | 9/17/2020 | | 20,000 | | | 75,400 | | ||||||||
| | OPI | | 9/18/2019 | | 15,000 | (b) | | 448,050 | | | ILPT | | 9/17/2020 | | 10,000 | | | 226,500 | | ||||||||
| | OPI | | 5/29/2019 | | 3,000 | (b) | | 71,910 | | | OPI | | 9/17/2020 | | 15,000 | (b) | | 345,600 | | ||||||||
| | OPI | | 2/27/2019 | | 3,000 | (b) | | 89,850 | | | OPI | | 5/27/2020 | | 3,500 | (b) | | 93,135 | | ||||||||
| | SVC | | 9/18/2019 | | 10,000 | | | 250,300 | | | SVC | | 9/17/2020 | | 20,000 | | | 168,800 | | ||||||||
| | FVE | | 12/11/2018 | | 140 | | | 493 | | | FVE | | 12/11/2019 | | 2,000 | | | 9,000 | | ||||||||
| | TA | | 11/28/2018 | | 300 | | | 6,765 | | | TA | | 12/4/2019 | | 3,000 | | | 27,330 | | ||||||||
| | TRMT | | 9/18/2019 | | 10,000 | (b) | | 45,500 | | | TRMT | | 9/17/2020 | | 10,000 | (b) | | 29,200 | | ||||||||
| | TRMT | | 4/24/2019 | | 3,000 | (b) | | 31,080 | | | TRMT | | 5/13/2020 | | 3,000 | (b) | | 5,760 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | ||||||
| | | | | | $1,477,898 | | | | | | | $1,129,675 | | ||||||||||||||
| | | | | | | | | | | | | ||||||||||||||||
| Matthew P. Jordan | | RMR | | 9/18/2019 | | 5,000 | | | $229,950 | | Matthew P. Jordan | | RMR | | 9/17/2020 | | 5,000 | | | $148,950 | | ||||||
| | | DHC | | 9/18/2019 | | 10,000 | | | 87,100 | | | | DHC | | 9/17/2020 | | 20,000 | | | 75,400 | | ||||||
| | | ILPT | | 9/18/2019 | | 10,000 | | | 216,900 | | | | ILPT | | 9/17/2020 | | 10,000 | | | 226,500 | | ||||||
| | | OPI | | 9/18/2019 | | 10,000 | | | 298,700 | | | | OPI | | 9/17/2020 | | 10,000 | | | 230,400 | | ||||||
| | | SVC | | 9/18/2019 | | 10,000 | | | 250,300 | | | | SVC | | 9/17/2020 | | 20,000 | | | 168,800 | | ||||||
| | | FVE | | 12/11/2018 | | 140 | | | 493 | | | | FVE | | 12/11/2019 | | 2,000 | | | 9,000 | | ||||||
| | | TA | | 11/28/2018 | | 300 | | | 6,765 | | | | TA | | 12/4/2019 | | 3,000 | | | 27,330 | | ||||||
| | | TRMT | | 9/18/2019 | | 5,000 | | | 22,750 | | | | TRMT | | 9/17/2020 | | 5,000 | | | 14,600 | | ||||||
| | | | | | | | | | | | | | | | | | | | | | | ||||||
| | | | | | | | | | $1,112,958 | | | | | | | | | | | $900,980 | | ||||||
| | |
THE RMR GROUP INC. 20202021 Proxy Statement 23
Outstanding Equity Awards at 20192020 Fiscal Year End
| | | | | | Stock Awards | | | | | | | Stock Awards | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | | Company | | Date Granted | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested(1) | | | Company | | Date Granted | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested(1) | | ||||||||
| | |||||||||||||||||||||||||
Adam D. Portnoy | | RMR | | 9/18/2019 | | 8,000 | | | $363,840 | | | RMR | | 9/17/2020 | | 8,000 | | | $219,760 | | ||||||
| | RMR | | 9/13/2018 | | 4,800 | | | 218,304 | | ||||||||||||||||
| | RMR | | 9/14/2017 | | 3,200 | | | 145,536 | | ||||||||||||||||
| | RMR | | 9/15/2016 | | 1,600 | | | 72,768 | | | RMR | | 9/18/2019 | | 6,000 | | | 164,820 | | ||||||
| | FVE | | 12/13/2017 | | 900 | | | 4,235 | | | RMR | | 9/13/2018 | | 3,200 | | | 87,904 | | ||||||
| | FVE | | 12/7/2016 | | 600 | | | 2,823 | | | RMR | | 9/14/2017 | | 1,600 | | | 43,952 | | ||||||
| | FVE | | 12/14/2015 | | 300 | | | 1,412 | | | FVE | | 12/13/2017 | | 600 | | | 3,042 | | ||||||
| | TA | | 11/29/2017 | | 1,440 | | | 17,748 | | | FVE | | 12/7/2016 | | 300 | | | 1,521 | | ||||||
| | TA | | 11/30/2016 | | 960 | | | 11,832 | | | TA | | 11/29/2017 | | 960 | | | 18,758 | | ||||||
| | TA | | 12/8/2015 | | 480 | | | 5,916 | | | TA | | 11/30/2016 | | 480 | | | 9,379 | | ||||||
| | | | | | | | | | | | | | | | | | | | | ||||||
| | | | | | | | | $844,414 | | | | | | | | | | $549,136 | | ||||||
| | | | | | | | | | | | |||||||||||||||
Jennifer B. Clark | | RMR | | 9/18/2019 | | 4,000 | | | $181,920 | | | RMR | | 9/17/2020 | | 4,000 | | | $109,880 | | ||||||
| RMR | | 9/13/2018 | | 2,400 | | | 109,152 | | | RMR | | 9/18/2019 | | 3,000 | | | 82,410 | | |||||||
| RMR | | 9/14/2017 | | 1,600 | | | 72,768 | | | RMR | | 9/13/2018 | | 1,600 | | | 43,952 | | |||||||
| RMR | | 9/15/2016 | | 800 | | | 36,384 | | | RMR | | 9/14/2017 | | 800 | | | 21,976 | | |||||||
| DHC | | 9/18/2019 | | 16,000 | | | 148,080 | | | DHC | | 9/17/2020 | | 24,000 | | | 84,480 | | |||||||
| DHC | | 9/13/2018 | | 6,000 | | | 55,530 | | | DHC | | 9/18/2019 | | 12,000 | | | 42,240 | | |||||||
| DHC | | 9/14/2017 | | 3,800 | | | 35,169 | | | DHC | | 9/13/2018 | | 4,000 | | | 14,080 | | |||||||
| DHC | | 9/15/2016 | | 1,900 | | | 17,585 | | | DHC | | 9/14/2017 | | 1,900 | | | 6,688 | | |||||||
| ILPT | | 9/18/2019 | | 8,000 | | | 170,000 | | | ILPT | | 9/17/2020 | | 8,000 | | | 174,960 | | |||||||
| ILPT | | 9/13/2018 | | 3,000 | | | 63,750 | | | ILPT | | 9/18/2019 | | 6,000 | | | 131,220 | | |||||||
| OPI | | 9/18/2019 | | 8,000 | | | 245,120 | | | ILPT | | 9/13/2018 | | 2,000 | | | 43,740 | | |||||||
| OPI | | 9/13/2018 | | 2,142 | | | 65,631 | | | OPI | | 9/17/2020 | | 8,000 | | | 165,760 | | |||||||
| OPI | | 9/14/2017 | | 1,428 | | | 43,754 | | | OPI | | 9/18/2019 | | 6,000 | | | 124,320 | | |||||||
| OPI | | 9/15/2016 | | 714 | | | 21,877 | | | OPI | | 9/13/2018 | | 1,428 | | | 29,588 | | |||||||
| SVC | | 9/18/2019 | | 8,000 | | | 206,320 | | | OPI | | 9/14/2017 | | 714 | | | 14,794 | | |||||||
| SVC | | 9/13/2018 | | 5,100 | | | 131,529 | | | SVC | | 9/17/2020 | | 16,000 | | | 127,200 | | |||||||
| SVC | | 9/14/2017 | | 3,000 | | | 77,370 | | | SVC | | 9/18/2019 | | 6,000 | | | 47,700 | | |||||||
| SVC | | 9/15/2016 | | 1,500 | | | 38,685 | | | SVC | | 9/13/2018 | | 3,400 | | | 27,030 | | |||||||
| FVE | | 12/11/2018 | | 1,200 | | | 5,646 | | | SVC | | 9/14/2017 | | 1,500 | | | 11,925 | | |||||||
| FVE | | 12/13/2017 | | 900 | | | 4,235 | | | FVE | | 12/11/2019 | | 1,600 | | | 8,112 | | |||||||
| FVE | | 12/7/2016 | | 600 | | | 2,823 | | | FVE | | 12/11/2018 | | 900 | | | 4,563 | | |||||||
| FVE | | 12/14/2015 | | 300 | | | 1,412 | | | FVE | | 12/13/2017 | | 600 | | | 3,042 | | |||||||
| TA | | 11/28/2018 | | 1,920 | | | 23,664 | | | FVE | | 12/7/2016 | | 300 | | | 1,521 | | |||||||
| TA | | 11/29/2017 | | 1,440 | | | 17,748 | | | TA | | 12/4/2019 | | 2,400 | | | 46,896 | | |||||||
| TA | | 11/30/2016 | | 960 | | | 11,832 | | | TA | | 11/28/2018 | | 1,440 | | | 28,138 | | |||||||
| TA | | 12/8/2015 | | 480 | | | 5,916 | | | TA | | 11/29/2017 | | 960 | | | 18,758 | | |||||||
| TRMT | | 9/18/2019 | | 4,000 | | | 19,520 | | | TA | | 11/30/2016 | | 480 | | | 9,379 | | |||||||
| TRMT | | 9/13/2018 | | 3,000 | | | 14,640 | | |||||||||||||||||
| | | | | | | | | | | ||||||||||||||||
| | | | | $1,828,060 | |
24 THE RMR GROUP INC. 20202021 Proxy Statement
| | | | | | Stock Awards | | | | | | | Stock Awards | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | | Company | | Date Granted | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested(1) | | | Company | | Date Granted | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested(1) | | ||||||||
| ||||||||||||||||||||||||||
| TRMT | | 9/17/2020 | | 4,000 | | | 11,680 | | |||||||||||||||||
| TRMT | | 9/18/2019 | | 3,000 | | | 8,760 | | |||||||||||||||||
| TRMT | | 9/13/2018 | | 2,000 | | | 5,840 | | |||||||||||||||||
| | | | | | | | | | | ||||||||||||||||
| | | | | $1,450,632 | | ||||||||||||||||||||
| | | | | | | ||||||||||||||||||||
John G. Murray | | RMR | | 9/18/2019 | | 4,000 | | | $181,920 | | | RMR | | 9/17/2020 | | 4,000 | | | $109,880 | | ||||||
| | RMR | | 9/13/2018 | | 2,400 | | | 109,152 | | | RMR | | 9/18/2019 | | 3,000 | | | 82,410 | | ||||||
| | RMR | | 9/14/2017 | | 1,600 | | | 72,768 | | | RMR | | 9/13/2018 | | 1,600 | | | 43,952 | | ||||||
| | RMR | | 9/15/2016 | | 800 | | | 36,384 | | | RMR | | 9/14/2017 | | 800 | | | 21,976 | | ||||||
| | DHC | | 9/18/2019 | | 8,000 | | | 74,040 | | | DHC | | 9/17/2020 | | 16,000 | | | 56,320 | | ||||||
| | DHC | | 9/13/2018 | | 2,400 | | | 22,212 | | | DHC | | 9/18/2019 | | 6,000 | | | 21,120 | | ||||||
| | DHC | | 9/14/2017 | | 800 | | | 7,404 | | | DHC | | 9/13/2018 | | 1,600 | | | 5,632 | | ||||||
| | DHC | | 9/15/2016 | | 300 | | | 2,777 | | | DHC | | 9/14/2017 | | 400 | | | 1,408 | | ||||||
| | ILPT | | 9/18/2019 | | 12,000 | | | 255,000 | | | ILPT | | 9/17/2020 | | 12,000 | | | 262,440 | | ||||||
| | ILPT | | 9/13/2018 | | 1,500 | | | 31,875 | | | ILPT | | 9/18/2019 | | 9,000 | | | 196,830 | | ||||||
| | OPI | | 9/18/2019 | | 8,000 | | | 245,120 | | | ILPT | | 9/13/2018 | | 1,000 | | | 21,870 | | ||||||
| | OPI | | 9/13/2018 | | 306 | | | 9,376 | | | OPI | | 9/17/2020 | | 8,000 | | | 165,760 | | ||||||
| | OPI | | 9/14/2017 | | 204 | | | 6,251 | | | OPI | | 9/18/2019 | | 6,000 | | | 124,320 | | ||||||
| | OPI | | 9/15/2016 | | 102 | | | 3,125 | | | OPI | | 9/13/2018 | | 204 | | | 4,227 | | ||||||
| | SVC | | 9/18/2019 | | 12,000 | | | 309,480 | | | OPI | | 9/14/2017 | | 102 | | | 2,113 | | ||||||
| | SVC | | 9/13/2018 | | 5,100 | | | 131,529 | | | SVC | | 9/17/2020 | | 24,000 | | | 190,800 | | ||||||
| | SVC | | 9/14/2017 | | 3,000 | | | 77,370 | | | SVC | | 9/18/2019 | | 9,000 | | | 71,550 | | ||||||
| | SVC | | 9/15/2016 | | 1,500 | | | 38,685 | | | SVC | | 9/13/2018 | | 3,400 | | | 27,030 | | ||||||
| | FVE | | 12/11/2018 | | 112 | | | 527 | | | SVC | | 9/14/2017 | | 1,500 | | | 11,925 | | ||||||
| | FVE | | 12/13/2017 | | 84 | | | 395 | | | FVE | | 12/11/2019 | | 1,600 | | | 8,112 | | ||||||
| | FVE | | 12/7/2016 | | 56 | | | 263 | | | FVE | | 12/11/2018 | | 84 | | | 426 | | ||||||
| | FVE | | 12/14/2015 | | 28 | | | 132 | | | FVE | | 12/13/2017 | | 56 | | | 284 | | ||||||
| | TA | | 11/28/2018 | | 960 | | | 11,832 | | | FVE | | 12/7/2016 | | 28 | | | 142 | | ||||||
| | TA | | 11/29/2017 | | 720 | | | 8,874 | | | TA | | 12/4/2019 | | 2,400 | | | 46,896 | | ||||||
| | TA | | 11/30/2016 | | 480 | | | 5,916 | | | TA | | 11/28/2018 | | 720 | | | 14,069 | | ||||||
| | TA | | 12/8/2015 | | 240 | | | 2,958 | | | TA | | 11/29/2017 | | 480 | | | 9,379 | | ||||||
| | TRMT | | 9/18/2019 | | 4,000 | | | 19,520 | | | TA | | 11/30/2016 | | 240 | | | 4,690 | | ||||||
| | TRMT | | 9/13/2018 | | 1,500 | | | 7,320 | | | TRMT | | 9/17/2020 | | 4,000 | | | 11,680 | | ||||||
| | | | | | | | | | | | TRMT | | 9/18/2019 | | 3,000 | | | 8,760 | | ||||||
| | | | | | | | | $1,672,205 | | | TRMT | | 9/13/2018 | | 1,000 | | | 2,920 | | ||||||
| | | | | | |||||||||||||||||||||
David M. Blackman | | RMR | | 9/18/2019 | | 4,000 | | | $181,920 | | ||||||||||||||||
| RMR | | 9/13/2018 | | 2,400 | | | 109,152 | | |||||||||||||||||
| RMR | | 9/14/2017 | | 1,600 | | | 72,768 | | |||||||||||||||||
| RMR | | 9/15/2016 | | 800 | | | 36,384 | | |||||||||||||||||
| DHC | | 9/18/2019 | | 8,000 | | | 74,040 | | |||||||||||||||||
| DHC | | 9/13/2018 | | 3,000 | | | 27,765 | | |||||||||||||||||
| DHC | | 9/14/2017 | | 1,600 | | | 14,808 | | |||||||||||||||||
| DHC | | 9/15/2016 | | 800 | | | 7,404 | | |||||||||||||||||
| ILPT | | 9/18/2019 | | 8,000 | | | 170,000 | | |||||||||||||||||
| ILPT | | 9/13/2018 | | 1,500 | | | 31,875 | | |||||||||||||||||
| OPI | | 9/18/2019 | | 12,000 | | | 367,680 | | |||||||||||||||||
| OPI | | 9/13/2018 | | 2,142 | | | 65,631 | | |||||||||||||||||
| OPI | | 9/14/2017 | | 1,428 | | | 43,754 | | |||||||||||||||||
| OPI | | 9/15/2016 | | 714 | | | 21,877 | | |||||||||||||||||
| SVC | | 9/18/2019 | | 8,000 | | | 206,320 | | |||||||||||||||||
| SVC | | 9/13/2018 | | 1,800 | | | 46,422 | | |||||||||||||||||
| SVC | | 9/14/2017 | | 800 | | | 20,632 | | |||||||||||||||||
| SVC | | 9/15/2016 | | 400 | | | 10,316 | | |||||||||||||||||
| FVE | | 12/11/2018 | | 112 | | | 527 | | |||||||||||||||||
| FVE | | 12/13/2017 | | 84 | | | 395 | | |||||||||||||||||
| FVE | | 12/7/2016 | | 56 | | | 263 | | |||||||||||||||||
| FVE | | 12/14/2015 | | 28 | | | 132 | | |||||||||||||||||
| | | | | | | | | | | ||||||||||||||||
| | | | | | | | | $1,528,921 | |
THE RMR GROUP INC. 20202021 Proxy Statement 25
| | | | | | Stock Awards | | | | | | | Stock Awards | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | | Company | | Date Granted | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested(1) | | | Company | | Date Granted | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested(1) | | ||||||||
| ||||||||||||||||||||||||||
David M. Blackman(2) | | RMR | | 9/17/2020 | | 4,000 | | | $109,880 | | ||||||||||||||||
| RMR | | 9/18/2019 | | 3,000 | | | 82,410 | | |||||||||||||||||
| RMR | | 9/13/2018 | | 1,600 | | | 43,952 | | |||||||||||||||||
| RMR | | 9/14/2017 | | 800 | | | 21,976 | | |||||||||||||||||
| DHC | | 9/17/2020 | | 16,000 | | | 56,320 | | |||||||||||||||||
| DHC | | 9/18/2019 | | 6,000 | | | 21,120 | | |||||||||||||||||
| DHC | | 9/13/2018 | | 2,000 | | | 7,040 | | |||||||||||||||||
| DHC | | 9/14/2017 | | 800 | | | 2,816 | | |||||||||||||||||
| ILPT | | 9/17/2020 | | 8,000 | | | 174,960 | | |||||||||||||||||
| ILPT | | 9/18/2019 | | 6,000 | | | 131,220 | | |||||||||||||||||
| ILPT | | 9/13/2018 | | 1,000 | | | 21,870 | | |||||||||||||||||
| OPI | | 9/17/2020 | | 12,000 | | | 248,640 | | |||||||||||||||||
| OPI | | 9/18/2019 | | 9,000 | | | 186,480 | | |||||||||||||||||
| OPI | | 9/13/2018 | | 1,428 | | | 29,588 | | |||||||||||||||||
| OPI | | 9/14/2017 | | 714 | | | 14,794 | | |||||||||||||||||
| SVC | | 9/17/2020 | | 16,000 | | | 127,200 | | |||||||||||||||||
| SVC | | 9/18/2019 | | 6,000 | | | 47,700 | | |||||||||||||||||
| SVC | | 9/13/2018 | | 1,200 | | | 9,540 | | |||||||||||||||||
| SVC | | 9/14/2017 | | 400 | | | 3,180 | | |||||||||||||||||
| FVE | | 12/11/2019 | | 1,600 | | | 8,112 | | |||||||||||||||||
| FVE | | 12/11/2018 | | 84 | | | 426 | | |||||||||||||||||
| FVE | | 12/13/2017 | | 56 | | | 284 | | |||||||||||||||||
| FVE | | 12/7/2016 | | 28 | | | 142 | | |||||||||||||||||
| | TA | | 12/4/2019 | | 2,400 | | | 46,896 | | ||||||||||||||||
| TA | | 11/28/2018 | | 240 | | | 2,958 | | | TA | | 11/28/2018 | | 180 | | | 3,517 | | |||||||
| TA | | 11/29/2017 | | 108 | | | 1,331 | | | TA | | 11/29/2017 | | 72 | | | 1,407 | | |||||||
| TA | | 11/30/2016 | | 72 | | | 887 | | | TA | | 11/30/2016 | | 36 | | | 703 | | |||||||
| TA | | 12/8/2015 | | 36 | | | 444 | | | TRMT | | 9/17/2020 | | 8,000 | | | 23,360 | | |||||||
| TRMT | | 9/18/2019 | | 8,000 | | | 39,040 | | | TRMT | | 9/18/2019 | | 6,000 | | | 17,520 | | |||||||
| TRMT | | 9/13/2018 | | 3,000 | | | 14,640 | | | TRMT | | 9/13/2018 | | 2,000 | | | 5,840 | | |||||||
| TRMT | | 11/13/2017 | | 2,000 | | | 9,760 | | | TRMT | | 11/13/2017 | | 2,000 | | | 5,840 | | |||||||
| | | | | | | | | | | | | | | | | | | | | ||||||
| | | | | $1,579,125 | | | | | | | $1,454,733 | | |||||||||||||
| | | | | | | | | | | | |||||||||||||||
Matthew P. Jordan | | RMR | | 9/18/2019 | | 4,000 | | | $181,920 | | | RMR | | 9/17/2020 | | 4,000 | | | $109,880 | | ||||||
| | RMR | | 9/13/2018 | | 2,400 | | | 109,152 | | | RMR | | 9/18/2019 | | 3,000 | | | 82,410 | | ||||||
| | RMR | | 9/14/2017 | | 1,600 | | | 72,768 | | | RMR | | 9/13/2018 | | 1,600 | | | 43,952 | | ||||||
| | RMR | | 9/15/2016 | | 800 | | | 36,384 | | | RMR | | 9/14/2017 | | 800 | | | 21,976 | | ||||||
| | DHC | | 9/18/2019 | | 8,000 | | | 74,040 | | | DHC | | 9/17/2020 | | 16,000 | | | 56,320 | | ||||||
| | DHC | | 9/13/2018 | | 2,400 | | | 22,212 | | | DHC | | 9/18/2019 | | 6,000 | | | 21,120 | | ||||||
| | DHC | | 9/14/2017 | | 600 | | | 5,553 | | | DHC | | 9/13/2018 | | 1,600 | | | 5,632 | | ||||||
| | DHC | | 9/15/2016 | | 300 | | | 2,777 | | | DHC | | 9/14/2017 | | 300 | | | 1,056 | | ||||||
| | ILPT | | 9/18/2019 | | 8,000 | | | 170,000 | | | ILPT | | 9/17/2020 | | 8,000 | | | 174,960 | | ||||||
| | ILPT | | 9/13/2018 | | 1,500 | | | 31,875 | | | ILPT | | 9/18/2019 | | 6,000 | | | 131,220 | | ||||||
| | OPI | | 9/18/2019 | | 8,000 | | | 245,120 | | | ILPT | | 9/13/2018 | | 1,000 | | | 21,870 | | ||||||
| | OPI | | 9/13/2018 | | 306 | | | 9,376 | | | OPI | | 9/17/2020 | | 8,000 | | | 165,760 | | ||||||
| | OPI | | 9/14/2017 | | 204 | | | 6,251 | | | OPI | | 9/18/2019 | | 6,000 | | | 124,320 | | ||||||
| | OPI | | 9/15/2016 | | 102 | | | 3,125 | | | OPI | | 9/13/2018 | | 204 | | | 4,227 | | ||||||
| | SVC | | 9/18/2019 | | 8,000 | | | 206,320 | | | OPI | | 9/14/2017 | | 102 | | | 2,113 | | ||||||
| | SVC | | 9/13/2018 | | 1,500 | | | 38,685 | | | SVC | | 9/17/2020 | | 16,000 | | | 127,200 | | ||||||
| | SVC | | 9/14/2017 | | 600 | | | 15,474 | | | SVC | | 9/18/2019 | | 6,000 | | | 47,700 | | ||||||
| | SVC | | 9/15/2016 | | 300 | | | 7,737 | | | SVC | | 9/13/2018 | | 1,000 | | | 7,950 | | ||||||
| | FVE | | 12/11/2018 | | 112 | | | 527 | | ||||||||||||||||
| | FVE | | 12/13/2017 | | 84 | | | 395 | | ||||||||||||||||
| | FVE | | 12/7/2016 | | 56 | | | 263 | | ||||||||||||||||
| | FVE | | 12/14/2015 | | 28 | | | 132 | | ||||||||||||||||
| | TA | | 11/28/2018 | | 240 | | | 2,958 | | ||||||||||||||||
| | TA | | 11/29/2017 | | 108 | | | 1,331 | | ||||||||||||||||
| | TA | | 11/30/2016 | | 72 | | | 887 | | ||||||||||||||||
| | TA | | 12/8/2015 | | 36 | | | 444 | | ||||||||||||||||
| | TRMT | | 9/18/2019 | | 4,000 | | | 19,520 | | ||||||||||||||||
| | TRMT | | 9/13/2018 | | 1,500 | | | 7,320 | | ||||||||||||||||
| | | | | | | | | | | ||||||||||||||||
| | | | | | | | | $1,272,546 | | ||||||||||||||||
|
26 THE RMR GROUP INC. 2021 Proxy Statement
| | | | | | Stock Awards | | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | | Company | | Date Granted | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested(1) | | ||||
| |||||||||||||
| | SVC | | 9/14/2017 | | 300 | | | 2,385 | | |||
| | FVE | | 12/11/2019 | | 1,600 | | | 8,112 | | |||
| | FVE | | 12/11/2018 | | 84 | | | 426 | | |||
| | FVE | | 12/13/2017 | | 56 | | | 284 | | |||
| | FVE | | 12/7/2016 | | 28 | | | 142 | | |||
| | TA | | 12/4/2019 | | 2,400 | | | 46,896 | | |||
| | TA | | 11/28/2018 | | 180 | | | 3,517 | | |||
| | TA | | 11/29/2017 | | 72 | | | 1,407 | | |||
| | TA | | 11/30/2016 | | 36 | | | 703 | | |||
| | TRMT | | 9/17/2020 | | 4,000 | | | 11,680 | | |||
| | TRMT | | 9/18/2019 | | 3,000 | | | 8,760 | | |||
| | TRMT | | 9/13/2018 | | 1,000 | | | 2,920 | | |||
| | | | | | | | | | | |||
| | | | | | | | | $1,236,898 | | |||
|
26 THE RMR GROUP INC. 2020 Proxy Statement
Potential Payments upon Termination or Change in Control |
On September 18, 2019, the Equity Plan17, 2020, our Compensation Committee approved awards of 10,000 Class A Common Shares to Mr. Adam Portnoy and 5,000 Class A Common Shares to each of Ms. Jennifer Clark and Messrs. John Murray, David Blackman John Murray and Matthew Jordan in their capacities as our executive officers. These awards were valued at $45.99$29.79 per Class A Common Share, the closing price of the Class A Common Shares on the Nasdaq on the date the awards were made under our Equity Plan. The form of award agreement for each of these awards provides for vesting of the Class A Common Shares in five equal annual installments beginning on the date of the award and acceleration of vesting of all share awards upon the occurrence of certain change in control or employment termination events (each, a "Termination Event").
The following table describes the potential payments to our named executive officers upon a Termination Event, if such event had occurred, as of September 30, 2019.2020.
Name | | Number of Shares Vested Upon Termination Event (#) | | Value Realized on Termination Event as of September 30, 2019(1) | | | Number of Shares Vested Upon Termination Event (#) | | Value Realized on Termination Event as of September 30, 2020(1) | | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | |||||||||||||||
Adam D. Portnoy | | 17,600 | | | $800,448 | | | 18,800 | | | $516,436 | | ||||
Jennifer B. Clark | | 8,800 | | | 400,224 | | | 9,400 | | | 258,218 | | ||||
John G. Murray | | 8,800 | | | 400,224 | | | 9,400 | | | 258,218 | | ||||
David M. Blackman | | 8,800 | | | 400,224 | | | 9,400 | | | 258,218 | | ||||
Matthew P. Jordan | | 8,800 | | | 400,224 | | | 9,400 | | | 258,218 | | ||||
| |
THE RMR GROUP INC. 2021 Proxy Statement 27
Fiscal Year |
Each of our named executive officers was provided with the following material elements of compensation in fiscal year 2019:2020:
Base Salary. In fiscal year 20192020 we paid an annual base salary of $325,000$350,000 to each of our named executive officers. For our fiscal year 2020,2021, we expect to pay an annual base salary of $350,000 to each of our continuing named executive officers.
Annual Cash Bonuses. Annual cash bonuses are a key component of our named executive officer compensation and represented the majority of compensation we paid to each of our named executive officers for our 20192020 fiscal year. We did not provide guaranteed cash bonuses to any of our named executive officers for fiscal year 20192020 and did not set specific performance targets on which bonuses would be payable. Instead, the annual cash bonuses we paid to our named executive officers with respect to fiscal year 20192020 were discretionary in amount and were based on a performance evaluation conducted by in the case of Adam Portnoy, the Equity Plan Committee, and in the case of other named executive officers, our Compensation Committee. In addition, because of the impact of the pandemic on our business, cash bonuses were capped at the prior year's amount. The evaluation by our Compensation Committee involved an analysis of both (i) our overall performance and (ii) the performance of the individual officer and his or her contributions to us. We believe this evaluation process allowed us to link pay with performance in the closest way possible and provided us with the flexibility necessary to take all relevant factors into account in determining the bonus amounts, including our named executive officers' ability to react to changing circumstances that impact our business. We believe our compensation process provided us with a better compensation structure than a formulaic bonus structure based solely on the achievement of specific pre-established performance targets which may not capture all appropriate factors that materially impacted our or the individual named executive officer's performance.
Equity Awards. Under the Equity Plan, an aggregate of 600,000 Class A Common Shares arewere initially available for grants of options to acquire stock, restricted or unrestricted stock, contractual rights to receive stock in the future, stock appreciation rights, other rights to receive compensation in amounts determined by the value of the Class A Common Shares and cash based awards. Employees, Directors, independent
THE RMR GROUP INC. 2020 Proxy Statement 27
contractors and consultants of theour Company or any affiliate of theour Company are eligible to receive awards under the Equity Plan. Equity awards we makegrant to our employees (including our named executive officers) are made by our Equity PlanCompensation Committee. Equity awards madegranted to our employees (including our named executive officers) by our public client companies are made to them by the compensation committees of the boards of such companies.
401(k) Plans.Plan. We maintain a 401(k) plan for eligible employees, including our named executive officers and provide matching contributions equal to 100.0% of the first 3.0% and 50.0% of the next 2.0% of an employee's cash compensation contributed to the plan up to stated maximums. We do not maintain a defined pension plan or any nonqualified deferred compensation plans.
Employee Benefits. Eligible employees, including our named executive officers, participate in broad based and comprehensive employee benefit programs, including medical, dental, vision, life and disability insurance. Our named executive officers participate in these programs on the same basis as other eligible employees.
Employment Agreements. We have no employment agreements with our named executive officers or any of our other employees.
28 THE RMR GROUP INC. 20202021 Proxy Statement
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF ERNSTDELOITTE & YOUNGTOUCHE LLP AS INDEPENDENT AUDITORS
TheOur Audit Committee has the sole authority and responsibility to hire, evaluate and, when appropriate, replace our independent auditors and is directly responsible for the appointment, compensation and general oversight of the work of theour independent auditors. TheOur Audit Committee is responsible for approving the audit and permissible non-audit services provided by theour independent auditors and the associated fees.
TheOur Audit Committee evaluates the performance of our independent auditors annually and determines whether to re-engage the current independent auditors or consider other audit firms. In doing so, theour Audit Committee considers the quality and efficiency of the services provided by the auditors, the auditors' technical expertise and knowledge of our operations and industry, the auditors' independence, legal proceedings involving the auditors, the results of PCAOB inspections and peer quality reviews of the auditors and the auditors' reputation in the marketplace. In connection with the mandated rotation of theour independent auditors' lead engagement partner, theour Audit Committee and its chair consider the selection of the new lead engagement partner identified by theour independent auditors.
Based on this evaluation, theour Audit Committee has appointed ErnstDeloitte & YoungTouche LLP ("Deloitte") to serve as the Company'sour independent auditors for the fiscal year ending September 30, 2020.2021. On June 12, 2020, our Audit Committee approved the engagement of Deloitte as our independent registered public accounting firm, effective as of such date. During the fiscal years ended September 30, 2018 and September 30, 2019, and the subsequent interim period through June 12, 2020, we did not, nor did anyone on our behalf, consult with Deloitte with respect to (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, and no written report or oral advice was provided to us that Deloitte concluded was an important factor that we consider in reaching a decision as to any accounting, auditing or financial reporting issue or (b) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K). Contemporaneous with our Audit Committee's determination to engage Deloitte, our Audit Committee dismissed Ernst & Young LLP has served("Ernst & Young") as our independent registered public accounting firm, effective as of such date.
The reports of Ernst & Young on our financial statements for each of the Company's independent auditors sincetwo fiscal years ended September 30, 2018, and September 30, 2019, did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. In connection with the audits of our formationfinancial statements for the fiscal years ended September 30, 2018, and September 30, 2019, and during the subsequent interim period through June 12, 2020, there were no "disagreements" (as that term is defined in 2015Item 304(a)(1)(iv) of Regulation S-K and is considered by managementrelated instructions) between us and Ernst & Young on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures which, if not resolved to the satisfaction of Ernst & Young would have caused Ernst & Young to make reference to the subject matter of the disagreement in their report. During the fiscal years ended September 30, 2018 and September 30, 2019 and the Audit Committeesubsequent interim period through June 12, 2020, there were no "reportable events" (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).
We provided Ernst & Young with a copy of this disclosure and requested that Ernst & Young furnish us with a letter addressed to be well qualified.the SEC stating whether it agrees with the statements contained herein. A copy of Ernst & Young's letter, dated June 15, 2020, is filed as Exhibit 16.1 to our Current Report on Form 8-K filed on June 15, 2020.
TheOur Audit Committee has determined to submit its selection of theour independent auditors to our shareholders for ratification. This vote will ratify prior action by theour Audit Committee and will not be binding upon theour Audit Committee. However, theour Audit Committee may reconsider its prior appointment of the
THE RMR GROUP INC. 2021 Proxy Statement 29
our independent auditors or consider the results of this vote when it determines who to appoint as our independent auditors in the future.
Audit Fees and All Other Fees |
The following table shows the fees for audit and other services provided to us by Deloitte for the fiscal year ended September 30, 2020.
| | | | ||
| 2020 Fees | | |||
---|---|---|---|---|---|
Audit Fees | | | $447,652 | | |
Audit Related Fees | | | — | | |
Tax Fees | | | — | | |
All Other Fees | | | 948 | | |
| | | |
The following table shows the fees for audit and other services provided to us by Ernst & Young LLP for the fiscal years ended September 30, 20192020 and 2018.2019.
| | | | | | | | | | | ||||||||
| | 2019 Fees | | 2018 Fees | | | 2020 Fees | | 2019 Fees | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Audit Fees | | | $748,780 | | | $818,500 | | | | $176,490 | | | $748,780 | | ||||
Audit Related Fees | | | — | | | — | | | | — | | | — | | ||||
Tax Fees | | | — | | | — | | | | — | | | — | | ||||
All Other Fees | | | 787 | | | 720 | | | | 992 | | | 787 | | ||||
| | | | | | | | | | |
Audit Fees. This category includes fees associated with the annual financial statements audit and related audit procedures, work performed in connection with any registration statements and any applicable Current Reports on Form 8-K and the review of any of the Company'sour Quarterly Reports on Form 10-Q.
Audit Related Fees. This category consists of services that are reasonably related to the performance of the audit or review of financial statements and are not included in "Audit Fees." These services principally include due diligence in connection with acquisitions, consultation on accounting and internal control matters, audits in connection with proposed or consummated acquisitions, information systems audits and other attest services.
THE RMR GROUP INC. 2020 Proxy Statement 29
Tax Fees. This category consists of fees for tax services, including tax compliance, tax advice and tax planning.
All Other Fees. This category consists of services that are not included in the above categories. The amounts for 2019 and 20182020 relating to fees for audit and other services provided to us by Ernst & Young and Deloitte, in each case, at such times they served as our independent auditors, reflect annual subscription fees for Ernst & Young LLP'seach independent auditor's online accounting research application.
30 THE RMR GROUP INC. 2021 Proxy Statement
TheOur Audit Committee has established policies and procedures that are intended to control the services provided by our independent auditors and to monitor their continuing independence. Under these policies, our independent auditors may not undertake any services unless the engagement is specifically approved by theour Audit Committee or the services are included within a category that has been approved by theour Audit Committee. The maximum charge for services is established by theour Audit Committee when the specific engagement or the category of services is approved. In certain circumstances, our management is required to notify theour Audit Committee when approved services are undertaken and theour Audit Committee or its Chair may approve amendments or modifications to the engagement or the maximum fees. Our Director of Internal Audit is responsible for reporting to theour Audit Committee regarding compliance with these policies and procedures.
TheOur Audit Committee will not approve engagements of theour independent auditors to perform non-audit services for the Companyus if doing so will cause theour independent auditors to cease to be independent within the meaning of applicable SEC or Nasdaq rules. In other circumstances, theour Audit Committee considers, among other things, whether our independent auditors are able to provide the required services in a more or less effective and efficient manner than other available service providers and whether the services are consistent with the Public Company Accounting Oversight Board Rules.
All services for which the Companywe engaged its independent auditorsDeloitte in fiscal 2020 and Ernst & Young in fiscal 2020 and 2019, and 2018in each case, at such times they served as our independent auditors, were approved by theour Audit Committee. The total fees for audit and non-audit services provided by Deloitte in fiscal 2020 and Ernst & Young LLP in fiscal 2020 and 2019, and fiscal 2018in each case, at such times they served as our independent auditors, are set forth above.above and include estimated fee amounts. Our Audit Committee approved the engagement of Deloitte in fiscal 2020 and Ernst & Young LLPin fiscal 2020 and 2019 to provide the non-audit services described above because it determined that Deloitte in fiscal 2020 and Ernst & Young LLPin fiscal 2020 and 2019 providing these services would not compromise Ernst & Young LLP'seach independent auditor's independence and that theeach firm's familiarity with our record keeping and accounting systems would permit the firm to provide these services with equal or higher quality, more efficientlyquickly and at a lower cost than the Companywe could obtain these services from other providers. For fiscal 2019 and 2020, there were no non-audit services provided to us by Ernst & Young and Deloitte other than with respect to our subscriptions to each independent auditor's online accounting research application.
Other Information |
The Company hasWe have been advised by Ernst & Young LLPDeloitte that neither the firm, nor any member of the firm, has any material interest, direct or indirect, in any capacity in the Companyus or itsour subsidiaries.
One or more representatives of Ernst & Young LLPDeloitte will be present at the 2020our 2021 Annual Meeting. The representatives will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
Assuming a quorum is present at the meeting, ratificationRatification of the appointment of theour independent auditors requires the affirmative vote of a majority of all the votes cast, in person or by proxy, at the 2020our 2021 Annual Meeting.
TheOur Board of Directors recommends a vote "FOR" the ratification of the appointment of ErnstDeloitte & YoungTouche LLP as independent auditors.
30 THE RMR GROUP INC. 20202021 Proxy Statement31
REPORT OF THEOUR AUDIT COMMITTEE
In the course of theour Audit Committee's oversight by the Audit Committee (the "Audit Committee") of the Board of Directors of The RMR Group Inc. (the "Company") of the Company'sour financial reporting process, theour Audit Committee has: (i) reviewed and discussed with our management the audited financial statements for the fiscal year ended September 30, 2019;2020; (ii) discussed with ErnstDeloitte & YoungTouche LLP, the Company'sour independent auditors, the matters required to be discussed under PCAOB Auditing Standard No. 1301; (iii) received the written disclosures and the letter from theour auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding theour independent auditors' communications with theour Audit Committee concerning independence; (iv) discussed with theour independent auditors their independence; and (v) considered whether the provision of non-audit services by theour independent auditors is compatible with maintaining their independence and concluded that it is compatible at this time.
Based on the foregoing review and discussions, theour Audit Committee recommended to theour Board that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2019,2020, for filing with the Securities and Exchange Commission.SEC.
Ann Logan,Chair Rosen Plevneliev Jonathan Veitch Walter C. Watkins, Jr. |
32 THE RMR GROUP INC. 20202021 Proxy Statement31
Proxy Materials and Voting Information
1. What is included in the proxy materials? What is a proxy statement and what is a proxy? |
The proxy materials for the 2020our 2021 Annual Meeting include the Notice Regarding the Availability of Proxy Materials, Notice of 20202021 Annual Meeting, this Proxy Statement and the Company'sour Annual Report for the fiscal year ended September 30, 20192020 (collectively, the "proxy materials"). If you request a paper copy of these materials, the proxy materials will also include a proxy card or voting instruction form.
A proxy statement is a document that the SEC regulations require the Companyus to give you when it askswe ask you to return a proxy designating individuals to vote on your behalf. A proxy is your legal designation of another person to vote the shares you own. That other person is called your proxy. We are asking you to designate the following three persons as your proxies for the 2020 Annual Meeting: Jennifer B. Clark, Managing Director, Executive Vice President, General Counsel and Secretary, Matthew P. Jordan, Executive Vice President, Chief Financial Officer and Treasurer; and Adam D. Portnoy, Managing Director, President and Chief Executive Officer.
2. What is the difference between holding shares as a shareholder of record and as a beneficial owner? |
If your shares are registered directly in your name with the Company'sour registrar and transfer agent, Equiniti Shareowner Services, you are considered a shareholder of record of those shares. If you are a shareholder of record, you should receive only one notice or proxy card for all the Class A Common Shares you hold in certificate form and in book entry form.
If your shares are held in an account you own at a bank or brokerage or you hold shares through another nominee, you are considered the "beneficial owner" of those shares. If you are a beneficial owner, you will receive voting instruction information from the bank, broker or other nominee through which you own your Class A Common Shares.
If you hold some shares of record and some shares beneficially, you should receive a notice or proxy card for all the Class A Common Shares you hold of record and a separate voting instruction form for the shares from the bank, broker or other nominee through which you own Class A Common Shares.
3. What different methods can I use to vote? |
By Written Proxy. All shareholders of record can submit voting instructions by written proxy card. If you are a shareholder of record and receive a Notice Regarding the Availability of Proxy Materials, you may request a written proxy card by following the instructions included in the notice. If you are a beneficial owner, you may request a written proxy card or a voting instruction form from your bank, broker or other nominee. Proxies submitted by mail must be received by 11:59 p.m., Eastern time, on March 10, 2020 or, if the meeting is postponed or adjourned to a later date, by 11:59 p.m., Eastern time, on the day immediately preceding the date of the reconvened meeting.
By Telephone or Internet. All shareholders of record also can authorize a proxy to vote their shares by touchtone telephone by calling 1-800-690-6903, or through the internet atwww.proxyvote.com, using the procedures and instructions described in your Notice Regarding the Availability of Proxy Materials or proxy card. Beneficial owners may authorize a proxy by telephone or internet if their bank, broker or other nominee makes those methods available, in which case the bank, broker or nominee will include the
32 THE RMR GROUP INC. 2020 Proxy Statement
instructions with the proxy voting materials. To authorize a proxy by telephone or internet, you will need the 16 digit control number provided on your Notice Regarding the Availability of Proxy Materials, proxy card or voting instruction form. The telephone and internet proxy authorization procedures are designed to authenticate shareholder identities, to allow shareholders to vote their shares and to confirm that their instructions have been recorded properly. Proxies submitted by telephone or through the internet must be received by 11:59 p.m., Eastern time, on March 10, 20202021 or, if the meeting is postponed or adjourned to a later date, by 11:59 p.m., Eastern time, on the day immediately preceding the date of the reconvened meeting.
By Written Proxy. All shareholders of record can also submit voting instructions by written proxy card. If you are a shareholder of record and receive a Notice Regarding the Availability of Proxy Materials, you may request a written proxy card by following the instructions included in the notice. If you are a
THE RMR GROUP INC. 2021 Proxy Statement 33
beneficial owner, you may request a written proxy card or a voting instruction form from your bank, broker or other nominee. Proxies submitted by mail must be received by 11:59 p.m., Eastern time, on March 10, 2021 or, if the meeting is postponed or adjourned to a later date, by 11:59 p.m., Eastern time, on the day immediately preceding the date of the reconvened meeting.
In Person.Electronically at our 2021 Annual Meeting.
A shareholder may revoke a proxy at any time before it is voted at the 2020our 2021 Annual Meeting, subject to the proxy voting deadlines described above, by authorizing a proxy again on a later date by internet or by telephone, (only the last internet or telephone proxy submitted prior to the meeting will be counted), by signing and returning a later dated proxy card or by attending the meeting and voting in person or by sending an original written statement revoking the prior proxy to theour Secretary of the Company at our principal executive office (or by hand delivery to the Secretary before the taking of the vote at the 2020our 2021 Annual Meeting). If you are a beneficial owner, see the response toquestion 11.
Beneficial owners who wish to change their votes should contact the organization that holds their shares.
4. Who may vote at |
Holders of record of any class of our Common Shares as of the close of business on January 9, 2020,6, 2021, the record date, may vote at the meeting. Holders of any class of our Common Shares will vote as a single class on all matters at the meeting.
5. What if I authorize a proxy and do not specify how my shares are to be voted? |
If you submit a signed proxy card or authorize a proxy by internet or telephone, but do not indicate how your Common Shares should be voted on one or more proposals, then the proxies will vote your shares as theour Board of Directors recommends on those proposals. Other than the proposals listed on pages 10 and 29, we do not know of any other matters to be presented at the meeting. If any other matters are properly presented at the meeting, the proxies may vote your shares in accordance with their discretion.
6. What is a quorum? How are abstentions and broker non-votes counted? |
A quorum of shareholders is required for shareholders to take action at the 2020our 2021 Annual Meeting. The presence, in person or by proxy, of shareholders entitled to cast a majority of all the votes entitled to be cast at the 2020our 2021 Annual Meeting constitutes a quorum.
Abstentions and broker non-votes (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owner or the persons entitled to vote and (ii) the broker does not have discretionary voting power on a particular matter), if any, are included in determining whether a quorum is present. Abstentions are not votes cast and, therefore, will not be included in vote totals and will have no effect on the outcome of Proposal 1 or Proposal 2. Broker non-votes are not votes cast and, therefore, will not be included in vote totals and will have no effect on the outcome of Proposal 1. There can be no broker non-votes on Proposal 2 as it is a matter on which, if you hold your shares in street name and do not provide voting instructions to the broker, bank or other nominee that holds your shares, the nominee has discretionary authority to vote on your behalf.
34 THE RMR GROUP INC. 20202021 Proxy Statement33
7. Can I access the proxy materials on the internet? How can I sign up for the electronic proxy delivery service? |
The Notice of 20202021 Annual Meeting, this Proxy Statement and the Annual Report are available atwww.proxyvote.com. You may access these proxy materials on the internet through the conclusion of the 2020our 2021 Annual Meeting.
Instead of receiving future copies of the Company'sour proxy materials by mail, shareholders of record and most beneficial owners may elect to receive these materials electronically. Opting to receive your future proxy materials electronically will reduce the environmental impact of our annual meeting, save us the cost of printing and mailing documents, and also will give you an electronic link to our proxy voting site. Your Notice Regarding the Availability of Proxy Materials instructs you as to how you may request electronic delivery of future proxy materials.
8. How are proxies solicited and what is the cost? |
The Company bearsWe bear all expenses incurred in connection with the solicitation of proxies. We will request banks, brokers and other nominees to forward proxy materials to the beneficial owners of Class A Common Shares and to obtain their voting instructions. We will reimburse those firms for their expenses of forwarding proxy materials.
Proxies may also be solicited, without additional compensation, by the Company'sour and itsour subsidiaries' directors, officers and employees, by mail, telephone or other electronic means or in person.
9. What is householding? |
As permitted by the Exchange Act, we may deliver only one copy of the Notice Regarding the Availability of Proxy Materials, Notice of 20202021 Annual Meeting, this Proxy Statement and the Annual Report to Shareholders residing at the same address, unless the shareholders have notified us of their desire to receive multiple copies of those documents. This practice is known as "householding."
We will deliver a separate copy of any of those documents to you if you write to the Companyus at Investor Relations, The RMR Group Inc., Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458, or call the Companyus at (617) 796-8230. If you want to receive separate copies of our notices regarding the availability of proxy materials, notices of annual meetings, proxy statements and annual reports in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee, or you may contact us at the above address or telephone number.
20202021 Annual Meeting Information
10. Why is our 2021 Annual Meeting being held virtually? |
In light of the COVID-19 pandemic, we believe hosting our 2021 Annual Meeting virtually will help ensure the health and safety of our shareholders, Board and management. Shareholders attending our 2021 Annual Meeting virtually will be afforded the same rights and opportunities to participate as they would have had at an in-person meeting.
THE RMR GROUP INC. 2021 Proxy Statement 35
11. How do I attend |
Attendance at the meeting is limited to the Company'sour Directors and officers, shareholders as of the record date (January 9, 2020)6, 2021) or their duly authorized representatives or proxies, and other persons permitted by the ChairmanChair of the meeting. All attendees need photo identification for admission.
34 THE RMR GROUP INC. 2020 Proxy Statement
ownership of shares. For this purpose, a copy of a letter or account statement from the applicable brokerage firm, bank or other nominee confirming such ownership will be acceptableacceptable. If you are a beneficial owner and such copy may be retained by the Company. Please note thatwant to vote your shares at our 2021 Annual Meeting, you must also provide a legal proxy from your bank, broker or other nominee. You will not be able to vote your shares at the meetingour 2021 Annual Meeting without a legal proxy, as described in the response toquestion 1112. Please follow the instructions from your bank, broker or nominee included with these proxy materials, or contact your bank, broker or nominee to request a legal proxy form.
To register, you must submit proof of your beneficial ownership of shares and legal proxy, as applicable, along with your name and address, to virtualmeeting@viewproxy.com. Upon successful preregistration, you will receive a confirmation email from virtualmeetings@allianceadvisorsllc.com confirming registration and providing further instructions regarding attending our 2021 Annual Meeting. Beneficial owners should complete the registration process noted above at least three days in advance of our 2021 Annual Meeting to ensure that all documentation and verifications are in order.
If you have questions regarding these admission procedures, please call Investor Relations at (617) 796-8230.
|
If you are a beneficial owner and want to vote your shares at the 2020our 2021 Annual Meeting, you need to first obtain a valid legal proxy from your bank, broker or other nominee. You also neednominee and then register in advance to attend our 2021 Annual Meeting. Please follow the procedures described in the response toquestionquestions 3 and 11 and to bring the legal proxy with you to the meeting and hand it in with a signed ballot that will be provided to you at the meeting. .
You will not be able to vote your shares at the meeting without a legal proxy. If you do not have a legal proxy, you can still attend the meeting by following the procedures described in the response toquestion 11. However, you will not be able to vote your shares at the meeting without a legal proxy. The Company encouragesWe encourage you to vote your shares in advance, even if you intend to attend the meeting.
Company Documents, Communications and Shareholder Proposals
36 THE RMR GROUP INC. 2021 Proxy Statement
|
You can visit our website to view our Governance Guidelines, Board committee charters and the Code. To view these documents, go towww.rmrgroup.com, click on "Investors & Media" and then click on "Corporate Governance." To view the Company'sour SEC filings and Forms 3, 4 and 5 filed by the Company'sour Directors and executive officers, go to www.rmrgroup.com, click on "Investors & Media" and then click on "Financial Information."
We will deliver free of charge, upon request, a copy of the Company'sour Governance Guidelines, Board committee charters, Code or Annual Report to any shareholder requesting a copy. Requests should be directed to Investor Relations at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
|
Any shareholder or other interested person who wants to communicate with the Company'sour Directors, individually or as a group, should write to the party for whom the communication is intended, c/o Secretary, The RMR Group Inc., Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or email secretary@rmrgroup.com. The communication will then be delivered to the appropriate party or parties.
THE RMR GROUP INC. 2020 Proxy Statement 35
|
A proposal for action to be presented by any shareholder at the Company's 2021our 2022 annual meeting of shareholders must be submitted as follows:
Proposals should be sent to the Company'sour Secretary at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
For additional information regarding how to submit a shareholder proposal, see page 8 of this Proxy Statement.
36 THE RMR GROUP INC. 20202021 Proxy Statement37
In this "Related Person Transactions" section, unless the context requires otherwise, references to "RMR Inc.", "we," "us" and "our" refer solely to The RMR Group Inc., a Maryland corporation, and not any of our subsidiaries. The description of agreements in this "Related Person Transactions" section do not purport to be complete and are subject to, and qualified in their entirety by, reference to the actual agreements, copies of certain of which are filed as exhibits to our Annual Report.
A "related person transaction" is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which (i) we were, are or will be a participant, (ii) the amount involved exceeds $120,000 and (iii) any related person had, has or will have a direct or indirect material interest.
A "related person" means any person who is, or at any time since October 1, 20182019 was:
We have adopted written Governance Guidelines that contain guidelines for the consideration and approval of any related person transactions. Under these Governance Guidelines, neither we nor any of our subsidiaries may enter into a transaction in which any Director or executive officer, any member of the immediate family of any Director or executive officer or other related person, has or will have a direct or indirect material interest unless that transaction has been disclosed or made known to theour Board and theour Board reviews and approves or ratifies the transaction by the affirmative vote of a majority of the disinterested Directors, even if the disinterested Directors constitute less than a quorum. If there are no disinterested Directors, the transaction must be reviewed, authorized and approved or ratified by both (i) the affirmative vote of a majority of theour Board and (ii) the affirmative vote of a majority of the Independent Directors (as such term is defined under Nasdaq rules). In determining whether to approve or ratify a transaction, theour Board, or disinterested Directors or Independent Directors, as the case may be, also act in accordance with any applicable provisions of our Articles of Amendment and Restatement and Bylaws, consider all of the relevant facts and circumstances and approve only those transactions that they determine are fair and reasonable to the Company.us. All related person transactions described belowin Annex A to this Proxy Statement were reviewed and approved or ratified by a majority of the disinterested Directors or otherwise in accordance with our policies, as described above, and Maryland law. In the case of any transaction with us in which any other employee of us who is subject to the Code who has a direct or indirect material interest in the transaction, the employee must seek approval from an executive officer who has no interest in the matter for which approval is being requested. Copies of our Governance Guidelines and the Code are available on our website,www.rmrgroup.com.
Certain related person transactions are set forth in Annex A to this Proxy Statement.
38 THE RMR GROUP INC. 2021 Proxy Statement
OTHER INFORMATION
At this time, we know of no other matters that will be brought before the meeting. If, however, other matters properly come before the meeting or any postponement or adjournment thereof, the persons named in the accompanying proxy card intend to vote the shares for which they have been appointed or authorized as proxy in accordance with their discretion on such matters to the maximum extent that they are permitted to do so by applicable law.
Jennifer B. Clark
Managing Director, Executive Vice President, General Counsel and Secretary
Newton, Massachusetts
January 14, 2021
THE RMR GROUP INC. 2021 Proxy Statement 39
ANNEX A—CERTAIN RELATED PERSON TRANSACTIONS
We conduct substantially all of our business through our majority owned subsidiary, RMR LLC. We have no employees, and the personnel and various services we require to operate our business are or will be provided to us by RMR LLC. We serve as the managing member of RMR LLC and, as of January 9, 2020,6, 2021, we owned 15,300,30215,395,641 class A membership units ("Class A Units") of RMR LLC and 1,000,000 class B membership units of RMR LLC.
THE RMR GROUP INC. 2020 Proxy Statement 37
Adam D. Portnoy, one of our Managing Directors, is the sole trustee of our controlling shareholder, ABP Trust, and owns all of ABP Trust's voting securities and a majority of the economic interests of ABP Trust. As of January 9, 2020,6, 2021, Adam D. Portnoy beneficially owned, in aggregate, including through ABP Trust, (i) 144,502157,502 Class A Common Shares, (ii) all the outstanding Class B-1 Common Shares, (iii) all the outstanding Class B-2 Common Shares, and (iv) 15,000,000 Class A Units of RMR LLC. Our Class B-1 Common Shares and Class B-2 Common Shares entitle holders to ten votes per share. As a result of their ownership of our Common Shares and units of RMR LLC, Adam D. Portnoy and ABP Trust, in effect, own in aggregate a combined direct and indirect 51.6%51.5% economic interest in RMR LLC and control 91.4%91.3% of the voting power of our outstanding Common Shares.
Adam D. Portnoy, Jennifer B. Clark and Matthew P. Jordan are our officers, officers of ABP Trust and the Company and officers and employees of RMR LLC, andLLC; Jennifer F. (Francis) Mintzer, John G. Murray David M. Blackman and Jonathan M. Pertchik are officers and employees of RMR LLC; and David M. Blackman is an employee of RMR LLC.
Through RMR LLC, we provide management services for four real estate investment trusts: Diversified Healthcare Trust, formerly known as Senior Housing Properties Trust (including its subsidiaries, "DHC"); Industrial Logistics Properties Trust (including its subsidiaries, "ILPT"); Office Properties Income Trust (including its subsidiaries, "OPI"); and Service Properties Trust formerly known as Hospitality Properties Trust (including its subsidiaries, "SVC," and together with DHC, ILPT and OPI, the "Managed Equity REITs"). Prior to December 31, 2018, Select Income REIT (including its subsidiaries, "SIR") was a separate Managed Equity REIT. On December 31, 2018, SIR merged with and into a subsidiary of OPI (then known as Government Properties Income Trust ("GOV")), which subsidiary then merged into OPI, and SIR's separate business and property management agreements with RMR LLC were terminated. Since these mergers, the combined company continues to be managed by RMR LLC pursuant to OPI's business and property management agreements with RMR LLC. In this proxy statement, we refer to SIR separately in some instances when referencing matters or time periods on or before December 31, 2018.
As of January 9, 2020, Adam D. Portnoy beneficially owned, in aggregate, including through ABP Trust, 1.1% of DHC's outstanding common shares, 1.2% of ILPT's outstanding common shares, 1.5% of OPI's outstanding common shares and 1.1% of SVC's outstanding common shares.
On July 1, 2019, DHC, OPI and SVC sold all their Class A Common Shares in an underwritten public offering at a price to the public of $40.00 per share pursuant to an underwriting agreement among us, those Managed Equity REITs and the underwriters named therein.
Through our subsidiary Tremont Realty Advisors LLC ("Tremont Advisors"), we provide advisory services for two mortgage real estate investment trusts, RMR Mortgage Trust (including its subsidiaries, "RMRM") and Tremont Mortgage Trust a mortgage REIT (including its subsidiaries, "TRMT" and together with RMRM and the Managed Equity REITs, the "Managed REITs"), and, as of December 18, 2019, Centre Street Finance LLC, a private fund focused on originating and investing in mortgage loans ("Centre Street," and together with RMRM and TRMT, the "Tremont Advisory Clients"). Centre Street is a direct wholly-owned subsidiary of ABP Trust. Tremont Advisors is also TRMT's largest shareholder, owning 1,600,100 of TRMT's common shares, or approximately 19.4%19.3% of its outstanding common shares as of January 9, 2020.6, 2021. Our subsidiary RMR Advisors LLC, which previously provided advisory services for RMRM, was merged into Tremont Advisors on January 6, 2021. On April 16, 2020, shareholders of RMRM approved its conversion from a registered investment company to a commercial mortgage real estate investment trust and amended RMRM's fundamental investment policies and restrictions to permit RMRM to pursue its new business. On January 5, 2021, RMRM received an order from the SEC declaring that RMRM has ceased to be an investment company under the Investment Company Act of 1940 and subsequently terminated its investment advisory agreement with RMR Advisors LLC and entered into a new management agreement with Tremont Advisors.
Through RMR LLC, we provide management services for three real estate based operating companies: Five Star Senior Living Inc. (including its subsidiaries, "FVE"); Sonesta International HotelsHoldco Corporation (including its subsidiaries, "Sonesta"); and TravelCenters of America Inc. (including its subsidiaries, "TA" and together with FVE and Sonesta, the "Managed Operators"). Through RMR LLC, we provide management services for ABP Trust and also provided managed services for certain related private companies, including ABP Trust and RMR Office Property Fund LP, a private open end real estate fund (the "Open End Fund"), which was dissolved on July 28, 2020, and also provided management services to Affiliates Insurance Company, an Indiana Insurance Company ("AIC"), which is currently in the process of dissolving. Through our subsidiary RMR Advisors, we also provide advisory services for RMR Real Estate Income Fund ("RIF"). As of January 9, 2020: Adam D. Portnoy, including through ABP Trust, beneficially owned 6.3% of the outstanding common stock of FVE; Adam D. Portnoy, including through RMR LLC, beneficially owned 4.0% of TA's outstanding common shares; and Adam D. Portnoy, including through ABP Trust, beneficially owned 2.3% of RIF's outstanding common shares. The general partner of the Open End Fund is a subsidiary of ABP Trust, and ABP Trust and RMR LLC are the limited partners of the Open End Fund. As of January 9, 2020, ABP Trust owned 206,300 limited partnership units of thewas dissolved on February 13, 2020.
38 THE RMR GROUP INC. 20202021 Proxy StatementA-1
Open End Fund and RMR LLC owned no limited partnership units, but has committed to contributing $100.0 million to the Open End Fund.
Adam D. Portnoy is the majority owner and a director of Sonesta. Adam D. Portnoy is also the chair of the board of trustees of each of the Managed Equity REITs, the chair of the board of directors of each of Five StarFVE and TA, a managing trustee or managing director of each of the Managed REITs, FVE and TA, a director of Sonesta (and its parent) and RIF.the controlling shareholder of Sonesta. Jennifer B. Clark is a managing trustee of DHC, and RIFa managing director of FVE and a director of Sonesta (and its parent), and until January 5, 2021, she served as a managing trustee of RMRM. Ms. Clark also serves as the secretary of all the publicly traded client companies to which we provide management services and Sonesta. Prior to its dissolution on February 13, 2020, Mr. Portnoy was a director of AIC and Ms. Clark was the president and chief executive officer of AIC. Many of the executive officers of the Managed Operators are officers or employees of RMR LLC. Some of our executive officers are also managing directors, managing trustees or executive officers of certain of the Managed REITs and the Managed Operators.
As of January 9,6, 2021, Adam D. Portnoy beneficially owned, in aggregate, 6.3% of FVE's outstanding common shares (including through ABP Trust), 1.1% of SVC's outstanding common shares, 1.2% of ILPT's outstanding common shares, 1.5% of OPI's outstanding common shares, 1.1% of DHC's outstanding common shares, 4.5% of TA's outstanding common shares (including through RMR LLC), 2.3% of RMRM's outstanding common shares, and 19.4% of TRMT's outstanding common shares (including through Tremont Advisors). Until its dissolution on February 13, 2020, ABP Trust owned 14.3% of AIC. Other officers of the Company serve as managing trustees or managing directors of certain of the Managed REITs, RIF and TA and executive officers of the Managed REITs, Managed Operators, RIF, ABP Trust and the Open End Fund.
The Managed Equity REITs all have no employees, and the Open End Fund haveand AIC had no employees. RMR LLC provides or arranges for all the personnel, overhead and services required for the operation of the Managed Equity REITs, and did the same for the Open End Fund and AIC until they dissolved, pursuant to management agreements with them. All the officers of the Managed Equity REITs are, and all of the officers of the Open End Fund arewere, officers or employees of RMR LLC. TRMT has no employees. All the officers, overhead and required office space of RMRM and TRMT are provided or arranged by Tremont Advisors,Advisors. All of RMRM's and all of TRMT's officers are officers or employees of Tremont Advisors or RMR LLC. RIF has no employees and no office separate from RMR Advisors. All the officers, overhead and required office space of RIF are provided or arranged by RMR Advisors and officers of RIF are officers or employees of RMR Advisors or RMR LLC.
Several of our client companies have material historical and ongoing material relationships with other of our client companies and several of the independent trustees and independent directors of our public client companies also serve as independent trustees or independent directors of other of our public client companies. For example, as of January 9, 2020,6, 2021, SVC owned 8.1% of the outstanding common shares of TA and 33.9% of the outstanding shares of Sonesta, and DHC owned 33.9%33.7% of the outstanding common stock of FVE and SVCFVE. As of January 6, 2021, ILPT owned 8.2%a 22% equity interest in a joint venture with two third-party partners; we manage this joint venture. Until AIC's dissolution on February 13, 2020, each of the outstanding common shares of TA. In addition, ABP Trust, DHC, ILPT, OPI, SVC, FVE and TA each own 14.3% of the outstanding common stock of AIC and are parties to an AIC shareholders agreement, and Adam D. Portnoy, and the independent trustees and independent directors of the Managed Equity REITs, FVE and TA serve on the board of directors of AIC.owned AIC in equal amounts. SVC is TA's principal landlord, and TA is SVC's largest tenant, operating travel center locations owned by SVC pursuant to long term leases. Asleases, and Sonesta manages many of January 1, 2020,the hotels SVC owns and most of the hotels Sonesta operates are owned by SVC. FVE and DHC completed their restructuring transaction, which provided that, among other things, allmanages most of the senior living communities that DHC owns that FVE operates will be operated by FVE pursuant to long term management agreements and FVE issued shares of its common stock to DHC and DHC's shareholders such that, after giving effect to those issuances, DHC owned approximately 33.9% of FVE's outstanding common stock and DHC shareholders received shares representing approximately 51.1% of FVE's outstanding common stock. Sonesta manages a number of SVC's hotels pursuant to long term management agreements.
Related Person Transactions
Management and Advisory Services
As a result of the relationships described in this "Related Person Transactions" section, the Managed REITs, the Managed Operators, the Open End Fund, AIC RIF and ABP Trust may be considered to be related
A-2 THE RMR GROUP INC. 2021 Proxy Statement
persons of us. RMR LLC recognized management services, advisory services and reimbursable payroll and related cost revenues from these related parties for the fiscal year ended September 30, 20192020 as set forth in the following table (dollars in thousands):
THE RMR GROUP INC. 2020 Proxy Statement 39
| | For the Fiscal Year Ended September 30, | |
---|---|---|---|
| | | |
Managed Equity REITs: | | | |
DHC | | $ | |
ILPT | | | |
OPI | | | |
| | | |
| | | |
| 527,191 | | |
| | | |
Managed Operators: | | | |
| | | |
Sonesta | | 1,738 | |
TA | | 13,565 | |
| | | |
| | | |
| | | |
| |||
| |||
| |||
| |||
| |||
Other: | | | |
ABP Trust | | | |
AIC | | 98 | |
| |||
Open End Fund | | | |
RMRM | | 2,767 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| $ | (1) | |
| | | |
Our Management Agreements with the Managed Equity REITs
RMR LLC is party to a business management agreement and a property management agreement with each Managed Equity REIT. Each business management agreement requires RMR LLC to use its reasonable best efforts to present the Managed Equity REIT with a continuing and suitable real estate investment program consistent with the REIT's real estate investment policies and objectives. Each property management agreement requires RMR LLC to act as managing agent for each Managed Equity REIT's properties and devote such time, attention and effort as may be appropriate to operate and manage the Managed Equity REIT's properties in a diligent, orderly and efficient manner.
Business Management Agreement Fees. Each business management agreement between RMR LLC and a Managed Equity REIT provides for (i) an annual base management fee, payable monthly in arrears, and (ii) an annual incentive business management fee. The annual base management fee generally is calculated as the lesser of:
40 THE RMR GROUP INC. 2020 Proxy Statement
The base management fee is payable monthly in arrears.THE RMR GROUP INC. 2021 Proxy Statement A-3
The annual incentive business management fee payable by each Managed Equity REIT, if any, is calculated as follows:
THE RMR GROUP INC. 2020 Proxy Statement 41
If the business management agreement is terminated, the base business management fee and incentive business management fee due in respect of any partial period prior to the date of termination will be prorated as provided in the agreement.
Property Management Agreement Fees. No property management fees are payable by a Managed Equity REIT to RMR LLC for any hotels, senior living communities or travel centers which are leased to, or
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managed by, a Managed Operator or another operating business such as a hotel management company or a senior living or healthcare services provider. For other properties, each property management agreement between RMR LLC and a Managed Equity REIT provides for (1) a management fee equal to 3.0% of the gross rents collected from tenants and (2) a construction supervision fee equal to 5.0% of the cost of any construction, renovation or repair activities at the Managed Equity REIT's properties, other than ordinary maintenance and repairs.
Expense Reimbursement. Under each business management agreement: the Managed Equity REIT pays or reimburses RMR LLC for all of the expenses relating to the Managed Equity REIT's activities, including the costs and expenses of investigating, acquiring, owning and disposing of its real estate (third party property diligence costs, appraisal, reporting, audit and legal fees), its costs of borrowing money, its costs of securities listing, transfer, registration and compliance with reporting requirements and its costs of third party professional services, including legal and accounting fees, and as otherwise agreed; and RMR LLC bears its general and administrative expenses relating to its performance of its obligations under the agreement, including expenses of its personnel, rent and other office expenses. Also, the allocable cost of internal audit services is reimbursed by each Managed Equity REIT to RMR LLC.
Also, under each property management agreement, the Managed Equity REIT pays certain allocable expenses of RMR LLC in the performance of its duties, including wages for onsite property management personnel and allocated costs of centralized property management services.
Term and Termination. The terms of the business and property management agreements with each Managed Equity REIT end on December 31, 2039, and automatically extend on December 31st of each year so that theand have terms thereafter that end on the 20th anniversary of the date of theeach extension. A Managed Equity REIT has the right to terminate its management agreements with RMR LLC: (1) at any time upon 60 days' written notice for convenience, (2) immediately upon written notice for cause, as defined in the agreements, (3) onupon written notice given within 60 days after the end of anyan applicable calendar year for a performance reason, as defined in the agreements, and (4) by written notice during the 12 months following a manager change of control, as defined in the agreements. RMR LLC has the right to terminate the management agreements for good reason, as defined in the agreements.
If a Managed Equity REIT terminates a management agreement for convenience, or if RMR LLC terminates a management agreement with a Managed Equity REIT for good reason, the Managed Equity REIT is obligated to pay RMR LLC a termination fee equal to the sum of the present values of the monthly future fees, as defined in the agreement, payable for the remaining term of the agreement, assuming it had not been terminated. If a Managed Equity REIT terminates a management agreement for a performance reason, as defined in the agreement, the Managed Equity REIT is obligated to pay RMR LLC the termination fee calculated as described above, but assuming a remaining term of ten years.
The management agreements provide for certain adjustments to the termination fees if a Managed Equity REIT merges with another REIT to which RMR LLC is providing management services or if the Managed Equity REIT spins off a subsidiary to which it contributed properties and to which RMR LLC is providing management services, both at the time of the spin off and on the date of the expiration or termination of either of the management agreements.
A Managed Equity REIT is not required to pay any termination fee if it terminates its business or property management agreements for cause, or as a result of a manager change of control, in each case as defined in such agreements. The management agreements provide for certain proportional adjustments to the termination fees in certain circumstances.
42 THE RMR GROUP INC. 2020 Proxy Statement
Other Provisions. Under both the business and property management agreements, each Managed Equity REIT has agreed to indemnify RMR LLC, its members, officers, employees and affiliates against liabilities relating to acts or omissions of RMR LLC with respect to the provision of services by RMR LLC, except to the extent such provision of services was in bad faith or fraudulent, wasconstituted willful misconduct or was grossly negligent. In addition, each management agreement provides that any disputes, as defined in those agreements, arising out of or relating to the agreement or the provision of services pursuant thereto, upon the demand of a party to the dispute, will be subject to mandatory arbitration in accordance with procedures provided in the agreement.
THE RMR GROUP INC. Termination of SIR Management Agreements and Waiver of Termination Fees in Connection with SIR/GOV Merger.2021 Proxy Statement On December 31, 2018, SIR merged with and into a wholly owned subsidiaryA-5
Our Management Agreements with the Managed Operators
Fees. RMR LLC provides services and earns fees pursuant to a business management agreement with each of the Managed Operators. Under these agreements, RMR LLC provides services to the Managed Operators relating to, or assists them with, among other things, their compliance with various laws and rules applicable to them, capital markets and financing activities, maintenance of their properties, selection of new business sites and evaluation of other business opportunities, accounting and financial reporting, internal audit, investor relations and general oversight of the Managed Operator's daily business activities, including legal and tax matters, human resources, insurance programs and management information systems.
Each Managed Operator pays RMR LLC a fee under its business management agreement in an amount equal to 0.6% of: (i) for FVE, FVE's revenues from all sources reportable under U.S. Generally Accepted Accounting Principles ("GAAP"), other than revenues reportable by FVE with respect to properties for which FVE provides management services, plus the gross revenues of properties managed by FVE determined in accordance with GAAP; (ii) for Sonesta, Sonesta's revenues from all sources reportable under GAAP, other than any revenues reportable by Sonesta with respect to hotels for which Sonesta provides management services, plus the revenues of hotels managed by Sonesta (except to the extent such managed hotel revenues are included in Sonesta's gross revenues under GAAP); and (iii) for TA, the sum of TA's gross fuel margin, determined as TA's fuel sales revenues less its cost of fuel sales, plus TA's total nonfuel revenues. In addition, the business management agreement with each Managed Operator provides that the compensation of senior executives of the Managed Operator, who are also employees or officers of RMR LLC, is the responsibility of the party to or on behalf of which the individual renders services. In the past, because at least 80.0% of each of these executives' business time was devoted to services to the Managed Operator, 80.0% of these executives' total cash compensation was paid by the Managed Operator and the remainder was paid by RMR LLC. Each Managed Operator reimburses RMR LLC for certain expenses as provided under its business management agreement.
Term and Termination. The terms of the business management agreements with each Managed Operator end on December 31st of each year, and automatically extend for successive one year terms, unless RMR LLC or the applicable Managed Operator gives notice of non-renewal before the expiration of the applicable term. Also, a Managed Operator may terminate its business management agreement at any time (i) for FVE and TA, on 60 days' notice and RMR LLC may terminate such agreements at any time on 120 days' notice, and (ii) for Sonesta, on 30 days' notice and RMR LLC may terminate its agreement with Sonesta on 30 days' notice. If FVE or TA terminates or elects not to renew its agreement, other than for cause as defined in each agreement, the Managed Operator is obligated to pay RMR LLC a termination fee equal to 2.875 times the sum of the annual base management fee and the annual internal audit services expense, which amounts are based on averages during the 24 consecutive calendar months prior to the date of notice of nonrenewal or termination.
Other Provisions. Each Managed Operator has agreed to indemnify RMR LLC, its members, officers, employees and affiliates against liabilities relating to acts or omissions of RMR LLC with respect to the provision of services by RMR LLC, except to the extent such provision of services was in bad faith or was grossly negligent. In addition, each agreement provides that any disputes, as defined in those agreements, arising out of or relating to the agreement or the provision of services pursuant thereto, upon the demand of a party to the dispute, shall be subject to mandatory arbitration in accordance with procedures provided in the agreement.
Our Management Agreements with ABP Trust, AIC and the Open End Fund
RMR LLC provides business and property management services to our controlling shareholder, ABP Trust, for which it receives, depending upon the services provided, a business management fee in an annual amount equal to 0.5% of ABP Trust's average invested capital (effective January 1, 2020) and 0.6% of ABP Trust's revenues from all sources reportable under GAAP (prior to January 1, 2020), a property management fee in an amount equal to 3.0% of rents collected from managed properties and a construction supervision fee in an amount equal to 5.0% of the cost of any construction, renovation or repair activities at the managed properties, other than ordinary maintenance and repairs.
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Until its dissolution on February 13, 2020, RMR LLC provided business management services to AIC for a fee calculated as 3.0% of the total premiums paid for insurance arranged by AIC. AIC's property insurance program expired on June 30, 2019 and was not continued. As a result, AIC has not incurred any management fees payable to RMR LLC since that date.
Until its dissolution on July 28, 2020, RMR LLC managed the Open End Fund and received annual fund administration fees equal to 1.0% of the Open End Fund's net asset value, property management fees equal to 3.0% of all rents collected from commercial real estate investments, and 5.0% of costs of construction or any improvement at commercial real estate investments held by the Open End Fund. In connection with the dissolution of the Open End Fund, the Transaction Agreement, dated as of July 31, 2018, between ABP Trust and RMR LLC was terminated and all of the properties that ABP Trust initially contributed to the Open End Fund were transferred back to ABP Trust.
Our Management Agreements with the Tremont Advisory Clients
Tremont Advisors is party to a management agreement with each of the Tremont Advisory Clients. Under each management agreement, Tremont Advisors will implement the business strategies of each Tremont Advisory Client subject to the oversight of the respective Tremont Advisory Client's board of trustees or board of directors, as applicable. Tremont Advisors is also responsible for each Tremont Advisory Client's day to day operations and to perform (or cause to be performed) corporate office functions for the Tremont Advisory Client. In June 2018, Tremont Advisors agreed to waive any business management fees otherwise due and payable by TRMT pursuant to the management agreement for the period beginning July 1, 2018 until June 30,December 31, 2020. In addition, no incentive fee was or will be paid or payable by TRMT to Tremont Advisors for the 2018, 2019 or 20192020 calendar years.
Fees and Expense Reimbursements. Under the management agreements, each Tremont Advisory Client is responsible to pay Tremont Advisors the following:
Fees.:
Each Managed Operator pays RMR LLC a fee under its business management agreement in an annual base management feeamount equal to 1.5%0.6% of: (i) for FVE, FVE's revenues from all sources reportable under U.S. Generally Accepted Accounting Principles ("GAAP"), other than revenues reportable by FVE with respect to properties for which FVE provides management services, plus the gross revenues of TRMT's equity, payableproperties managed by FVE determined in cash quarterly (0.375% per quarter)accordance with GAAP; (ii) for Sonesta, Sonesta's revenues from all sources reportable under GAAP, other than any revenues reportable by Sonesta with respect to hotels for which Sonesta provides management services, plus the revenues of hotels managed by Sonesta (except to the extent such managed hotel revenues are included in arrears. Under the management agreement, "equity" means (a)Sonesta's gross revenues under GAAP); and (iii) for TA, the sum of (i)TA's gross fuel margin, determined as TA's fuel sales revenues less its cost of fuel sales, plus TA's total nonfuel revenues. In addition, the proceeds receivedbusiness management agreement with each Managed Operator provides that the compensation of senior executives of the Managed Operator, who are also employees or officers of RMR LLC, is the responsibility of the party to or on behalf of which the individual renders services. In the past, because at least 80.0% of each of these executives' business time was devoted to services to the Managed Operator, 80.0% of these executives' total cash compensation was paid by TRMT from its initial public offering (the "TRMT IPO")the Managed Operator and the concurrent private placement ofremainder was paid by RMR LLC. Each Managed Operator reimburses RMR LLC for certain expenses as provided under its common shares to Tremont Advisors, plus (ii) the net proceeds received by TRMT from any future sale or issuance of shares of beneficial interest of TRMT, plus (iii) TRMT's cumulative core earnings (as defined in thebusiness management agreement) for the period commencing on the completionagreement.
Term and Termination. The terms of the TRMT IPO tobusiness management agreements with each Managed Operator end on December 31st of each year, and automatically extend for successive one year terms, unless RMR LLC or the endapplicable Managed Operator gives notice of non-renewal before the expiration of the most recent calendar quarter, less (b) (i) any distributions previously paid to holders ofapplicable term. Also, a Managed Operator may terminate its common shares, (ii) any incentive fee previously paid to Tremont Advisors and (iii) any amount that TRMT may have paid to repurchase its common shares. All items in the foregoing sentence (other than clause (a)(iii)) are calculated on a daily weighted average basis.
THE RMR GROUP INC. 2020 Proxy Statement 43
For purposes of the calculation of base management fees and incentive fees payable to Tremont Advisors by each of TRMT and Centre Street, "core earnings" is defined as net income (or loss) (for TRMT, net income (or loss) attributable to common shareholders) computed in accordance with generally accepted accounting principles in the United States ("GAAP"), including realized losses not otherwise included in GAAP net income (loss), and excluding: (a) the incentive fees earned by Tremont Advisors; (b) depreciation and amortization (if any); (c) non cash equity compensation expense (if any); (d) unrealized gains, losses and other similar non-cash items that are included in net income for the period of the calculation (regardless of whether such items are included in or deducted from net income or in other comprehensive income or loss under GAAP); and (e) one-time events pursuant to changes in GAAP and certain material non cash income or expense items (for TRMT, in each case after discussions between Tremont Advisors and the independent trustees of TRMT and approved by a majority of such independent trustees). Pursuant to the terms of each management agreement, the exclusion of depreciation and amortization from the calculation of core earnings shall only apply to owned real estate. Shares of beneficial interest of each Tremont Advisory Client that are entitled to a specific periodic distribution or have other debt characteristics will not be included in equity for the purpose of calculating incentive fees payable to Tremont Advisors. Instead, the aggregate distribution amount that accrues to such shares during the calendar quarter of such calculation will be subtracted from core earnings for purposes of calculating incentive fees, unless such distribution is otherwise already excluded from core earnings. Equity and core earningscause as defined in each management agreement, are non GAAP financial measures and may be different than shareholders' equity and net income of each Tremont Advisory Client calculated according to GAAP.
44 THE RMR GROUP INC. 2020 Proxy Statement
Term and Termination. The initial term of the management agreement with TRMT ends on December 31, 2020, and the agreement will automatically renew for successive one year terms beginning January 1, 2021 and each January 1 thereafter, unless it is sooner terminated upon written notice delivered no later than 180 days prior to a renewal date by the affirmative vote of at least two thirds (2/3) of the independent trustees of TRMT based upon a determination that (a) Tremont Advisors' performance is unsatisfactory and materially detrimental to TRMT or (b) the base management fee and incentive fee, taken as a whole, payable to Tremont Advisors under the management agreement are not fair to TRMT (provided that in the instance of (b), Tremont Advisors will be afforded the opportunity to renegotiate the base management fee and incentive fee prior to termination). The management agreement may be terminated by Tremont Advisors before each annual renewal upon written notice delivered to the board of trustees of TRMT no later than 180 days prior to an annual renewal date.
Tremont Advisors may terminate the management agreement if TRMT becomes required to register as an investment company under the Investment Company Act of 1940, as amended (the "Investment Company Act"), with such termination deemed to occur immediately before such event. In addition, Tremont Advisors may terminate the management agreement upon 60 days' written notice for a material breach by TRMT, as defined in the management agreement, which includes if TRMT defaults in the performance or observance of any material term, condition or covenant contained in the management agreement, the consequence of which was materially adverse to Tremont Advisors and which did not result from and was not attributable to any action, or failure to act, of Tremont Advisors and the default continues for a period of 30 days after written notice to TRMT requesting that the default be remedied within that period, TRMT materially reduces Tremont Advisors' duties and responsibilities or scope of its authority under the management agreement or TRMT ceases or take steps to cease to conduct the business of originating or investing in commercial real estate loans.
The initial term of the management agreement with Centre Street ends on December 31, 2022, and the agreement will automatically renew for successive one year terms beginning January 1, 2023 and each January 1 thereafter. Centre Street and Tremont Advisors each have the right, upon 60 days' prior written notice to the other party, to terminate the management agreement in its entirety.
Other ProvisionsProvisions.. TRMT Each Managed Operator has agreed to indemnify Tremont Advisors and its affiliates, including RMR LLC, its members, officers, employees and affiliates against liabilities relating to acts or omissions of such partyRMR LLC with respect to the provision of services to TRMT,by RMR LLC, except to the extent such provision of services was in bad faith or was grossly negligent. In addition, the managementeach agreement provides that any disputes, as defined in thethose agreements, arising out of or relating to the agreement or the provision of services pursuant thereto, upon the demand of a party to the dispute, shall be subject to mandatory arbitration in accordance with procedures provided in the agreement.
Our Management Agreements with ABP Trust, AIC and the Open End Fund
RMR LLC provides business and property management services to our controlling shareholder, ABP Trust, for which it receives, depending upon the services provided, a business management fee in an annual amount equal to 0.5% of ABP Trust's average invested capital (effective January 1, 2020) and 0.6% of ABP Trust's revenues from all sources reportable under GAAP (prior to January 1, 2020), a property management fee in an amount equal to 3.0% of rents collected from managed properties and a construction supervision fee in an amount equal to 5.0% of the cost of any construction, renovation or repair activities at the managed properties, other than ordinary maintenance and repairs.
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Until its dissolution on February 13, 2020, RMR LLC provided business management services to AIC for a fee calculated as 3.0% of the total premiums paid for insurance arranged by AIC. AIC's property insurance program expired on June 30, 2019 and was not continued. As a result, AIC has not incurred any management fees payable to RMR LLC since that date.
Until its dissolution on July 28, 2020, RMR LLC managed the Open End Fund and received annual fund administration fees equal to 1.0% of the Open End Fund's net asset value, property management fees equal to 3.0% of all rents collected from commercial real estate investments, and 5.0% of costs of construction or any improvement at commercial real estate investments held by the Open End Fund. In connection with the dissolution of the Open End Fund, the Transaction Agreement, dated as of July 31, 2018, between ABP Trust and RMR LLC was terminated and all of the properties that ABP Trust initially contributed to the Open End Fund were transferred back to ABP Trust.
Our Management Agreements with the Tremont Advisory Clients
Tremont Advisors is party to a management agreement with each of the Tremont Advisory Clients. Under each management agreement, Tremont Advisors will implement the business strategies of each Tremont Advisory Client subject to the oversight of the respective Tremont Advisory Client's board of trustees or board of directors, as applicable. Tremont Advisors is also responsible for each Tremont Advisory Client's day to day operations and to perform (or cause to be performed) corporate office functions for the Tremont Advisory Client. Tremont Advisors agreed to waive any business management fees otherwise due and payable by TRMT pursuant to the management agreement for the period beginning July 1, 2018 until December 31, 2020. In addition, no incentive fee was or will be paid or payable by TRMT to Tremont Advisors for the 2018, 2019 or 2020 calendar years.
Fees and Expense Reimbursements. Under the management agreements, each Tremont Advisory Client is responsible to pay Tremont Advisors the following:
FeesFees.. RMR LLC provides services and earns fees pursuant to a business management agreement with each of the Managed Operators. Under these agreements, RMR LLC provides services to the Managed Operators relating to, or assists them with, among other things, their compliance with various laws and rules applicable to them, capital markets and financing activities, maintenance of their properties, selection of new business sites and evaluation of other business opportunities, accounting and financial reporting, internal audit, investor relations and general oversight of the company'sManaged Operator's daily business activities, including legal and tax matters, human resources, insurance programs and management information systems.
Each Managed Operator pays RMR LLC a fee under its business management agreement in an amount equal to 0.6% of: (i) for FVE, FVE's revenues from all sources reportable under GAAPU.S. Generally Accepted Accounting Principles ("GAAP"), other than revenues reportable by FVE with respect to properties for which FVE provides management services, plus the gross revenues of properties managed by FVE determined in accordance with GAAP; (ii) for Sonesta, Sonesta's revenues from all sources reportable under GAAP, other than any revenues reportable by Sonesta with respect to hotels for which Sonesta provides management services, plus the revenues of hotels managed by Sonesta (except to the extent such managed hotel revenues are included in Sonesta's gross revenues under GAAP); and (iii) for TA, the sum of TA's gross fuel margin, determined as TA's fuel sales revenues less its cost of fuel sales, plus TA's total nonfuel revenues. In addition, the business management agreement with each Managed Operator provides that the compensation of senior executives of the Managed Operator, who are also employees or officers of RMR LLC, is the responsibility of the party to or on behalf of which the individual renders services. In the past, because at least 80.0% of each of these executives' business time was devoted to services to the Managed Operator, 80.0% of these executives' total cash compensation was paid by the Managed Operator and the remainder was paid by RMR LLC. Each Managed Operator reimburses RMR LLC for certain expenses as provided under its business management agreement.
Term and TerminationTermination.. The terms of the business management agreements with each Managed Operator end on December 31 2020,st of each year, and automatically extend for successive one year terms, unless RMR LLC or the applicable Managed Operator gives notice of non-renewal before the expiration of the applicable term. Also, a Managed Operator may terminate its business management agreement at any time (i) for FVE and TA, on 60 days' notice and RMR LLC may terminate such agreements at any time on 120 days' notice, and (ii) for Sonesta, on 30 days' notice and RMR LLC may terminate its agreement with Sonesta on 30 days' notice. If FVE or TA terminates or elects not to renew its agreement, other than for cause as defined in each agreement, the Managed Operator is obligated to pay RMR LLC a termination fee equal to 2.875 times the sum of the annual base management fee and the annual internal audit services expense, which amounts are based on averages during the 24 consecutive calendar months prior to the date of notice of nonrenewal or termination.
Other ProvisionsProvisions.. Each Managed Operator has agreed to indemnify RMR LLC, its members, officers, employees and affiliates against liabilities relating to acts or omissions of RMR LLC with respect to the provision of services by RMR LLC, except to the extent such provision of services was in bad faith or was grossly negligent. In addition, each agreement provides that any disputes, as defined in those agreements, arising out of or relating to the agreement or the provision of services pursuant thereto, upon the demand of a party to the dispute, shall be subject to mandatory arbitration in accordance with procedures provided in the agreement.
Our Advisory AgreementManagement Agreements with RIFABP Trust, AIC and the Open End Fund
RMR Advisors is partyLLC provides business and property management services to an investment advisory agreement with RIF, pursuant toour controlling shareholder, ABP Trust, for which it provides RIF withreceives, depending upon the services provided, a continuous investment program, makes day to day investment decisions and generally manages the business affairs of RIFmanagement fee in accordance with its investment objectives and policies. RMR Advisors is compensated pursuant to that agreement at an annual rateamount equal to 0.5% of 0.85%ABP Trust's average invested capital (effective January 1, 2020) and 0.6% of RIF's average dailyABP Trust's revenues from all sources reportable under GAAP (prior to January 1, 2020), a property management fee in an amount equal to 3.0% of rents collected from managed assets, as definedproperties and a construction supervision fee in an amount equal to 5.0% of the agreement. Average daily managed assets includes the net asset value attributable to RIF's outstanding common shares, plus the liquidation preference of RIF's outstanding preferred shares plus the principal amountcost of any borrowings, including from banksconstruction, renovation or evidenced by notes, commercial paper orrepair activities at the managed properties, other similar instruments issued by RIF.than ordinary maintenance and repairs.
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The investment advisory agreement continues until September 7,Until its dissolution on February 13, 2020, and continues thereafter from year to year or for such longer term as may be approved by RIF's board of trustees, as permitted by the Investment Company Act. So long as required by the Investment Company Act, the agreement is terminable by RIF on 60 days' notice and automatically in the event of an assignment, as defined in the Investment Company Act.
RMR Advisors LLC is also responsible for certain administrative functions of RIF pursuant to an administration agreement with RIF. RMR Advisors has entered into a sub administration agreement with State Street Bank and Trust Company, ("State Street"), to perform substantially all fund accounting and other administrative services for RIF. RIF paid State Street directly, and no additional administrative services fee was paid to RMR Advisors.
Our Management Agreements with AIC, ABP Trust and the Open End Fund
RMR LLC provided business management services to AIC for a fee calculated as 3.0% of the total premiums paid for insurance arranged by AIC. AIC's property insurance program expired on June 30, 2019 and was not continued. As a result, AIC has not incurred any management fees payable to RMR LLC since that date. As noted above, AIC is currently in the process of dissolving.
Until its dissolution on July 28, 2020, RMR LLC provides business and property management services to our controlling shareholder, ABP Trust, for which it receives, depending upon the services provided, a business management fee in an annual amount equal to 0.6% of ABP Trust's revenues from all sources reportable under GAAP, a property management fee in an amount equal to 3.0% of rents collected from managed properties and a construction supervision fee in an amount equal to 5.0% of the cost of any construction, renovation or repair activities at the managed properties, other than ordinary maintenance and repairs.
RMR LLC manages the Open End Fund and receivesreceived annual fund administration fees equal to 1.0% of the Open End Fund's net asset value, property management fees equal to 3.0% of all rents collected from commercial real estate investments, and 5.0% of costs of construction or any improvement at commercial real estate investments held by the Open End Fund. In connection with the dissolution of the Open End Fund, the Transaction Agreement, dated as of July 31, 2018, between ABP Trust and RMR LLC was terminated and all of the properties that ABP Trust initially contributed to the Open End Fund were transferred back to ABP Trust.
Our Management Agreements with the Tremont Advisory Clients
Tremont Advisors is party to a management agreement with each of the Tremont Advisory Clients. Under each management agreement, Tremont Advisors will implement the business strategies of each Tremont Advisory Client subject to the oversight of the respective Tremont Advisory Client's board of trustees or board of directors, as applicable. Tremont Advisors is also responsible for each Tremont Advisory Client's day to day operations and to perform (or cause to be performed) corporate office functions for the Tremont Advisory Client. Tremont Advisors agreed to waive any business management fees otherwise due and payable by TRMT pursuant to the management agreement for the period beginning July 1, 2018 until December 31, 2020. In addition, no incentive fee was or will be paid or payable by TRMT to Tremont Advisors for the 2018, 2019 or 2020 calendar years.
Fees and Expense Reimbursements. Under the management agreements, each Tremont Advisory Client is responsible to pay Tremont Advisors the following:
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core earnings (as defined in the management agreement) for the period commencing on December 18, 2019 to the end of the most recent calendar quarter, less (ii) (A) any distributions previously paid to Centre Street's sole member, and (B) any incentive fee previously paid by Centre Street to Tremont Advisors. All items in the foregoing sentence shall be calculated on a daily weighted average basis.
For purposes of the calculation of base management fees and incentive fees payable to Tremont Advisors by each of RMRM, TRMT and Centre Street, "core earnings" is defined as net income (or loss) (for RMRM and TRMT, net income (or loss) attributable to common shareholders) computed in accordance with GAAP, including realized losses not otherwise included in GAAP net income (loss), and excluding: (a) the incentive fees earned by Tremont Advisors; (b) depreciation and amortization (if any); (c) non cash equity compensation expense (if any); (d) unrealized gains, losses and other similar non-cash items that are included in net income for the period of the calculation (regardless of whether such items are included in or deducted from net income or in other comprehensive income or loss under GAAP); and (e) one-time events pursuant to changes in GAAP and certain material non cash income or expense items (for RMRM and TRMT, in each case after discussions between Tremont Advisors and the independent trustees of such Tremont Advisory Client and approved by a majority of such independent trustees). Pursuant to the terms of each management agreement, the exclusion of depreciation and amortization from the calculation of core earnings shall only apply to owned real estate. Shares of beneficial interest of each Tremont Advisory Client that are entitled to a specific periodic distribution or have other debt characteristics will not be included in equity for the purpose of calculating incentive fees payable to Tremont Advisors. Instead, the aggregate distribution amount that accrues to such shares during the calendar quarter of such calculation will be subtracted from core earnings for purposes of calculating incentive fees, unless such distribution is otherwise already excluded from core earnings. Equity and core earnings as defined in each management agreement are non-GAAP financial measures and may be different than shareholders' equity and net income of each Tremont Advisory Client calculated according to GAAP.
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occurs within 24 months of its initial commencement, the base management fee and the incentive fee will be annualized for such two year period based on such fees earned by Tremont Advisors during such period, plus $1.6 million. No termination fee will be payable if the management agreement is terminated by the applicable Tremont Advisory Client for a cause event or by Tremont Advisors without such Tremont Advisory Client's material breach.
Term and Termination. The initial term of the management agreement with RMRM ends on December 31, 2023, and the agreement will automatically renew for successive one year terms beginning January 1, 2024 and each January 1 thereafter, unless it is sooner terminated upon written notice delivered no later than 180 days prior to a renewal date by the affirmative vote of at least two thirds (2/3) of the independent trustees of RMRM based upon a determination that (a) Tremont Advisors' performance is unsatisfactory and materially detrimental to RMRM or (b) the base management fee and incentive fee, taken as a whole, payable to Tremont Advisors under the management agreement are not fair to RMRM (provided that in the instance of (b), Tremont Advisors will be afforded the opportunity to renegotiate the base management fee and incentive fee prior to termination). The management agreement may be terminated by Tremont Advisors before each annual renewal upon written notice delivered to the board of trustees of RMRM no later than 180 days prior to an annual renewal date.
The term of the management agreement with TRMT automatically renews for successive one year terms each January 1, unless it is sooner terminated upon written notice delivered no later than 180 days prior to a renewal date by the affirmative vote of at least two thirds (2/3) of the independent trustees of TRMT based upon a determination that (a) Tremont Advisors' performance is unsatisfactory and materially detrimental to TRMT or (b) the base management fee and incentive fee, taken as a whole, payable to Tremont Advisors under the management agreement are not fair to TRMT (provided that in the instance of (b), Tremont Advisors will be afforded the opportunity to renegotiate the base management fee and incentive fee prior to termination). The management agreement may be terminated by Tremont Advisors before each annual renewal upon written notice delivered to the board of trustees of TRMT no later than 180 days prior to an annual renewal date.
For each of RMRM and TRMT, Tremont Advisors may terminate the management agreement if the Tremont Advisory Client becomes required to register as an investment company under the Investment Company Act of 1940, as amended (the "Investment Company Act"), with such termination deemed to occur immediately before such event. In addition, Tremont Advisors may terminate the management agreement upon 60 days' written notice for a material breach by the Tremont Advisory Client, as defined in each respective management agreement, which includes if the Tremont Advisory Client defaults in the
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performance or observance of any material term, condition or covenant contained in the management agreement, the consequence of which was materially adverse to Tremont Advisors and which did not result from and was not attributable to any action, or failure to act, of Tremont Advisors and the default continues for a period of 30 days after written notice to the Tremont Advisory Client requesting that the default be remedied within that period, the Tremont Advisory Client materially reduces Tremont Advisors' duties and responsibilities or scope of its authority under the management agreement or the Tremont Advisory Client ceases or take steps to cease to conduct the business of originating or investing in commercial real estate loans.
The initial term of the management agreement with Centre Street ends on December 31, 2022, and the agreement will automatically renew for successive one year terms beginning January 1, 2023 and each January 1 thereafter. Centre Street and Tremont Advisors each have the right, upon 60 days' prior written notice to the other party, to terminate the management agreement in its entirety.
Other Provisions. Each of RMRM and TRMT has agreed to indemnify Tremont Advisors and its affiliates, including RMR LLC, its members, officers, employees and affiliates against liabilities relating to acts or omissions of such party with respect to the provision of services to the applicable Tremont Advisory Client, except to the extent such provision of services was in bad faith or was grossly negligent. In addition, the management agreement provides that any disputes, as defined in the agreements, arising out of or relating to the agreement or the provision of services pursuant thereto, upon the demand of a party to the dispute, shall be subject to mandatory arbitration in accordance with procedures provided in the agreement.
Reimbursable Compensation and Benefits
Reimbursable compensation and benefits include reimbursements, at cost, that arise primarily from services RMR LLC provides pursuant to its property management agreements, a significant portion of which are charged or passed through to and were paid by tenants of our client companies. RMR LLC realized reimbursable compensation and benefits for the fiscal year ended September 30, 20192020 of approximately $57.5$57.3 million. Included in reimbursable compensation and benefits are shared services fees RMR LLC earns from TRMT for compensation and other costs related to the operation of the Tremont business. RMR LLC earned shared services fees from TRMT of approximately $1.4 million for the fiscal year ended September 30, 2019. Reimbursable compensation and benefits also include grants of common shares from the client companies directly to certain of RMR LLC's officers and employees in connection with the provision of management services to those companies. For the fiscal year ended September 30, 2019,2020, we recognized approximately $6.5$4.9 million for these equity based compensation expenseexpenses and related reimbursements.
Other Client Company Reimbursable Expenses
Other client company reimbursable expenses include other reimbursements, at cost, that arise from services RMR LLC provides pursuant to its property management agreements, a significant portion of which are charged or passed through to and were paid by tenants of our client companies. RMR LLC recognized other client company reimbursable expenses for the fiscal year ended September 30, 20192020 of approximately $354.5$360.6 million.
Share Awards by Our Public Client Companies
Our public client companies annually award equity grants to certain of our Directors, officers and employees. During the fiscal year ended September 30, 2019,2020, the compensation committees of the
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Managed REITs (which at such time did not include RMRM) and the public Managed Operators awarded common shares directly to such persons in connection with their service as directors, trustees or officers of, or the provision of services to, those companies. Based on their grant date values, the aggregate value of such awards was as follows: $1.6$1.4 million from DHC; $2.3$2.5 million from ILPT; $3.1$2.5 million from OPI; $3.5$2.2 million from SVC; $0.1$0.2 million from FVE; $1.7$1.4 million from TA; and $0.2 million from TRMT. On occasion, our public client companies have entered into arrangements with former employees of RMR LLC in connection with the termination of their employment with RMR LLC, providing for the acceleration of vesting of common shares previously awarded to them under the respective companies' equity compensation plan.
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Purchase of TA Shares
On July 6, 2020, RMR LLC purchased 218,577 shares of TA common stock in an underwritten public equity offering. RMR LLC paid an aggregate purchase price of approximately $3.1 million for these shares. On September 30, 2020, RMR LLC purchased 104,738 shares of TA common stock from Andrew J. Rebholz, TA's former managing director and chief executive officer, and RMR LLC's former executive officer, pursuant to a right of first refusal. RMR LLC paid an aggregate purchase price of approximately $2.3 million for these shares. As of September 30, 2020, RMR LLC owned 621,853 shares of TA common stock, or approximately 4.3% of TA's then outstanding shares of common stock.
The Up-C Transaction
The transaction by which, among other things, DHC, (then known as SNH), OPI, (then known as GOV), SIRSelect Income REIT (now part of OPI) and SVC, the four then existing Managed Equity REITs, acquired 15,000,000 Class A Common Shares (the "Up-C Transaction") from us, was completed on June 5, 2015 pursuant to transaction agreements, we, RMR LLC and ABP Trust entered with each of such Managed Equity REIT. On July 1, 2019, DHC, OPI (including the shares Select Income REIT had acquired) and SVC sold all their Class A Common Shares in an underwritten public offering at a price to the public of $40.00 per share pursuant to an underwriting agreement among us, those Managed Equity REITs and the underwriters named therein. In addition to the amended and restated business management agreement and amended and restated property management agreement RMR LLC entered with each such Managed Equity REIT, the Company iswe are party to the agreements described below which were entered into on June 5, 2015 in connection with the Up-C Transaction:
As of September 30, 2019,2020, we had recorded a liability of approximately $32.1$30.0 million payable to ABP Trust under the tax receivable agreement, which relates to our purchase of 15,000,000 class A membership units of RMR LLC in the Up-C Transaction. During the fiscal year ended September 30, 2019,2020, we paid approximately $2.1 million to ABP Trust pursuant to the tax receivable agreement. Future redemptions of ABP Trust's class A membership units of RMR LLC, if and when they occur, are expected to give rise to increases in the tax basis of the
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assets of RMR LLC attributable to our interests in RMR LLC. Such increases in tax basis are likely to increase (for tax purposes) amortization deductions and therefore reduce the amount of
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income tax we would otherwise be required to pay in the future. These increases in tax basis may also decrease gain (or increase loss) on future dispositions of certain assets to the extent the increased tax basis is allocated to those assets. As a result, any such future redemptions are expected to increase the amounts payable to ABP Trust under the tax receivable agreement.
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matters in which it is established that the individual in question received an improper benefit or undertook active and deliberate dishonesty. We, our affiliates and executive officers, the tax matters partner of RMR LLC and the executive officers of RMR LLC will not be liable to RMR LLC or to any non-managing member of RMR LLC for any act or omission performed or omitted by or on behalf of the individual or entity in question in such capacity, with an exception for certain matters for which it is established that the person received an improper benefit or undertook active and deliberate dishonesty.
Agreements with RMR Office Property Fund LP
On August 31, 2018, ABP Trust, which is controlled by Adam Portnoy, formed the Open End Fund. A subsidiary of ABP Trust is the general partner of the Open End Fund. In connection with the formation of the Open End Fund, ABP Trust contributed 15 properties to the Open End Fund with an aggregate value of $206.3 million in exchange for 206,300 limited partnership units in the Open End Fund and RMR LLC committed to contribute up to $100.0 million to the Open End Fund when called by the general partner in exchange for 100,000 limited partnership units in the Open End Fund. The valuation of the 15 properties contributed to the Open End Fund by ABP Trust was agreed to by a special committee of our Board consisting of members that were unaffiliated with ABP Trust and with the assistance of an independent third party appraiser. This same special committee also approved RMR LLC's $100.0 million capital commitment to the Open End Fund. RMR LLC provides management and administrative services to the Open End Fund pursuant to management agreements. The terms of these management agreements continue until the earlier of (i) the date on which the Open End Fund is liquidated and (ii) the date that the current general partner of the Open End Fund is removed from that position.
Leases
As of September 30, 2019,2020, RMR LLC leased office space for use as its headquarters and other offices under various lease agreements with ABP Trust and certain Managed Equity REITs. For the fiscal year ended September 30, 2019,2020, RMR LLC incurred rental expense under these leases aggregating $5.6 million. Generally, the rents RMR LLC pays the Managed Equity REITs were set at the average building rent for third party tenants in the same buildings at the time the leases were entered and the leases were approved by the independent trustees of the applicable Managed Equity REIT. The rents RMR LLC pays to ABP Trust were set based upon a survey of comparable market rents at the time the leases were entered. These leases have various termination dates and several have renewal options. Also, some of these leases allow RMR LLC to terminate such lease early if RMR LLC's management agreements applicable to the buildings in which RMR LLC leases space are terminated.
Other
Effective December 15, 2019, Andrew J. Rebholz resigned his position as an Executive Vice President and employee of RMR LLC and as chief executive officer and as one of the managing directors of TA. In connection with Mr. Rebholz's planned retirement, on December 13, 2019, TA and RMR LLC,October 2020, we entered into a retirement agreement with Mr. Rebholz.David M. Blackman, a former Executive Vice President of RMR LLC. Pursuant to his retirement agreement, Mr. RebholzBlackman continued to serve as president, chief executive officer and a director of Tremont Advisors, president, chief executive officer and managing trustee of TRMT, president, chief executive officer and managing trustee of OPI, and executive vice president of RMR Advisors LLC through December 31, 2020 and will continue to serve as a managing trustee of OPI until June 30, 2021 or such earlier time as his successor managing trustee is elected to OPI's board of trustees. In addition, Mr. Blackman will continue to serve as an employee of RMR LLC through June 30, 2020.2021. Under Mr. Rebholz'sBlackman's retirement agreement, consistent with past practice, RMR LLC and TA will continueagreed to pay Mr. Rebholz his current aggregate annual base salary of $0.375 million until June 30, 2020 and they paid him an aggregateBlackman combined cash bonus in respect of 2019payments in the amount of $1.25$2.85 million, in December 2019; 80.0%with half of these amounts were and willthat amount expected to be paid on or about January 31, 2021 and the other half expected to be paid on or about July 31, 2021. In addition, in October 2020, our Compensation Committee approved the acceleration of all 9,400 unvested shares owned by TA and RMR LLC will pay 20.0%. Pursuant toMr. Blackman of us as of his retirement agreement, Mr. Rebholz granted to TA or its nominee a first right of refusal in the event he determines to sell any of his shares of TA, pursuant to which TA may elect during a specified period to purchase those shares at the average closing price per share for the ten trading days preceding the date, of his written notice to TA of his intent to sell. In the event that TA declines to exercise its purchase right, RMR LLC may elect to purchase such shares at the price offered to TA. Mr. Rebholz also agreed that, as long as he owns shares in the Company, DHC, ILPT, OPI, SVC, TA, FVE or TRMT, he will vote those shares at shareholders' meetings in favor of nominees for director or trustee, as applicable, and proposals recommended by the Board or the board of trustees or board of directors, as applicable, of such other companies. RMR LLC and TA also agreed to pay Mr. Rebholz a combined cash payment of $1.25 million in 2020,June 30, 2021, subject to certain conditions; TA will
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pay 80.0%, and RMR LLC will pay 20.0% of this amount.conditions set forth in his retirement agreement. Mr. Rebholz'sBlackman's retirement agreement contains other terms and conditions, including cooperation, confidentiality, non-solicitation, non-competition and other covenants, and a waiver and release. Mr. Rebholz's retirement agreement also contains certain terms relating to TA.
DavidEffective December 15, 2019, Andrew J. Hegarty, Mark L. Kleifges, Bruce J. Mackey Jr., Thomas M. O'Brien and John C. Popeo, eachRebholz, a former Executive Vice President of RMR LLC, retiredresigned from and resigned theirhis RMR LLC officer positions between November 29, 2017 and December 31, 2018. Weposition. In connection with his planned retirement, we entered into a retirement agreementsagreement with these former officers in connection with their retirements.Mr. Rebholz. Pursuant to these agreements,this agreement, we made various cash payments and accelerated the vesting of unvested shares RMR Inc. previously awarded to these retiring officers.Mr. Rebholz. We also enter into separation arrangements from time to time with other nonexecutive officers and employees of ours. As of September 30, 2019, there remained no further substantive performance obligations with respect to any such arrangements. For the fiscal year ended September 30, 2019,2020, we recognized separation costs of $6.8$0.5 million in connection with the resignations and retirements of our executive officers.
In October 2019, the board of trustees of RIF approved a proposal by RMR Advisors to change its business from a registered investment company to a mortgage REIT (the "Business Change Proposal") and directed that such proposal be submitted for consideration of the shareholders of RIF at a special meeting to be held in 2020. RMR Advisors agreed to pay all third party costs and expenses related to consideration and approval of the Business Change Proposal.Mr. Rebholz's retirement.
We, DHC, ILPT, OPI, SVC, FVE, TA, RMRM and TRMT participate in a combined directors' and officers' liability insurance policy for primary coverage, including errors and omissions coverage for RMR LLC. We paid a premium of $0.2 million for this coverage for the policy year ending September 30, 2019. We paid a premium of $0.1 million for this coverage for each of the policy yearyears ending September 30, 2020.2020 and 2021. The premiums for the combined policy were allocated among the insured companies after consultation with our insurance broker.
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Pursuant to RMR LLC's management agreements with our client companies, RMR LLC may from time to time negotiate on behalf of such entities with certain third party vendors and suppliers for the procurement of services to them. As part of this arrangement, these entities may enter agreements with RMR LLC and other companies to which RMR LLC provides management services for the purpose of obtaining more favorable terms from such vendors and suppliers.
We conduct a Leadership Development Program for which certain of our employees take part in a two year rotational program, working at each of RMR LLC, FVE, TA and Sonesta. The employee remains on our payroll during this rotational program and the Managed Operators reimburse us for the applicable employee costs for the period of time that the employee works for it.
We and our public client companies have in the past held, and likely will in the future hold, business meetings at Sonesta operated hotels from time to time, and the directors, trustees, officers and employees of us and our public client companies have in the past stayed, and are likely in the future to stay, overnight at Sonesta operated hotels when traveling for business. The applicable company pays Sonesta for the use of meeting space and related services and pays Sonesta or reimburses its directors, trustees, officers or employees for the costs of these hotel stays.
For more information about related person transactions, please see the proxy statements and periodic reports filed with the SEC by our public client companies, i.e., DHC, ILPT, OPI, SVC, FVE, TA, TRMTRMRM and RIF.TRMT. These SEC filed proxy statements and periodic reports are available at www.sec.gov.www.sec.gov. Those documents are not incorporated by reference into this Proxy Statement. Also, please see Note 6, Related Person Transactions, included in the audited consolidated financial statements included in our Annual Report for additional information regarding related party transactions for the fiscal year ended September 30, 2019.2020.
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At this time, the Company knows of no other matters that will be brought before the meeting. If, however, other matters properly come before the meeting or any postponement or adjournment thereof, the persons named in the accompanying proxy card intend to vote the shares for which they have been appointed or authorized as proxy in accordance with their discretion on such matters to the maximum extent that they are permitted to do so by applicable law.
Jennifer B. ClarkManaging Director, Executive Vice President, General Counsel and Secretary
Newton, MassachusettsJanuary 16, 2020
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THANK YOU
Thank you for being a shareholder of The RMR Group Inc.
AUTHORIZE YOUR PROXY BY INTERNET - www.proxyvote.com Use the internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern time,Time, on March 10, 2020.2021. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to submit your voting instructions. AUTHORIZE YOUR PROXY BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern time,Time, on March 10, 2020.2021. Have your proxy card in hand when you call and then follow the instructions. If the meeting is postponed or adjourned, the above times will be extended to 11:59 p.m., Eastern time,Time, on the day before the reconvened meeting. AUTHORIZE YOUR PROXY BY MAIL Mark, sign and date your proxy cardpr oxy car d and returnr etur n it in the postage-paid envelope we have provided or return it to The RMR Group Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. VOTE BY VIRTUALLY ATTENDING THE MEETING During the Meeting - Go to https://www.viewproxy.com/rmrgroup/2021/ You may attend the meeting via the Internet and vote during the meeting. Have your proxy card in hand when you access the website and follow the instructions provided on the website. ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS If you would like to reduce the costs incurred by The RMR Group Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically by email or over the internet. To sign up for electronic delivery, please follow the instructions above to vote using the internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years. THE RMR GROUP INC. C/O BROADRIDGE FINANCIAL SOLUTIONS, INC. P.O. BOX 1342 BRENTWOOD, NY 11717 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E88836-P31722D28943-P48205 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. THE RMR GROUP INC. 1. Election of Directors. For Withhold ! ! ! ! ! ! ! ! ! ! ! ! Jennifer B. Clark For Against Abstain ! ! ! 2. Ratification of the appointment of ErnstDeloitte & YoungTouche LLP as independent auditors to serve for the 20202021 fiscal year. Ann Logan Rosen Plevneliev Adam D. Portnoy Jonathan Veitch Walter C. Watkins, Jr. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR IN PROPOSAL 1 AND FOR PROPOSAL 2. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE PROXIES, IN THEIR DISCRETION, ARE AUTHORIZED TO VOTE AND OTHERWISE REPRESENT THE UNDERSIGNED ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR AT ANY POSTPONEMENT OR ADJOURNMENT THEREOF. ! For address changes, please check this box and write them on the back where indicated. (NOTE: Please sign exactly as your name(s) appear(s) hereon. All holders must sign. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. Joint owners should each sign personally. If a corporation, please sign in full corporate name, by authorized officer, indicating title. If a partnership, please sign in partnership name by authorized person indicating title.) Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date The Board of Directors Recommends a Vote FOR all Nominees for Director in Proposal 1 and FOR Proposal 2.
THE RMR GROUP INC. ANNUAL MEETING OF SHAREHOLDERS March 11, 2020,2021, 9:30 a.m., Eastern time The RMR Group Headquarters Two Newton Place, 255 Washington Street, Suite 100 Newton, Massachusetts 02458 Upon arrival, please present photo identificationTime Virtually via the Internet at the registration desk.https://www.viewproxy.com/rmrgroup/2021/ Please see the Proxy Statement for additional attendance instructions. The 20202021 Annual Meeting of Shareholders of The RMR Group Inc. will address the following items of business: 1. Election of the Directors named in the Proxy Statement to the Company's Board of Directors; 2. Ratification of the appointment of ErnstDeloitte & YoungTouche LLP as independent auditors to serve for the 20202021 fiscal year; and 3. Transaction of such other business as may properly come before the meeting and at any postponements or adjournments of the meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES FOR DIRECTOR IN PROPOSAL 1 AND FOR PROPOSAL 2. E88837-P31722D28944-P48205 THE RMR GROUP INC. The RMR Group Headquarters Two Newton Place, 255 Washington Street, Suite 100 Newton, MA 02458ANNUAL MEETING OF SHAREHOLDERS March 11, 2021, 9:30 a.m., Eastern Time Proxy Important Notice Regarding Internet Availability of Proxy Materials: The proxy materials for the 20202021 Annual Meeting of Shareholders of The RMR Group Inc. (the "Company"), including the Company’s annual report and proxy statement, are available on the internet. To view the proxy materials or vote online or by telephone, please follow the instructions on the reverse side hereof. This proxy is solicited on behalf of the Board of Directors of The RMR Group Inc. The undersigned shareholder of the Company hereby appoints Jennifer B. Clark Matthew P. Jordan and Adam D. Portnoy, or anyeither of them, as proxies for the undersigned, with full power of substitution in each of them, to attend the 20202021 Annual Meeting of Shareholders of the Company to be held at The RMR Group Headquarters, Two Newton Place, 255 Washington Street, Suite 100, Newton, Massachusetts 02458, on March 11, 2020,2021, at 9:30 a.m., Eastern time,Time, virtually via the Internet at https://www.viewproxy.com/rmrgroup/2021/, and any postponement or adjournment thereof, to cast on behalf of the undersigned all the votes that the undersigned is entitled to cast at the meeting and otherwise to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting. The undersigned hereby acknowledges receipt of the annual report and the proxy statement, which includes the Notice of 20202021 Annual Meeting of Shareholders, each of which is incorporated herein by reference, and revokes any proxy heretofore given with respect to the meeting. THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST AS INSTRUCTED ON THE REVERSE SIDE HEREOF. IF THIS PROXY IS EXECUTED, BUT NO INSTRUCTION IS GIVEN, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST FOR ALL NOMINEES FOR DIRECTOR IN PROPOSAL 1 AND FOR PROPOSAL 2. ADDITIONALLY, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST BY THE PROXIES, IN THEIR DISCRETION, ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF. See reverse for instructions on how to authorize a proxy. (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Address Changes/Comments: