QuickLinks-- Click here to rapidly navigate through this documentUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Soliciting Material Pursuant to §240.14a-12
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HRPT PROPERTIES TRUST
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HRPT PROPERTIES TRUST
400 Centre Street
Newton, Massachusetts 02458
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 15, 2007
 | HRPT PROPERTIES TRUST
400 Centre Street
Newton, Massachusetts 02458
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 12, 2008
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To the shareholdersShareholders of HRPT Properties Trust:
Notice is hereby given that the annual meeting of shareholders of HRPT Properties Trust, a Maryland real estate investment trust, will be held at 9:30 a.m. on Tuesday, May 15, 2007,Thursday, June 12, 2008, at 400 Centrethe Sheraton Newton Hotel, 320 Washington Street, Newton, Massachusetts, 02458, for the following purposes:
To elect one trusteeIndependent Trustee in Group IIII to our board.Board.
2.To elect one Managing Trustee in Group I to our Board.
3.To consider and vote upon amendmentson a shareholder proposal, if it is properly presented at the meeting, requesting our Board of Trustees to our declarationimplement a policy regarding the chairperson of trust that will change the required shareholder vote and manner of voting for certain actions and provide that the required shareholder vote necessary for the election of trustees or to take certain other actions shall be set in our bylaws.3.Board.
4.To consider and vote upon amendments to our declaration of trust that will change the required shareholder vote for certain amendments to our declaration of trust, for certain business combinations or for termination of the trust.4. To consider and vote upon an amendment to our declaration of trust that, subject to an express provision in the terms of any class or series of shares of beneficial interest, would authorize our board to divide or combine the outstanding shares of any class or series of shares of beneficial interest without a shareholder vote.
5. To consider and vote upon an amendment to our declaration of trust to provide that any shareholder who violates our declaration of trust or bylaws will indemnify and hold us harmless from and against all costs, expenses, penalties, fines and other amounts, including attorneys’ and other professional fees, arising from the shareholder’s violation, together with interest on such amounts.
6. To consider and vote upon an amendment to our declaration of trust that would permit our issuance of securities that are redeemable at the option of the holders.
7. To consider and vote upon the adjournment or postponement of the meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the meeting to elect a trustee as proposed in Item 1 or to approve Items 2, 3, 4, 5 or 6.
8. To consider and act upon such other matters as may properly come before the meeting and at any adjournments or postponements thereof.
THE OUR BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”"FOR" THE NOMINEENOMINEES FOR TRUSTEE UNDER ITEMIN ITEMS 1 AND “FOR”2 AND "AGAINST" THE PROPOSALSSHAREHOLDER PROPOSAL IN ITEMS 2, 3, 4, 5, 6 and 7.ITEM 3.
We encourage you to contact the firm assisting us in the solicitation of proxies, Innisfree M&A Incorporated, or Innisfree, if you have any questions or need assistance in voting your shares. Banks and brokers may call Innisfree, collect, at (212) 750-5833. Shareholders may call Innisfree, toll free, at (877) 717-3929.825-8971.
Shareholders of record at the close of business on March 20, 2007,April 14, 2008 are entitled to notice of and to vote at the meeting and at any adjournments or postponements thereof.
| By Order of the Board,
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| JOHN C. POPEO, Secretary
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This year, new Securities and Exchange Commission rules allow us to furnish proxy materials to our shareholders on the internet. You can now access proxy materials and vote at www.proxyvote.com. You may also vote via internet or telephone by following the instructions on that website. In order to vote on the internet or by telephone you must have a shareholder identification number which is being mailed to you on a Notice Regarding the Availability of Proxy Materials.
Newton, Massachusetts
April 13, 200721, 2008
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING IN PERSON OR BY PROXY. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATEREAD THE PROXY STATEMENT AND RETURNCOMPLETE A PROXY FOR YOUR SHARES AS SOON AS POSSIBLE. YOU MAY VOTE YOUR SHARES OVER THE ENCLOSEDINTERNET OR BY TELEPHONE BY FOLLOWING THE INSTRUCTIONS ON THE WEBSITE INDICATED IN THE NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS THAT YOU RECEIVED IN THE MAIL. YOU MAY ALSO REQUEST A PAPER PROXY CARD IN THE ACCOMPANYING POSTAGE PAID ENVELOPE.AT ANY TIME PRIOR TO MAY 30, 2008 TO SUBMIT YOUR VOTE BY MAIL. IF YOU ATTEND THE MEETING AND VOTE IN PERSON, THAT VOTE WILL REVOKE ANY PROXY YOU PREVIOUSLY SUBMITTED. IF YOU HOLD SHARES IN THE NAME OF A BROKERAGE FIRM, BANK, NOMINEE OR OTHER INSTITUTION, YOU MUST PROVIDE A LEGAL PROXY FROM THAT INSTITUTION IN ORDER TO VOTE YOUR SHARES AT THE MEETING, EXCEPT AS OTHERWISE DISCUSSED IN THE ACCOMPANYING PROXY STATEMENT. YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN. PLEASE SEND IN YOUR PROXY CARD TODAY.
HRPT PROPERTIES TRUST
400 Centre Street
Newton, Massachusetts 02458
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on Tuesday, May 15, 2007Thursday, June 12, 2008
INTRODUCTIONINTRODUCTION
A notice of the annual meeting of shareholders of HRPT Properties Trust, a Maryland real estate investment trust, or the company, is on the preceding page and a form of proxy solicited by our boardBoard of trustees,Trustees, or our board, is enclosed.Board, accompanies this proxy statement. This proxy statement and the attacheda form of proxy, are being first sent to shareholders on or about April 13, 2007, together with a copy of our annual report to shareholders for the year ended December 31, 2006,2007, including our audited financial statements.statements, are first being made available, and a Notice Regarding the Availability of Proxy Materials, or the Notice of Internet Availability, is first being mailed, to shareholders on or about April 21, 2008.
The annual meeting record date is March 20, 2007.April 14, 2008. Only shareholders of record as of the close of business on March 20, 2007,April 14, 2008, are entitled to notice of, and to vote at, the meeting and at any postponement or adjournment thereof. We had 211,056,590225,444,497 common shares of beneficial interest, $.01 par value per share, or common shares, outstanding on the record date and entitled to vote at the meeting. The holders of our outstanding common shares are entitled to one vote per common share.
A quorum of shareholders is required to take action at the meeting. The presence, in person or by proxy, of holders of common shares entitled to castvote at the meeting representing a majority of all the votestotal number of common shares entitled to be cast at the meetingvote on a question will constitute a quorum.quorum for such question. Common shares represented by valid proxies will count for the purpose of determining the presence of a quorum for the meeting. Abstentions and “broker non-votes”"broker non-votes" will be treated as present for purposes of determining the presence of a quorum for the meeting. Failure of a quorum to be present at the meeting will necessitate adjournment of that meeting and will subject us to additional expense.
The affirmative vote of a majority of our common shares entitled to vote at the meeting is required for the election of the nomineenominees for trusteeTrustee described in ItemItems 1 and for the approval of Items 2, 4 and 5. The affirmative vote of at least seventy-five percent (75%) of our common shares entitled to vote at the meeting is required for the approval of Items 3 and 6.2. The affirmative vote of a majority of all votes cast at the meeting at which a quorum is present is required for the approval of the shareholder proposal described in Item 7.3.
The individuals named as proxies on the encloseda properly completed proxy card will vote in accordance with your directions as indicated thereon if your proxy is received properly executed.thereon. If you properly executecomplete your proxy card and give no voting instructions, your shares will be voted FOR"FOR" the nomineenominees for trustee under ItemTrustee in Items 1 and FOR2 and "AGAINST" the proposalsproposal in Items 2, 3, 4, 5, 6Item 3.
Shareholders of record may vote their shares over the internet or by telephone in the manner provided on the website indicated in the Notice of Internet Availability they received in the mail, or, if they requested paper or email copies of proxy materials at any time prior to May 30, 2008, by completing and 7.returning the proxy card, or by attending the meeting and voting in person. Votes provided over the internet or by telephone must be received by 11:59 p.m. eastern daylight time on June 11, 2008.
If your shares are held in the name of a brokerage firm, bank, nominee or other institution (referred to as “in"in street name”name"), you will receive instructions from the street name holder of record that you must follow in order for you to specify how your shares will be voted. If you do not specify how you would like your shares to be voted, your shares held in street name may still be voted. Certain street name holders have the
authority under rules of the New York Stock Exchange, or NYSE, to vote shares for which their customers do not provide voting instructions on certain routine, uncontested items. In the case of non-routine or contested items, the institution holding street name shares cannot vote the shares if it has not received voting instructions. These are considered to be “broker"broker non-votes.”"
Under the NYSE rules, each of Items 1 and 2 (election of trustee), 5 (amendment to declaration of trust concerning indemnification of the trust for violation of declaration of trust or bylaws), 6 (amendment to our declaration of trust to permit us to issue securities thattrustees) are redeemable at the election of the holder) and 7 (adjournment or postponement of the meeting) is considered a routine itemitems for which street name shares may be voted without specific instructions. If your street name holder of record signscompletes and returns a proxy card on your behalf, but does not indicate how the common shares should be voted, the common shares represented on the proxy card will be voted FOR"FOR" the nomineenominees for trustee under ItemTrustee in Items 1 and FOR Items 5, 6 and 7.
The approval of2. Under the amendments to our declaration of trust described in each of Items 2 (amendment to declaration of trust concerning the required shareholder vote necessary for the election of trustees or to take certain other actions),NYSE rules, Item 3 (amendment to declaration of trust to change the required shareholder vote for certain amendments, certain business combinations or for termination) and 4 (amendment to declaration of trust to authorize trustees to effect share divisions or combinations without shareholder approval)(shareholder proposal) is considered a non-routine item for which street name holders of record may not vote your shares without specific instructions. If yourAs a result, if a shareholder does not instruct his or her street name holder of record signs and returns a proxy card on your behalf, but does not indicateas to how thesuch shareholder's common shares should be voted with respect to Items 2,Item 3, or 4 your sharesa "broker non-vote" will not be voted for that Item.occur.
Abstentions and shares not voted will have the same effect as votes AGAINST"AGAINST" the nomineenominees for trustee under ItemTrustee in Items 1 and AGAINST Items 2, 3, 4, 5 and 6. Abstentions and shares not voted as to Item 7 will have no effect because they are not considered votes cast at the meeting.2.
If we adjourn the annual meeting, we will announce the time and place of the adjourned meeting at the original meeting, but we will not deliver another notice of the meeting unless it is to be held after July 18, 2007.August 12, 2008. At any subsequent reconvening of the annual meeting, all proxies will be voted in the same manner as they would have been at the original convening of the meeting (except for any proxies which have been effectively revoked or withdrawn).
IMPORTANT: If your shares are held in the name of a brokerage firm, bank, nominee or other institution, you should provide instructions to your broker, bank, nominee or other institution on how to vote your shares. Please contact the person responsible for your account and give instructions for a proxy card to be signedcompleted for your shares. If you have any questions or need assistance in voting your shares, please call the firm assisting us in the solicitation of proxies:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers Call Collect at (212) 750-5833
Shareholders Call Toll Free at (877) 717-3929825-8971
A shareholder givingof record who has given a proxy may revoke it any time prior to its exercise by delivering to our Secretarysecretary a written revocation or a duly executed proxy bearing a later date, by voting over the internet or by telephone at a later time in the manner provided on the website indicated in the Notice of Internet Availability, or by attending the meeting and voting his or her common shares in person. If a shareholder of record wants to receive a paper or email copy of the proxy card, he or she may request one at any time prior to May 30, 2008. Votes provided over the internet or by telephone must be received by 11:59 p.m. eastern daylight time on June 11, 2008. If your shares are held in the name of a brokerage firm, bank, nominee or other institution, and you have instructed your brokerage
firm, bank, nominee or other institution to vote your shares, you must follow the instructions received from your brokerage firm, bank, nominee or other institution to change those instructions.
Our website address is included several times in this proxy statement as a textual reference only and the information in the website is not incorporated by reference into this proxy statement.
Item 1. ElectionNotice Regarding the Availability of one trusteeProxy Materials
In accordance with rules and regulations recently adopted by the Securities and Exchange Commission, or the SEC, instead of mailing a printed copy of our proxy materials to each shareholder of record, we may now furnish proxy materials via the internet. Accordingly, all of our shareholders will receive a Notice of Internet Availability, which will be mailed on or about April 21, 2008.
On the date of mailing of the Notice of Internet Availability, shareholders will be able to access all of the proxy materials on the internet at www.proxyvote.com. The proxy materials will be available free of charge. The Notice of Internet Availability will instruct you as to how you may access and review all of the important information contained in Group IIIthe proxy materials (including our annual report to our board.shareholders) over the internet or through other methods specified at the website designated in the Notice of Internet Availability. The website designated contains instructions as to how to vote by internet or over the telephone. The Notice of Internet Availability also instructs you as to how you may request a paper or email copy of the proxy card. If you received a Notice of Internet Availability and would like to receive printed copies of the proxy materials, you should follow the instructions for requesting such materials included in the Notice of Internet Availability.
Items 1 and 2.
ELECTION OF TRUSTEES
The number of our trusteesTrustees is currently fixed at five, and our boardBoard is currently divided into three groups, with two trusteesTrustees in Group I, two trusteesTrustees in Group II and one trusteeTrustee in Group III. Trustees in each group are elected for three year terms and serve until their successors are elected and qualify.qualified.
Our current trusteesTrustees are Barry M. Portnoy and Frederick N. Zeytoonjian in Group I with a term of office expiring at our 2008 annualthe meeting of shareholders,to which this proxy statement relates, William A. Lamkin and Adam D. Portnoy in Group II with a term of office expiring at our 2009 annual meeting of shareholders, and Patrick F. Donelan in Group III with a term of office expiring at theour 2010 annual meeting to which this proxy statement relates.
Biographical information relating to our trustees and other information relating to our board of trustees appears below in this proxy statement. As more fully discussed below, Messrs. Donelan, Lamkin and Zeytoonjian are our independent trustees.
Pursuant to a recommendation of our nominating and governance committee, our board has nominated Mr. Donelan for election as the Group III trustee.shareholders. The term of the Group III trusteeI Trustees elected at the meeting will expire at our 20102011 annual meeting of shareholders.
Our Trustees are also qualified as Independent Trustees or Managing Trustees. Our Independent Trustees are not our officers, are not involved in our day to day activities and are not employed by, or an affiliate of, Reit Management & Research LLC, or RMR, our manager, and do not otherwise have a material business or professional relationship with us, RMR or any other person or entity that holds in excess of 9.8% of our issued and outstanding shares of beneficial interest and are persons who qualify as independent under our declaration of trust, bylaws and applicable rules of the NYSE. Our Managing Trustees are involved in our day to day activities or are employed by RMR. Our Board of Trustees is currently composed of three Independent Trustees and two Managing Trustees. Messrs. Donelan, Lamkin and Zeytoonjian are our Independent Trustees, and Messrs. Barry Portnoy and Adam Portnoy are our Managing Trustees. Biographical information relating to our Trustees and other information relating to our Board appears below in this proxy statement.
Item 1: Election of One Independent Trustee
Pursuant to a recommendation of our Nominating and Governance Committee, our Board has nominated Mr. Zeytoonjian for election as an Independent Trustee in Group I. The term of the Independent Trustee in Group I elected at the meeting will expire at our 2011 annual meeting of shareholders. The persons named in the enclosedaccompanying proxy intend to exercise properly executed and delivered proxies FOR"FOR" the election of Mr. Donelan,Zeytoonjian, except to the extent that proxy cardsproperly completed proxies indicate that the votes should be withheld for the nominee.nominee.
Mr. DonelanZeytoonjian has agreed to serve as trusteean Independent Trustee in Group I if elected. However, if Mr. DonelanZeytoonjian becomes unable or unwilling to accept election to our board,Board, the proxies will be voted for a substitute nominee designated by our present board.Board. Our Board has no reason to believe that Mr. Zeytoonjian will be unable to serve.
The board �� Our Board recommends a vote FOR"FOR" the election of Mr. DonelanZeytoonjian as an Independent Trustee in Group III trustee.I.
Item 2: Election of One Managing Trustee
Item 2. Approval of amendments Pursuant to our declaration of trust that will change the required shareholder vote and manner of voting for certain actions and provide that the required shareholder vote necessary for the election of trustees or to take certain other actions shall be set in our bylaws.
Our declaration of trust currently provides that election of a memberrecommendation of our board requires the affirmative vote of a majority ofNominating and Governance Committee, our common shares entitled to vote at the applicable meeting. It also specifies voting percentages for certain other actions, some of which are the subject of Item 3 below.
Under currently applicable NYSE rules, non-contested elections of trustees and various other items are classified as routine items for which NYSE member brokers have the authority to vote in their own discretion in the absence of instructions from the beneficial owners of voting shares held in street name. The nomination ofBoard has nominated Mr. DonelanBarry Portnoy for election as a trustee, which is the subject of Item 1 above, and Items 5, 6 and 7 are considered routine matters.
Managing Trustee in Group I. The NYSE has proposed a rule that would eliminate the ability of NYSE member brokers to vote in their own discretion on the election of board members in the absence of instructions from beneficial owners. Under the proposed rule, non-contested board elections would become non-routine matters, making it harder for nominees who are favored by a majority of shares actually voted to be elected if the required vote for election remains a majorityterm of the outstanding shares entitled to vote. If approved by the Securities and Exchange Commission, or SEC, the NYSE rule would likely take effectManaging Trustee in the beginning of
2008. If this rule is adopted it may become difficult and expensive for public companies to obtain the required votes for election of trustees and directors in uncontested elections and for other routine matters. This expense may be especially burdensome for companies like us who have a large number of shareholders who individually own few shares. Also, during the past few years, the number of proposals presented to publicly owned companies’ shareholder meetings related to matters which may be detrimental to the companies’ businesses seems to have increased.
In order to enhance our flexibility to respond to possible changes in applicable rules and to the increasing number of shareholder proposals which may be detrimental to our business, our board has proposed to amend our declaration of trust to provide that the shareholders’ vote necessary to elect a trustee or take other actions shall be set in our bylaws, except in certain cases where the Maryland real estate investment trust law requires that provisions of this nature be in a declaration of trust to be effective. We believe that providing for voting rules in our bylaws, rather than our declaration of trust, is more typical of modern governance provisions for Maryland real estate investment trusts, and, if adopted, would permit our board to consider and establish voting rules which are from time to time appropriate.
The proposed amendments would provide that, subject to the express provisions of any class or series of our shares of beneficial interest at the time outstanding, the vote of holders of shares required to elect a trustee or with respect to any proposal as to which the required vote is not specified in the declaration of trust or applicable provisions of law and which may be properly considered by shareholders may be specified from time to time in our bylaws.
If these amendments are adopted, our board currently intends to amend our bylaws as follows:
· with regard to election of a trustee, except as may be mandated by applicable law or the listing requirements of the principal exchange on which our common shares are traded:
· for an uncontested election, the vote required for election will be a majority of the votes castGroup I elected at the meeting and
· for a contested election, the vote required for election will be a majorityexpire at our 2011 annual meeting of the shares entitled to vote at the meeting;
· with regard to all other matters which may be properly considered by shareholders, except as may be mandated by applicable law, by the listing requirements of the principal exchange on which our common shares are traded or by a specific provision of our declaration of trust:
· for a matter which is approved by at least 75% of our trustees then in office, including at least 75% of our independent trustees, the vote required will be a majority of the votes cast at the meeting, and
· for a matter which is not approved by at least 75% of our trustees then in office, including 75% of our independent trustees, the vote required will be 75% of our shares entitled to vote at the meeting;
in each such case subject to any express provisionshareholders. The persons named in the terms of any class or series of our shares of beneficial interest.
The effect of these amendmentsaccompanying proxy intend to exercise properly executed and the proposed bylaw changes will be to reduce the number of voting shares required to elect a trustee in uncontested elections and to reduce the number of voting
shares required to take certain actions when the action is approved by 75% of our trustees, including 75% of our independent trustees; but this amendment and the proposed bylaw changes will also increase the number of voting shares required to take certain actions which are not so approved by our trustees. The amendment would not change the vote required for removal of a trustee, which is the affirmative vote of two-thirds of our shares entitled to vote on that matter.
Maryland law currently provides that a merger as to which our shareholders are entitled to vote requires the affirmative vote of two-thirds of our shares entitled to vote on that matter at the applicable meeting, unless our declaration specifies a different proportion, which may not be less than a majority of our shares entitled to vote on that matter at the applicable meeting. Our declaration of trust does not currently specify a different percentage, except for transactions covered by the business combinations provisions of our declaration. Under those provisions, certain business combinations with certain related parties in certain circumstances require the affirmative vote of 75% of our shares entitled to vote. The amendments discussed under Item 3 below include a proposal which would have the effect of providing that the shareholder vote required to approve such a business combination with certain related parties will be the same as for a comparable business combination with a third party.
Under the proposed amendments to our declaration of trust, subject to the express provisions of any class or series of our shares of beneficial interest at the time outstanding and to applicable provisions of law, the shareholders’ vote required for approval of a merger or consolidation involving us or the sale or other disposition of substantially all of our assets, if a shareholders’ vote is required by applicable law at the time of the meeting, would be as follows:
· if such merger, consolidation, sale or other disposition has been approved by at least 75% of our trustees then in office, including at least 75% of our independent trustees, as permitted by applicable law, the lesser of (x) a majority of the votes cast at the meeting, or (y) a majority of shares entitled to vote at the meeting; and
· if such merger, consolidation, sale or other disposition has not been approved by at least 75% of our trustees then in office, including at least 75% of our independent trustees, 75% of our shares entitled to vote at the meeting.
This provision is intended to have the same practical effect as amendments to our declaration of trust and bylaws described above, but is proposed as a separate provision in our declaration of trust in light of the provisions of Maryland law requiring that voting provisions regarding mergers, consolidations and sales or other dispositions of substantially all of our assets be in our declaration of trust rather than our bylaws.
To more fully implement the amendments described in this Item 2, we are also proposing a change to our declaration of trust to provide that shareholders may not act by written consent in lieu of a meeting. Our declaration of trust currently permits written consents in lieu of a meeting, except for when voting at a meeting is required in connection with termination of the trust, amendments to the declaration of trust or transfer of the assets of the trust to a successor. Our board has determined that shareholder voting at a meeting is the more appropriate procedure for any actions by shareholders.
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We believe these amendments and the proposed bylaw changes, if adopted, may reduce the costs of future proxy solicitations for uncontested elections and for matters subject to shareholders’ votes which are approved by our board. These amendments and the proposed bylaw changes, if adopted, will also enhance the power of our board to screen proposals to determine whether proposals are in our best interest. This screening and the increased number of voting shares required for adoption of proposals not approved by a supermajority of our board may discourage proposals which our board determines are not in our best interest and thus avoid the costs of future proxy contests.
These proposed amendments to our declaration of trust will enable our board to amend certain shareholder voting requirements by amending our bylaws without a future vote by shareholders. We believe this flexibility is desirable to respond to regulatory changes which may be adopted from time to time or to changes in the number and types of proposals which may be presented for shareholders’ votes. However, it is also possible that one effect of these amendments is that our board, in certain circumstances, may make changes to our bylaws affecting shareholders’ votes which could delay or prevent a change of control of our company. Similarly, the removal of the right to act by written consent could make it more difficult for shareholders to vote on items not properly presented at a meeting of shareholders.
The proposed amendments to our declaration of trust described in this Item 2 and the intended bylaw amendments will not be applicable todelivered proxies "FOR" the election of Mr. DonelanBarry Portnoy, except to the extent that properly completed proxies indicate that the votes should be withheld for the nominee.
Mr. Barry Portnoy has agreed to serve as a trusteeManaging Trustee in Group I if elected. However, if Mr. Barry Portnoy becomes unable or unwilling to accept election to our Board, the other Items described in this proxy statement.proxies will be voted for a substitute nominee designated by our present Board. Our Board has no reason to believe that Mr. Barry Portnoy will be unable to serve.
The text of the proposed amendments described in this Item 2 is attached at Appendix A to this proxy statement.
The boardOur Board recommends a vote FOR Item 2.
Item 3. Approval"FOR" the election of amendments to our declaration of trust that will change the required shareholder vote for certain amendments to our declaration of trust, for certain business combinations or for termination of the trust.
Our declaration of trust currently provides for various voting majorities for actions by shareholders. Some of the voting percentages specified in the declaration of trust are:
· for (a) certain changes to the declaration of trust relating to (i) the number, term of office or qualification of our trustees, (ii) investment policies and distributions, (iii) certain restrictions on transfer and ownership of our shares, (iv) special voting rights for certain business combinations and (v) the provisions which govern amendments to the declaration of trust, the affirmative vote of 75% of our shares entitled to vote on that matter at the applicable meeting, and (b) termination of our trust, the affirmative vote of two-thirds of our shares entitled to vote on that matter at the applicable meeting;
· for changes to the declaration of trust not referred to in the preceding bullet (with certain exceptions and excluding changes which are permitted to be authorized by our board without approval of our shareholders), the affirmative vote of a majority of our shares entitled to vote on that matter at the applicable meeting.
For reasons similar to those discussed with respect to Item 2 above, our board has proposed amendments to change the voting requirements for the matters described above in this Item 3. The proposed amendments would provide that the shareholder vote required to approve certain business
combinations with certain related parties would be the same as the vote required to approve a comparable business combination with a third party, and that subject to the express provisions of any class or series of our shares of beneficial interest at the time outstanding and to applicable provisions of law, the shareholders’ vote required for approval of any changes to our declaration of trust, except those described below, and for termination of the trust, shall be as follows:
· if such change or termination has been approved by at least 75% of our trustees then in office, including at least 75% of our independent trustees, as permitted by applicable law, the lesser of (x) a majority of the votes cast at the meeting, or (y) a majority of shares entitled to vote at the meeting; and
· if such change or termination has not been approved by at least 75% of our trustees then in office, including at least 75% of our independent trustees, 75% of our shares entitled to vote at the meeting.
The effect of these amendments will be to reduce the number of voting shares required for amendments, for certain business combinations and for termination of the trust when the action is approved by 75% of our trustees, including 75% of our independent trustees, but these amendments will also increase the number of voting shares required for certain amendments which are not so approved by our trustees.
These amendments are intended to have similar effect and benefits as the amendments described in Item 2 above. However, it is also possible that an effect of these amendments may be to delay or prevent a change of control of our company. These amendments have been proposedMr. Barry Portnoy as a separate item from the amendments describedManaging Trustee in Item 2 above because the vote required for approval of these amendments is 75% of outstanding shares while the vote required for the approval of the amendments proposed in Item 2 is a majority of outstanding shares.Group I.
The proposed amendments to our declaration of trust described in this Item 3 will not be applicable to the Items described in this proxy statement. The proposed changes will not affect amendments to provisions of the declaration of trust which govern the personal liability of our shareholders, trustees, officers, employees and agents or the prohibition of assessments upon shareholders.
The text of the proposed amendments described in this Item 3 is attached at Appendix B to this proxy statement.
The board recommends a vote FOR Item 3.
Item 4. Approval of an amendment to our declaration of trust that, subject to an express provision in the terms of any class or series of shares of beneficial interest, would authorize our board to divide or combine the outstanding shares of any class or series of shares of beneficial interest without a shareholder vote.
Presently, our board is authorized without shareholder approval to declare and pay dividends or distributions to our shareholders payable in our common shares. For shareholders, such a distribution has the effect of a share split. For example, after a one for one share distribution, a shareholder would own two common shares for each common share previously held. Another method to accomplish the same goal, but without affecting our aggregate stated capital, would be to divide our shares in an actual share split. That currently would require an approval of our shareholders. A share combination is, in effect, a reverse share
split. For example, after a one for two combination, a shareholder would own one common share for every two common shares previously owned. Under our declaration of trust, a share combination currently requires approval of our shareholders.
We are proposing an amendment that would allow our board, without shareholder approval, to divide or combine our shares, to the extent permitted by Maryland law. The amendment would not permit our board to override an express provision of the terms of any then outstanding class or series of our shares; for example, the terms of a series of preferred shares that require the approval of the holders of that series for a division or combination of those shares.
Share splits and combinations can be beneficial to shareholders depending on market conditions. In a circumstance where a company’s stock is trading at a price that is higher than comparable companies’ stock price ranges, a share dividend or stock split may reduce the trading price. Conversely, a company which is trading on a per share basis at a trading price which is low relative to comparable companies’ stock price ranges may implement a reverse stock split in order to increase its share trading price. By adjusting the total number of outstanding shares and diluting (in the case of a split) or concentrating (in the case of a combination) the amount of our company’s value represented by each share, our share price may be adjusted so that our company’s shares trade in ranges closer to comparable companies, promoting trading liquidity and comparisons of our performance relative to comparable companies.
We have no present intention to effect a share division or combination. However, our board believes that this amendment will enhance our board’s flexibility and efficiency in responding to market conditions or circumstances in which our board believes that a division or combination is appropriate and provide the same flexibility our board currently has to effect the equivalent of a share split by declaration of a dividend payable in shares. Obtaining shareholder consent for a split or combination may involve substantial time and expense, including the expense of preparing and circulating a proxy statement, soliciting the requisite shareholder vote and conducting a shareholder meeting.
The text of the proposed amendment described in this Item 4 is attached at Appendix C to this proxy statement.
The board recommends a vote FOR Item 4.
Item 5. Approval of an amendment to our declaration of trust to provide that any shareholder who violates our declaration of trust or bylaws will indemnify and hold us harmless from and against all costs, expenses, penalties, fines and other amounts, including attorneys’ and other professional fees, arising from the shareholder’s violation, together with interest on such amounts.
Recently, one of the funds managed by RMR Advisors, Inc., or RMR Advisors, which is an affiliate of our manager, Reit Management & Research LLC, or RMR, experienced substantial cost and expense through the willful failure of a shareholder to abide by that fund’s limitation on share ownership. Our board believes that similar restrictions in our declaration of trust provide a meaningful benefit to our company. In view of this RMR fund’s recent experience and although we believe we could currently seek reimbursement from any shareholder who violates our declaration of trust or bylaws for costs, expenses, penalties, fines and other amounts, including attorneys’ and other professional fees, arising from the shareholder’s violation, our board has determined that it would be preferable to make a violating shareholder’s obligation to reimburse such costs and expenses explicit in a new provision to be added by amendment to our declaration of trust. To the extent that the amendment in this Item 5 increases the effectiveness of the restrictions on transfer and ownership of shares, it could have the effect of delaying or preventing a change of control.
The proposed amendment is not the result of our knowledge of any current violation by a shareholder of our declaration of trust or bylaws or of our knowledge of any specific effort to accumulate our shares or to obtain control of us.
The text of the proposed amendment described in this Item 5 is attached at Appendix D to this proxy statement.
The board recommends a vote FOR Item 5.
Item 6. Approval of an amendment to our declaration of trust that would permit us to issue securities which are redeemable at the option of the holders.
Presently, our declaration of trust includes a provision which prohibits us from issuing securities which are redeemable at the holders’ option. This provision was adopted as a part of our original declaration of trust in 1986 in order to comply with certain regulatory requirements which no longer apply to us. The proposed amendment would eliminate this prohibition. If approved, we would be permitted, but not obligated, to issue redeemable securities, for example debt, which entitle the holder, at its election, to require redemption at specified times or upon the occurrence of specified circumstances (such as a change of control).
We believe securities which are redeemable at the option of the holder, either absolutely or contingently, are now common in the capital markets. Our board believes that this amendment will enhance our flexibility and efficiency in offering securities that include the terms expected by investors and thus that permit us to acquire capital at a lower cost and otherwise on terms which are in our best interests and the best interests of our shareholders. In the past our board has considered, but we do not currently have any plans to issue, redeemable securities.
The text of the proposed amendment described in this Item 6 is attached at Appendix E to this proxy statement.
The board recommends a vote FOR Item 6.
Item 7. Approval of the adjournment or postponement of the meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the meeting to elect a trustee as proposed in Item 1 or to approve Items 2, 3, 4, 5 or 6.
We are submitting Item 7 for consideration at the meeting to authorize the named proxies to approve one or more adjournments or postponements of the meeting if there are insufficient votes to elect a trustee as proposed in Item 1 or to approve Items 2, 3, 4, 5 or 6. Item 7 relates only to an adjournment or postponement of the meeting for purposes of soliciting additional proxies to obtain the requisite shareholder votes to elect a trustee as proposed in Item 1 or to approve any of Items 2, 3, 4, 5 or 6. We retain full authority to adjourn or postpone the meeting for any other purpose, including absence of a quorum, without the consent of shareholders.
The board recommends a vote FOR Item 7.
SOLICITATION OF PROXIES
We are paying the cost of this solicitation, including the preparation, printing, mailing and mailingwebsite hosting of proxy materials. We will request banks, brokers and other custodians, nominees and fiduciaries to forward proxy materials to the beneficial owners of our common shares and to obtain their voting instructions. We will reimburse those firms for their expenses. In addition, we have retained Innisfree M&A Incorporated, or Innisfree, to assist in the solicitation of proxies for a fee of $15,000 plus reimbursement for out of pocket expenses. We have agreed to indemnify Innisfree against certain liabilities arising out of our agreement with Innisfree.
TRUSTEES AND EXECUTIVE OFFICERS
The following are the ages and recent principal occupations, as of March 20, 2007,April 14, 2008, of our trusteesTrustees and our executive officers:
Trustee NomineeNominees for a Term Expiring In 20102011
BARRY M. PORTNOY, Age: 62
Mr. Portnoy has been one of our Managing Trustees since 1986. Mr. Portnoy has been a Managing Trustee of Hospitality Properties Trust, or HPT, and of Senior Housing Properties Trust, or SNH, since 1995 and 1999, respectively. He has been a Managing Director of Five Star Quality Care, Inc., or Five Star, and of TravelCenters of America LLC, or TA, since 2001 and 2006, respectively. Mr. Portnoy is the majority owner of RMR and of RMR Advisors, Inc., or RMR Advisors, an SEC registered investment advisor. Mr. Portnoy has been the Chairman of RMR since 1986, and a director and Vice President of RMR Advisors since 2002. Mr. Portnoy has been a Managing Trustee and portfolio manager of RMR Real Estate Fund, RMR Hospitality and Real Estate Fund, RMR F.I.R.E. Fund, RMR Preferred Dividend Fund, RMR Dividend Capture Fund and RMR Funds Series Trust since 2002, 2004, 2004, 2004, 2007 and 2007, respectively and Managing Trustee of RMR Asia Pacific Real Estate Fund and RMR Asia Real Estate Fund since 2006 and 2007, respectively. Mr. Portnoy is a Managing Trustee in Group I and, if elected at the meeting, he will serve until our 2011 annual meeting of shareholders.
FREDERICK N. ZEYTOONJIAN, Age: 72
Mr. Zeytoonjian has been one of our Independent Trustees since 1999. Mr. Zeytoonjian is the founder and has been Chairman and Chief Executive Officer of Turf Products Corporation, one of the largest distributors of lawn care equipment in the United States, for over five years. Mr. Zeytoonjian also has been a Trustee of SNH since 2003. Mr. Zeytoonjian is an Independent Trustee in Group I and, if elected at the meeting, will serve until our 2011 annual meeting of shareholders.
Continuing Trustees
PATRICK F. DONELAN, Age: 6466
Mr. Donelan has been one of our trusteesIndependent Trustees since 1998. Mr. Donelan has been principally employed as a private investor since December 2003. Mr. Donelan was the Non-Executive Chairman and member of the advisory board from December 2002 until December 2003, and was Chairman and Chief Executive Officer from July 2001 through December 2002, of eSecLending (Europe) Ltd, a London based privately owned company in the business of managing securities lending programs for institutional owners of publicly owned securities. Prior to its acquisition by Dresdner Bank in 1995, Mr. Donelan was Chairman of Kleinwort Benson (North America) Inc., the U.S. based subsidiary of Kleinwort Benson Limited, a United Kingdom based bank. At the time of his retirement in 2001, he was a Managing Director at Dresdner Kleinwort Wasserstein, the U.K. subsidiary of Dresdner Bank of Germany. Mr. Donelan has also been an independent director of TravelCenters of America, LLC, or TA, since January 2007. Mr. Donelan is aan Independent Trustee in Group III trustee and if elected at the meeting will serve until our 2010 annual meeting of shareholders.
10
Continuing Trustees
WILLIAM A. LAMKIN, Age: 4748
Mr. Lamkin has been one of our trusteesIndependent Trustees since 2006. Mr. Lamkin has been a partner in Ackrell Capital LLC, a San Francisco based investment bank, since November 2003, and a partner in Ackrell & Company LLC, a San Francisco based investment advisory firm, since October 2002. From December 2001 until October 2002, Mr. Lamkin served as a financial consultant to companies in the technology sector. Previously, he was a Senior Vice President in the investment banking division of ABN AMRO, Incorporated and has held other positions in the investment banking business. Mr. Lamkin has also beenserved as an independent trusteeIndependent Trustee of Hospitality Properties Trust, or HPT since January 2007. Mr. Lamkin is aan Independent Trustee in Group II trusteeIII and will serve until our 2009 annual meeting of shareholders.
ADAM D. PORTNOY, Age: 3637
Mr. Portnoy has been one of our managing trusteesManaging Trustees since 2006. Mr. Portnoy has been a managing trusteeManaging Trustee of HPT and SNH since January 2007. He was our Executive Vice President from 2003 through 2006. Mr. Portnoy has been an executive officer of RMR since September 2003 and currently is the President, Chief Executive Officer and a director of RMR. Additionally, Mr. Portnoy is the minority owner of RMR and of RMR Advisors, a registered investment adviser.Advisors. Mr. Portnoy has been a Vice President of RMR Advisors since 2004,2007 and was a Vice President prior to that time since 2003. He has also been a Vice President and portfolio manager of RMR Real Estate Fund, RMR Hospitality and Real Estate Fund, RMR F.I.R.E. Fund, RMR Preferred Dividend Fund, RMR Dividend Capture Fund and RMR Funds Series Trust and President of RMR Asia Pacific Real Estate Fund and RMR Asia Real Estate Fund since 2007. Prior to becoming President in 2007, Mr. Portnoy served as Vice-President of RMR Real Estate Fund, RMR Hospitality and Real Estate Fund, RMR F.I.R.E. Fund, RMR Preferred Dividend Fund, RMR Asia Pacific Real Estate Fund and RMR Asia Real Estate Fund beginning in 2004, 2004, 2004, 20052004, 2006 and 2006,2007, respectively. Mr. Portnoy served as an Investment Officer at the International Finance Corp., a member of the World Bank Group, from 2001 to July 2003. Mr. Adam Portnoy is the son of Barry Portnoy, our other managing trustee.Managing Trustee. Mr. Adam Portnoy is a Managing Trustee in Group II trustee and will serve until our 2009 annual meeting of shareholders.
BARRY M. PORTNOY, Age: 61
Mr. Portnoy has been one of our managing trustees since 1986. Mr. Portnoy has been a managing trustee of HPT and of Senior Housing Properties Trust, or SNH, since 1995 and 1999, respectively, and a managing director of Five Star Quality Care, Inc., or Five Star, and of TA since 2001 and 2006, respectively. Mr. Portnoy is the majority beneficial owner of RMR and of RMR Advisors. Mr. Portnoy has been the chairman of RMR since 1986, and a director and Vice President of RMR Advisors since 2002. Mr. Portnoy has been a managing trustee of RMR Real Estate Fund, RMR Hospitality and Real Estate Fund, RMR F.I.R.E. Fund, RMR Preferred Dividend Fund and RMR Asia Pacific Real Estate Fund since 2003, 2004, 2004, 2005 and 2006, respectively. Mr. Portnoy is a Group I trustee and will serve until our 2008 annual meeting of shareholders.
FREDERICK N. ZEYTOONJIAN, Age: 71
Mr. Zeytoonjian has been one of our trustees since 1999. Mr. Zeytoonjian is the founder and has been Chairman and Chief Executive Officer of Turf Products Corporation, one of the largest distributors of lawn care equipment in the United States, for over five years. Mr. Zeytoonjian has been a trustee of SNH since 2003. Mr. Zeytoonjian is a Group I trustee and will serve until our 2008 annual meeting of shareholders.
Executive Officers
JOHN A. MANNIX, Age: 5152
Mr. Mannix has been our President and Chief Operating Officer since 1999. Mr. Mannix has also been a Senior Vice President of RMR since 2006, and was Vice President prior to that time, and has served in various capacities with RMR and its affiliates for over five years. Mr. Mannix is a member of the Urban Land Institute and the Greater Boston Real Estate Board’sBoard's Real Estate Finance Association.
JOHN C. POPEO, Age: 4647
Mr. Popeo has been our Treasurer, Chief Financial Officer and Secretary since 1999. Mr. Popeo has also been a Senior Vice President of RMR since 2006, and was Vice President prior to that time, and has served in various capacities with RMR and its affiliates for over five years. Mr. Popeo is a certified public accountant.
DAVID M. LEPORE, Age: 4647
Mr. Lepore has been one of our Senior Vice Presidents since 1998 and is primarily responsible for building operations and acquisition diligence. Mr. Lepore has also been a Senior Vice President of RMR since 2006, and was Vice President prior to that time, and has served in various capacities with RMR and its affiliates for over five years. Mr. Lepore is a member of the Building Owners and Managers Association, the National Association of Industrial and Office Properties and is a certified real property administrator.
JENNIFER B. CLARK, Age: 4546
Ms. Clark has been one of our Senior Vice Presidents since 1999 and has also been a Senior Vice President of RMR since 2006, and was Vice President prior to that time, and has been employed by RMR since 1999. Ms. Clark is primarily responsible for leasing our properties and tenant relations.
Except as noted with regard to Mr. Barry Portnoy and Mr. Adam Portnoy, there are no family relationships among any of our trusteesTrustees or executive officers. Our executive officers serve at the discretion of our board.Board.
BOARD OF TRUSTEES
Our business is conducted under the general direction of our boardBoard as provided by our declaration of trust, our bylaws and the laws of the State of Maryland, the state in which we were organized on October 9, 1986.
Three of our current trustees,Trustees, Patrick F. Donelan, William A. Lamkin and Frederick N. Zeytoonjian, are our independent trusteesIndependent Trustees within the meaning of our declaration of trust and bylaws; that is, trusteesTrustees who doare not perform any services for us except as trustees,our officers, are not involved in our day to day activities, and are not employed byemployees or affiliates of RMR, our manager, orand do not otherwise affiliated or have a material business or professional relationship with us, RMR or any other person or entity that holds in excess of 9.8% of our issued and outstanding common shares. Our board is comprised of a majority of trusteesbeneficial interest and are persons who also qualify as independent trustees pursuantunder our declaration of trust, bylaws and applicable rules of the NYSE. Two of our Trustees, Adam and Barry Portnoy, are Managing Trustees; that is Trustees who are involved in our day to the corporate governance standards for companies listed on the NYSE.day activities or are employed by our manager, RMR.
In determining independence pursuant to NYSE standards,the status of those Trustees who qualify as Independent Trustees, each year our boardBoard affirmatively determines whether trusteesTrustees have a direct or indirect material relationship with us, including our subsidiaries. When assessing a trustee’sTrustee's relationship with us, our boardBoard considers all relevant facts and circumstances, not merely from the trustee’sTrustee's standpoint, but from that of the persons or organizations with which the trusteeTrustee has an affiliation. Material relationships can include commercial, banking, consulting, legal, accounting, charitable and familial relationships.
Our boardBoard has determined that Messrs. Donelan, Lamkin and Zeytoonjian currently qualify as independentIndependent Trustees under our declaration of trust, bylaws and NYSE rules. In making that determination with respect to Mr. Donelan, our boardBoard considered Mr. Donelan’sDonelan's past employment with Dresdner Kleinwort Wasserstein, an affiliate of which he was the agent and a lender under our previous revolving bank credit facility. Such former relationship ended over five years ago and was with a very large bank for which we did not account for a material amount of revenues. Our boardBoard also considered each of these three trustees’Trustees' service in other enterprises and on the boards of other publicly traded
companies managed or advised by RMR and its affiliates. Our boardBoard has concluded that none of these trusteesTrustees possessed or currently possesses any relationship that could impair his judgment in connection with his duties and responsibilities as a trusteeTrustee or that could otherwise be a direct or indirect material relationship under our declaration of trust, bylaws and NYSE standards.
During 2006,2007, our board held seven meetings, our audit committeeBoard held nine meetings, our compensation committeeAudit Committee held twonine meetings, our Compensation Committee held four meetings, and our nominatingNominating and governance committeeGovernance Committee held three meetings.one meeting. During 2006,2007, each trusteeTrustee attended 75% or more of the total number of meetings of our boardBoard and any committee of which he was a member during the time in which he served on our boardBoard or such committee. All of our trusteesTrustees attended last year’syear's annual meeting of shareholders.
Pursuant to our governance guidelines,Governance Guidelines, our independent trustees, who constitute our non-management trustees,Independent Trustees meet at least once each year without management. The presiding trusteeTrustee at these meetings is the chairChair of our audit committee,Audit Committee, unless the independent trusteesIndependent Trustees in attendance select another independent trusteeIndependent Trustee to preside.
BOARD COMMITTEES
We have an audit committee, a compensation committeestanding Audit Committee, a Compensation Committee and a nominatingNominating and governance committee,Governance Committee, each of which has a written charter. Each of the above committees is comprised of Messrs. Donelan, Lamkin and Zeytoonjian, who are independent under our declaration of trust, bylaws and applicable NYSE listing standards and each committee’scommittee's respective charter.
The primary function of our audit committeeAudit Committee is to select our independent registered public accounting firm and to assist our boardBoard in fulfilling its responsibilities for oversight of: (1) the integrity of our financial statements; (2) our compliance with legal and regulatory requirements; (3) the independent registered public accounting firm’sfirm's qualifications and independence; and (4) the performance of our internal audit function. Our boardBoard has determined that Mr. Lamkin is our audit committeeAudit Committee financial expert and is “independent”"independent" as defined by the rules of the Securities and Exchange Commission, or SEC and the NYSE. Our board’sBoard's determination that Mr. Lamkin is a financial expert was based upon: (i) his current position as partner of Ackrell Capital LLC, an investment advisory firm; and (ii) his prior experience (a) as a financial consultant, (b) as a Senior Vice President in the investment banking division of ABN AMRO, Incorporated and (c) in various investment banking positions with Donaldson, Lufkin & Jenrette,
PaineWebber and Kidder, Peabody, where he worked with the Real Estate Investment Banking Group and the Project Lease Finance Group.
Our compensation committee’sCompensation Committee's primary responsibilities include: (1) reviewing, at least annually, the performance of RMR under its contract with us and making determinations regarding continuance of the contract; (2) evaluating the performance of our President; (3) reviewing the performance of our directorDirector of internal auditInternal Audit and determining the compensation payable to him;him and the costs of our internal audit function generally; and (4) evaluating, approving and administering all our equity compensation plans. The compensation committeeCompensation Committee is delegated the powers of the boardour Board necessary to carry out these responsibilities. For information on
Annually, typically in September, the Chair of our Compensation Committee meets with our Managing Trustees and the chairs of the compensation committee’s processescommittees of the other public companies for which RMR provides services. The purpose of this meeting is, among other things, to discuss compensation philosophy and proceduresfactors which may affect compensation decisions, to provide a comparative understanding of potential share grants by us and the other affected companies and to hear and consider recommendations from our Managing Trustees concerning potential share grants.
Subsequent to this meeting, the members of the Compensation Committee hold a meeting at which the Chair provides a report of the information discussed with the Managing Trustees and others and makes recommendations for share grants to executive officers. Our Compensation Committee then discusses these recommendations and other factors and determines the amount of the share awards. Our executive officers have not participated in these meetings and have not been involved in determining or recommending the amount or form of executive and trusteecompensation. Our Compensation Committee has not engaged compensation seeconsultants to participate in the sections entitled “Compensation Discussion and Analysis” and “Compensation Tables” below.determination or recommendation of the amount or form of executive compensation.
The responsibilities of our nominatingNominating and governance committeeGovernance Committee include: (1) identification of individuals qualified to become members of our boardBoard and recommending to our boardBoard the trusteeTrustee nominees for each annual meeting of shareholders or when vacancies occur; (2) development, and recommendation to our board, of a setBoard, of governance principles;guidelines; and (3) evaluation of the performance of our board.Board.
The charter of each of our standing committees provides that the committee may form and delegate authority to subcommittees of one or more members when appropriate. Subcommittees are subject to the provisions of the applicable committee’scommittee's charter.
Our policy with respect to board members’Board members' attendance at our annual meetings of shareholders can be found in our governance guidelines,Governance Guidelines, the full text of which appears at our website at www.hrpreit.com. In addition to our governance guidelines,Governance Guidelines, copies of the charters of our audit, compensationAudit, Compensation and nominatingNominating and governance committees,Governance Committees, as well as our Code of Business Conduct and Ethics, may be obtained free of charge by writing to our Secretary, HRPT Properties Trust, 400 Centre Street, Newton, MA 02458 or at our website, www.hrpreit.com.
COMMUNICATIONS WITH TRUSTEES
Any shareholder or other interested person who desires to communicate with our independent trusteesIndependent Trustees or any other trustees,Trustees, individually or as a group, may do so by filling out a report at our website (www.hrpreit.com), by calling our toll free confidential message system at (866) 511-5038, or by writing to the party for whom the communication is intended, care of our directorDirector of internal audit,Internal Audit, HRPT Properties Trust, 400 Centre Street, Newton, MA 02458. Our directorDirector of internal auditInternal Audit will then deliver any communication to the appropriate party or parties.
SELECTION OF CANDIDATES FOR TRUSTEES;
SHAREHOLDER RECOMMENDATIONS, NOMINATIONS AND PROPOSALS
Our boardBoard has established governance guidelinesGovernance Guidelines which, among other matters, set forth the qualifications for service on our board.Board. These guidelines may be changed from time to time by our boardBoard upon the recommendation of our nominatingNominating and governance committee.Governance Committee. Our boardBoard makes nominations of persons to be elected by shareholders as trustees.Trustees. Our boardBoard also elects trusteesTrustees to fill boardBoard vacancies which may occur from time to time. In both these circumstances, our boardBoard will act upon recommendations made by our nominatingNominating and governance committee.Governance Committee.
In considering candidates to serve as Trustees, our Nominating and Governance Committee seeks individuals who have qualities which the Committee believes may be effective in serving our long term best interests. Among the characteristics which the Committee considers are the following: the quality of the candidate's past services to us, if any; the business and personal experiences of the candidate and
their relevance to our business; the reputation of the candidate for integrity; the reputation of the candidate for intelligence, sound judgment, the ability to understand complex financial issues and to make meaningful inquiries; the willingness and ability of the candidate to devote sufficient time to Board business; the familiarity of the candidate with the responsibilities of service on the board of a publicly owned company; the qualification of the candidate to be either an Independent Trustee or a Managing Trustee; and other matters that the Nominating and Governance Committee deems appropriate. An "Independent Trustee" is one who is not one of our officers, is not involved in our day to day activities and is not an employee or affiliate of RMR and does not otherwise have a material business or professional relationship with us, RMR or any other person or entity that holds in excess of 9.8% of our issued and outstanding shares of beneficial interest and who qualifies as independent under our declaration of trust, bylaws and applicable rules of the NYSE. A "Managing Trustee" is a Trustee who is not an Independent Trustee and who has been an employee of our manager or has been involved in our day to day activities for at least one year prior to his or her election. In seeking candidates for Trustees who have not previously served as our Trustees, the Nominating and Governance Committee may use the business, professional and personal contacts of its members, it may accept recommendations from other Board members, and, if it considers it appropriate, the Nominating and Governance Committee may engage a professional search firm.
In 2007, we did not pay any third party to identify or to assist in the evaluation of any candidate for election to our Board. We did not receive any shareholder recommendations or nominations for our Board for the 2008 annual meeting, except the nominations made by our Board which includes Board members who are shareholders of record.
Shareholder recommendations for nominees.It is the policy of our nominatingNominating and governance committeeGovernance Committee to consider candidates for election as trusteesTrustees who are recommended by our shareholders pursuantof record who are entitled to make nominations of persons for election to our Board at the applicable meeting and who have timely and properly provided a notice of a recommendation for a nominee. The notice for a recommendation for a nominee must be delivered to our secretary and to the procedures set forthChair of our Nominating and Governance Committee at our principal executive offices not later than the time that a notice of a nomination must be provided to our secretary as described below for the applicable meeting. Any such notice must be accompanied by the same information, copies of share certificates and other documents as described below. In considering shareholder recommendations for nominees, the Nominating and Governance Committee may request additional information concerning the nominee or the nominating shareholder or shareholder associated person (as defined below).
If a shareholder who is entitled to do so under Shareholder nominations and proposals at annual meetings. Under our bylaws, desires to recommend an individual for membership on the board, then that shareholder must provide a written notice to the chair of the nominating and governance committee and to our Secretary, HRPT Properties Trust, 400 Centre Street, Newton, MA 02458. Inin order for a recommendationshareholder to be entitled to nominate a person for election to our Board at an annual meeting of shareholders or to propose any other item of business to be considered by shareholders at an annual meeting, such shareholder must (1) be a shareholder of record at the nominatingtime of giving of notice described below and governance committee, thisat the time of the annual meeting, (2) be entitled to vote at the meeting, (3) timely and properly give the notice described below, and (4) otherwise comply with the terms and provisions of our bylaws.
For nominations for election to our Board or other business to be properly brought before an annual meeting by a shareholder of record, the shareholder of record must have given timely notice thereof in writing to our secretary and such other business must otherwise be a proper matter for action by shareholders. To be timely, a notice from a shareholder of record must set forth all information required below and must be received within the 30 day period endingdelivered to our secretary at our principal executive offices
not later than 5:00 p.m. (Eastern Time) on the last90th day nor earlier than the 120th day prior to the first anniversary of the date of the proxy statement for the preceding year's annual meeting. In the event that the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the proxy statement for the preceding year's annual meeting, notice by the shareholder of record to be timely must be so delivered not earlier than the 120th day prior to the first anniversary of the date of the proxy statement for the preceding year's annual meeting and not later than 5:00 p.m. (Eastern Time) on the later of: (1) the 90th day prior to the date of such annual meeting or (2) the 10th day following the day on which shareholders maypublic announcement of the date of such meeting is first made by us. In no event will the postponement or adjournment of an annual meeting commence a new time period for the giving of a shareholder's notice as described above.
No shareholder is entitled to give timelysuch a notice of a nomination for trustee nominations underelection to our bylawsBoard or of other business to be properly brought before an annual meeting or to make a recommendation for a nomination, unless such shareholder is a shareholder of record at the relevant times described above and applicable stateholds share certificates for all our shares of beneficial interest owned by such shareholder, and federal law, anda copy of each such share certificate must contain, ataccompany such shareholder's notice to our secretary in order for such notice to be effective.
A notice from a minimum,shareholder of record referred to in the following:preceding paragraph must set forth:
(A)
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- as to each
personindividual whom the shareholder of record proposes to nominate (or recommend, as the case may be) for election or reelection as a trustee,Trustee, or a proposed nominee, and any proposed nominee associated person (as defined below) (1) such person’sthe name, age, business address and residence address
of such proposed nominee and the name and address of such proposed nominee associated person, (2) the class, series and number of ourany shares of our beneficial interest that are beneficially owned or owned of record by such proposed nominee or by such proposed nominee associated person,
(3) a statement of whether such proposed nominee is proposed for nomination as an Independent Trustee or a Managing Trustee and a description of such proposed nominee's qualifications to be an Independent Trustee or Managing Trustee, as the case may be, (4) the date such shares were acquired and the investment intent of such acquisition,
(4) the record (5) a description of all purchases and sales of our securities by such proposed nominee or by such proposed nominee associated person during the previous 12 month period, including the date of the transactions, the class, series and number of securities involved in the transactions and the consideration involved, (6) a description of all derivative transactions (as defined below) by such proposed nominee or by such proposed nominee associated person during the previous 12 month period, including the date of the transactions and
(5) the class, series and number of securities involved in, and the material economic terms of, the transactions, such description to include all information that such proposed nominee or proposed nominee associated person would be required to report on an insider report (as defined below) if such proposed nominee or proposed nominee associated person were a Trustee or the beneficial owner of more than 10 percent of the shares of the trust at the time of the transactions, (7) to the extent known by such proposed nominee or such proposed nominee associated person, the name and address of any other person who owns, of record or beneficially, any shares of our beneficial interest and who supports the proposed nominee for election or reelection as a Trustee, (8) all other information relating to such proposed nominee or such proposed nominee associated person that is required to be disclosed in solicitations of proxies for election of trusteesTrustees in an election contest (even if an election contest is not involved), or is otherwise
required, in each case pursuant to Regulation 14A (or any successor provision) under the SEC’s proxy rules, includingSecurities Exchange Act of 1934, as amended, or the Exchange Act, and (9) such person’sproposed nominee's notarized written consent to being named in the proxy statement as a nominee and to serving as a trusteeTrustee if elected;
(B)
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- as to any other business that the shareholder of record proposes to bring before the meeting, (1) a description of such business, (2) the reasons for proposing such business at the meeting and any material interest in such business of such shareholder or any shareholder associated person (as defined below), including any anticipated benefit to such shareholder or any shareholder associated person therefrom and (3) a representation that such shareholder intends to appear in person or by proxy at the meeting to bring the business before the meeting;
- •
- as to the shareholder of record giving the notice and any shareholder associated person,
(defined below),(1) the class, series and number of all shares of our sharesbeneficial interest which are owned of record by such shareholder andor by such shareholder associated person, if any, and (2) the class, series and number of, and the nominee holder for, all shares owned beneficially but not of record by such shareholder andor by any such shareholder associated person;(C) person, if any;
- •
- as to the shareholder of record giving the notice and any shareholder associated person
their namescovered in the second and addresses,third bullet points above, (1) the name and address of such shareholder, as they appear on our share ledgerledger; and the current namesname and addresses,address, if different;(D) different, of such shareholder associated person and (2) the investment strategy or objective, if any, of such shareholder or shareholder associated person and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such shareholder or shareholder associated person;
- •
- as to the shareholder of record giving the notice and any shareholder associated person covered in the
recordsecond and third bullet points above, (1) a description of all purchases and sales of our securities by such shareholder or shareholder associated person during the previous 12 month period including the date of the transactions, the class, series and number of securities involved in the transactions and the consideration involved;involved and(E) (2) a description of all derivative transactions by such shareholder or shareholder associated person during the previous 12 month period, including the date of the transactions and the class, series and number of securities involved in, and the material economic terms of, the transactions, such description to include all information that such shareholder or shareholder associated person would be required to report on an insider report if such shareholder or shareholder associated person were a Trustee or the beneficial owner of more than 10 percent of the shares of the trust at the time of the transactions; and
- •
- to the extent known by the shareholder of record giving the notice, the name and address of any other
shareholder supportingperson who owns, beneficially or of record, any shares of our beneficial interest and who supports the nominee for election or reelection as a trusteeTrustee or the proposal of other business on the date of such shareholder's notice.
As used above,
A “shareholder
- •
- a "shareholder associated
person”person" of any shareholder ismeans (1) any person controlling, directly or indirectly, or acting in concert with, such shareholder, (2) any beneficial owner of our shares of beneficial interest owned of record, or beneficially, by such shareholder and (3) any person
At the same time as or prior to the submission of any shareholder nomination or proposal of business to be considered at an annual or special meeting that, if approved and implemented by us, would cause us to be in breach of any of our covenants in any existing or proposed debt instrument, agreement or other material contract or agreement, the proponent shareholder or shareholders must submit to our secretary at our principal executive offices (1) evidence satisfactory to our Board of the lender's or contracting party's willingness to waive the breach of covenant or (2) a plan for repayment of the indebtedness to the lender or correcting the contractual default, specifically identifying the actions to be taken or the source of funds to be used in the repayment, which plan must be satisfactory to our Board in its discretion.
At the same time or prior to the submission of any shareholder nominations or proposal of business to be considered at an annual or special meeting that, if approved, could not be implemented by us without notifying or obtaining the consent or approval of any federal, state, municipal or other regulatory body, the proponent shareholder or shareholders must submit to our secretary at our principal executive offices (1) evidence satisfactory to our Board that any and all required notices, consents or approvals have been given or obtained, including without limitation such evidence as the Board of Trustees may require so that any nominee may be determined to satisfy any suitability or other requirements, or (2) a plan for making the requisite notices or obtaining the requisite consents or approvals, as applicable, prior to the implementation of the proposal or election, which plan must be satisfactory to our Board in its discretion.
Our board If information submitted pursuant to these requirements by any shareholder proposing a nominee for election as a Trustee or any proposal for other business at a meeting of shareholders is incomplete or inaccurate, any authorized officer or our nominatingBoard of Trustees or any committee thereof may treat such information as not having been provided in accordance with the procedures described above and governancein our bylaws. Upon written request by our secretary or our Board or any committee thereof, any shareholder proposing a nominee for election as a Trustee or any proposal for other business at a meeting of shareholders must provide, within three business days of delivery of such request (or such other period as may be specified in such request) (i) written verification, satisfactory to any authorized officer or our Board or any committee thereof, in his, her or its sole discretion, to demonstrate the accuracy of any information submitted by the shareholder and (ii) a written update, to a current date, of any information submitted by the shareholder pursuant to the procedures described above and in our bylaws as of an earlier date. If a shareholder fails to provide such written verification or such written update within such period, any authorized officer or our Board or any committee thereof may treat the information as to which written verification or written update was requested as not having been provided in accordance with the procedures described above and in our bylaws. We are not required to request clarification or updating of the information provided by any shareholder, but our Board of Trustees, a committee thereof or our secretary acting on behalf of our Board or committee may request additional information aboutdo so in its discretion.
Additional requirements for shareholder nominations and proposals appear in our bylaws. Only such individuals who are nominated in accordance with the procedures described above and in our bylaws will be eligible for election by shareholders as Trustees and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth above and in our bylaws. The chairperson of the shareholders meeting will have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with these procedures and, if any proposed nomination or other business is not in compliance with these procedures, to declare that such defective nomination or proposal be disregarded.
A shareholder nomineesubmitting any nominations or aboutproposals of business to be considered at an annual or special meeting must also comply with all applicable requirements of state law and the Exchange Act and the rules and regulations thereunder with respect to matters set forth above and in our bylaws. Nothing in the above described procedures will be deemed to require that a recommending shareholder.shareholder nomination of an individual for election to our Board or a shareholder proposal relating to other business be included in our proxy statement except as may be required by law.
In considering candidates Our Board may from time to time require any individual nominated to serve as trustees,a Trustee to agree in writing with regard to matters of business ethics and confidentiality while such nominee serves as a Trustee, such agreement to be on the terms and in a form determined satisfactory by our nominatingBoard, as amended and governance committee seeks individuals who have qualities whichsupplemented from time to time in the committee believesdiscretion of our Board. The terms of such an agreement may be effective in servingsubstantially similar to our long term best interests. Among the characteristics which the committee considers are the following: the qualitycode of business conduct and ethics or any similar code promulgated by us or may differ from or supplement such code.
For purposes of the candidate’s past servicesforegoing, "public announcement" means disclosure in (1) a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or any other widely circulated news or wire service or (2) a document publicly filed by us with the SEC pursuant to the company, if any; the business and personal experience of the candidate and their relevance to our business; the reputation of the candidate for integrity; the reputation of the candidate for intelligence, sound judgment and the ability to understand complex financial issues and to make meaningful inquiries; the willingness and ability of the candidate to devote sufficient time to board business; the familiarity of the candidate with the responsibilities of service on the board of a publicly owned company; the status of the candidate as independent of management; and other matters that the nominating and governance committee deems appropriate. In seeking candidates for trustees who have not previously served as our trustees, the nominating and governance committee may use the business, professional and personal contacts of its members, it may accept recommendations from other board members, and, if it considers it appropriate, the nominating and governance committee may engage a professional search firm. Shareholder recommendations which meet the requirements set forth above will be considered using the same criteria as other candidates considered by our nominating and governance committee.Exchange Act.
2009 annual meeting deadlines.To be eligible for consideration at our 20082009 annual meeting, shareholder nominations of a candidate (or candidates) to be elected as a trusteeTrustee (or trustees)Trustees) must be received at our principal executive offices in the manner described above and in our bylaws no earlier than December 15, 200722, 2008 and no later than January 14, 2008.21, 2009. Shareholder nominations must also be made in compliance with the informational requirements about the nominee and the nominating shareholder of record, be accompanied by the copies of the documents described above and in our bylaws, and otherwise conform to the requirements as set forth above and in our bylaws. Shareholder nominations which are recommended by our nominatingNominating and governance committeeGovernance Committee and supported by our boardBoard will appear in our 20082009 proxy statement. Shareholder nominations which are properly made in accordance with the procedures set forth above and in our bylaws but are not recommended by our nominatingNominating and governance committeeGovernance Committee or are not supported by our boardBoard will not, unless required by law, appear in our 20082009 proxy statement, but they may be considered at our annual meeting.
In 2006, we did not pay any third party to identify or to assist in the evaluation of any candidate for election to our board. We did not receive any shareholder recommendations or nominations for our board for the 2007 annual meeting, except the nominations made by our board which includes board members who are shareholders.
Under our bylaws and the rules and regulations of the SEC, to be eligible for inclusion in the proxy statement for our 20082009 annual meeting, shareholder proposals other than nominations must be received at our principal executive offices no later than December 15, 2007,22, 2008, and must otherwise satisfy the conditions for inclusion established bydescribed above and those under our bylaws and the SEC.SEC rules and regulations. Proposals by shareholders other than nominationsof record, intended for presentation at the 20082009 annual meeting but not intended to be included in our proxy statement for that meeting, other than nominations, must be received at our principal executive office no earlier than December 15, 2007,22, 2008 and no later than January 14, 2008,21, 2009, and must meet all the other requirements ofdescribed above and those under our bylaws and of the SEC.SEC rules and regulations.
Copies of our bylaws, including the provisions which concern the requirements for shareholder nominations and proposals, may be obtained by writing to our Secretary, HRPT Properties Trust, 400 Centre Street, Newton, MA 02458.
16
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Overview and Objectives
Our compensation policies are determined by the compensation committee of our board, which is comprised of only independent trustees. We do not have any employees. ServicesNone of our executive officers has an employment agreement with us or any agreement that becomes effective upon his termination or a change in control of us. Our manager, RMR, provides services that otherwise would be provided by employees are provided under contract byemployees. RMR conducts our manager, RMR. Except for the grants of shares underday to day operations on our Incentive Share Award Plan discussed below, webehalf and compensates our named executive officers (Messrs. Mannix and Popeo) directly and in its sole discretion in connection with their services rendered to RMR and to us. We do not pay our executive officers salaries or bonuses or provide other compensatory benefits.benefits except for the grants of shares under our Incentive Share Award Plan discussed below. Although our Compensation Committee reviews and approves our contract with RMR, it is not involved in compensation decisions made by RMR for its employees other than the employee serving as our Director of Internal Audit. Our payments to RMR are described in “Related"Related Person Transactions and Company Review of Such Transactions.”"
We have adopted ourAnalysis of Grants under Our Incentive Share Award Plan
Although we do not pay any cash compensation and have no employees, we have adopted an Incentive Share Award Plan to reward our executive officers and other RMR employees who provide services to us and to foster a continuing identity of interest between managementthem and our shareholders. We
award shares under our Incentive Share Award Plan to recognize our executive officers' scope of responsibilities, reward demonstrated performance and leadership, motivate future superior performance, align the interests of our executives with those of our other shareholders and to motivate the executives to remain employees of our manager and to continue to provide incentive equity awardsservices to our executive officers and others who perform services for us.us through the term of the awards.
Under its charter, our compensation committeeCompensation Committee evaluates, approves and administers share awards under our Incentive Share Award Plan. In implementing this plan, the committeeCommittee has to date determined to use grants of restricted common shares rather than stock options. Because the value of our common shares may be determined in part by reference to its dividend yield relative to market interest rates rather than our performance,by its potential for capital appreciation, we believe a conventional stock option plan might not provide appropriate incentives for management for a business like ours, but a stock grant plan would createcreates a better identity of interests between management and other shareholders. The Committee does not consider the share grants to be the primary element of compensation of the recipients; we believe the cash compensation that RMR pays these individuals is substantially more than the value of the shares granted to these individuals. In setting incentive share awards under thatour plan, our compensation committeeCompensation Committee considers multiple factors, including the following primary factors: (1) the scope of responsibility of each individual, (2) the amount and terms of the incentive shares previously granted to each recipient, (2)(3) the amount of shares previously granted to persons performing similar services for us as are currently performed by each recipient, (4) the amount of time spent, the complexity of the duties, and the value of services performed, by the particular recipient, and (3)(5) the fair market value of the common shares granted.granted, and (6) the recommendations of our officers and Managing Trustees. We determine the fair market value of the shares granted based uponon the closing price of our common shares on the date of grant.
The committeeCommittee has imposed, and may impose, vesting and other conditions on the granted common shares because it believes that time based vesting encourages recipients of share awards to remain with RMR and continue to provide services to us. Prior to 2006, the committeeCommittee generally imposed a vesting schedule on share awards under which one third of the shares vested immediately and the remaining shares vested in two equal annual installments on the first and second anniversaries of the date of grant. For the 2006 award grants from and after 2006, the committeeCommittee determined to use a vesting schedule under which one fifth of the shares vested immediately and the remaining shares vested in four equal, consecutive annual installments commencing on the first anniversary of the date of grant. The committeeCommittee made this change to provide an incentive to provide services for a longer term and in consideration of the tax treatment of the share grants to us and to the recipients. In the event a recipient granted an incentive share award ceases to perform duties for us or ceases to be an officer or an employee of RMR or any company which RMR manages during the vesting period, we may repurchase the common shares which have not yet vested for nominal consideration. As with other issued common shares, vested and unvested shares awarded under our Incentive Share Award Plan are entitled to distributions.
It As discussed further in the section entitled "Board Committees," it is the committee’sCompensation Committee's current policy to consider share grants to managementexecutive officers annually in September. Prior to its consideration of share grants, the chairChair of our compensation committeeCompensation Committee meets with our managing trusteesManaging Trustees and the chairs of the compensation committees of the other public companies for which RMR provides management services. The purpose of this meeting is, among other things, to provide a comparative understanding of potential share grants by us and the other affected companies
and to hear and consider recommendations byfrom our managing trusteesManaging Trustees concerning potential share grants. The chairChair then provides a
report to our compensation committee of the information discussed at the meeting to our Compensation Committee. Our Compensation Committee discusses this information and makes recommendations for share grants. Our compensation committee discusses these recommendations in conjunction with comparative compensation data as well as anythe other information it deems relevant,factors enumerated above and determines the amount of the share awards.
Because the schedule for consideration of share awards by our compensation committeeCompensation Committee and our boardBoard is determined several months in advance, the proximity of any grants to earnings announcements or other market events is coincidental.
We believe that our compensation philosophy and programs are designed to foster a business culture that aligns the interests of our managementexecutive officers with those of our shareholders. We believe that the equity compensation of our managementexecutive officers is appropriate to the goal of providing shareholders dependable, long term returns.
Compensation Committee Report
The undersigned members of the Compensation Committee have reviewed and discussed the Compensation Discussion and Analysis with the company's management. Based upon this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the company's Annual Report on Form 10-K for the year ended December 31, 2007.
COMPENSATION TABLES
The following tables provide (1) summary 2007 and 2006 compensation information relating to our executive officers, (2) information with respect to incentive share awards made to, or held by, our named executive officers during the periods or at the dates specified below and (3) compensation information relating to our trustees.Trustees for 2007. Our named executive officers consist of two individuals, our President and Chief Operating Officer and our Treasurer, Chief Financial Officer and Secretary, the compensation of whom is required to be reported herein under the rules of the SEC. The compensation of our other executive officers is below the level at which compensation would be required by such rules to be reported in this proxy statement.
Summary Compensation Table for 2006
SUMMARY COMPENSATION TABLE FOR 2007 AND 2006
(Shares granted in 2007, 2006 and prior years, which vested in 2007 and 2006)
Name and Principal Position | | Year | | Stock
Awards ($) (1) | | All Other
Compensation
($)(2) | | Total ($) | |
John A. Mannix | | 2006 | | | $ | 50,558 | | | | $ | 1,680 | | | $ | 52,238 | |
President and Chief Operating Officer | | | | | | | | | | | | | |
John C. Popeo | | 2006 | | | $ | 50,558 | | | | $ | 1,680 | | | $ | 52,238 | |
Treasurer, Chief Financial Officer and Secretary | | | | | | | | | | | | | |
Name and Principal Position
| | Year
| | Stock
Awards ($)(1)
| | All Other
Compensation
($)(2)
| | Total ($)
|
|---|
John A. Mannix
President and Chief Operating Officer |
|
2007
2006 |
|
$
$ |
52,070
50,558 |
|
$
$ |
7,224
4,145 |
|
$
$ |
59,294
54,703 |
John C. Popeo
Treasurer, Chief Financial Officer and
Secretary |
|
2007
2006 |
|
$
$ |
52,070
50,558 |
|
$
$ |
7,224
4,145 |
|
$
$ |
59,294
54,703 |
- (1)
Represents the value based upon the closing price on the date of grant in 2007, 2006 and prior years of shares vesting in 2006.2007 or 2006, as applicable. This is also the compensation cost recognized by us in the applicable year for purposes of FAS 123R. No assumptions are used in this calculation.
(2)Consists of distributions during 2007 or 2006, as applicable, on share awards granted in 2006.unvested shares.Grants of Plan Based Awards for 2006
GRANTS OF PLAN BASED AWARDS FOR 2007
(Shares granted in 2006,2007, including vested and unvested grants)
Name | | Grant Date | | All Other Stock Awards:
Number of Shares of Stock
or Units | | Grant Date Fair
Value of Stock and
Option Awards (1) | | | Grant Date
| | All Other Stock Awards: Number of Shares of Stock or Units (#)
| | Grant Date Fair Value of Stock and Option Awards(1)
|
|---|
John A. Mannix | | | 9/20/06 | | | 8,000 Common Shares | | | $ | 95,040 | | | | 9/18/07 | | 8,000 Common Shares | | $ | 79,200 |
John C. Popeo | | | 9/20/06 | | | 8,000 Common Shares | | | $ | 95,040 | | | | 9/18/07 | | 8,000 Common Shares | | $ | 79,200 |
- (1)
Represents the value based upon the closing price on the date of grant.
grant, which is also the grant date fair value under FAS 123R. No assumptions are used in this calculation.Incentive share awards granted by us to executive officers in 20062007 provide that one fifth of each award vests on the grant date and one fifth vests on each of the next four anniversaries of the grant date. In the event an executive officera recipient granted an incentive share award ceases to perform duties for us or ceases to be an officer or an employee of RMR or any company which RMR manages during the vesting period, we may repurchase the common shares which have not yet vested for nominal
consideration. Holders of vested and unvested shares awarded under our incentive share award plan are eligible to receive distributions on the same terms as other holders of our common shares.
Outstanding Equity Awards at Fiscal Year End for 2006
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END FOR 2007
(Shares granted in 20062007 and prior years, which have not yet vested)
| | Stock Awards | | |
| | Stock Awards
|
|---|
Name | | Number of Shares
or Units of Stock That Have Not
Vested (#) | | Market Value of Shares or
Units of Stock That Have
Not Vested ($) (1) | | | Year Granted
| | Number of Shares or Units
of Stock That Have Not
Vested (#)
| | Market Value of Shares
or Units of Stock That
Have Not Vested ($)(1)
|
|---|
John A. Mannix | | | 7,734 | (2) | | | $ | 95,515 | | | | 2007 | | 6,400 | (2) | $ | 49,472 |
| John A. Mannix | | | 2006 | | 4,800 | (3) | $ | 37,104 |
John C. Popeo | | | 7,734 | (2) | | | $ | 95,515 | | | | 2007 | | 6,400 | (2) | $ | 49,472 |
| John C. Popeo | | | 2006 | | 4,800 | (3) | $ | 37,104 |
- (1)
Represents the value based upon the final 20062007 closing price of our shares.
shares, which was $7.73 on December 31, 2007.
(2)
These shares will vest as follows: 2,934 shares in September 2007; 1,600 shares in September 2008;2008, 1,600 shares in September 2009;2009, 1,600 shares in September 2010, and 1,600 shares in September 2010.Option Exercises2011.
(3)These shares will vest as follows: 1,600 shares in September 2008, 1,600 shares in September 2009, and Stock Vested for 20061,600 shares in September 2010.
OPTION EXERCISES AND STOCK VESTED FOR 2007
(Share grants which vested in 2006,2007, including shares granted in prior years)
| | Stock Awards | |
Name | | Number of Shares
Acquired on Vesting (#) | | Value Realized on
Vesting ($) (1) | |
John A. Mannix | | | 4,267 | | | | $ | 50,292 | | |
John C. Popeo | | | 4,267 | | | | $ | 50,292 | | |
| | Stock Awards
| |
|---|
Name
| | Number of Shares
Acquired on Vesting (#)
| | Value Realized on
Vesting ($)
| |
|---|
| John A. Mannix | | 4,534 | | $ | 44,350 | (1) |
| John C. Popeo | | 4,534 | | $ | 44,350 | (1) |
- (1)
Represents the value based upon the closing price on the 20062007 dates of vesting of grants made in 20062007 and prior years.Trustee Compensation for 2006
TRUSTEE COMPENSATION FOR 2007
(20062007 compensation; all share grants to trusteesTrustees vest at the time of grant)
Name | | Fees Earned or
Paid in Cash ($) | | Stock Awards ($)(1) | | All Other
Compensation
($)(2) | | Total ($) | | | Fees Earned or
Paid in Cash ($)
| | Stock
Awards ($)(1)
| | All Other
Compensation
| | Total ($)
|
|---|
Tjarda Clagett (3) | | | $ | 2,000 | | | | — | | | | — | | | $ | 2,000 | | |
Patrick F. Donelan | | | $ | 40,500 | | | | $ | 24,458 | | | | $ | 945 | | | $ | 65,903 | | | $ | 38,500 | | $ | 35,100 | | $ | — | | $ | 73,600 |
William A. Lamkin | | | $ | 33,500 | | | | $ | 24,458 | | | | $ | 945 | | | $ | 58,903 | | | $ | 42,500 | | $ | 35,100 | | $ | — | | $ | 77,600 |
Gerard M. Martin (3) | | | — | | | | — | | | | — | | | — | | |
Adam D. Portnoy (4) | | | — | | | | $ | 56,007 | | | | $ | 945 | | | $ | 56,952 | | |
| Adam D. Portnoy(2) | | | $ | — | | $ | 47,866 | | $ | 840 | (3) | $ | 48,706 |
Barry M. Portnoy | | | — | | | | $ | 24,458 | | | | $ | 945 | | | $ | 25,403 | | | $ | — | | $ | 35,100 | | $ | — | | $ | 35,100 |
Frederick N. Zeytoonjian | | | $ | 37,000 | | | | $ | 24,458 | | | | $ | 945 | | | $ | 62,403 | | | $ | 39,000 | | $ | 35,100 | | $ | — | | $ | 74,100 |
- (1)
Represents the value based upon the closing price on the date of grant.
(2) Consists of distributions during 2006 on stock awards granted in 2006.(3) Messrs. Clagett and Martin served as trustees of the company through May 2006.
(4)
Mr. Adam Portnoy served as executive vice president of the company from 2003 until May 2006. The value of his stock awards shown above includes $24,458$12,766 for stock awarded to him in 2006 for his services as a trustee and $31,549 for stock awardedprior to him in prior years2007 that vested in 2006.2007 for service as an officer of the company. At December 31, 2006,2007, all shares held by Mr. Adam Portnoy held 1,334were vested.
(3)Consists of distributions during 2007 on unvested shares of stock, which had not yet vested, with a market value of $16,475 based on the final 2006 closing price of our shares.awarded in 2005.Each independent trusteeIndependent Trustee receives an annual fee of $25,000 for services as a trustee,Trustee, plus a fee of $500 for each meeting attended. Up to two $500 fees are paid if a boardBoard meeting and one or more boardBoard committee meetings are held on the same date. The chairpersons of our audit committee, compensation committeeAudit Committee, Compensation Committee and nominatingNominating and governance committeeGovernance Committee receive an additional $7,500, $3,500 and $3,500, respectively each year. In addition, each trusteeTrustee receives a grant of 2,2503,000 of our common shares as part of his annual compensation. We generally reimburse all our trusteesTrustees for travel expenses incurred in connection with their duties as trustees.Trustees.
Each Our Board believes it is important to align the interests of Trustees with those of our shareholders and for Trustees to hold equity ownership positions in our company. Accordingly, our Board believes that a portion of each Trustee's compensation should be paid in shares. In determining the amount and composition of such compensation, our Board considers the compensation of trustees and directors of other comparable enterprises, both with respect to size and industry.
Historically, each year our board reviewsBoard has reviewed the compensation paid to our trusteesTrustees and determinesdetermined both the amount of such compensation and the allocation of such compensation between equity based awards and cash. In December 2007, the charter of our Compensation Committee was amended and, beginning in 2008, the Compensation Committee will determine the equity compensation for the Trustees. Our managing trusteesManaging Trustees do not receive any compensation for their services as trustees,Trustees, other than common share grants.
Our board believes it is important to align the interests of trustees with those of our shareholders and for trustees to hold equity ownership positions in our company. Accordingly, our board believes that a portion of each trustee’s compensation should be paid in shares. In determining the amount and composition of such compensation, our board considers the compensation of trustees and directors of other comparable enterprises, both with respect to size and industry.
20
Compensation Committee Report
The undersigned members of the compensation committee have reviewed and discussed the Compensation Discussion and Analysis with the company’s management. Based upon this review and discussion, the compensation committee recommended to the board of trustees that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into the company’s Annual Report on Form 10-K for the year ended December 31, 2006.
| COMPENSATION COMMITTEE
|
| Frederick N. Zeytoonjian, Chairman
|
| Patrick F. Donelan
|
| William A. Lamkin
|
Audit Committee Report
In the course of our oversight of the company’scompany's financial reporting process, we have: (1) reviewed and discussed with management the audited financial statements for the year ended December 31, 2006;2007; (2) discussed with Ernst & Young LLP, the company’scompany's independent registered public accounting firm, the matters required to be discussed by Statement on AccountingAuditing Standards No. 61, Communication with Audit Committees;Committees, as amended; (3) received the written disclosures and the letter from the
independent registered public accounting firm required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees; (4) discussed with the independent registered public accounting firm its independence; and (5) considered whether the provision of nonaudit services by the independent registered public accounting firm is compatible with maintaining its independence and concluded that it is compatible at this time.
Based on the foregoing review and discussions, the audit committeeAudit Committee recommended to the board of trusteesBoard that the audited financial statements be included in the company’scompany's Annual Report on Form 10-K for the year ended December 31, 2006,2007, for filing with the SEC.
| AUDIT COMMITTEE
|
| Patrick F. Donelan, Chairman
|
| William A. Lamkin
|
| Frederick N. Zeytoonjian
|
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial ownership of our common shares as of April 14, 2008 by (1) each person or entity known to us to be the beneficial owner of more than 5% of our outstanding common shares, and byshares; (2) each of our trusteesTrustees and executive officers individuallywho served at any time during 2007; and (3) each of our current Trustees and executive officers as a group, as of March 20, 2007.group. Unless otherwise indicated, we believe that each owner named below has sole voting and investment power for all common shares shown to be beneficially owned by that person or entity, subject to the matters set forth in the footnotes to the table below.
| | Beneficial Ownership(1) | |
Name and Address (2) | | Number of Shares | | Percent | |
Beneficial Owners of More Than 5% of Our Common Shares | | | | | | | | | |
Barclays Global Investors, N.A. (3) | | | 10,556,679 | | | | 5.0 | % | |
The Vanguard Group, Inc. (4) | | | 12,426,665 | | | | 5.9 | % | |
Trustees, Nominees for Trustee and Executive Officers | | | | | | | | | |
Jennifer B. Clark | | | 24,691 | | | | * | | |
Patrick F. Donelan | | | 8,250 | | | | * | | |
William A. Lamkin | | | 2,250 | | | | * | | |
David M. Lepore | | | 25,000 | | | | * | | |
John A. Mannix | | | 42,218 | | | | * | | |
John C. Popeo | | | 27,000 | | | | * | | |
Adam D. Portnoy (5) | | | 1,061,399 | | | | * | | |
Barry M. Portnoy (5)(6) | | | 1,736,329 | | | | * | | |
Frederick N. Zeytoonjian (5)(7) | | | 28,250 | | | | * | | |
All trustees, nominees and executive officers as a group (nine persons) (5)(6)(7) | | | 1,955,387 | | | | * | | |
| | Beneficial Ownership(1)
|
|---|
Name and Address(2)
| | Number of Shares
| | Percent
|
|---|
| Beneficial Owners of More Than 5% of Our Common Shares | | | | |
| Barclays Global Investors, N.A.(3) | | 15,516,752 | | 6.9% |
| The Vanguard Group, Inc.(4) | | 13,927,092 | | 6.2% |
Trustees, Nominees and Executive Officers |
|
|
|
|
| Jennifer B. Clark | | 34,546 | | * |
| Patrick F. Donelan | | 11,250 | | * |
| William A. Lamkin | | 5,250 | | * |
| David M. Lepore | | 33,000 | | * |
| John A. Mannix | | 52,488 | | * |
| John C. Popeo | | 35,000 | | * |
| Adam D. Portnoy(5) | | 1,064,399 | | * |
| Barry M. Portnoy(5)(6) | | 1,739,329 | | * |
| Frederick N. Zeytoonjian(5)(7) | | 31,250 | | |
| All current Trustees, nominees and executive officers as a group (nine persons)(5)(6)(7) | | 2,006,512 | | * |
- *
Less than 1% of our common shares.
(1)Our declaration of trust places restrictions on the ability of any person or group to acquire beneficial ownership of more than 9.8% of any class of our shares.
(2)The address of each of our trusteesTrustees, nominees and executive officers is c/o HRPT Properties Trust, 400 Centre Street, Newton, Massachusetts 02458.
(3)(3)This information is as of December 31, 20062007 and is based solely on a Schedule 13G filed with the SEC on January 23, 2007February 5, 2008 by a filing group including Barclays Global Investors, NA. Based on the information provided in such Schedule 13G, the relevant members of the group, together with their respective addresses are: Barclays Global Investors, NA and Barclays Global Fund Advisors, each with an address of 45 Freemont Street, San Francisco, California 94105; Barclays Global Investors, Ltd., Murray House, 1 Royal Mint Court, London EC3N 4HH England; Barclays Global Investors Japan Trust and Banking Company Limited and Barclays Global Investors Japan Limited, each with an address of Ebisu Prime Square Tower, 8th Floor, 1-1-39 Hiroo Shibuya-Ku, Tokyo 150-0012 Japan.Japan; Barclays Global Investors Canada Limited, with an address of Brookfield Place, 161 Bay Street, Suite 2500, P.O. Box 614, Toronto, Ontario M5J 2S1, Canada; Barclays Global Investors Australia Limited, with an address of Level 43, Grosvenor Place, 225 George Street,
P.O. Box N43, Sydney, NSW 1220, Australia; and Barclays Global Investors (Deutschland) AG, with an address of Apianstrasse 6, D-85774, Unterfohring, Germany. These entities report sole voting power over 7,034,194, 2,070,557, 235,110,10,555,307, 2,549,895, 191,374, 0, 486,457, 13,457, 0 and 188,8860 shares, respectively, and sole dispositive power over 8,060,956, 2,071,727, 235,110,12,252,725, 2,549,895, 214,218, 0, 486,457, 13,457, 0 and 188,8860 shares, respectively.
- (4)
- The information is as of December 31,
20062007 and is based solely on a Schedule 13G13G/A filed with the SEC on February 14, 20072008 by The Vanguard Group, Inc., or Vanguard. The address of Vanguard is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. Vanguard reports sole voting power over 90,60885,846 shares and sole dispositive power over 12,426,66513,927,092 shares. Additionally, the Schedule 13G states that Vanguard Fiduciary Trust Company, or VFTC, a wholly owned subsidiary of Vanguard, is the beneficial owner of 116,47136,660 shares as a result of its serving as investment manager of collective trust accounts, and that VFTC directs the voting of these shares.
- (5)
- Includes 1,000,000 of our common shares owned by SNH. RMR is the manager of SNH, and Messrs. Barry Portnoy and Adam Portnoy own all of the outstanding shares of Reit Management & Research Trust, the sole member of RMR. RMR and Messrs. Barry Portnoy and Adam Portnoy may be deemed to have beneficial ownership of the common shares owned by SNH; however, each disclaims beneficial ownership of these shares. Under applicable regulatory definitions, Mr. Zeytoonjian, who is an
independent trusteeIndependent Trustee of SNH, may also be deemed to have beneficial ownership of SNH’sSNH's 1,000,000 common shares; however Mr. Zeytoonjian disclaims beneficial ownership of such shares, which are not included in the number of shares beneficially owned by Mr. Zeytoonjian in this table.
- (6)
- Includes 625,148 common shares owned by a corporation of which Mr. Barry Portnoy is the sole shareholder.
- (7)
- Includes 8,000 common shares owned by Mr.
Zeytoonjian’sZeytoonjian's wife. Mr. Zeytoonjian disclaims beneficial ownership of these shares.
Related Person Transactions and Company Review of Such Transactions
We have adopted written Governance Guidelines which address, among other things, the consideration and approval of any related person transactions. Under these Governance Guidelines, we shallmay not enter into any transaction in which any trusteeManaging Trustee or executive officer, or any member of the immediate family of any trusteeManaging Trustee or executive officer or any other related person, has or will have a direct or indirect material interest unless that transaction has been disclosed or made known to the boardour Board and the boardour Board reviews, authorizes, approves or ratifies the transaction by the affirmative vote of a majority of the disinterested trustees,Trustees, even if the disinterested trusteesTrustees constitute less than a quorum. The Governance Guidelines further provide that, in determining whether to approve or ratify a transaction, our Board should act in accordance with any applicable provisions of our declaration of trust, consider all of the relevant facts and circumstances, and approve only those transactions that are fair and reasonable to us. All related person transactions described below, including those which predated the adoption of our Governance Guidelines, were reviewed and approved by a majority of the disinterested trustees.Trustees.
We have agreements with RMR originatesto originate and presentspresent investment and divestment opportunities to our boardus and providesto provide property management and administrative services to usus. These agreements are subject to the annual review and approval of our Independent Trustees. Any termination of our
contract with RMR would cause a default under an agreement.our revolving credit facility, if not approved by a majority of lenders. RMR is beneficially owned by Barry M. Portnoy and Adam D. Portnoy, who are our Managing Trustees. Each of our executive officers are also officers of RMR. RMR is compensated at an annual rate equal to 0.7% of our average real estate investments, as defined, up to the first $250 million of such investments and 0.5% thereafter, plus an incentive fee based upon increases in funds from operations per common share, as defined, plus property management fees equal to 3.0% of gross rents and construction management fees equal to 5.0% of certain construction costs. The incentive fee to RMR is paid in our common shares. Our total fees to RMR were $60.4 million for 2007. RMR also provides the internal audit function for us and for other publicly owned companies to which it provides management or other services. Our Audit Committee appoints our Director of Internal Audit, and our Compensation Committee approves his salary. Our Compensation Committee also approves the costs which we pay with respect to our internal audit function. Our pro rata share of RMR’sRMR's costs in providing that function was $173,000approximately $170,000 in 2006. Aggregate fees earned by2007. At December 31, 2007, beneficial owners of RMR and its affiliates owned 1,475,291 of our common shares and received distributions from us totaling $1.2 million in 2007. RMR and an affiliate also lease approximately 32,500 square feet of office space from us at rental rates which we believe to be commercially reasonable. Rent received under these leases totaled approximately $629,000 during 2006 for services were $54.5 million for 2006. Our audit committee appoints our director of internal audit and our compensation committee approves his salary and the allocated internal audit costs we pay.2007. All transactions between us and RMR and affiliates are approved by our
compensation committee. Both our audit Independent Trustees. Our Audit and compensation committeesCompensation Committees are 100% composed solely of trusteesTrustees who are independent of RMR.
In 2006, we sold all 7.7 million SNH common sharesCompensation Committee Interlocks and all 4.0 million HPT common shares we owned. We, alongInsider Participation
None of the members of the Compensation Committee is currently, or has been, at any time since our formation, an officer or employee of the company. No interlocking relationship exists between any member of our Board or the Compensation Committee and any member of the board or compensation committee of any other company. Members of our Compensation Committee serve as independent trustees or independent directors and compensation committee members of other public companies managed by or affiliated with SNH and HPT, were parties to underwriting agreements in connection with these sales. SNH and HPT did not receive any proceeds from our sale of their shares.RMR.
During 2006, we leased 3,000 square feet of office space to Five Star. Rent received under this lease totaled approximately $5,000 during 2006.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our trustees,Trustees, executive officers and persons who own more than 10% of a registered class of our equity securities file reports of ownership and changes in ownership of securities with the SEC and the NYSE. Our executive officers, trusteesTrustees and greater than 10% shareholders are required to furnish us with copies of all forms they file pursuant to Section 16(a). Based solely on our review of the copies of these reports furnished to us or written representations that no such reports were required, we believe that, during 2006,2007, all filing requirements applicable to our executive officers, trusteesTrustees and greater than 10% shareholders were timely met.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our audit committeeAudit Committee appointed Ernst & Young LLP as our independent registered public accounting firm for 2006.2006 and 2007. A representative of Ernst & Young LLP is expected to be present at our annual meeting, with the opportunity to make a statement if he or she desires to do so. This representative will be available to respond to appropriate questions from shareholders who are present at our annual meeting.
The fees for services provided by Ernst & Young LLP to us in the last two fiscal years were as follows:
| | 2005 | | 2006 | | | 2006
| | 2007
|
|---|
Audit Fees | | $ | 727,350 | | $ | 829,000 | | | $ | 829,000 | | $ | 840,000 |
Audit Related Fees | | 135,000 | | 32,000 | | | 32,000 | | 32,000 |
Tax Fees | | 11,500 | | 17,100 | | | 17,100 | | 13,700 |
| | | |
| |
|
Subtotal | | $ | 873,850 | | $ | 878,100 | | | 878,100 | | 885,700 |
All Other Fees | | — | | — | | | — | | — |
| | | |
| |
|
Ernst & Young LLP Total Fees | | $ | 873,850 | | $ | 878,100 | | | $ | 878,100 | | $ | 885,700 |
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Our audit committeeAudit Committee has established policies and procedures which are intended to control the services provided by our independent registered public accounting firm and to monitor their continuing independence. Under these policies, no services may be undertaken by our independent registered public accounting firm unless the engagement is specifically approved by our audit committeeAudit Committee or the services are included within a category which has been pre-approved by our audit committee.Audit Committee. The maximum charge for services is established by the audit committeeAudit Committee when the specific engagement or the category of services is approved or pre-approved. In certain circumstances, our management is required to notify the audit committeeAudit Committee when pre-approved services are undertaken and the committeeCommittee or its chairmanchairperson may approve
amendments or modifications to the engagement or the maximum fees. Our directorDirector of internal auditInternal Audit is responsible to report to our audit committeeAudit Committee regarding compliance with these policies and procedures.
Our audit committeeAudit Committee will not approve engagements of our independent registered public accounting firm to perform non-audit services for us if doing so will cause our independent registered public accounting firm to cease to be independent within the meaning of applicable SEC rules. In other circumstances, our audit committeeAudit Committee considers, among other things, whether our independent registered public accounting firm is 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 we engaged our independent registered public accounting firm in 20052006 and 20062007 were approved by our audit committee.Audit Committee. The total fees we paid to Ernst & Young LLP for services in 20052006 and 20062007 are set forth above. Audit related fees in 2005 and 2006 relaterelated to services provided with respect to our leases and acquisitions. Audit related fees in 2007 related to services provided with respect to our leases. The tax fees in 20052006 and 20062007 were for services involved in reviewing our tax reporting. Our audit committeeAudit Committee approved the engagement of Ernst & Young LLP to provide these non-audit services because it determined that Ernst & Young LLP’sLLP's providing these services would not compromise its independence and that its familiarity with our record keeping and accounting systems would permit it to provide these services with equal or higher quality, more quickly and at a lower cost than we could obtain these services from other providers.
CERTAIN PROVISIONS OF OUR DECLARATION OF TRUST, BYLAWS AND MARYLAND LAW
As described above, some of the proposed amendments to our declaration of trust may be deemed to have an anti-takeover effect. The proposed amendments are not the result of our management’s knowledge of any specific effort to accumulate our shares or to obtain control of us. Nonetheless, we believe these amendments are important for the reasons set forth in each item describing the proposals. Set forth below is a description of certain present provisions of our declaration of trust and bylaws and Maryland law, which may be deemed to have an anti-takeover effect. You should carefully consider the following when deciding whether or not to vote for the approval of the proposed amendments:
· We have a classified board of trustees. Our board is divided into three classes of trustees serving staggered three-year terms. There is no cumulative voting in the election of trustees.
· Our bylaws require compliance with certain procedures for shareholders to properly make a nomination for election to our board or to propose other business. For further information on these procedures, see “Selection of Candidates for Trustees; Shareholder Recommendations, Nominations and Proposals.”
· Our declaration of trust prohibits, with certain exceptions, any beneficial owner from directly or indirectly owning more than 9.8% in value of our outstanding total shares.
· Our declaration of trust permits our board, without shareholder approval, to amend our declaration of trust at any time to increase or decrease the aggregate number of shares or the number of shares of any class that we have authority to issue. Our declaration of trust further authorizes our board to cause us to issue our authorized shares and to reclassify any unissued preferred shares into other classes or series.
· Our bylaws provide procedures limiting actions by shareholders by written consent.
· Our bylaws provide that the bylaws may only be amended by the vote of a majority of the trustees or by a written consent signed by a majority of the trustees.
·
Our bylaws contain a provision exempting from the control share statute of the Maryland General Corporation Law, or MGCL, any and all acquisitions by any person of our shares. This provision may be amended or eliminated at any time in the future. If such bylaw provision is amended, the control share acquisition provisions of the MGCL, which also applies to Maryland real estate investment trusts, provides that control shares of a Maryland real estate investment trust acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquiror, by officers or by employees who are trustees of the trust are excluded from shares entitled to vote on the matter. As a general matter, control shares are voting shares which, if aggregated with all other shares owned by the acquiror, or in respect of which the acquiror is able to exercise or direct the exercise of voting power, would entitle the acquiror to exercise voting power in electing trustees within one of the following ranges of voting power: (1) one-tenth or more but less than one-third; (2) one-third or more but less than a majority; or (3) a majority or more of all voting power. In certain circumstances following a control share acquisition, we may redeem for fair value any or all of the control shares.
· Our declaration of trust requires that business combinations between us and a beneficial holder of 10% or more of our outstanding shares (“interested shareholder”) be approved by the affirmative vote of the holders of at least 75% of the shares unless (1) our board by unanimous vote or written consent shall have expressly approved in advance the acquisition of the outstanding shares that caused the interested shareholder to become an interested shareholder or shall have approved the business combination prior to the interested shareholder involved in the business combination having become an interested shareholder; or (2) the business combination is solely between us and a 100% owned affiliate of us. We are proposing to delete this provision as described in Item 3.
· We have adopted a shareholders’ rights plan which provides for the distribution of one junior participating preferred share purchase right for each common share in certain circumstances. Initially, the rights are attached to our common shares. The rights will separate from the common shares upon a rights distribution date which is the earlier of (i) 10 business days following a public announcement by us that a person or group of persons has acquired, or has obtained the right to acquire, beneficial ownership of 10% or more of the outstanding common shares or (ii) 10 business days following the commencement of a tender offer or exchange offer that would result in a person acquiring beneficial ownership of 10% or more of the outstanding common shares. In certain circumstances, each holder of a right (other than rights that are or were held by certain beneficial owners of 10% or more of our common shares) will have the ability to exercise it for a number of common shares (or, in certain circumstances, other property) having a current market price equal to two times the exercise price of the right or to exchange their right for a number of shares of common stock of the acquiring company having a current market price equal to two times the exercise price of the right.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
Some banks, brokers and other record holders of our common shares may participate in the practice of “householding”"householding" proxy statements, annual reports and annual reports.notices of internet availability of those documents. This means that, unless shareholders give contrary instructions, only one copy of our proxy statement, or annual report or notice of internet availability may be sent to multiple shareholders in each household. We will promptly deliver a separate copy of either documentany of those documents to you if you call or write to us at the following address or telephone number: Investor Relations, HRPT Properties Trust, 400 Centre Street, Newton, MA 02458, telephone (617) 332-3990. If you want to receive separate copies of our proxy statement, or annual report or notice of internet availability 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 record holder, or you may contact us at the above address or telephone number.
OTHER MATTERS TO BE VOTED UPON
Item 3. Proposal by the Service Employees International Union
The benefit funds office of the Service Employees International Union, SEIU Master Trust, 10 Dupont Circle, N.W. Ste. 900, Washington, D.C. 20036, which owns 29,100 shares of the company's common shares, has given the company notice of its intention to introduce the following resolution at our annual meeting:
RESOLVED that shareholders of HRPT Properties Trust ("HRP") urge the board of trustees to adopt a policy that the board shall designate a trustee who is independent of both HRP and Reit Management & Research LLC ("RMR") to serve as chairperson. The policy should be implemented so as not to violate any contractual obligation. The policy should also specify (a) how to select a new independent chairperson if a current chairperson ceases to be independent during the time between annual meetings of shareholders, and (b) that compliance with the policy is excused if no independent trustee is willing to serve as chairperson.
It is difficult to overstate the importance of the board of directors (called the board of trustees at HRP) in our system of corporate accountability. As a Conference Board Commission 2003 report stated, "Only a strong, diligent and independent board of directors that understands the key issues, provides wise counsel and asks management the tough questions is capable of ensuring that the interests of shareowners as well as other constituencies are being properly served."
HRP does not identify any trustee as board chairman, nor as lead or designated trustee. In our opinion, an independent board leader would be better positioned and better able to advocate for shareholders' interests and would counterbalance the influence of the company's founder playing multiple roles within the RMR/HRP structure.
Currently, HRP founder and managing trustee Barry Portnoy is the majority beneficial owner of RMR, which manages the operations of HRP and its subsidiaries. We believe that this arrangement could impair the board's effectiveness in representing shareholders' interests. Mr. Portnoy also serves as managing trustee of three affiliated companies: Hospitality Properties Trust, Senior Housing Properties Trust and the RMR Funds, all of which are managed by RMR.
As a trustee to related corporate entities, there is a risk that Mr. Portnoy's interests will conflict with the board's duty to oversee our company's business and affairs. Specifically, we are concerned about the board's ability to monitor the extensive transactions between HRP and RMR. RMR conducts the day-to-day business of HRP, provides administrative services to HRP, manages its properties, and presents investment opportunities to the HRP board of trustees. HRP's trustees are charged with approving transactions between HRP and RMR.
Industry watchers have expressed concern as well. As an August 2007 Cantor Fitzgerald stock report on HRPT notes, "we believe the shares deserve to trade at a discount to the peer group, due to an outside advised corporate structure." An earlier Stifel Nicolaus analyst report states, "It is our belief that the outside advisory structure is not ideal, primarily due to the potential conflict of interest concerns. This structure, which is not followed by any of HRPT's peer group, may result in a discount when valuing HRPT." Further, HRP's total shareholder returns have lagged behind its peer group for the past one, three and five years. Therefore, we believe that independent board leadership is critical.
We urge shareholders to vote"FOR" this proposal.
We believe the proposal contained in Item 3 is being presented by the SEIU Master Trust (the "Union") as part of a campaign to unionize unrelated third party contractors with whom the company does business. We believe the Union's true objective is not to pursue the best interests of the company's shareholders, but is to pressure the company's management to accede to the Union's demands that the company change its contracting policies. We urge shareholders to vote"AGAINST" the proposal.
The company currently awards maintenance contracts for its properties using a competitive bid process whereby the lowest priced, qualified, service providers are selected. We do not discriminate for or against unionized contractors, and several of our contractors employ unionized personnel or pay union scale wages. We have explained these policies to the Union's representatives. Nonetheless, starting about two years ago, the Union began to demand that the company only contract with unionized contractors or otherwise encourage its contractors' employees to join the Union, including picketing the company's 2006 annual meeting.
To further its own separate agenda, which we believe is contrary to the best interests of the company's shareholders generally, the Union has selectively quoted two stock research reports out of context: the Union has quoted a portion of a sentence in an August 9, 2007 stock research report by Cantor Fitzgerald and two sentences from a November 9, 2005 stock research report by Steifel, Nicolas & Company. In fact, neither or these reports expressed concern with respect to the ability of our Board of Trustees to effectively monitor the company's contracts with RMR:
- •
- In the same sentence of the Cantor report from which the Union draws its quote—but in a portion of the sentence the Union omits—the Cantor report states that the company has a "historical track record of fiduciary responsibility."
- •
- Similarly, in the sentence immediately following the two sentences from the Steifel report quoted by the Union, that report acknowledged that RMR "has a long track record of being a good fiduciary."
Although the company's Board believes the Union's motivation for presenting the proposal in Item 3 and its misleading statements in support of this proposal may be appropriate reasons to reject this proposal, the Board has periodically considered the concept of having an independent chairman.
We believe that all publicly owned companies need effective governance structures:
- •
- No person is currently designated as chairman of our Board, but different Board members often take the lead in discussions affecting business which reflects their responsibilities as Board committee chairs or otherwise.
- •
- Our bylaws require that a majority of our Board be composed of Independent Trustees who are not involved in our day to day activities, who are not employees of RMR and who otherwise qualify as "independent" pursuant to the requirements in our declaration of trust and corporate governance standards for companies listed on the NYSE.
- •
- Our bylaws establish three standing committees of our Board which have responsibilities related to our governance: (i) an Audit Committee which reviews our financial reports, selects our independent accountants and determines the compensation paid to our independent accountants; (ii) a Compensation Committee which annually reviews our contracts with RMR and administers
We agree with the motivations which often support proposals for an independent chairman that board members of a publicly owned company need to be able to set agendas and candidly conduct their deliberations. However, we do not believe that a "one size fits all" approach of requiring an independent chairman is the only, or always the best, way to achieve these objectives. Our Nominating and Governance Committee annually reviews our governance rules and procedures and it may in the future decide that an independent chairman is appropriate. At present, however, we believe the Union's proposal is a smokescreen for its true agenda and that the Board's current approach to governance is appropriate.
OUR BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" ITEM 3. PROXIES SOLICITED BY OUR BOARD WILL BE VOTED "AGAINST" ITEM 3 UNLESS SHAREHOLDERS SPECIFY OTHERWISE.
OTHER MATTERS
At this time, we know of no other matters which will be brought before our annual meeting. However, if other matters properly come before our annual meeting or any postponement or adjournment thereof, and if discretionary authority to vote with respect thereto has been conferred by the enclosed proxy, the persons named in the proxy will vote the proxy in accordance with their discretion on those matters.
By Order of the Board JOHN C. POPEO,Secretary
Newton, Massachusetts
April 21, 2008
IMPORTANT | By Order of the Board
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| JOHN C. POPEO, Secretary
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Newton, Massachusetts
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April 13, 2007
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IMPORTANT
If your shares are held in your own name, please sign, datecomplete a proxy over the internet or by telephone in the manner provided on the website indicated in the Notice of Internet Availability that you received in the mail, or request, complete and return the encloseda proxy card, today. If your shares are held in “street"street name,”" you should provide instructions to your broker, bank, nominee or other institution on how to vote your shares. PleaseYou may provide instructions to your bank, nominee or other institution over the internet or by telephone if your broker, bank, nominee or other institution offers these options, or you may return the encloseda proxy card to your broker, bank or bankother institution and contact the person responsible for your account to ensure that a proxy card is voted on your behalf. If you have any questions or need assistance in voting your shares, please call the firm assisting the company in the solicitation of proxies:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers Call Collect at (212) 750-5833
Shareholders Call Toll Free at (877) 717-3929825-8971
APPENDIX AANNUAL MEETING OF SHAREHOLDERS
SET FORTH BELOW ARE THE PROPOSED CHANGES TO SECTION 2.4 AND TO THE LAST TWO PARAGRAPHS OF SECTION 6.9 OF THE DECLARATION OF TRUST. WORDS THAT ARE IN BOLD AND DOUBLE UNDERLINED WILL BE ADDED AND WORDS THAT ARE CROSSED OUT WILL BE DELETED
[Changes to Section 2.4]
2.4 Vacancies. If any or all the Trustees cease to be Trustees hereunder, whether by reason of resignation, removal, incapacity, death or otherwise, such event shall not terminate the Trust or affect its continuity. Until vacancies are filled, the remaining Trustee or Trustees (even though fewer than three (3)) may exercise the powers of the Trustees hereunder. Vacancies (including vacancies created by increases in number) may be filled by the remaining Trustee or by a majority of the remaining Trustees (or a majority of the remaining Independent Trustees, if any, if the vacant position was formerly held by an Independent Trustee or is required to be held by an Independent Trustee) or by vote of holders of Shares representing a majority of the total number of votes authorized to be cast by Shares then outstanding and entitled to vote thereon.in accordance with Section 6.9. If at any time there shall be no Trustees in office, successor Trustees shall be elected by the Shareholders as provided in Section 6.9. Any Trustee elected to fill a vacancy created by the resignation, removal or death of a former Trustee shall hold office for the unexpired term of such former Trustee.
[Changes to last two paragraphs of Section 6.9]
Except as otherwise clearly indicated in this Declaration or the Bylaws, but subject to the provisions of any class or series of Shares at the time outstanding and to applicable provisions of Maryland law, whenever any action is to be taken by the Shareholders, it shall be authorized by the affirmative vote of the holders of Shares representing a majority of the total number of votes authorized to be cast by shares then outstanding and entitled to vote thereon the number or percentage of Shares specified from time to time in the Bylaws. At all elections of Trustees, voting by Shareholders shall be conducted under the non-cumulative method and the election of Trustees shall be by the affirmative vote of the holders of Shares representing a majority of the total number of votes or percentage of Shares specified from time to time in the Bylaws. Except as otherwise specified in Section 6.15 (titled “Business Combinations”), the merger of the Trust with or into another entity, the consolidation of the Trust with one or more other entities into a new entity, the sale, lease, exchange or other transfer of all or substantially all of the trust property or the termination of the trust that has been declared advisable by the Trustees and otherwise requires the approval of shareholders shall be authorized to be cast by shares then outstanding and entitled to vote thereon.by:
(a) if such merger, consolidation, sale, lease, exchange or other transfer or termination shall first have been approved by vote of not fewer than seventy-five percent (75%) of the Trustees then in office, including not fewer than seventy-five percent (75%) of the Independent Trustees then in office, the lesser, as permitted by applicable law, of (x) the affirmative vote of at least a majority of the votes cast on the matter, or (y) the affirmative vote of holders of Shares entitled to cast at least a majority of all the votes entitled to be cast on the matter; and
(b) the affirmative vote of holders of Shares entitled to cast at least seventy-five percent (75%) of all the votes entitled to be cast on the matter if clause (a) above is not applicable to such merger, consolidation, sale, lease, exchange or other transfer or termination.
Whenever Shareholders are required or permitted to take any action by a vote at a meeting of Shareholders (unless a vote at a meeting is specifically required as in Sections 8.1, 8.3 and 8.5), such action
may not be taken except by such vote at such meeting of Shareholders and the Shareholders shall have no power or right to take any such action by executing without a meeting by written consents in lieu thereof setting forth the action so taken, signed by the holders of a majority (or such higher percentage as may be specified elsewhere in this Declaration) of the total number of votes authorized to be cast by shares then outstanding and entitled to vote thereon.
APPENDIX BThursday, June 12, 2008
SET FORTH BELOW ARE THE PROPOSED CHANGES TO SECTIONS 6.15, 8.1 AND 8.3 OF THE DECLARATION OF TRUST. WORDS THAT ARE IN BOLD AND DOUBLE UNDERLINED WILL BE ADDED AND WORDS THAT ARE CROSSED OUT WILL BE DELETED
6.159:30 a.m.Election With Respect to Certain Provisions of Maryland Law. The Trust elects not to be governed by the provisions of Subtitle 6 of Title 3 of the Corporations and Associations Article of the Annotated Code of Maryland.
Special Voting Requirements for Certain Business Combinations .
(a)The affirmative vote of the holders of not less than 75% of the Shares then outstanding and entitled to vote thereon shall be required for the approval or authorization of any “Business Combination” (as hereinafter defined) of the Trust with any “Related Person” (as hereinafter defined). However, such 75% voting requirement shall not be applicable if: (1) the Board of Trustees by unanimous vote or written consent shall have expressly approved in advance the acquisition of the outstanding Shares of the Trust that caused the Related Person to become a Related Person or shall have approved the Business Combination prior to the Related Person involved in the Business Combination having become a Related Person; or (2) the Business Combination is solely between the Trust and another limited partnership, partnership, trust or corporation, 100% of the voting securities of which is owned directly or indirectly by the Trust.
(b) For purposes of this Section 6.15:
(i) The term “Business Combination” shall mean (a) any merger or consolidation of the Trust with or into a Related Person, (b) any sale, lease, exchange, transfer or other disposition, including without limitation a mortgage or any other security device, of all or any “Substantial Part” (as hereinafter defined) of the assets of the Trust (including without limitation any voting securities of a subsidiary) to a Related Person, (c) any merger or consolidation of a Related Person with or into the Trust, (d) any sale, lease, exchange, transfer or other disposition of assets of a Related Person to the Trust having a book value equal to more than 10% of the Invested Assets of the Trust as of the end of the Trust’s most recent fiscal year ending prior to the time the determination is made, (e) the issuance of any Securities (other than by way of pro rata distribution to all Shareholders) of the Trust to a Related Person, and (f) any agreement, contract or other arrangement providing for any of the transactions described in this definition of Business Combination.Sheraton Newton Hotel
(ii)The term “Related Person” shall mean and include any individual, corporation, partnership, limited partnership or other person or entity other than the Advisor or any wholly owned subsidiary of the Advisor which, together with its “affiliates” and “associates” (as defined as of September 1, 1986, in Rule 12b-2 under the Securities Exchange Act of (iii) “beneficially owns” (as defined as of September 1, 1986, in Rule 13d-3 under the Securities Exchange Act of 1934) in the aggregate 10% or more of the outstanding Shares of the Trust.
(iii) The term “Substantial Part” shall mean an amount equal to more than 10% of the Invested Assets of the Trust as of the end of its most recent fiscal year ending prior to the time the determination is being made.
(iv) Without limitation, any Shares that any Related Person has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise, shall be deemed beneficially owned by the Related Person.320 Washington Street
(c)The Trust elects not to be governed by the provisions of Subtitle 6 of Title 3 of the Corporations and Associations Article of the Annotated Code of Maryland, and the provisions of subparagraphs (a) and (b) of this Section 6.15 shall be in substitution for and to the exclusion of said Subtitle 6 of Title 3.
(d)Except as otherwise provided in this Section 6.15, the Trust may effect any merger or consolidation in accordance with applicable law.
8.1 Duration of Trust. The duration of the Trust shall be perpetual; provided, however, the Trust may be terminated at any time if declared advisable by the Trustees and approved by the affirmative vote at a meeting of Shareholders ofin accordance with the holders of Shares representing two-thirds of the total number of Shares then outstanding and entitled to vote thereon.provisions of Section 6.9.
8.3Amendment Procedure.If any such amendment is declared advisable and approved by a majority of the Trustees (including a majority of the Independent Trustees), this Declaration may be amended (except that the provisions governing the personal liability of the Shareholders, Trustees and of the officers, employees and agents of the Trust and the prohibition of assessments upon Shareholders may not be amended in any respect that could increase the personal liability of such Shareholders, Trustees or officers, employees and agents of the Trust) at a meeting of Shareholders by holders of Shares representing:
(a) if such amendment shall first have been approved by vote of not fewer than seventy-five percent (75%) of the Trustees then in office, including not fewer than seventy-five percent (75%) of the Independent Trustees then in office, the lesser, as permitted by applicable law, of (x) the affirmative vote of at least a majority of the votes cast on the matter, or (y) the affirmative vote of holders of Shares entitled to cast at least a majority of all the votes entitled to be cast on the matter; and
(b) the affirmative vote of holders of Shares entitled to cast at least seventy-five percent (75%) of all the votes entitled to be cast on the matter, unless clause (a) is applicable to such amendment. majority (or, with respect to amendments of Article V, amendments to the provisions of Section 8.1, amendments to this Section 8.3 that would reduce the percentage vote required to approve any amendments to this Declaration, and with respect to amendments inconsistent with Sections 2.1, 6.14 and6.15., seventy-five percent (75%)) of the total number of votes authorized to be cast in respect of Shares then outstanding and entitled to vote thereon. The approval of a majority of the Trustees (including a majority of the Independent Trustees) shall also be required for any such amendment. Two-thirds of the Trustees may, after fifteen (15) days written notice to the Shareholders, also amend this Declaration without the vote or consent of Shareholders if in good faith they deem it necessary to conform this Declaration to the requirements of the REIT Provisions of the Internal Revenue Code, but the Trustees shall not be liable for failing to do so. Actions by the Trustees pursuant to Section 1.1, Section 6.1, or Section 9.6(a) that result in an amendment to this Declaration shall be effected without the vote or consent of Shareholders.
APPENDIX CNewton, MA 02458
SET FORTH BELOW IS TEXT THAT WILL BE ADDED AS A NEW CLAUSE (aa) OF SECTION 3.2 OF OUR DECLARATION OF TRUST AND THE CURRENT CLAUSE (aa) OF SUCH SECTION 3.2 WILL BE RELETTERED AS CLAUSE (bb)
(aa) subject to an express provision to the contrary in the terms of any class or series of Shares hereafter authorized, to divide or combine the outstanding shares of any class or series of Shares, without a vote of shareholders; and
APPENDIX D
SET FORTH BELOW IS TEXT THAT WILL BE ADDED AS A NEW SECTION 7.12 OF OUR DECLARATION OF TRUST IMMEDIATELY FOLLOWING SECTION 7.11
7.12. Indemnification of the Trust. Each shareholder will indemnify and hold harmless the Trust from and against all costs, expenses, penalties, fines and other amounts, including, without limitation, attorneys’ and other professional fees, whether third party or internal, arising from such shareholder’s violation of any provision of this Declaration or the Bylaws, including, without limitation, Section 6.14, and shall pay such sums to the Trust upon demand, together with interest on such amounts, which interest will accrue at the lesser of 15% per annum and the maximum amount permitted by law, from the date such costs or the like are incurred until the receipt of repayment by the Trust. Nothing in this Section shall create or increase the liability of any shareholders, trustees, officers, employees or agents of the Trust for actions taken on behalf of the Trust.
APPENDIX E
THE TEXT OF CLAUSE (d) OF SECTION 5.2 OF OUR DECLARATION OF TRUST WILL BE DELETED IN ITS ENTIRETY AND THE WORD “RESERVED” WILL BE SUBSTITUTED FOR SUCH TEXT. SET FORTH BELOW IS THE PROPOSED CHANGE TO CLAUSE (d) OF SECTION 5.2. WORDS THAT ARE IN BOLD AND DOUBLE UNDERLINED WILL BE ADDED AND WORDS THAT ARE CROSSED OUT WILL BE DELETED.
5.2 Prohibited Investments and Activities. The Trustees shall not engage in any of the following practices or activities:
. . . .
(d) [reserved];issuing Securities that are redeemable at the option of the holders thereof;
| | HRPT Properties Trust
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, May 15, 2007
9:30 a.m.
400 Centre Street
Newton, MA 02458 | HRPT Properties Trust
| | | [Logo of HRPT
| 400 Centre Street
| | | Properties Trust]
| Newton, MA 02458
| proxy
| Proxy |
Important Notice Regarding Internet Availability of Proxy Materials: The proxy materials for the HRPT Properties Trust Annual Meeting of Shareholders, including our annual report and the proxy statement, are available over the internet. To view the proxy materials or vote online or by telephone, please follow the instructions on the Notice Regarding the Availability of Proxy Materials. This proxy is solicited on behalf of the Board of Trustees of HRPT Properties Trust for use at the Annual Meeting on May 15, 2007.June 12, 2008. The undersigned shareholder of HRPT Properties Trust, a Maryland real estate investment trust, or the company, hereby appoints John A. Mannix, Adam D. Portnoy and Barry M. Portnoy, or any of them, as proxies for the undersigned, with full power of substitution in each of them, to attend the annual meeting of shareholders of the company to be held at the company’s offices at 400 CentreSheraton Newton Hotel, 320 Washington Street, Newton, Massachusetts, 02458, on Tuesday, May 15, 2007Thursday, June 12, 2008, at 9:30 a.m., and any adjournment or postponement 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 notice of the annual meeting of shareholders and of the accompanying Proxy Statement, 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” THE NOMINEENOMINEES FOR TRUSTEE UNDER ITEMIN ITEMS 1 AND “FOR”2 AND “AGAINST” THE SHAREHOLDER PROPOSAL IN EACH OF ITEMS 2, 3, 4, 5, 6 AND 7.ITEM 3. ADDITIONALLY, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST IN THE DISCRETION OF THE PROXY HOLDERPROXIES ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. See reverse for voting instructions. (If you noted any Address Changes above, please mark corresponding box on the reverse side.)
| VOTE 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 Daylight Time on June 11, 2008. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. | | | HRPT PROPERTIES TRUST | ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER | 400 CENTRE STREET
NEWTON, MA 02458 | COMMUNICATIONS
If you would like to reduce the costs incurred by HRPT Properties Trust in |
| mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or 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. |
| | | VOTE BY PHONE - 1-800-690-6903 |
| Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Daylight Time on June 11, 2008. Have your proxy card in hand when you call and then follow the instructions. |
| | | VOTE BY MAIL | | Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to HRPT Properties Trust, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | HRPTP1 | | KEEP THIS PORTION FOR YOUR RECORDS | | | | DETACH AND RETURN THIS PORTION ONLY | | | | |
TheTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
HRPT PROPERTIES TRUST Our Board of Trustees Recommends a Vote FOR“FOR” the Proposals.Nominees for Trustee in Items 1 and 2 and “AGAINST” the Proposal in Item 3.
Vote on Nominees for Trustees 1. | To elect one trusteeIndependent Trustee in Group IIII to our board.Board. | For | Withhold | | | Nominee: |
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| Frederick N. Zeytoonjian | o | o | | | | Nominee:
Patrick F. Donelan
| | o Vote FOR this nominee
| | o Vote WITHHELD from this nominee
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2. To approve amendments to the declaration of trust that will change the required shareholder vote and manner of voting for certain actions and provide that the required shareholder vote necessary for the election of trustees or to take certain other actions shall be set in the bylaws.
| | o FOR
o AGAINST
o ABSTAIN
| | | 3. 2.
| To approve amendmentselect one Managing Trustee in Group I to the declaration of trust that will change the required shareholder vote for certain amendments to the declaration of trust, for certain business combinations or for termination of the trust.our Board. | For | Withhold | |
| Nominee: |
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| | | Barry M. Portnoy | o FOR
| o AGAINST
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| For | Against | Abstain | Vote on Shareholder Proposal |
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| 3. | To approve a shareholder proposal, if it is properly presented at the meeting, requesting our Board of Trustees to adopt a policy that the Board will designate a Trustee who is independent of both the company and Reit Management & Research LLC to serve as chairperson of our Board. | o ABSTAIN | o | o | | | | | 4. To approve an amendment to the declaration of trust that, subject to an express provision in the terms of any class or series of shares of beneficial interest, would authorize the board to divide or combine the outstanding shares of any class or series of shares of beneficial interest without a shareholder vote. | | o FOR
o AGAINST
o ABSTAIN
| | | 5. To approve an amendment to the declaration of trust to provide that any shareholder who violates the declaration of trust or bylaws will indemnify and hold the company harmless from and against all costs, expenses, penalties, fines and other amounts, including attorneys’ and other professional fees, arising from the shareholder’s violation together with interest on such amounts.
| | o FOR
o AGAINST
o ABSTAIN
| | | 6. To approve an amendment to the declaration of trust that would permit issuance of securities which are redeemable at the option of the holders.
| | o FOR
o AGAINST
o ABSTAIN
| | | 7. To approve the adjournment or postponement of the meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the meeting to elect a trustee as proposed in Item 1 or to approve Items 2, 3, 4, 5 or 6.
| | o FOR
o AGAINST
o ABSTAIN
| | | 8. In their discretion, the Proxies are authorized to vote and otherwise represent the undersigned on such other matters as may properly come before the meeting or at any adjournment or postponement thereof.
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED “FOR EACH OF” THE PROPOSALS.NOMINEES FOR TRUSTEE IN ITEMS 1 AND 2 AND “AGAINST” THE SHAREHOLDER PROPOSAL IN ITEM 3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE AND OTHERWISE REPRESENT THE UNDERSIGNED ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
(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. If a partnership, please sign in partnership name by authorized person.) Address Change? Mark Box o IndicateFor address changes, below:please check this box and write them on the back where indicated.
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| | | o | | | | | | | Please indicate if you wish to view meeting materials electronically via the Internet rather than receiving a hard copy. Please note that you will continue to receive a proxy card for voting | o Yes | o No | | Signature(s) in Boxpurposes only.
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| | Please sign exactly as your name(s) appears on the proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy.
| | | | | Signature (PLEASE SIGN WITHIN BOX) | | Date | Signature (Joint Owners) | Date |
QuickLinks
HRPT PROPERTIES TRUST 400 Centre Street Newton, Massachusetts 02458 PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS To Be Held on Thursday, June 12, 2008
INTRODUCTION
Items 1 and 2. ELECTION OF TRUSTEES
SOLICITATION OF PROXIES
TRUSTEES AND EXECUTIVE OFFICERS
BOARD OF TRUSTEES
BOARD COMMITTEES
COMMUNICATIONS WITH TRUSTEES
SELECTION OF CANDIDATES FOR TRUSTEES; SHAREHOLDER RECOMMENDATIONS, NOMINATIONS AND PROPOSALS
COMPENSATION DISCUSSION AND ANALYSIS
COMPENSATION TABLES
SUMMARY COMPENSATION TABLE FOR 2007 AND 2006
GRANTS OF PLAN BASED AWARDS FOR 2007
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END FOR 2007
OPTION EXERCISES AND STOCK VESTED FOR 2007
TRUSTEE COMPENSATION FOR 2007
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
OTHER MATTERS TO BE VOTED UPON
OTHER MATTERS
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