UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
STAG Industrial, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee paid previously with preliminary materials.
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
![[MISSING IMAGE: lg_stagreg-pn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-036721/lg_stagreg-pn.jpg)
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 3, 20212, 2022
To our stockholders:
You are cordially invited to attend the 20212022 annual meeting of the stockholders of STAG Industrial, Inc., a Maryland corporation, that will be held on May 3, 2021,2, 2022, at 1:00 p.m., Eastern Time. Due to the ongoing public health crisis of the novel coronavirus disease (COVID-19) pandemic and to support the health and welfare of our stockholders, the meeting will be held solely by remote communicationTime, in a virtual-only meeting format. You will be able to attend the annual meeting by visiting www.virtualshareholdermeeting.com/STAG2021.STAG2022. Please follow the instructions in this proxy statement to join the virtual annual meeting.
At the meeting, stockholders will consider and vote on the following matters:
1.
the election of nine directors to hold office until the 2023 annual meeting of stockholders and until their successors are duly elected and qualified;
2.
the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2022; and
3.
the approval, by non-binding vote, of our executive compensation.
In addition, stockholders will consider and vote on such other business as may properly come before the annual meeting, including any adjournments or postponements of the meeting.
If you owned shares of our common stock as of the close of business on March 11, 2021,10, 2022, you can vote those shares by proxy or at the virtual annual meeting. Pursuant to rules promulgated by the Securities and Exchange Commission (the “SEC”), we are providing access to our proxy materials over the internet. On or about March 24, 2021,23, 2022, we expect to mail our stockholders either (i) a copy of this proxy statement, the accompanying proxy card, our annual report and the notice of internet availability of proxy materials (the “Notice”) or (ii) the Notice only, each in connection with the solicitation of proxies by the board of directors for use at the annual meeting and any adjournments or postponements thereof. If you received only the Notice by mail, you will not receive a printed copy of the proxy materials other than as described herein. The Notice contains instructions for your use of this process, including how to access our proxy statement and annual report over the internet, how to authorize your proxy to vote online and how to request a paper copy of the proxy statement and annual report.
If you are unable to attend the meeting, it is very important that your shares be represented and voted at the annual meeting. You may authorize your proxy to vote your shares over the internet as described in the Notice. Alternatively, if you received a paper copy of the proxy card by mail, please complete, date, sign and promptly return the proxy card in the self-addressed stamped envelope provided. You also may vote by telephone as described in your proxy card. If you vote your shares over the internet, by mail or by telephone before the annual meeting, you may nevertheless revoke your proxy and cast your vote at the virtual annual meeting.
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By order of the board of directors:
JEFFREY M. SULLIVAN
Executive Vice President, General Counsel and Secretary
Executive Vice President, General Counsel and Secretary
Boston, Massachusetts
March24, 2021
March
23, 2022
TABLE OF CONTENTS
2021
2022 ANNUAL MEETING OF STOCKHOLDERS
We are a real estate investment trust (“REIT”) focused on the acquisition, ownership and operation of single-tenant, industrial properties throughout the United States. Our primary business objective is to own and operate a balanced and diversified industrial real estate portfolio consisting mostly of binary risk investments (individual single-tenant industrial buildings) that maximizes cash flows and enhances stockholder value over time.
Our business strategy has resulted in a consistent track record of creating strong operational performance and long-term value for our stockholders.
| | | PROVEN AND STRATEGIC GROWTH PROFILE | | |
| | • Since our initial public offering in 2011, as of December 31, • | |||
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| | | 5-Year Acquisition Volume | | |
| | ![[MISSING IMAGE: tm223531d1-bc_5yracqpn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-036721/tm223531d1-bc_5yracqpn.jpg) | | | |
| | | • During | | |
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| | | TOTAL STOCKHOLDER RETURN AND FINANCIAL PERFORMANCE | | |
| | • We believe that the value creation produced from an investment in real estate should be assessed over a long-term period, and our strategy has focused on long-term value creation. | | | |
 | | Cumulative Total Stockholder Return (12/31/2018 through 12/31/2021) | | |
| | ![[MISSING IMAGE: tm223531d1-bc_ttlstocpn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-036721/tm223531d1-bc_ttlstocpn.jpg) | | |
| | | We continue to execute on our operational goals and maintained strong occupancy •
As of and for the year ended December 31, ◦ | ||
Net income was approximately | ||||
◦ Funds from operations (“FFO”) was approximately | ||||
◦ Net operating income (“NOI”) was approximately • During 2021, we continued to increase our annual revenue by, among other matters, actively managing our portfolio, completing acquisitions in our robust investment pipeline and executing build-to-suit transactions. | | | ||
| | | 5-Year Annual Revenue & Year-Over-Year Revenue Growth | | |
 | | ![[MISSING IMAGE: tm223531d1-bc_5yrannupn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-036721/tm223531d1-bc_5yrannupn.jpg) | | |
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| | * FFO and NOI meet the definition of “non-GAAP financial measures” as set forth in Item 10(e) of Regulation S-K promulgated by the Securities and Exchange Commission (“SEC”). Please refer to Appendix A attached hereto for an explanation of why our management considers these measures, the historical amounts of these two measures and a reconciliation of the measures to the nearest measure under generally accepted accounting principles (“GAAP”). | | |
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Executive Compensation Highlights
We are proud of the way our employees performedcontinued to perform during the COVID-19 crisis. ongoing public health crisis of the novel coronavirus disease (“COVID-19”) pandemic. We succeeded due in large part to the stewardship and leadership of our executive management team, who implemented policies to protect the safety and wellbeing of our employees; steered us through the challenges posed by the COVID-19 pandemic; and executed successful strategies to drive strong operational performance, grow our portfolio, (despite a near total cessation in acquisition activity at the outset of the pandemic), strengthen our balance sheet and increase stockholder value. We established our bonus performance metrics early in 2020, before the COVID-19 crisis, and we did not adjust those metrics or otherwise make any changes to our executive compensation program in response to the unprecedented pandemic. Below are certain features of our executive compensation program, which reflect our commitment to a pay-for-performance compensation structure:
| | ✔We pay for performance | | | |
| | • Approximately | | | |
| | • Annual base salaries are intended to be less than 25% of total compensation | | | |
| | • We do not guarantee annual base salary increases, | | |
| | ✔Our | | | |
| | • Bonuses are based on company performance goals (80%) and individual performance goals (20%) | | | |
| | • Our | | | |
| | • We do not guarantee bonuses of a minimum amount (bonuses can be zero) and do not provide uncapped bonuses | | |
| | ✔Our | | | |
| | • Performance units are based on our total stockholder return, defined as common stock price appreciation plus dividends, assuming reinvestment of dividends into additional shares of common stock (“TSR”), over a three-year period compared to both relative returns (TSR vs. three benchmarks) and an absolute return (we must achieve a cumulative 25% | | | |
| | • Performance units will have zero value (no payout) for performance below the 30th percentile | | | |
| | • We target outperformance; | | |
| | ✔Stockholders have expressed support for our executive compensation practices | | | |
| | • At the | | |
For more information, see “Executive Officer Compensation Discussion and Analysis” below.
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Snapshot of Corporate Governance Practices
The table below presents a snapshot of our corporate governance policies.
| | Annual election of directors to the board of directors (the “board”) | | ✔ | | |
| | Majority voting standard for the election of directors (with a director resignation policy) | | ✔ | | |
| | Regular executive sessions of independent directors | | ✔ | | |
| | Independent board; eight of our nine directors are “independent” under New York Stock Exchange (“NYSE”) rules | | ✔ | | |
| | Designation of lead independent director | | ✔ | | |
| | All members of the audit committee, compensation committee and nominating and corporate governance committee are “independent” under NYSE rules | | ✔ | | |
| | Four of the five members of the audit committee qualify as “audit committee financial experts” as defined by the SEC | | ✔ | | |
| | Diverse | | ✔ | | |
| | Annual board, committee and | | ✔ | | |
| | Regular board review | | ✔ | | |
| | Stockholder ability to amend bylaws | | ✔ | | |
| | No stockholder rights plan (i.e., “poison pill”) without stockholder approval or ratification | | ✔ | | |
| | Opted out of Maryland control share acquisition and business combination statutes and may not opt back in without stockholder approval | | ✔ | | |
| | Robust stock ownership guidelines for directors and executive officers | | ✔ | | |
| | Anti-hedging and anti-pledging policies | | ✔ | | |
| | Code of business conduct and ethics for employees and directors | | ✔ | |
Corporate Responsibility Highlights
We are committed to having a robust corporate responsibility program that incorporates environmental, social and governance (“ESG”) strategies into our overall business strategy, investment decisions and asset management strategies to increase both the sustainability and the value of our portfolio. During 2020,2021, we enhancedcontinued to enhance and refinedrefine our corporate responsibility program and related initiatives. Significant milestones and accomplishments include:
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2020-2021 Environmental, Social and Governance Report. In December 2021, we published our inaugural 2020-2021 Environmental, Social and Governance Report (our “Sustainability Report”), which includes information regarding our ESG policies and programs, historic results and performance targets, including a new long-term greenhouse gas (GHG) reduction goal as approved by the Science-Based Targets Initiative (SBTi). While our tenants maintain operational control of the
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properties under our triple-net leases, we seek to (i) identify, assess and manage environmental risks and opportunities at our properties, (ii) collaborate with our tenants on sustainable strategies to optimize property performance and (iii) partner with our tenants to improve the efficiency of our properties through the implementation of strategic environmentally focused property practices and solutions.
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Environmental Stewardship. During 2021, we enhanced our environmental programs and related initiatives and achieved the following milestones and accomplishments:
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| | | | | | | | Green Lease Leader | | | | | | ||||||
| | | | | We achieved
![[MISSING IMAGE: lg_gresp-4clr.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-036721/lg_gresp-4clr.jpg) | |
| | | | | | The U.S. Department of
![[MISSING IMAGE: lg_greenlease-4clr.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-036721/lg_greenlease-4clr.jpg) | | | | ||
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| | | | | | Reflective Roofing | | | | | | | | Lighting Conversions | | | |||
| | | | | | Since 2015, | | | | | | | | As of December 31, | | | | ||
| | | | | | | | | | | | | | | | | |||
| | | | | | Solar Panel Installations | | | | ||||||||||
| | | | | | We pursue solar energy opportunities in our portfolio nationwide and have executed contracts for solar development or leasing in multiple states. As of December 31, Our building in Hampstead, Maryland hosts the nation’s largest rooftop solar project, which was completed last year. The 9.2 megawatts system is one of three systems on our properties that are part of Maryland’s community solar program providing low-cost renewable energy to | | | | ||||||||||
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Corporate Donations and Volunteering. During 2021, we continued to support several local and national charities with a focus on child welfare, youth empowerment, equality and social justice:
| | | | | | | | | | | | | | | | ||||
| | | | Charitable Action Committee | | | | | | | | Charitable Action Fund | | | | | | ||
| | | | | | We established our Charitable Action Committee (the “CAC”) to promote quality interaction with our local community in Boston. The CAC is funded by our company and |
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| activities | ||||||
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| | | | | As an expression of our commitment to good corporate citizenship, we |
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• Stockholder Engagement. We provide institutional investors with many opportunities and events to provide feedback directly to our management team throughout the year, including formal events, one-on-one sessions and group meetings. During 2021, our management team attended (in-person and virtually) 11 investor conferences and numerous other individual investor meetings, where they met with more than 100 institutional investors. These meetings covered a range of topics, including our financial condition and results of operations, our business investment, finance and operation strategies, our stock price performance, economic, industry and market trends, ESG policies, corporate governance and executive compensation and other matters. In addition to, and apart from, our regular investor meetings, we speak exclusively about executive compensation and corporate governance with a number of our investors each year. • Enhancing board diversity. We are committed to diversity and recognize the benefits of having a diverse board. Women and minorities currently represent 33.3% of the board. We remain focused on appointing women and other diverse candidates to the board in the future as opportunities arise. • Management Succession Planning by the Board. As previously announced, pursuant to ongoing management succession planning by the board, we expect that, on July 1, 2022, Benjamin S. Butcher, our chief executive officer and chairman of the board, will become executive chairman of the board and William R. Crooker, our president, will be appointed chief executive officer and join the board. Over the next few months, Mr. Butcher will work closely with Mr. Crooker on transitioning to chief executive officer. After becoming executive chairman in July, Mr. Butcher’s responsibilities will include managing the business of the board, regularly consulting with the chief executive officer on key corporate matters and liaising between the board and the management team. In addition, on January 10, 2022, the board appointed Matt s S. Pinard as our executive vice president, chief financial officer and treasurer. |
For more information, see “Board of Directors and Its Committees” and “Corporate Responsibility” below.
Additional information regarding our corporate responsibility program is also included in our Sustainability Report, which is available under the “Corporate Responsibility” section of our website at www.stagindustrial.com. However, the information located on, or accessible from, our website is not, and should not be deemed to be, part of this proxy statement or incorporated into any other filing that we submit to the SEC.
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Matters to be Voted On at the 20212022 Annual Meeting
| | Proposal | | | Board Recommendation | | | |
| | | Proposal 1: Election of Directors | | | FOR | | |
| | | Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm | | | FOR | | |
| | | Proposal 3: Advisory (Non-Binding) Vote on Executive Compensation | | | FOR | | |
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
STAG2022.
Q: Why did I receive these proxy materials? A: The board Pursuant to rules promulgated by the SEC, we are providing access to our proxy materials over the internet. On or about March 23, 2022, we are mailing to our stockholders of record as of March 10, 2022, either (i) a copy of this proxy statement, the accompanying proxy card, our annual report and the notice of internet availability of proxy materials (the “Notice”) or (ii) the Notice only. The Notice and this proxy statement summarize the information you need to know in order to vote by proxy or at the virtual annual meeting. Q: When was the Notice mailed? A: The Notice was mailed to stockholders beginning on or about March 23, 2022. Q: When and where is the annual meeting being held? A: The annual meeting will be held on Monday, May 2, 2022, at 1:00 p.m., Eastern Time, in a virtual-only meeting format. You will be able to attend the annual meeting by visiting www.virtualshareholdermeeting.com/STAG2022. Note that the decision to proceed with a virtual-only meeting again this year will not mean we will utilize a virtual-only format or any means of remote communication for future annual meetings. Q: Who can attend the annual meeting? A: You are entitled to attend the annual meeting if you were a common stockholder of record (i.e., stockholders holding shares of common stock directly in their name with our transfer agent) as of the close of business on March 10, 2022, the record date for the annual meeting, or hold a duly authorized proxy for the meeting provided by your broker, bank or other nominee. You do not need to attend the annual meeting in order to vote. Q: How do I attend the annual meeting? A: You will be able to attend the annual meeting online through live audio webcast at www.virtualshareholdermeeting.com/STAG2022. Online registration will begin 30 minutes before the meeting. To attend and vote at the annual meeting, you must login with your 16-digit control number included on your proxy card, voting instruction form or the Notice you previously received. Q: May stockholders ask questions at the annual meeting? A: Yes. Stockholders will be able to submit live questions during the virtual annual meeting online at www.virtualshareholdermeeting.com/STAG2022, however, all live questions will be subject to time restrictions and we will do our best to accommodate as many as possible. Q: What if I have trouble accessing the annual meeting virtually? A: The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong internet connection wherever they intend to participate in the annual meeting. We encourage you to access the | ||
platform prior to the start time. Please allow ample time for online check-in, which will begin at 12:30 p.m. Eastern Time. If you encounter any difficulties accessing the virtual meeting platform during the check-in time or during the annual meeting, please call the technical support number that will be posted on www.virtualshareholdermeeting.com/STAG2021.
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Q:
Who is entitled to vote at the annual meeting?
A:
All common stockholders of record as of the close of business on March 10, 2022, the record date, are entitled to vote at the annual meeting.
Q:
What is the quorum for the meeting?
A:
A quorum at the annual meeting will consist of a majority of the votes entitled to be cast by the holders of all shares of common stock outstanding. No business may be conducted at the meeting if a quorum is not present. As of the record date, 178,014,466 shares of common stock were issued and outstanding. If less than a majority of outstanding shares entitled to vote are represented at the annual meeting, the chairman of the meeting may adjourn the annual meeting to another date, time or place, not later than 120 days after the original record date of March 10, 2022. Notice need not be given of the new date, time or place if announced at the meeting before an adjournment is taken.
Q:
How many votes do I have?
A:
You are entitled to one vote for each whole share of common stock you held as of the record date. Our stockholders do not have the right to cumulate their votes for directors.
Q:
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A:
If your shares are registered in your name with our transfer agent, Continental Stock Transfer & Trust Company, LLC, you are the “stockholder of record” of those shares.
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of those shares. The Notice and proxy statement and any accompanying documents have been forwarded to you by your broker, bank or other nominee. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote your shares by following the instructions provided by the institution holding your shares for voting on the internet or by telephone or mail.
Q:
How do I vote?
A:
If you are the stockholder of record:
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On the internet: You may submit your proxy over the internet by following the instructions in the Notice, proxy card or voting instruction card that you received.
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By telephone: You may submit your proxy by telephone by following the instructions in the Notice, proxy card or voting instruction card that you received.
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By mail: If you received a paper copy of a proxy card or voting instruction card by mail, you may submit your proxy by completing, signing and dating your proxy card or voting instruction card and mailing it in the accompanying self-addressed stamped envelope. No postage is necessary if mailed in the United States.
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At the virtual annual meeting: You may vote during the virtual annual meeting by following the instructions available on the meeting website during the meeting.
If you are the beneficial owner of shares held by a broker, bank or other nominee, you may instruct your broker, bank or other nominee to vote your shares by following the instructions that the institution holding the shares provides to you. If you are the beneficial owner and want to vote during the meeting, you must obtain a duly authorized proxy executed in your favor, from the institution holding the shares in order to vote your shares at the virtual annual meeting.
Properly completed and submitted proxy cards and voting instruction cards, as well as proxies properly completed and submitted on the internet or by telephone prior to the annual meeting, will be voted at the annual meeting in accordance with the instructions provided as long as they are received in time for voting and not revoked.
Whether or not you plan to attend the annual meeting, we recommend that you authorize a proxy in advance as described above so that your vote will be counted if you later decide not to attend the annual
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meeting. Authorizing your proxy over the internet, by telephone or by mailing a proxy card or voting instruction card, will not limit your right to attend the annual meeting and vote your shares.
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Q:
Can I change my vote after I have voted?
A:
Yes. If you are the stockholder of record, you may revoke a proxy at any time prior to its exercise by filing with our corporate secretary a duly executed revocation of proxy, by properly submitting, either on the internet or by telephone or mail, a proxy bearing a later date or by attending the virtual annual meeting and voting. Attendance at the annual meeting will not by itself constitute revocation of a proxy.
If you are the beneficial owner of shares held by a broker, bank or other nominee, please follow the instructions provided by the institution holding the shares regarding how to revoke your voting instructions.
Q:
What am I voting on?
A:
You will be voting on:
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the election of nine directors to hold office until the 2023 annual meeting of stockholders and until their successors are duly elected and qualified;
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the ratification of the appointment of PricewaterhouseCoopers LLP to act as our independent registered public accounting firm for year ending December 31, 2022; and
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the approval, by non-binding vote, of our executive compensation.
In addition, you will be voting on such other business as may properly come before the annual meeting, including any adjournments or postponements thereof.
Q:
What vote is required to approve the proposals assuming that a quorum is present at the annual meeting?
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| Proposal 1: | The election of the director nominees must be approved by a majority of the votes cast. | |
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Proposal 2:
The ratification of the appointment of the independent registered public accounting firm requires a majority of the votes cast. Proposal 3: |
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The advisory vote approving executive compensation requires an affirmative vote of a majority of the votes cast.
Q:
How are abstentions and broker non-votes treated?
A:
If you are the beneficial owner of shares held by a broker, bank or other nominee, you must instruct the broker, bank or other nominee how to vote your shares. A “broker non-vote” occurs when a bank, broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. If your shares are held by a broker, bank or other nominee, your broker, bank or other nominee has discretionary voting authority under NYSE rules to vote your shares on the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm even if the institution does not receive voting instructions from you. However, your broker, bank or other nominee does not have discretionary authority to vote on the election of directors or the advisory vote approving our executive compensation, in which case a broker non-vote will occur and your shares will not be voted on these matters.
Pursuant to Maryland law, abstentions and broker non-votes are counted as present for purposes of determining the presence of a quorum.
For purposes of the election of directors and the vote on Proposal 3, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote.
For purposes of the vote on Proposal 2, abstentions will not be counted as votes cast and will have no effect on the result of the vote.
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Q:
Will there be any other items of business on the agenda?
A:
The board does not know of any other matters that may be brought before the annual meeting nor does it foresee or have reason to believe that proxy holders will have to vote for substitute or alternate nominees for election to the board. If any other matter should come before the annual meeting or any nominee is not available for election, the persons named in the enclosed proxy will have discretionary authority to vote all proxies with respect to such matters in accordance with their discretion.
Q:
What happens if I submit my proxy without providing voting instructions on all proposals?
A:
Proxies properly submitted via the internet, mail or telephone will be voted at the annual meeting in accordance with your directions. If the properly-submitted proxy does not provide voting instructions on a proposal, the proxy will be voted as follows:
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if you are a stockholder of record, to elect (FOR) each of the director nominees listed in “Proposal 1: Election of Directors;” if you are a beneficial owner of shares held by a broker, bank or other nominee, a broker non-vote will occur;
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if you are a stockholder of record or a beneficial owner of shares held by a broker, bank or other nominee, in favor of (FOR) “Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm;” and
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if you are a stockholder of record, in favor of (FOR) “Proposal 3: Advisory (Non-Binding) Vote on Executive Compensation;” if you are a beneficial owner of shares held by a broker, bank or other nominee, a broker non-vote will occur.
Q:
Where can I find the voting results after the annual meeting?
A:
We will announce the preliminary voting results at the annual meeting and will report the final voting results in a current report on Form 8-K, which we will file with the SEC within four business days after the meeting.
Q:
Will anyone contact me regarding this vote?
A:
No arrangements or contracts have been made with any solicitors as of the date of this proxy statement, although we reserve the right to engage solicitors at any time if we deem them necessary. Such solicitations may be made by mail, telephone, facsimile, e-mail or personal interviews.
Q:
Who has paid for this proxy solicitation?
A:
We have paid the entire expense of preparing, printing and mailing the Notice and, to the extent requested by our stockholders, the proxy materials and any additional materials furnished to stockholders. Proxies may be solicited by our directors, officers or employees personally or by telephone without additional compensation for such activities. We also will request persons, firms and corporations holding shares in their names or in the names of their nominees, which are beneficially owned by others, to send appropriate solicitation materials to such beneficial owners. We will reimburse such holders for their reasonable expenses.
Q:
How many copies should I receive if I share an address with another stockholder?
A:
The SEC has adopted rules that permit companies and intermediaries, such as a broker, bank or other agent,nominee, to implement a delivery procedure called “householding.” Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our proxy materials, unless the affected stockholder has provided us with contrary instructions. This procedure provides extra convenience for stockholders and cost savings for companies.
Our company
We and some brokers, banks or other agentsnominees may be householding our proxy materials. A single Notice and, if applicable, a single set of our proxy materials, including this proxy statement, the accompanying proxy card, our annual report and the Notice, will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker, bank or other agentnominee that it will be householding communications to
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your address, householding will continue until you are notified otherwise or until you revoke your consent. If you did not respond that you did not want to participate in householding, you were deemed to have consented to the process. Stockholders may revoke their consent at any time by contacting Broadridge ICS, either by calling toll-free (800) 542-1061 or by writing to Broadridge ICS, Householding Department, 51 Mercedes Way, Edgewood, New York, 11717.
Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, a single set of our proxy materials, to any stockholder at a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the Notice and, if applicable, our proxy materials, you may send a written request to STAG Industrial, Inc., One Federal Street, 23rd Floor, Boston, Massachusetts, 02110, Attention: Jeffrey M. Sullivan, Corporate Secretary. In addition, if you are receiving multiple copies of the Notice and, if applicable, our proxy materials, you can request householding by contacting our corporate secretary in the same manner.
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What does it mean if I receive more than one Notice? A: |
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It means that you have multiple accounts at the transfer agent or with brokers, banks or other nominees. Please submit all of your proxies over the internet, following the instructions provided in the Notice, by mail or by telephone to ensure that all of your shares are voted.
Q:
Can I find additional information on the company’s website?
A:
Yes. Our website is www.stagindustrial.com. You can view additional information on the website, such as our corporate responsibility and ESG policies, including our Sustainability Report, our corporate governance guidelines, our code of business conduct and ethics, our stock ownership guidelines, charters of the board committees and reports that we file with the SEC. However, the information located on, or accessible from, our website is not, and should not be deemed to be, part of this proxy statement or incorporated into any other filing that we submit to the SEC. A copy of our corporate governance guidelines, our code of business conduct and ethics, our stock ownership guidelines and each of the charters of the board committees also may be obtained free of charge by writing to STAG Industrial, Inc., One Federal Street, 23rd Floor, Boston, Massachusetts, 02110, Attention: Jeffrey M. Sullivan, Corporate Secretary.
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The board of directors currently consists of nine members with directors serving one-year terms and until their successors are duly elected and qualified. The term for each director expires at each annual meeting of stockholders. At the 20212022 annual meeting, nine directors will be elected to serve until the 20222023 annual meeting and until their successors are duly elected and qualified. The board of directors has nominated the following current directors (the “Nominees”“nominees”) to serve as directors: Benjamin S. Butcher, Jit Kee Chin, Virgis W. Colbert, Michelle S. Dilley, Jeffrey D. Furber, Larry T. Guillemette, Francis X. Jacoby III, Christopher P. Marr and Hans S. Weger. The board of directors anticipates that each Nomineenominee will serve, if elected, as a director. However, if anyone nominated by the board of directors is unable to accept election, the proxies will be voted for the election of such other person or persons as the board of directors may recommend.
Vote Required
The affirmative vote of a majority of the votes cast at a meeting at which a quorum is present is required for the election of the Nominees.nominees. For purposes of the election of directors, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote.
Recommendation
The board of directors recommends a vote FOR each Nominee.nominee.
Snapshot of Board Composition
The table below presents a snapshot of the expected composition of the board of directors.board.
| | Total number of directors | | | 9 | |
| | Percentage of independent directors | | | 89% | |
| | Average age of independent directors | | 60 | | |
| | Average tenure of independent directors (years) | | 8.5 | | |
| | Lead independent director | | | Yes | |
| | Percentage of independent directors with CEO experience | | | 50% | |
| | Percentage of independent directors with CFO experience | | | 50% | |
| | Percentage of audit committee members designated as “audit committee financial experts” | | | 80% | |
| | Percentage of women and minorities on the board (two of our directors are | | | 33% | |
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Director Nominees for Election to Term Expiring 20222023
The following tables and biographical descriptions set forth certain information with respect to each Nominee,nominee, including the specific experience, qualifications, attributes and skills that led to the conclusion by the board that such person should continue to serve as a director.
Director Nominees | Age | Principal Occupation | Director Since |
| Benjamin S. Butcher | 67 | Chief Executive Officer, President and Chairman | 2010 |
| Jit Kee Chin | 42 | Executive Vice President, Chief Data Officer and Chief Innovation Officer at Suffolk Construction | 2020 |
| Virgis W. Colbert | 81 | Former Executive Vice President of Miller Brewing Company | 2014 |
| Michelle S. Dilley | 49 | Chief Executive Officer of Awesome Leaders, NFP | 2018 |
| Jeffrey D. Furber | 62 | Global Chief Executive Officer of AEW | 2011 |
| Larry T. Guillemette | 65 | Former Chairman, Chief Executive Officer and President of Amtrol | 2011 |
| Francis X. Jacoby III | 59 | Chief Financial Officer and Executive Vice President of Leggat McCall Properties, LLC | 2011 |
| Christopher P. Marr | 56 | Chief Executive Officer and Trustee of CubeSmart | 2012 |
| Hans S. Weger | 57 | Strategic Consultant | 2011 |
| | Director Nominees | | | Age | | | Principal Occupation | | | Director Since | | ||||||
| | Benjamin S. Butcher | | | | | 68 | | | | Chief Executive Officer and Chairman of the Board | | | | | 2010 | | |
| | Jit Kee Chin | | | | | 43 | | | | Executive Vice President, Chief Data Officer and Chief Innovation Officer at Suffolk Construction | | | | | 2020 | | |
| | Virgis W. Colbert | | | | | 82 | | | | Retired Executive Vice President of Miller Brewing Company | | | | | 2014 | | |
| | Michelle S. Dilley | | | | | 50 | | | | Chief Executive Officer of Awesome Leaders, NFP | | | | | 2018 | | |
| | Jeffrey D. Furber | | | | | 63 | | | | Global Chief Executive Officer of AEW | | | | | 2011 | | |
| | Larry T. Guillemette | | | | | 66 | | | | Retired Chairman, Chief Executive Officer and President of Amtrol | | | | | 2011 | | |
| | Francis X. Jacoby III | | | | | 60 | | | | Chief Financial Officer and Executive Vice President of Leggat McCall Properties, LLC | | | | | 2011 | | |
| | Christopher P. Marr | | | | | 57 | | | | Chief Executive Officer and Trustee of CubeSmart | | | | | 2012 | | |
| | Hans S. Weger | | | | | 58 | | | | Strategic Consultant | | | | | 2011 | | |
Director Qualifications
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| | Colbert | | | Dilley | | | Furber | | | Guillemette | | | Jacoby | | | Marr | | | Weger | | |||||||||||||||||||||||||||
| | CEO/public company executive | | | | | | | | | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | • | | | ||||||
| | Data analytics | | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Finance/accounting | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | ||||
| | Industrial operations | | • | | | | | | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | | ||||
| | Logistics | | • | | | | | | • | | | | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||
| | Real estate / construction / development / finance | | | | | • | | | | | | | | | | | | | | | | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | • | | | ||||||
| | Real estate or property technology | | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Risk management | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | • | | | |||||||
| | Strategic planning | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | |||||||||
| | Supply chain management | | • | | | | | | | | | | | | • | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||
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Director Nominees
| | Benjamin S. Butcher Chief Executive Officer Committees: •
Investment (Chair) | | | | Mr. Butcher has served as our chief executive officer In light of his extensive company-specific operational, finance and market experience, his leadership abilities, his foundership of our company, and his expertise in the acquisition, ownership and management of single-tenant industrial properties, the board | | |
| | Jit Kee Chin Independent Director Committees: •
Audit | | | | Dr. Jit Kee Chin has served as executive vice president and chief data officer at Suffolk Construction Corporation Inc. (“Suffolk”), a national privately-held general contractor, since 2017 and additionally as chief innovation officer since 2019. In her roles, Dr. Chin is responsible for building a new capability for Suffolk, setting vision and strategy, driving business insight through analytics and operationalizing the data transformation. At Suffolk, she served on the enterprise steering committee from 2018 to 2020, which governs development and implementation of strategic initiatives. She is also part of the leadership team focused on disruptive technologies, leading Suffolk Technologies and its corporate venture program, which she set up in 2019. In that capacity, she In light of her extensive data, analytics and technology infrastructure expertise, including the development and implementation of strategic initiatives, the board | | |
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| | Virgis W. Colbert Independent Director Committees: • Compensation
Nominating and Corporate Governance | | | | Mr. Colbert served in a variety of key leadership positions with Miller Brewing Company from 1979 until his retirement in 2005, including executive vice president of worldwide operations from 1997 to 2005 and senior vice president of operations from 1993 to 1997. As executive vice president, Mr. Colbert was responsible for plant operations, international operations, brewing, research and quality assurance, engineering, procurement, order production/planning and logistics. Since his retirement, he continues to serve as a senior advisor to MillerCoors LLC. In addition, Mr. Colbert currently serves on the board, including the audit committee thereof, In light of his extensive public company board and corporate governance experience and his significant operational experience including addressing logistics, plant operations and other issues common to our tenants, the board | | |
| | Michelle S. Dilley Independent Director Committees: • Compensation
Nominating and Corporate Governance | | | | Ms. Dilley has served as the chief executive officer of Awesome Leaders, NFP since July 2020. AWESOME (Achieving Women’s Excellence in Supply Chain Operations, Management and Education) is the supply chain industry’s most active and prominent organization focused on advancing and transforming the future of supply chain leadership. Prior to joining AWESOME, Ms. Dilley served as chief supply chain transformation officer and additionally as chief operating officer at DSC Logistics, Inc. (“DSC”), a logistics and supply chain management organization, from 2017 to 2020. In these roles, she led the vision for the company’s operating platform, implemented strategic initiatives to deliver continuous improvement and was directly responsible for DSC’s network of logistics centers and supply chain packaging operations throughout North In light of her significant supply chain, finance and operational experience, including experience in the development and implementation of strategic initiatives, and her recent experience with diversity initiatives in the supply chain industry, the board | | |
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| | Jeffrey D. Furber Independent Director Committees: •
Compensation (Chair) •
Investment | | | | Mr. Furber serves as the global chief executive officer of AEW. As one of the leading real estate investment advisors, AEW currently manages $75 billion of real estate assets and securities on behalf of a global client base of public and corporate pension funds, sovereign wealth funds, endowments, foundations and high net worth investors. Mr. Furber has oversight responsibility for all of AEW’s operating business units in the United States, Europe and Asia. He chairs AEW’s management committee, which is responsible for AEW’s strategic direction and for managing the firm’s resources, and is a member of the firm’s risk management committee and the investment committees in North America, Europe and Asia. Mr. Furber joined AEW in 1997 from Winthrop Financial Associates (“Winthrop”), a wholly-owned subsidiary of Apollo Advisors, where he served as managing director of Winthrop and as president of Winthrop Management. In these capacities, he was responsible for acquisitions, asset management and capital markets activity, including the sourcing of equity and mezzanine debt investments. Mr. Furber is a member of the board of The Howard Hughes Corporation (NYSE: HHC) and Boston Children’s Hospital Trust. Mr. Furber holds a Bachelor of Arts degree from Dartmouth College and a Master of Business Administration degree from Harvard Business School. In light of his significant leadership, corporate governance and capital markets experience and his 34 years of real estate investment experience, including 21 years as chief executive officer of AEW, the board | | |
| | Larry T. Guillemette Lead Independent Director Committees: • Audit
Compensation | | | | Mr. Guillemette served as chairman of the board of directors, chief executive officer and president of Amtrol Inc., a multi-national pressure vessel manufacturer (“Amtrol”), from 2006 In light of his extensive leadership experience through his senior officer and director positions and his accounting and real estate experience, the board | | |
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| | Francis X. Jacoby III Independent Director Committees: • Audit Investment
Nominating and Corporate Governance | | | | Since 2016, and from 1995 to 2001, Mr. Jacoby has served as executive vice president and chief financial officer of Leggat McCall Properties, LLC, a real estate development company. From 2013 to 2016, Mr. Jacoby served as an independent consultant providing real estate finance, development and disposition related services. From 2008 to 2013, he served as president of Kensington Investment Company, Inc., the wealth management office for a family that owns travel-related businesses and passenger ships and makes investments in real estate, private equity and venture capital. In addition, in 2012, Mr. Jacoby served as the chief financial officer of Grand Circle Corporation, an affiliate of Kensington Investment Company, Inc. From 2001 to 2008, Mr. Jacoby served as the senior vice president and chief financial officer for GID Investment Advisers LLC, a family wealth management office whose primary focus is developing, acquiring and managing apartment communities, suburban office properties and flex industrial business parks throughout the United States for its own account and for joint ventures with institutional investors. From 1983 to 1995, Mr. Jacoby held a variety of senior management positions in the acquisitions, asset management and finance departments of Winthrop Financial Associates, a real estate investment company which owned and managed multiple property types. Mr. Jacoby holds a Bachelor of Arts degree from Dartmouth College and a Master of Business Administration degree from Boston University. In light of his extensive investment and capital markets experience and his significant financial and real estate investment experience, including structuring, negotiating and closing complex transactions, the board | | |
| | Christopher P. Marr Independent Director Committees: • Audit
Nominating and Corporate Governance (Chair) | | | | Mr. Marr has served as chief executive officer and member of the board of trustees of CubeSmart (NYSE: CUBE), a real estate company that acquires, owns, operates and develops self-storage facilities in the United States, since 2014 and as president of CubeSmart since 2008. Previously, he served as chief operating officer of CubeSmart from 2012 to 2014 and as chief financial officer from June 2006 to November 2008 and as treasurer from 2006 to 2012. From 2002 to 2006, Mr. Marr served as senior vice president and chief financial officer of Brandywine Realty Trust (NYSE: BDN), an office REIT. Prior to joining Brandywine Realty Trust, Mr. Marr served as chief financial officer of Storage USA, Inc., a publicly-traded self-storage REIT, from 1998 to 2002. Mr. Marr holds a Bachelor of Arts degree from Loyola University. In light of his public company leadership, financial reporting and operations experience as an executive officer of two publicly-traded REITs, including chief executive officer experience, the board | | |
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| | Hans S. Weger Independent Director Committees: •
Audit (Chair) • Compensation
Investment | | | | Mr. Weger provides consulting services to real estate and other companies. Prior to that, Mr. Weger served as chief financial officer of Focus Brands Inc., the franchisor and operator of restaurants and cafes in the United States, Puerto Rico and 63 foreign countries, from 2014 to 2016. From 2012 to 2014, Mr. Weger served as chief financial officer of Outrigger Enterprises Group, a privately-held leisure lodging and hospitality company. From 1998 to 2011, Mr. Weger served as chief financial officer, executive vice president and treasurer of LaSalle Hotel Properties (NYSE: LHO), a REIT focused on the acquisition, ownership, redevelopment and leasing of primarily upscale and luxury full-service hotels. In addition, Mr. Weger served as secretary of LaSalle Hotel Properties from 1999 to 2011. Mr. Weger was responsible for all of the company’s financial, accounting, human resources and information technology activities. Prior to joining LaSalle Hotel Properties, Mr. Weger served as vice president and treasurer for La Quinta Inns, Inc. where he was responsible for all financing activities. From 1992 until 1997, Mr. Weger served in various management roles with Harrah’s Entertainment, Inc. where he was responsible for strategic planning, mergers and acquisitions and project financing. Mr. Weger holds a Bachelor of Science degree from the University of Southern Mississippi and a Master of Business Administration degree from the University of Chicago. In light of his real estate and real estate financing knowledge and his financial reporting and operations experience as the chief financial officer of a publicly-traded real estate investment trust and a privately held company, the board | | |
Biographical Information Regarding Executive Officers Who Are Not Directors
The biographical descriptions below set forth certain information with respect to each of our executive officers other than Mr. Butcher, whose information appears above.
| | William R. Crooker
President Age: | | | | Mr. Crooker has served as our | | |
| | Matts S. Pinard Executive Vice President, Chief Financial Officer and Treasurer Age: 39 | | | | Mr. Pinard has served as our executive vice president, chief financial officer and treasurer since January 2022. Mr. Pinard served as senior vice president of capital markets and investor relations from 2019 to 2022. Previously, Mr. Pinard served as our vice president of capital markets and investor relations group from 2015 until 2019. Prior to joining our company in 2013, Mr. Pinard held various positions within capital markets and portfolio management. Mr. Pinard holds a Bachelor of Arts degree from Tufts University and a Master of Business Administration degree from Boston College. | | |
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| | | Stephen C. Mecke Executive Vice President and Chief Operating Officer Age: | | | | Mr. Mecke has served as our chief operating officer and executive vice president since 2011. Prior to the formation of our company, Mr. Mecke served as chief investment officer for STAG Capital Partners, LLC and STAG Capital Partners III, LLC from 2004 to 2011, where he was responsible for all asset acquisition and asset management activities. Prior to joining our predecessor business, Mr. Mecke ran the acquisitions groups for M|P|A, a private real estate fund that represented a large east coast endowment fund, from 2001 to 2004. Mr. Mecke also worked at Meditrust Corporation, a publicly-traded REIT, as vice president of acquisitions and various other positions from 1992 to 2000. Mr. Mecke holds a Bachelor of Arts degree from Hobart College and a Master of Business Administration degree from Northeastern University. | | |
| | Jeffrey M. Sullivan Executive Vice President, General Counsel and Secretary Age: | | | | Mr. Sullivan has served as our executive vice president, general counsel and secretary since 2015. From 2012 to 2014, Mr. Sullivan was a partner in the corporate group of Hunton & Williams LLP, and from 2005 to 2012, Mr. Sullivan was a partner in the finance group of DLA Piper LLP (US). Before joining DLA Piper LLP (US), Mr. Sullivan was an associate and then partner in the corporate transactions and securities group of Alston & Bird LLP from 1998 to 2005. While in private practice, Mr. Sullivan focused on securities law, mergers and acquisitions, corporate governance matters and general corporate law, primarily involving REITs and other real estate companies, private equity funds and underwriters. Mr. Sullivan holds a Bachelor of Arts degree from University of North Carolina at Chapel Hill and a Juris Doctor degree from Vanderbilt University Law School. | ||
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BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors
Our business is managed through the oversight and direction of the board of directors.board. A majority of the board of directors is “independent,” as determined by the board, of directors, consistent with the rules of the NYSE. The one member of the board of directors who is not independent is our chief executive officer.
Board Meetings and Executive Sessions
Our directors stay informed about our business by attending meetings of the board of directors and its committees and through supplemental reports and communications. In 2020,2021, the board of directors held seven meetings and each director attended at least 75% of the aggregate of the board meetings and his or her respective committee meetings. The board of directors does not have a policy with respect to directors’ attendance at annual meetings of stockholders. Nevertheless, all of our directors attended the 20202021 annual meeting of stockholders.
As required by the NYSE rules, the independent directors of the board regularly meet in executive session, without the presence of management or non-independent directors. Generally, these executive sessions follow after each quarterly meeting. In 2020,2021, the independent directors of the board met in executive session without management present five times (at each quarterly meeting and one special meeting), the audit committee met in executive session without management present four times (at each quarterly meeting), the compensation committee met in executive session without management present fourtwo times (at threetwo quarterly meetings and one special meeting)meetings), and the nominating and corporate governance committee met in executive session twothree times (at twothree quarterly meetings). Our lead independent director presides over such independent, non-management sessions of the board. Executive sessions of the audit, the compensation and the nominating and corporate governance committees are presided over by the respective chairperson of each committee.
Director Independence
Under the enhanced corporate governance standards of the NYSE, at least a majority of our directors, and all of the members of the audit committee, compensation committee and nominating and corporate governance committee, must meet the test of “independence.” The NYSE standards provide that, to qualify as an “independent” director, in addition to satisfying certain bright-line criteria, the board of directors must affirmatively determine that a director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with the company). The board of directors has affirmatively determined that each of Dr. Chin, Ms. Dilley and Messrs. Colbert, Furber, Guillemette, Jacoby, Marr and Weger satisfies the bright-line independence criteria of the NYSE and that none has a relationship with us that would interfere with such person’s ability to exercise independent judgment as a member of the board of directors.board. Therefore, we believe that all of these directors, who constitute a majority of the board, of directors, are independent under the NYSE rules.
We have implemented procedures for interested parties, including stockholders, to communicate directly with our independent directors. We believe that providing a method for interested parties to communicate directly with our independent directors, rather than with the full board, of directors, would provide a more confidential, candid and efficient method of relaying any interested party’s concerns or comments. See “Corporate Responsibility—Other Corporate Governance Matters—Communication with the Board of Directors, Independent Directors and the Audit Committee.”
Board Committees
The board of directors has established an investment committee, an audit committee, a compensation committee and a nominating and corporate governance committee and has adopted a written charter for each of these committees. Each of the audit committee, the compensation committee and the nominating and corporate governance committee is composed exclusively of independent directors, as required by and defined in the rules and listing qualifications of the NYSE and, with respect to the members of the audit committee, Rule 10A-3 promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Moreover, the compensation committee is composed exclusively of individuals intended to be, to the
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extent required by Rule 16b-3 of the Exchange Act, non-employee directors. The board of directors may from time to time establish other committees to facilitate the management of our company. Matters put topresented for a vote atof any one of our fourthe board committees must be approved by a majority of the directors on the committee who are present at a meeting at which there is a quorum or by unanimous written consent of the directors on thatthe committee.
Director | Investment | Audit | Compensation | Nominating and |
| Benjamin S. Butcher | Chair | |||
| Jit Kee Chin | ● | |||
| Virgis W. Colbert | ● | ● | ||
| Michelle S. Dilley | ● | ● | ||
| Jeffrey D. Furber | ● | Chair | ||
| Larry T. Guillemette | ● | ● | ||
| Francis X. Jacoby III | ● | ● | ● | |
| Christopher P. Marr | ● | Chair | ||
| Hans S. Weger | ● | Chair | ● | |
| Meetings Held in 2020 | 4 | 4 | 6 | 3 |
| | Director | | | Investment Committee | | | Audit Committee | | | Compensation Committee | | | Nominating and Corporate Governance Committee | |
| | Benjamin S. Butcher | | | Chair | | | | | | | | | | |
| | Jit Kee Chin | | | | | | • | | | | | | | |
| | Virgis W. Colbert | | | | | | | | | • | | | • | |
| | Michelle S. Dilley | | | | | | | | | • | | | • | |
| | Jeffrey D. Furber | | | • | | | | | | Chair | | | | |
| | Larry T. Guillemette | | | | | | • | | | • | | | | |
| | Francis X. Jacoby III | | | • | | | • | | | | | | • | |
| | Christopher P. Marr | | | | | | • | | | | | | Chair | |
| | Hans S. Weger | | | • | | | Chair | | | • | | | | |
| | Meetings Held in 2021 | | | 6 | | | 4 | | | 6 | | | 4 | |
Investment Committee
The board of directors has established an investment committee composed of four of our directors, three of whom are independent directors. The investment committee’s primary function is to review, evaluate and ultimately vote to approve all acquisitions and dispositions with an individual purchase or sale price of more than $50 million and up to $100 million, as well as all development and redevelopment projects with a development cost of more than $50 million and up to $100 million. Proposed acquisitions, dispositions and development and redevelopment projects with an individual purchase or sale price or development cost of more than $100 million require approval by the board of directors.board. The board, of directors, in its discretion, may change the investment committee’s authority to approve acquisitions, or dispositions and development and redevelopment projects from time to time, including the dollar thresholds.
The investment committee has adopted a written charter that outlines certain specified responsibilities of the investment committee. A copy of the investment committee charter is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Audit Committee
The board of directors has established an audit committee, which is composed exclusively of independent directors. Four members of the audit committee, Messrs. Guillemette, Jacoby, Marr and Weger, qualify as audit committee financial experts, as defined by the SEC, and all members are financially literate and able to read and understand fundamental financial statements. The audit committee assists the board in overseeing, among other things:
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our system of internal controls;
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our accounting and financial reporting processes;
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the integrity and audits of our consolidated financial statements;
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our compliance with legal and regulatory requirements;
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our risk exposures and policies to assess and manage risks (including financial risks);
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the qualifications and independence of our independent auditors; and
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the performance of our independent auditors and any internal auditors.
The audit committee also is responsible for engaging our independent public accountants, reviewing with the independent certified public accountants the plans and results of the audit engagement, approving professional services provided by the independent public accountants, reviewing the independence of the independent public accountants, considering the range of audit and non-audit fees and reviewing the adequacy of our internal accounting controls. The audit committee has the power to investigate any matter brought to its attention within the scope of its duties and to retain counsel for this purpose where appropriate.
The audit committee has adopted a written charter that outlines certain specified responsibilities of the audit committee and complies with the rules of the SEC and the NYSE. A copy of the audit committee charter is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Compensation Committee
The board of directors has established a compensation committee, which is composed exclusively of independent directors. The principal functions of the compensation committee are to:
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evaluate the performance and compensation of our chief executive officer;
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review and approve the compensation and benefits of our executive officers and members of the board;
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administer the STAG Industrial, Inc. 2011 Equity Incentive Plan, as amended and restated (the “2011 Equity Incentive Plan”), as well as any other compensation, stock option, stock purchase, incentive or other benefit plans; and
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produce an annual report on executive compensation for inclusion in our proxy statement after reviewing our compensation discussion and analysis.
The compensation committee is primarily responsible for establishing and implementing our compensation program and policies. To fulfill its responsibilities, the compensation committee may engage, oversee and provide appropriate funding for advisors and consultants to advise the committee on executive compensation matters.
The compensation committee has adopted a written charter that outlines certain specified responsibilities of the compensation committee and complies with the rules of the SEC and the NYSE. A copy of the compensation committee charter is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
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Nominating and Corporate Governance Committee
The board of directors has established a nominating and corporate governance committee, which is composed exclusively of independent directors. The principal functions of the nominating and corporate governance committee include:
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seeking, considering and recommending to the full board qualified candidates for election as directors;
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recommending a slate of nominees for election as directors at the annual meeting of stockholders;
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annually recommending to the board nominees for each committee of the board;
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annually facilitating the assessment of the board’s performance as a whole and of each committee and the individual directors;
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reviewing and making recommendations on matters involving the general operation of the board and our corporate governance, including our ESG policies and practices (and related policies for tenants, communities and vendors);
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reviewing our ESG risk oversight and management and related governance reporting; and
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reviewing our performance metrics concerning ESG matters.
The nominating and corporate governance committee has adopted a written charter that outlines certain specified responsibilities of the nominating and corporate governance committee and complies with the rules of the SEC and the NYSE. A copy of the nominating and corporate governance committee charter is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Compensation Committee Interlocks and Insider Participation
None of the members of the compensation committee is or has been employed by us. None of our executive officers currently serves, or in the past three years has served, as a member of the board of directors or compensation committee of another entity that has one or more executive officers serving on the board of directors or compensation committee. No member of the compensation committee has any other business relationship or affiliation with us other than his or her service as a director.
Board and Committee Evaluations
The board of directors and each of its committees performperforms an annual performance evaluation, with each director performing a self-evaluation of his or her board and committee experiences. The nominating and corporate governance committee oversees the evaluation process and considers all methods of performing these evaluations. ForTo assist the 2020board in its 2021 performance evaluation,evaluations, we engaged outside counsel to conduct one-on-one interviews of each director, to assist the board in its evaluations, which are designed, among other purposes, to identify any areas in which the board would be better served by adding new members with different skills, backgrounds or areas of experience. We believe using outside counsel fosters candor, facilitates participation in the evaluation process and enables individual assessments of each director. Generally, the evaluation process described below is managed by outside counsel with assistance from our corporate secretary and oversight by the chair of the nominating and corporate governance committee to ensure the process remains as thorough and transparent as possible.
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Organization and membership
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Key responsibilities
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Accountability and independence
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Meetings, information and resources
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Board Refreshment and Nomination Process
Board refreshment is important to our company. Before each annual meeting of stockholders, the nominating and corporate governance committee (i) assesses the composition and needs of the board as a whole, including with respect to diversity (and such matters are also the subject of full board discussions annually), (ii) rigorously evaluates all current directors and (iii) considers the nomination of all directors whose terms expire at the next annual meeting of stockholders. The nominating and corporate governance committee also considers new candidates whenever there is a vacancy on the board or whenever a vacancy is anticipated due to a change in the size or composition of the board, a retirement of a director or for any other reason. In addition to considering incumbent directors, the nominating and corporate governance committee may identify director candidates based on recommendations from the directors and executive officers and may engage the services of third-party search firms to assist in identifying or evaluating director candidates.
The board of directors considers director candidates based on a number of factors including:
•
whether the board member will be “independent,” as such term is defined by the NYSE listing standards;
•
whether the candidate possesses the highest personal and professional ethics, integrity and values;
•
whether the candidate has demonstrated leadership ability, with broad experience, diverse perspectives and the ability to exercise sound business judgment;
•
whether the candidate has experience in areas important to the operations of our company;
•
whether the candidate has an inquisitive and objective perspective, practical wisdom and mature judgment; and
•
whether the candidate provides a diversity of viewpoints, background, experience and demographics as compared to the current members of the board.
Candidates also are evaluated based on their understanding of our business and willingness to devote adequate time to carrying out their duties. The nominating and corporate governance committee monitors the mix of skills, experience and background to assure that the board has the necessary composition to effectively perform its oversight function. While diversity characteristics of a candidate are just one of several factors considered by the committee when evaluating director candidates, we believe that diversity is a valuable component of an effective and dynamic board and will continue to make diversity an integral part of the board’s search for future directors. See “Corporate Responsibility—Corporate Governance and Ethical Business Practices—Enhancing Board Diversity” below. In general, a candidate will neither be included nor excluded from consideration solely based on his or her diversity traits. The nominating and corporate governance committee conducts regular reviews of current directors in light of the considerations described above and their past contributions to the board of directors.board. The board reviews the effectiveness of its director nominating policies annually.
The nominating and corporate governance committee successfully completed our most recent board refreshment process in 2020 with the appointment of Dr. Chin to serve as an independent director.
The nominating and corporate governance committee will consider appropriate nominees for directors whose names are submitted in writing by a stockholder of our company. Director candidates submitted by our stockholders will be evaluated by the nominating and corporate governance committee on the same basis as any other director candidates. We did not receive any nominations of directors by stockholders for the 20202022 annual meeting. Nominations must be addressed to STAG Industrial, Inc., One Federal Street, 23rd Floor, Boston, Massachusetts, 02110, Attention: Jeffrey M. Sullivan, Corporate Secretary, indicating the nominee’s qualifications and other relevant biographical information and providing confirmation of the nominee’s consent to serve as director, if elected. To be considered for the next annual election of directors, any such written request must comply with the requirements set forth in our bylaws and below under “Other Matters—Stockholder Proposals.”
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Board Leadership
The board of directors recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure to provide independent oversight of management. The board understands that there is no single, generally accepted approach to providing board leadership and the right board leadership structure may vary as circumstances warrant. Consistent with this understanding, our independent directors consider the board’s leadership structure on an annual basis.
The board of directors annually will elect a chairman of the board, who may or may not be theour chief executive officer of our company.officer. Since our formation in 2010, Mr. Butcher has served as our chief executive officer and chairman of the board. As previously announced, pursuant to ongoing management succession planning by the board, we expect that, on July 1, 2022, Mr. Butcher will become executive chairman of the board and Mr. Crooker, our president, will be appointed chief executive officer and join the board. Over the next few months, Mr. Butcher will work closely with Mr. Crooker on transitioning to chief executive officer. After becoming executive chairman in July, Mr. Butcher is involved in our day-to-day operations and our strategic decision making atButcher’s responsibilities will include managing the business of the board, level.regularly consulting with the chief executive officer on key corporate matters and liaising between the board and the management team. Based on its most recent review of our leadership structure and the needs of our company, the board believes that Mr. Butcher continuing to serve in these positionsas chairman is optimal, because he has been involved in our day-to-day operations and our strategic decision making at the board level and his continued service provides our company with strong, effective and consistent leadership.
If the chairman of the board and chief executive officer areis not an independent director, the same person, our board of directors will annually elect a non-management and independent director to serve in a lead capacity, to coordinate the activities of the other non-management and independent directors and to perform any other duties and responsibilities that the board of directors may determine are advisable. Although this position is elected annually, it is generally expected that he or she will serve for more than one year. Mr. Guillemette has served as our lead independent director since 2015. The responsibilities of the lead independent director include (i) serving as liaison between the chairman and the independent directors, (ii) reviewing the type of information sent to the board, (iii) reviewing, in consultation with the chairman and others, agendas and board meeting schedules to determine whether sufficient time is allocated to agenda items and (iv) holding the authority to call meetings of the independent directors.
In considering its leadership structure, the board has taken a number of factors into account. The board, which consists of a majority of independent directors (eight of the nine members), exercises a strong, independent
oversight function. This oversight function is enhanced by the audit, compensation and nominating and corporate governance committees being comprised entirely of independent directors. A number of board and committee processes and procedures, including regular executive sessions of independent directors and a regular review of our executive officers’ performance, provide substantial independent oversight of our management’s performance. Finally, under our bylaws and corporate governance guidelines, the board has the ability to change its structure, should that be deemed appropriate and in the best interest of our company and our stockholders. The board believes that these factors provide the appropriate balance between the authority of those who oversee our company and those who manage it on a day-to-day basis.
The chairman of the board presides over all meetings of the stockholders and the board as a whole. The chairman performs such other duties, and exercises such powers, as from time to time shall be prescribed in our bylaws or by the board of directors.
board.
Our lead independent director presides over all meetings of ourthe board of directors where the chairman is not present, including executive sessions of the independent directors.
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Director Resignation Policy
We have a majority voting standard for uncontested election of directors and a plurality standard for elections in which the number of director nominees exceeds the number of directors to be elected. Subject to the provisions of our charter related to preferred stock directors, pursuantPursuant to our bylaws, director nominees in uncontested elections of directors will be elected by the vote of a majority of the votes cast with respect to the director, which means that the number of votes cast for a director must exceed the number of votes cast against the director.
Our corporate governance guidelines require incumbent director nominees who fail to receive a majority of the votes cast to submit promptly a written offer to resign from the board of directors.board. The nominating and corporate governance committee will make a recommendation to the board of directors on whether to accept or reject the resignation. Taking into account the recommendation of the nominating and corporate governance committee, the board of directors will determine whether to accept or reject any such resignation within 90 days after the certification of the voting results, and we will report such decision in a current report on Form 8-K furnished to the SEC. A copy of our corporate governance guidelines is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Role of the Board in Risk Oversight
Overview
Overview
While risk management is primarily the responsibility of our senior management team, the board of directors plays an active role in overseeing our risk management processes and controls. The board of directors administers this oversight function directly, with support from the audit committee, the compensation committee and the nominating and corporate governance committee, each of which addresses risks specific to their respective areas of oversight. While the committees assume responsibilities to evaluate certain risks and oversee management’s plan regarding such risks, the full board of directors keeps itself regularly informed regarding such risks through committee and management reports.
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| | BOARD OF DIRECTORS | | | |||||||||
| | One of the key functions of the board
• Strategic and operational risk management
• Information security risks (see “—Information Security”
• Management and board succession planning (see “—Management Succession Plans”
| | | ||||||||
| | | Audit Committee | | | | Compensation Committee | | | | Nominating and Corporate
| | |
| | • Financial risks, including our guidelines and policies to govern the process by which risk assessment and management is undertaken
• Compliance with legal and regulatory requirements
• Internal audit function | | | • Risks related to our compensation policies and programs, including whether any compensation program has the potential to encourage excessive risk taking |
| | | • Corporate governance risks, including
• ESG risks, including environmental sustainability risks, corporate social responsibility and related governance reporting |
| | ||||||||||||
| | | SENIOR MANAGEMENT TEAM | | | ||||||||
| | | Our senior management team reviews and prioritizes significant risks, allocates resources for mitigation and provides the board | | | ||||||||
| | | Information Security Risks | | | | Disclosure Risks | | | | Environmental Risks | | |
| | Our chief operating officer, to whom our data analytics and technology team (including information technology) reports, presents an information security update at each quarterly board
| | | Our disclosure committee, consisting of certain executives and senior employees, reports to our chief financial | | | Our | | |
In addition, to the board of directors’ review of risks applicable to our company generally, as discussed above under the “—Board and Committee Evaluations” section above,, the board of directors conducts an annual self-evaluation in order to evaluate its performance for the purpose of improving board and committee processes and effectiveness.
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Information Security
As discussed above, the board of directors has the primary responsibility for overseeing our information security risk management. Our chief operating officer, to whom our data analytics and technology team (including information technology) reports, presents an information security update at each quarterly board of directors meeting. Aspects of information security are reviewed through internal audit.
We use third-party experts to review and test our information security systems, including regular penetration tests of our network. We also use third-party systems to monitor our information security continually. We maintain a cybersecurity insurance policy, and we conduct mandatory information security training for all employees several times a year and regularly test our employees for information security awareness and adherence to our information security recommendations.
To our knowledge, we have not experienced an information security breach in the last three years or otherwise.
Management Succession Plans
The board of directors oversees the recruitment, development and retention of executive talent and reviews or discusses our management succession plans at least annually. Management succession is generally discussed throughout the year with the chief executive officer at board meetings and in executive sessions. Management succession discussions generally focus on the chief executive officer and other senior executive roles, but also include broader discussions about our employee workforce. The board of directors has regular and direct exposure to senior leadership and high-potential employees through board meetings held throughout each year. OurAs previously announced, pursuant to ongoing management succession planning by the board, we expect that, on July 1, 2022, Mr. Butcher will become executive chairman of directorsthe board and Mr. Crooker, our president, will be appointed chief executive officer and join the board. Over the next few months, Mr. Butcher will work closely with Mr. Crooker on transitioning to chief executive officer. In addition, on January 10, 2022, the board appointed Mr. Pinard as our executive vice president, chief financial officer and treasurer. The board has framed and continues to evolve plans with an adaptable timeframe for orderly management succession.
succession of other key positions.
In addition, in order to minimize the potential disruption to our company upon the unexpected resignation, termination, death, disability or other form of absence of our chief executive officer, the board of directors reviewed and approved a chief executive officer emergency succession policy (the “CEO Emergency Succession Policy”). The CEO Emergency Succession Policy is general in nature and is intended to provide the board and the nominating and corporate governance committee with contingency procedures upon a sudden succession of theour chief executive officer.
Board Compensation for 20202021
In
The compensation committee is responsible for reviewing the compensation of our non-management directors and may revise director compensation in its discretion. If a director is also one of our officers, we will not pay any compensation for services rendered as a director. Due to the consistently high level of say-on-pay support from our stockholders, the structure of our 2021 non-management director compensation program was unchanged from the 2020 we paidprogram. Non-management director compensation in 2021 consisted of an annual cash fee and an annual grant of $50,000 to each of our non-management directorsequity for services as a director as well as an annual grant of equity with a value of approximately $100,000 at the time of grant. In 2020, we paidand an additional annual cash fee for each of $25,000 to the lead independent director, an additional annual cash fee of $20,000 to the chair of the audit committee, an additional annual cash fee of $15,000 to the chair of the compensation committee and an additional annual cash fee of $12,500 to the chair of the nominating and corporate governance committee and any other committee ofin amounts set forth in the board of directors.table below. All members of the board of directors are reimbursed for their costs and expenses in attending our board meetings.
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| | Position Held | | | Annual Cash Fee(1) | | | Annual Equity Grant(2) | | ||||||
| | Non-Management Director | | | | $ | 50,000 | | | | | $ | 100,000 | | |
| | Lead Independent Director | | | | $ | 25,000 | | | | | | — | | |
| | Audit Committee Chair | | | | $ | 20,000 | | | | | | — | | |
| | Compensation Committee Chair | | | | $ | 15,000 | | | | | | — | | |
| | Nominating and Corporate Governance Committee Chair | | | | $ | 12,500 | | | | | | — | | |
(1)
Our directors have the option to receive fees in shares of common stock rather than in cash. The value of such shares of common stock is based on the 10-day average of the closing price of our common stock determined three days prior to the quarterly fee payment date. All of our independent directors elected to receive shares of our common stock in lieu of cash for payment of the fees payable to them in 2020. If a director is also one2021.
(2)
Represents the value of our officers, we will not pay any compensation for services rendered as a director.
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As mentioned above, wethe 2021 annual grant annualof equity awards to our non-management directors. In addition, anyat the time of grant. Any non-management director who joins the board of directors in the future receives an initial grant of LTIP units upon the commencement of his or her service. The LTIP units granted annually vest on January 1 of the following year, subject to the recipient’s continued service as a director. LTIP units can be converted to common units of our operating partnership, STAG Industrial Operating Partnership, L.P. (our “operating partnership”), on a one-for-oneone for one basis once a material equity transaction has occurred that results in the accretion of the member’s capital account to the economic equivalent of the common unit.
The board of directors (or a duly formed committee thereof) may revise our non-management directors’ compensation in its discretion.
The following table summarizes the compensation that we paid to our non-management directors in 2020:
2021:
| Name | Fees Earned(1) | Stock Awards(2)(3) | Total | ||||
| Jit Kee Chin | $50,000 | $99,992 | $149,992 | ||||
| Virgis W. Colbert | $50,000 | $99,992 | $149,992 | ||||
| Michelle S. Dilley | $50,000 | $99,992 | $149,992 | ||||
| Jeffrey D. Furber | $65,000 | $99,992 | $164,992 | ||||
| Larry T. Guillemette | $75,000 | $99,992 | $174,992 | ||||
| Francis X. Jacoby III | $50,000 | $99,992 | $149,992 | ||||
| Christopher P. Marr | $62,500 | $99,992 | $162,492 | ||||
| Hans S. Weger | $70,000 | $99,992 | $169,992 |
| | Name | | | Fees Earned(1) | | | Stock Awards(2)(3) | | | Total | | |||||||||
| | Jit Kee Chin | | | | $ | 50,000 | | | | | $ | 100,002 | | | | | $ | 150,002 | | |
| | Virgis W. Colbert | | | | $ | 50,000 | | | | | $ | 100,002 | | | | | $ | 150,002 | | |
| | Michelle S. Dilley | | | | $ | 50,000 | | | | | $ | 100,002 | | | | | $ | 150,002 | | |
| | Jeffrey D. Furber | | | | $ | 65,000 | | | | | $ | 100,002 | | | | | $ | 165,002 | | |
| | Larry T. Guillemette | | | | $ | 75,000 | | | | | $ | 100,002 | | | | | $ | 175,002 | | |
| | Francis X. Jacoby III | | | | $ | 50,000 | | | | | $ | 100,002 | | | | | $ | 150,002 | | |
| | Christopher P. Marr | | | | $ | 62,500 | | | | | $ | 100,002 | | | | | $ | 162,502 | | |
| | Hans S. Weger | | | | $ | 70,000 | | | | | $ | 100,002 | | | | | $ | 170,002 | | |
(1)
All of our independent directors elected to receive shares of our common stock in lieu of cash for payment of the fees payable to them for their service in 2021. The aggregate numbers of shares of common stock earned by the independent directors for their service in 2021 were as follows: Dr. Chin, 1,271; Mr. Colbert, 1,271; Ms. Dilley, 1,271; Mr. Furber, 1,652; Mr. Guillemette, 1,907; Mr. Jacoby, 1,271; Mr. Marr, 1,589; and Mr. Weger, 1,779. These shares were issued based on the calculation previously disclosed in this proxy statement and are not indicative of the fair market value on the date the directors received the shares.
(2)
As of December 31, 2021, the aggregate number of unvested LTIP units held by each independent director was as follows: Dr. Chin, 3,555; Mr. Colbert, 3,555; Ms. Dilley, 3,555; Mr. Furber, 3,555; Mr. Guillemette, 3,555; Mr. Jacoby, 3,555; Mr. Marr, 3,555; and Mr. Weger, 3,555. As of December 31, 2021, the aggregate number of LTIP units held by each independent director was as follows: Dr. Chin, 6,948; Mr. Colbert, 27,466; Ms. Dilley, 14,706; Mr. Furber, 42,607; Mr. Guillemette, 42,607; Mr. Jacoby, 42,607; Mr. Marr, 35,197; and Mr. Weger, 42,607.
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(3)
Represents 3,555 LTIP units granted to each of Dr. Chin, Ms. Dilley and Messrs. Colbert, Furber, Guillemette, Jacoby, Marr and Weger on January 7, 2021. The dollar value is computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 718, Compensation—Stock Compensation (“ASC Topic 718”). See Note 7 to our consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2021, for a discussion of our accounting of LTIP units and the assumptions used. The grant date fair value of each award granted on January 7, 2021 was $28.13.
Board Compensation for 2022
In 2021, the compensation committee of the board engaged Ferguson Partners Consulting (“FPC”), an independent compensation consultant, to evaluate the structure and competitiveness of our non-management director compensation program and recommend changes, as appropriate. Based on this review, effective for 2022 and later, the compensation committee of the board recommended and the board approved an annual cash fee and annual grant of equity for services as a non-management director and an additional annual cash fee for the chair of the nominating and corporate governance committee in the amounts set forth in the table below. All other components of the non-management director compensation program, including the additional annual cash fees paid to the lead independent director, the chair of the audit committee and the chair of the compensation committee, remained unchanged.
| | Position Held | | | Annual Cash Fee | | | Annual Equity Grant | | ||||||
| | Non-Management Director | | | | $ | 55,000 | | | | | $ | 110,000 | | |
| | Nominating and Corporate Governance Committee Chair | | | | $ | 15,000 | | | | | | — | | |
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CORPORATE RESPONSIBILITY
We are committed to having a robust corporate responsibility program that incorporates ESG strategies into our business to increase the sustainability and value of our portfolio. During 2020,2021, we enhanced and refined our corporate responsibility program and related initiatives discussed below.
To provide a board-guided leadership structure to oversee and drive our ESG initiatives, in April 2020, we amended the charter of the nominating and corporate governance committee to add ESGsets forth certain board oversight responsibilities, including (i) reviewing and making recommendations on our ESG policies and practices concerning environmental sustainability, human rights and social responsibility (and related policies for tenants, communities and vendors), (ii) reviewing our environmental sustainabilityESG risk oversight and management corporate and social responsibility and related governance reporting and (iii) reviewing our performance metrics concerning environmental sustainability, human rights and social responsibilityESG matters. For more information, see “Board of Directors and Its Committees—Board Committees—Nominating and Corporate Governance Committee” and “—Role of the Board in Risk Oversight” above.
www.stagindustrial.com.
Environmental Sustainability
As the long-term owner of industrial buildings, we have a vested interest in making investments and working with our tenants to create a portfolio of industrial buildings with modern sustainable features that will continue to meet tenant demand and help our tenants run their operations as efficiently as possible.
While our tenants maintain operational control of the properties under our triple-net leases, we seek to (i) identify, assess and manage environmental risks and opportunities at our properties, (ii) collaborate with our tenants on sustainable strategies to optimize property performance and (iii) partner with our tenants to improve the efficiency of our properties through the implementation of strategic environmentally focused property practices and solutions. We have made progress on environmental issues in four primary areas – (i)areas:
(1)
Energy Savings—With respect to our investments to garner energy savings, including modernization of lighting and HVAC equipment, (ii) installation of alternative energy generating systems, (iii) working with our tenants on utility consumption transparency, and (iv) conversion of our portfolio from non-reflective to reflective roofing. With respect to energy savings, we are working with our tenants to accelerate the replacement of inefficient equipment, including modernization of lighting and HVAC equipment, and, in doing so, generate significant electrical and natural gas cost savings, decrease resource consumption and increase the value of and return on our properties. These cost savings initially accrue to the tenants under our triple-net leases, but will make our buildings more competitive and attractive to potential tenants when exposed to market conditions in future lease negotiations. In addition, when one of our buildings becomes vacant, we advance these cost-saving modernization efforts on our own initiative.
(2)
Alternative Energy—With respect to the installation of alternative energy generating systems, the most promising technology for local power generation at our industrial sites is solar (photovoltaic). We have been aggressively pursuing solar panel installations in the states that are most receptive to these installations and, as of December 31, 2020,2021, our properties hosted or were undergoing construction for solar projects with more than 2525.5 megawatts capacity in aggregate. Through
(3)
Energy Consumption—With respect to energy consumption, through the terms in our standard lease agreement, we are also working with our tenants to develop more transparency in the energy consumption at our buildings. In 2020, we have beenwere recognized by the Institute for Market Transformation as a Green Lease Leader at the Gold“Gold” level. We achieved this recognition by modifying our standard form of lease to require sharing of tenant utility usage so that we can identify those of our buildings that are outliers with respect to energy consumption. Our capital decisions are then prioritized based on where deployment would yield maximum utility savings. For
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(4)
Reflective Roofing—With respect to the conversion of our portfolio from non-reflective to reflective roofing, we continue to use white membranes in the majority of our re-roof projects exclusively.projects. These white, or cool, roofs reflect sunlight and reduce the heat load on our buildings, which allows our tenants to keep the buildings at comfortable temperatures while minimizing utility usage.
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During 2020,2021, we enhanced our environmental programs and related initiatives and achieved the following milestones and accomplishments:
| | | | | 2021 ENVIRONMENTAL SUSTAINABILITY | | | | | | |||||||||
| | | | | | | | | | | | | | | | | |||
| | | | | Attractive GRESB Rating | | | | | | | | Green Lease Leader | | | | |||
| | | | | We achieved
| |
| | | | | | The U.S. Department of
| | | | ||
| | | | | | | | | | | | | | | | | |||
| | | | Reflective Roofing | | | | | | | | Lighting Conversions | | | | ||||
| | | | | | Since 2015, | | | | | | | | As of December 31, | | | | ||
| | | | | | | | | | | | | | | | ||||
| | | | | | Solar Panel Installations | | | | ||||||||||
| | | | | We pursue solar energy opportunities in our portfolio nationwide and have executed contracts for solar Our building in
| | | | ||||||||||
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Environmental Sustainability Policy
In April 2020, the
The board of directorshas adopted an Environmental Sustainability Policy, which outlines our practices regarding understanding environmental risks and opportunities in our business and promoting greater tenant
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engagement and awareness and responsibility among our employees. A copy of our Environmental Sustainability Policy is available under the “Corporate Responsibility” section of our website at www.stagindustrial.com.
Tenant Engagement on Environmental Policies
With respect to the properties in our existing portfolio, we are committed to appropriate environmental stewardship, monitoring the performance of our responsible investments and measuring our progress toward improving the environmental footprint of our properties through the implementation of targeted environmental efficiency projects and equipment upgrades, such as solar panel systems and LED lighting. Each year, we conduct a tenant survey to provide an opportunity for tenants to provide feedback on their properties that they did not communicate during our physical visits each year. We also use the survey as an opportunity to remind tenants that we are willing to finance capital improvements that lead to energy savings and to promote our capital investment program, where we invest additional capital in the building and, to pay for the project, receive monthly payments from the tenant that are less than or equal to the monthly savings realized through execution of the project. This program allows for a more efficient building at similar or reduced monthly operational cost.
Environmental Considerations in Investment Decisions
We are a growth-oriented company, and much of our growth comes from acquisitions. Accordingly, we believe our environmental strategies are most effective if they influence how we price and purchase a building, rather than being restricted to incremental improvement of already-owned real estate. We employ responsible investing practices as part of our acquisition due diligence process. Where feasible, in considering potential acquisitions, we evaluate and underwrite building systems, equipment and technologies that improve efficiency and conserve natural resources.
Social Responsibility and Human Rights
We are committed to good corporate citizenship. This commitment to social responsibility and human rights extends to all, including employees, tenants, communities, investors, suppliers and visitors. Our mission is to extend our financial resources, time and core values and principles to improve our communities and to provide a work environment that attracts, develops and retains high-performing individuals and that treats employees with dignity and respect.
Human Rights Policy
To evidence our commitment to maintaining a work environment where every employee is treated with dignity and respect, is free from discrimination and harassment, and is allowed to devote their full attention and best efforts to performing their job to the best of their respective abilities, in April 2020, the board of directorshas adopted a Human Rights Policy. This new policy solidifies our core principles regarding equal opportunity, competitive compensation, ethical behavior, workplace safety, open and risk-free communication and legal compliance. These commitments align seamlessly with our pledge to provide a work environment that attracts, develops and retains top talent by affording our employees an engaging work experience that allows for career development and opportunities for meaningful civic involvement. A copy of our Human Rights Policy is available under the “Corporate Responsibility” section of our website at www.stagindustrial.com.
Employee Engagement
We continually assess and strive to enhance employee satisfaction and engagement. Since our initial public offering in 2011, our employee headcount has increased from 26 employees to 86 employees at year-end 2021, an increase of approximately 231%, while maintaining a low attrition rate. Our 86 employees as of December 31, 2021, have an average tenure of 6.3 years.
We regularly conduct internal and external surveys of our employees, many of whom have a relatively long tenure with our company, to measure our culture and our employees’ engagement. We chose to conduct these surveys to collect our employee’s feedback based on the recognition that they, more than any other
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stakeholder, best understand our culture. On an annual basis sinceSince 2016, and through 2019, we have participated in anseveral employee engagement survey administered by a third partysurveys that providesprovide employees an opportunity to share their perspectives on what is and is not working within our organization. InFor example, in 2019, we participated in a second third-party survey of our employees designed to identify opportunities for improving employee engagement and business success. The results of the survey included benchmarking scores against comparably-sized businesses. In addition, in 2018, we conducted an internally-developed survey of our employees centered on culture (as opposed to engagement). We created the survey based on professional frameworks to assess and explore how our employees view our culture by archetype and to gain insight on what makes certain employees successful in our culture. Our employee survey results helped us better understand morale, satisfaction and engagement and have informed our strategies for improving company culture and communicating with our employees.
Diversity and Inclusion
We offer equal employment opportunities to all of our employees and seek to foster a diverse and vibrant workplace with employees who possess a broad range of experiences, backgrounds and skills. We are committed to promoting diversity and inclusion within our company culture and throughout our operations. We believe diversity in the workplace contributes to a more positive and inclusive environment. We are further committed to creating a respectful environment in which our employees can flourish. As part of that commitment, we endeavor to maintain a workplace free from discrimination or harassment on the basis of race, color, religion, creed, gender, gender identity or expression, sexual orientation, genetic information, national origin, ancestry, age, disability, military or veteran status, and political affiliate or activities, among others. We conduct training to prevent discrimination and harassment and monitor and address employee conduct.
Employee Compensation and Benefit Programs
We are committed to compensating our employees well and at competitive industry rates while, at the same time, monitoring our compensation programs to ensure that we are continuously attracting and retaining top talent. We also provide our employees with highly competitive health and wellness benefits, including medical, dental, vision, life and short-term disability insurance, with the premiums therefor entirely paid by us. We also offer flexible spending accounts for medical care, a program to pay commuting and office parking costs with pre-tax income and a competitive vacation policy, including paid holidays, personal time off and a variety of leave benefits.
Employee Training and Development
We believe that our employees’ training and development is critical to our long-term success. Our employees are offered regular opportunities to participate in personal growth and professional development programs and social or team building events. We believe that developing our employees through skill building, mentorship and educational opportunities fosters a more collaborative and sustainable work environment. We also recognize the importance of preparing employees for upward mobility and ensuring employees are capable of assuming other roles and responsibilities within the organization. We seek to identify and develop future leaders within our company and periodically review with our chief executive officer and the board of directors the identity, skills and characteristics of those persons who could succeed to senior and executive positions. For additional information on our management succession plans, see “Board of Directors and Its Committees—Role of the Board in Risk Oversight—Management Succession Plans” above.
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COVID-19 Business Continuity
We are committed to the health and safety of our employees and reducing their risk of exposure to COVID-19. Our response to the COVID-19 pandemic is a direct reflection of our commitment to our employee’s health, safety and well-being, as well our commitment to training and preparedness. In response to the outbreak of COVID-19 in the United States, we acted swiftly to protect the health and safety of our employees while also ensuring the continuity of operations. By mid-March 2020, we transitioned substantially all employees to working remotely with no disruption to our financial, operational, communications and other systems. Throughout the year,pandemic, we communicated frequently with employees through manager, department and company-wide video and audio meetings, email correspondence and other forms of electronic communication to enhance transparency and encourage open dialogue between leadership and employees. In addition, we developed and distributed safety guides for voluntary office visits in addition to equipping offices with personal protective equipment and enhanced cleaning regimens.
Corporate Donations and Volunteering
We strive to collaborate with local non-profit organizations that provide opportunities to inspire and empower children and young adults. Our employees demonstrate their personal commitment by volunteering time and resources into these organizations that we believe will help children and young adults realize their potential and make an impact to future generations.
Charitable Action Committee
Early in our life as a public company, we established the CAC to promote quality interaction with our local community in Boston. The CAC is funded by our company and is managed by our volunteer employees with differing seniorities and responsibilities. We currently support several local and national charities through a combination of financial support (both direct and employee matching) and numerous employee volunteer activities (such as food and clothing distribution, habitat improvement, etc.) with a focus on supporting children, young adults, equality and social justice.
Charitable Action Fund
In November 2020, we announced the establishment of
We established the Charitable Action Fund in cooperation with the Boston Foundation. The Charitable Action Fund will supportsupports our social responsibility endeavors, including promoting equality and inspiring children and young adults, particularly those at risk, to realize their potential and benefit future generations. The Charitable Action Fund was formed to be the predominant channel for our monetary charitable giving and will augmentaugments our ongoing company-wide volunteer programs. The Charitable Action Fund is a donor advised fund sponsored by the Boston Foundation, which is a non-profit organization qualified under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). Our executive officers will oversee the Charitable Action Fund, in conjunction with the CAC.
More information about our corporate donations and volunteer activities is available under “Social Responsibility” in the “Corporate Responsibility” section of our website at www.stagindustrial.com.
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Corporate Governance and Ethical Business Practices
Corporate Governance Overview
We have structured our corporate governance in a manner we believe closely aligns our interests with those of our stockholders. Notable features of our corporate governance structure include the following:
| | Annual election of directors to the board | | ✔ | | |
| | Majority voting standard for the election of directors (with a director resignation policy) | | ✔ | | |
| | Regular executive sessions of independent directors | | ✔ | | |
| | Independent board; eight of our nine directors are “independent” under NYSE rules | | ✔ | | |
| | Designation of lead independent director | | ✔ | | |
| | All members of the audit committee, compensation committee and nominating and corporate governance committee are “independent” under NYSE rules | | ✔ | | |
| | Four of the five members of the audit committee qualify as “audit committee financial experts” as defined by the SEC | | ✔ | | |
| | Diverse | | ✔ | | |
| | Annual board, committee and director self-evaluations, assisted by outside counsel | | ✔ | | |
| | Regular board review | | ✔ | | |
| | Stockholder ability to amend bylaws | | ✔ | | |
| | No stockholder rights plan (i.e., “poison pill”) without stockholder approval or ratification | | ✔ | | |
| | Opted out of Maryland control share acquisition and business combination statutes and may not opt back in without stockholder approval | | ✔ | | |
| | Robust stock ownership guidelines for directors and executive officers | | ✔ | | |
| | Anti-hedging and anti-pledging policies | | ✔ | | |
| | Code of business conduct and ethics for employees and directors | | ✔ | |
For more information about the board of directors and its committees, including board elections, board leadership, director independence and board policies related to annual self-evaluations and oversight of risk management, see “Board of Directors and Its Committees” above.
Vendor Code of Conduct
We encourage all our vendors to join our commitment to moral and ethical standards in conducting their businesses, and to refrain from engaging in or tolerating any unethical, improper or immoral business practices, including, but not limited to, bribery, corruption, extortion, fraud or misrepresentation. To promote that effort, in April 2020, the board of directorshas adopted a Vendor Code of Conduct, which sets uncompromising vendor standards for fair and ethical business practices, safe labor conditions, respect for human rights and environmental stewardship. A
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copy of our Vendor Code of Conduct is available under the “Corporate Responsibility” tab of our website at www.stagindustrial.com.
Stockholder Engagement
Our management team participates in an active stockholder engagement process each year:
![[MISSING IMAGE: tm223531d1-fc_annmeetpn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-036721/tm223531d1-fc_annmeetpn.jpg)
We provide institutional investors with many opportunities and events to provide feedback directly to our management team throughout the year, including formal events, one-on-one sessions and group meetings throughout the year.meetings. During 2020,2021, our management team attended (in-person and virtually) seven11 investor conferences and numerous other individual investor meetings, where they met with approximately 112more than 100 institutional investors, representing approximately 22% of our outstanding common stock.investors. These meetings covered a range of topics, including our financial condition and results of operations, our business investment, finance and operation strategies, our stock price performance, economic, industry and market trends, ESG policies, corporate governance and executive compensation and other matters. In addition to, and apart from, our regular investor meetings, we speak exclusively about executive compensation and corporate governance with a number of our investors each year.
We engage with stockholders throughout the year in order to:
•
provide visibility and transparency into our business, performance and corporate practices;
•
hear from our stockholders about issues that are important to them and their expectations for our company; and
•
assess emerging issues that may affect our business, inform our decision making, enhance our public disclosures and help shape our practices.
Our management team recognizes the benefits that come from this dialogue with our stockholders. Stockholder feedback is thoughtfully considered and has led to modifications in our ESG practices, executive compensation program and public disclosures.
Enhancing Board Diversity
We are committed to diversity and recognize the benefits of having a diverse board of directors.board. We view increasing diversity at the board level as essential to maintaining our competitive advantage and supporting the attainment of our strategic objectives. Not only does diversity promote the inclusion of different perspectives and ideas, and ensure that we have the opportunity to benefit from all available talent, but the promotion of a diverse board also makes prudent business sense and makes for better corporate governance. We believe that a truly diverse board will include and make good use of differences in the skills, regional and industry
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experience, background, race, gender, cultural and other distinctions between directors. These differences are considered in determining the optimum composition of our board. All board appointments are based on merit, in the context of the skills, experience, independence and knowledge which the board as a whole requires to be effective. As part of the annual performance evaluation of the effectiveness of the board, of directors, board committees and individual directors (described above under “Board of Directors and Its Committees—Board and Committee Evaluations”), the nominating and corporate governance committee considers the balance of skills, experience, independence and knowledge of our company and the diversity representation of the board, including gender, ethnicity and race, how the board works together as a unit, and other factors relevant to its effectiveness.
Stock Ownership Guidelines
We have adopted stock ownership guidelines that apply to all our executive officers. The stock ownership guidelines require that the chief executive officer and president own qualified securities equal to six times his or her annual base salary and the chief financial officer, chief operating officer and other executive officers own qualified securities equal to three times his or her annual base salary. Qualified securities include common stock, preferred stock, common units and LTIP units, whether owned directly or indirectly. Newly appointed executive officers will have up to five years to comply with the stock ownership guidelines. All of our executive officers are in compliance with the stock ownership guidelines.
In addition, we have adopted stock ownership guidelines that apply to all non-management members of the board of directors.board. The stock ownership guidelines require that the non-management members own qualified securities equal to five times their annual cash retainer. Qualified securities include common stock, preferred stock, common units and LTIP units, whether owned directly or indirectly. Newly appointed non-management members of the board of directors have up to five years to comply with the stock ownership guidelines. All of our non-management members of the board of directors are in compliance with our stock ownership guidelines.
Prohibition Against Hedging and Pledging
Our insider trading policy prohibits our officers, directors, employees and their respective family members from, among other prohibited activities, directly or indirectly engaging in short-term or speculative transactions in our securities or in other transactions in our securities that may lead to inadvertent violations of insider trading laws.
The insider trading policy prohibits our officers, directors, employees and their respective family members from, among other prohibited activities, (i) directly or indirectly engaging in strategies using puts, calls, equity swaps or other derivative securities on an exchange or in any other market in order to hedge or offset any decreases in the market value of any directly or indirectly owned securities of the company, (ii) engaging in short sale transactions or forward sale transactions or any short-term or speculative transactions in our securities or in other transactions in our securities that may lead to inadvertent violations of insider trading laws and (iii) pledging our securities as collateral for a loan or otherwise using our securities to secure a debt, including through the use of traditional margin accounts with a broker.
Other Corporate Governance Matters
Code of Business Conduct and Ethics and Corporate Governance Guidelines
We have adopted a code of business conduct and ethics and corporate governance guidelines that apply to all of our executive officers and employees and each member of the board of directors.board. The corporate governance guidelines provide the framework for the governance of our company and represent the board’s current views with respect to selected corporate governance issues considered to be of significance to our stockholders. The corporate governance guidelines direct the board of director’s actions with respect to, among other things, board composition and director qualifications, selection of our chief executive officer, chairman of the board and lead independent director, composition of the board’s standing committees, director resignation policy, executive sessions, stockholder communications with the board, management succession planning and the board’s annual performance evaluation.
Within the time period required by the SEC, we will disclose on our website any amendment to the code of business conduct and ethics and any waiver applicable to any director, executive officer or senior
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financial officer of any provision of the code of business conduct and ethics that would otherwise be required to be disclosed under the rules of the SEC or NYSE.
Copies of the code of business conduct and ethics and corporate governance guidelines are available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com. Copies of such documents are also available in print to any stockholder who requests them. Requests should be sent STAG Industrial, Inc., One Federal Street, 23rd Floor, Boston, Massachusetts, 02110, Attention: Jeffrey M. Sullivan, Corporate Secretary.
Related Party Transactions
The board of directors has adopted a policy for the review and approval of related person transactions requiring disclosure under Rule 404(a) of Regulation S-K. The policy provides that the nominating and corporate governance committee is responsible for reviewing and approving or disapproving all related party transactions, including any transaction, arrangement or relationship in which (i) the amount involved may be expected to exceed $120,000 in any fiscal year, (ii) we will be a participant and (iii) a related person has a direct or indirect material interest. A related person is defined as an executive officer, director or nominee for election as director, or a greater than 5% beneficial owner of our common stock, or an immediate family member of the foregoing. See “Certain Relationships and Related Party Transactions.”
Conflicts of Interests
Our code of business conduct and ethics expressly prohibits the continuation of any conflict of interest by an employee, officer or director except under guidelines approved by the board of directors.board. Our policies provide that any transaction involving us in which any of our directors or officers has a material interest must be approved by a vote of a majority of our disinterested directors. Our code of business conduct and ethics requires any employee, officer or director to report any actual conflict of interest to our compliance officer, who will then seek guidance from the board of directors.board. In addition, our corporate governance guidelines require that each member of
the board of directors consult the chairman of the board in advance of accepting an invitation to serve on another company’s board should there be a possible conflict and notify the nominating and corporate governance committee in writing of the outcome. Because the facts and circumstances regarding potential conflicts are difficult to predict, the board of directors has not adopted a written policy for evaluating conflicts of interests. If a conflict of interest arises, the board will review, among other things, the facts and circumstances of the conflict, our applicable corporate governance policies, the effects of any potential waivers of those policies, applicable state law, and the NYSE continued listing rules and regulations, and will consider the advice of counsel before making any decisions regarding the conflict.
Communication with the Board of Directors, Independent Directors and the Audit Committee
The board of directors may be contacted by any party via mail or e-mail at the addresses listed below:
Board of Directors
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
boardofdirectors@stagindustrial.com
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
boardofdirectors@stagindustrial.com
We believe that providing a method for interested parties to communicate directly with our independent directors, rather than to the full board, would provide a more confidential, candid and efficient method of relaying any interested party’s concerns or comments. The presiding director of independent executive sessions of directors is the lead independent director, and the lead independent director may be contacted by any party via mail or e-mail at the addresses listed below:
Lead Independent Director
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
leadindependentdirector@stagindustrial.com
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
leadindependentdirector@stagindustrial.com
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The audit committee has adopted a process for anyone to send communications to the audit committee with concerns or complaints concerning our regulatory compliance, accounting, audit or internal controls. The audit committee may be contacted by any party via mail or e-mail at the addresses listed below:
Chairman
Chair
Audit Committee
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
auditcommittee@stagindustrial.com
Audit Committee
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
auditcommittee@stagindustrial.com
Alternatively, anyone may call our whistleblower hotline toll-free at (877) 472-2110. A copy of our whistleblower policy is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Relevant communications are distributed to the board, or to any individual director or directors, as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the board of directors has requested that certain items that are unrelated to the duties and responsibilities of the board should be excluded or redirected, as appropriate, such as: business solicitations or advertisements; junk mail and mass mailings; resumes and other forms of job inquiries; spam; and surveys. In addition, material that is unduly hostile, threatening, potentially illegal or similarly unsuitable will be excluded; however, any communication that is excluded will be made available to any outside director upon request.
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EXECUTIVE OFFICER COMPENSATION DISCUSSION AND ANALYSIS
This section discusses the principles underlying the material components of our executive compensation program for our executive officers who are named in the “Summary Compensation Table” below and the factors relevant to an analysis of the compensatory policies and decisions. OurThe name and current title of each of our “named executive officers” during 2020 were:
for 2021 are set forth below:
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Benjamin S. Butcher, Chief Executive Officer and Chairman of the Board
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William R. Crooker, President
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Stephen C. Mecke, Executive Vice President and Chief Operating Officer
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Jeffrey M. Sullivan, Executive Vice President, General Counsel and Secretary
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David G. King, Executive Vice President and Director of Real Estate Operations (until September 17, 2021)
Executive Summary
At the 20202021 annual meeting of stockholders, approximately 97.4%96.8% of the votes cast in the advisory vote on the 20192021 compensation of our named executive officers were in favor. The compensation committee considered these voting results as supportive of the committee’s general executive compensation practices.
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2021 Business Highlights
During 2020,2021, we continued to deliver strong operating and financial results, while creating significant long-term value for our stockholders. Key highlights include the following:
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Our acquisition platform and process create significant external growth.
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Since our initial public offering in 2011, as of December 31, 2021, we have deployed approximately $6.9 billion of capital, representing the acquisition of 561 buildings totaling approximately 114.0 million rentable square feet.
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During 2021, we acquired 74 buildings totaling approximately 12.9 million rentable square feet for a total purchase price of approximately $1.4 billion, including one building under development.
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Our balance sheet enables capital access and liquidity and facilitates our strategic growth. As of December 31, 2021, our ratio of net debt to total real estate cost basis was approximately 34.2% and our ratio of total long-term indebtedness to total enterprise value was approximately 20.4%. During the year ended December 31, 2021:
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we raised equity capital of approximately $573.8 million through our “at-the-market” common stock offering program and follow-on common stock offerings (including net proceeds received upon physical settlement of certain forward sales agreements);
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we sold 22 buildings for a total sales price of approximately $193.4 million;
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we maintained two investment grade ratings from nationally recognized statistical rating agencies; and
◦
we paid a monthly dividend on shares of our common stock at an annualized rate of $1.449996 per share, which represents a dividend yield of approximately 3.0% based on the year-end closing stock price of $47.96.
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We continue to execute on our operational goals and maintained strong occupancy during the year. As of December 31, 2021, we achieved an occupancy rate of 96.9% on the total portfolio and 97.4% on the operating portfolio.
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Our investment strategy and execution generate significant cash flow growth and earnings growth. For the year ended December 31, 2021:
◦
Net income was approximately $196.4 million as compared to net income of approximately $206.8 million in 2020, a decrease of approximately 5.0%. These amounts included approximately $98.0 million and $135.7 million, respectively, of gain from sales of properties in 2021 and 2020. Excluding gain from sales of properties, our net income increased approximately 38.4% from 2020 to 2021.
◦
FFO was approximately $336.9 million as compared to FFO of approximately $291.1 million in 2020, an increase of approximately 15.7%.
◦
NOI was approximately $454.2 million as compared to NOI of approximately $394.1 million in 2020, an increase of approximately 15.2%.
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Our operating and financial performance has translated into significant stockholder returns. We believe that the value creation produced from an investment in real estate should be assessed over a long-term period, and our strategy has focused on long-term value creation. As of December 31, 2021, our TSR performance has been +120.7% over three years, +156.2% over five years and +184.3% over seven years. We have outperformed the MSCI US REIT Index and the S&P 500 Index over the three-year, five-year and seven-year periods.
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Our short-term (2021) stockholder return performance has been in line with the performance of our peer groups. Our TSR for 2021 was +59.1%, which placed us at approximately the 62nd percentile, the 72nd percentile and the 76th percentile in our 2021 industry peer group, our 2021 size-based peer group and the group of companies constituting the MSCI US REIT Index, respectively.
Please refer to Appendix A attached hereto for certain definitions and reconciliations of FFO and NOI to the nearest measure under GAAP.
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Executive Compensation Program Highlights
Our executive compensation program is designed to provide a total compensation package intended to attract and retain high-caliber executive officers and employees, and also to incentivize employee contributions that are consistent with our corporate objectives and stockholder interests. It is our policy to provide a competitive total compensation package and share our success with our named executive officers, as well as our other employees, when our objectives are met.
The key components of compensation are designed to be flexible and complementary and to support, collectively, the goals and objectives of our executive compensation program.
Below are certain features of our executive compensation program, which reflect our commitment to a pay-for-performance compensation structure:
Below are additionalkey features of our current executive compensation practices – practices—both the practices we believe drive performance and the practices we have not implemented because we do not believe they would serve the stockholders’ long-term interests:
| | | What We Do | | | | What We Don’t Do | | |
| | We mitigate undue risk, including utilizing retention provisions, multiple performance targets and robust board and management processes to identify risk. | | | | ✘
We | | |
| | | ✔ A substantial majority of compensation is tied to performance | | | | ✘ We do not guarantee annual base salary increases or bonuses of a minimum amount (bonuses can be zero). | | |
| | | We measure performance against multiple metrics and indices to avoid the risk of poor correlation of performance and reward. | | | | ✘ We do not provide uncapped bonuses. | | |
| | | ✔ We require | | | | We do not reprice stock options or stock appreciation rights without stockholder approval; exercise or base prices may not be less than grant date fair market value of our common stock. | | |
| | | ✔ The 2011 Equity Incentive Plan generally requires a minimum one-year vesting period for stock options and stock appreciation rights. | | | | ✘ We prohibit liberal share recycling; we may not reuse shares withheld or delivered for tax withholdings or exercise prices or use “net share counting” for stock appreciation rights. | | |
| | | We have reasonable
| | | |
Our employment agreements do not include tax gross-up provisions with respect to payments contingent upon a change of control. We do not have pension plans. | | |
| | | ✔ We provide only modest perquisites that have a sound benefit to our business. | | | | We do not distribute dividends on unearned performance unit awards. | | |
| | | ✔
The compensation committee benefits from its utilization of an independent compensation consulting firm. | | | | ✘ The compensation consulting firm did not provide any services to us not related to compensation, | | |
| | | ✔ We have stock ownership guidelines for executive officers and directors. | | | | We prohibit hedging and pledging of our common stock by executive officers and directors. | | |
Historically we have issued performance units to our executive officers that may settle in shares of common stock (or other securities) depending on our relative TSR performance over a three-year measuring period compared to three benchmarks: (i) the TSR of companies in an industry peer group, (ii) the TSR of companies in a size-based peer group, and (iii) the TSR of companies in a major real estate company stock index. The performance units also have a significant absolute TSR as a condition to higher settlement, or payout, levels.
In connection with the adoption of our redesigned executive compensation program in 2019, the compensation committee determined that, effective for the performance units to be issued after year-end 2019, the threshold for a target payout would be increased from the 50th percentile to the 55th percentile. The compensation committee further determined that other terms of the performance units would be substantially similar to the terms of our historical performance units.
Below are the key terms of the new performance unit awards:
ü Performance units will have zero value (no payout) for performance below the 30th percentile
ü Must outperform to earn target award; threshold for target payout is the 55th percentile
ü Must achieve a cumulative 25% absolute TSR to receive a payout above target on 50% of the award
The compensation committee specifically considered whether the performance units should pay out above target or otherwise in instances where we have had strong relative TSR performance but a negative absolute TSR (i.e., outperformance among the three peer groups when they have had overall negative performance). The compensation committee continues to believe that competitive pay practices require that executive officers be compensated at a reasonable level for outperforming peers in difficult economic environments, even if absolute TSR is negative. In this regard, the compensation committee took note of the following:
Executive Compensation Objectives and Philosophy
Objectives of Our Executive Compensation Program
The compensation committee’s overarching goal is to attract and maintain an excellent executive management team that enhances stockholder value over the long term. The executive compensation program is, therefore, designed to provide substantial incentives to focus executive management’s efforts accordingly. The compensation program also is designed to encourage and reward executives who contribute to company performance goalsour financial, operational and TSR performance by successfully executing the company’s business strategy, providing
thoughtful and creative stewardship and exhibiting outstanding performance. The specific objectives of the compensation program are to:
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align the interests of executive officers with the interests of stockholders;
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encourage and maintain a performance-driven company culture;
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provide the compensation committee with the flexibility and discretion to adjust executive compensation to appropriately reflect both individual circumstances and variable business conditions; and
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attract and retain talented and experienced executive officers.
Pay-for-Performance Philosophy
A substantial majority of executive officer compensation is tied to our performance and is not guaranteed. The compensation committee sets clear goals for company performance and differentiates certain elements of compensation based on individual achievement. Consistent with these objectives, executive compensation for 20202021 was heavily weighted toward (i) company financial and operational performance metrics for annual cash incentive bonuses and (ii) TSR performance for long-term equity incentives. We believe that the executive compensation program supports these objectives by providing the named executive officers with a multi-faceted compensation package, comprising a base salary, the opportunity to earn an annual cash incentive bonus and equity awards under the 2011 Equity Incentive Plan.
The diagram below depicts the cash and equity compensation of our chief executive officer for 2021. The diagram demonstrates that a substantial majority of our chief executive officer’s compensation (approximately 85%) was strongly aligned with the interests of our stockholders because either it was determined by or depends on performance or its value fluctuates as the price of our common stock increases or decreases. Approximately 15% of our chief executive officer’s compensation is fixed base salary that is not dependent on our stock price performance. All other compensation is variable.
2021 CEO Cash and Equity Compensation
![[MISSING IMAGE: tm223531d1-pc_compenpn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-036721/tm223531d1-pc_compenpn.jpg)
(1)
“At Risk” means the applicable compensation is either determined by or depends on company and
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individual performance goals (including TSR) or its value fluctuates with the price of our common stock (as in the case of LTIP units subject to forfeiture).
The graph below illustrates our long-term pay-for-performance alignment by comparing our chief executive officer’s total direct compensation to our TSR (indexed to a base date of December 31, 2015)2016) for the past five years.
![[MISSING IMAGE: tm223531d1-bc_performpn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-036721/tm223531d1-bc_performpn.jpg)
The compensation reported in this graph differs from compensation reported in the summary compensation table. The graph above aligns the value of equity incentive awards with the performance year for which they were earned, rather than the year in which they were granted. For example, compensation earned in any given year includes the fair value, as of the vesting date, of LTIP units that vested during the year, rather than the fair value, as of the grant date, of LTIP units granted in the year. As another example, compensation in 20192021 shown above includes the fair value of the LTIP units issued in satisfaction of the outperformance plan interests granted in 2016.2018.
Final Results of 20182019 Performance Units – Units—Alignment of Pay and Performance
In January 2018,2019, we issued performance units under the 2011 Equity Incentive Plan, which provided each executive officer the opportunity to earn a target number of awards as determined by our relative and absolute TSR performance over a three-year performance period compared to pre-established quantitative performance metrics. The following table shows the performance metrics and ultimate 140.7%192.9% achievement for the performance units at the completion of the three-year performance period from January 1, 20182019 through December 31, 2020.
| Benchmark | Performance Metrics | Performance Result(1) | Metric Payout Percentage | Weighting | Calculated | ||||||
30th Percentile | 50th Percentile | 75th Percentile | 95th Percentile | ||||||||
| Size-Based Peer Group | 50% earned | 100% earned | 200% earned | N/A | 52nd percentile | 109.3% | 25% | 27.3% | |||
| Industry Peer Group | 50% earned | 100% earned | 200% earned | N/A | 32nd percentile | 54.6% | 25% | 13.7% | |||
| MSCI US REIT Index(3) | 50% earned | 100% earned | 200% earned | 300% earned | 75th percentile | 199.4% | 50% | 99.7% | |||
| Total Calculated Payout Percentage: | 140.7% | ||||||||||
| | | | | Performance Metrics | | | | Performance Result(1) | | | Metric Payout Percentage | | | | Weighting | | | Calculated Payout Percentage(2) | | | | | | |||||||||
| | Benchmark | | | 30th Percentile | | | 50th Percentile | | | 75th Percentile | | | 95th Percentile | | | | ||||||||||||||||
| | Size-Based Peer Group | | | 50% earned | | | 100% earned | | | 200% earned | | | N/A | | | | 74th percentile | | | 197.6% | | | | 25% | | | 49.4% | | | | ||
| | Industry Peer Group | | | 50% earned | | | 100% earned | | | 200% earned | | | N/A | | | | 37th percentile | | | 67.1% | | | | 25% | | | 16.8% | | | | ||
| | MSCI US REIT Index(3) | | | 50% earned | | | 100% earned | | | 200% earned | | | 300% earned | | | | 86th percentile | | | 253.3% | | | | 50% | | | 126.7% | | | | ||
| | | | | | | | | | | | | | | | | | Total Calculated Payout Percentage: | | | 192.9% | | | | |||||||||
(1)
Rounded to the nearest whole percentile.
(2)
Excludes deemed dividend shares.
(3)
Awards above 100% for this benchmark require us to achieve a minimum absolute TSR of 25%. Our absolute TSR for the performance period from January 1, 20182019 through December 31, 20202021 was 29.2%103.3%.
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A comparison of this result to prior years illustrates the true variability of our long-term equity incentive compensation program. The total percentage of target achieved for the 2016-20182017-2019 and 2017-20192018-2020 performance units was 263%166% and 166%141%, respectively.
How We Determine Executive Compensation
The compensation committee determines compensation for the named executive officers and currently has five independent directors, Ms. Dilley and Messrs. Colbert, Furber, Guillemette and Weger. The compensation committee exercises independent discretion with respect to executive compensation matters and administers our equity incentive programs, including reviewing and approving equity grants to the named executive officers pursuant to the 2011 Equity Incentive Plan. The compensation committee operates under a written charter adopted by the board, of directors, a copy of which is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
The initial compensation arrangements with the named executive officers were determined in negotiations with each individual executive officer and were formalized in the executive officers’ employment agreements, as described below in “Potential Payments Upon Termination or Change in Control—Employment Agreements.” In making compensation decisions for 2020,2021, the compensation committee evaluated the performance of our chief executive officer and, together with our chief executive officer, assessed the individual performance of the other named executive officers. The compensation committee also reviewed market-based compensation data provided by its independent compensation consultant, FPL Associates, L.P. (“FPL”),FPC, and from data publicly available from other sources such as the National Association of Real Estate Investment Trusts (“Nareit”).
Engagement of Compensation Consultant
The compensation committee is authorized to retain the services of one or more executive compensation consultants, in its discretion, to assist with the establishment and review of our compensation programs and related policies. The compensation committee has sole authority to hire, terminate and set the terms of any future engagement of FPLFPC or any other compensation consultant.
For compensation advice in 2020,2021, the compensation committee engaged FPL,FPC, an independent compensation consulting firm, to provide market-based compensation data to assist the committee in the implementation of our comprehensive executive compensation program. In connection with these efforts, FPLFPC prepared for the compensation committee reports that included compensation analyses for each executive position, an analysis of a recommended peer group for the company and a description of the methodology used to provide the compensation analyses. FPLFPC researched competitive market practices, reviewed the proxy statements of its recommended peer group and checked its own proprietary information data bases. The compensation committee reviewed the peer group compensation analyses and methodology provided to the company and approved the 20202021 executive compensation program.
Peer Groups
Our focus on single tenant industrial properties that represent relative value is uncommon, making the identification of directly comparable companies difficult. For the 20202021 performance units, FPLFPC recommended 12 publicly-traded REITs with diverse investment focuses and with implied equity market capitalizations roughly comparable to our equity market capitalization (the “size-based peer group”). The companies in the size-based peer group are listed below:
| | CoreSite Realty Corporation | | Lexington Realty Trust | | | Rexford Industrial Realty, Inc. | | |
| | EastGroup Properties, Inc. | | | Physicians Realty Trust | | | STORE Capital Corporation | |
| | EPR Propertes | | | PS Business Parks, Inc. | | | Terreno Realty Corporation | |
| | First Industrial Realty Trust, Inc. | |||||||
| QTS Realty Trust, Inc. | | | |
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For the 20202021 performance units, the compensation committee also used a group of eight companies that primarily own industrial and/or single-tenant real estate (the “industry peer group”). The companies in the industry peer group are listed below:
| | Duke Realty Corporation | | | Monmouth Real Estate Investment Corporation | |
| | EastGroup Properties, Inc. | | | PS Business Parks, Inc. | |
| | First Industrial Realty Trust, Inc. | | | Rexford Industrial Realty, Inc. | |
| | Lexington Realty Trust | | | Terreno Realty Corporation | |
For more information regarding how the compensation committee used both the size-based peer group and the industry peer group to determine the 20202021 performance units, see “—Equity Incentive Compensation Program—Performance Units.”
Key Elements of Executive Compensation
The key elements of our executive compensation program are designed to be flexible and complementary and to support, collectively, the goals and objectives of the compensation committee. The following table summarizes the key elements of our executive compensation program for the named executive officers and each element’s program objectives, including annual cash compensation and equity awards. A more detailed discussion of each element of our executive compensation program follows this table.We established our bonus performance metrics early in 2020, before the COVID-19 crisis, and we did not adjust those performance metrics or otherwise make changes to our executive compensation program in response to the unprecedented pandemic.
| Element | | | Description | | | Objectives | | | ||
| | | Annual Cash Compensation | | | ||||||
| | | Annual Base Salary | | | Fixed cash compensation. Reviewed and adjusted periodically. Annual base salaries for our executive officers are intended to be less than 25% of total compensation. |
| | • Attract and retain executives
• Provide steady source of income sufficient to permit executives to focus effectively on their professional responsibilities
• Help ensure that total cash compensation is competitive but not in excess of market | | |
| | | Annual Cash Incentive Bonus Program | | | “At risk” variable cash compensation based on company performance goals and individual performance goals. |
| | • Encourage executives to achieve annual company and individual performance goals
• Align executives’ interests with the stockholders’ interests | | |
| | | Equity Incentive Compensation Program | | | ||||||
| | | LTIP Units | | | Awards vest in equal installments over multi-year periods, subject to continued service. Value of the award is “at risk” since (i) the award may never have any liquidation value in the absence of sufficient stock price appreciation and (ii) the value fluctuates with the company’s common stock price. LTIP unit awards should generally constitute approximately 40% or less of total annual equity incentive compensation. |
| | • Promote long-term equity ownership by executives
• Encourage the retention of executives
• Align executives’ interests with the stockholders’ interests | | |
| | | Performance Units | | | “At risk” variable equity compensation based on company performance over three-year performance period. Awards are paid in common stock or LTIP units. Performance units should generally constitute approximately 60% or more of total annual equity incentive compensation. |
| | • Encourage executives to achieve long-term company performance goals
• Align executives’ interests with the stockholders’ interests
• Attract and retain executives | | |
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Annual Base Salary
Annual base salary provides a minimum level of compensation commensurate with an experienced and motivated individual of the appropriate caliber and background to perform an executive officer’s job. It should be benchmarked to current market rates to ensure that we are able to attract new executive officers, if necessary. Base salary levels are intended to provide a steady source of income sufficient to permit these officers to focus effectively on their professional responsibilities. Base salaries of the named executive officers are reviewed and may be adjusted periodically by the compensation committee. No formulaic base salary increases are provided to the named executive officers. The compensation committee has determined that executive officers’ salaries should generally constitute less than 25% of total annual compensation.
Annual Cash Incentive Bonus Program
The annual cash incentive bonus program is intended to compensate the named executive officers for achieving annual company performance goals and individual performance goals. The compensation committee believes that incentive cash compensation is central to the attainment of the executive compensation program’s objectives. Annual cash incentive bonuses encourage the named executive officers to achieve company performance goals, which fosters a performance-driven company culture that aligns the executives’ interests with the stockholders’ interests.
The annual cash incentive bonus program allows our executive officers to earn from 0% to either 150% or 187.5% (depending on the named executive officer) of base salary based on various pre-defined and pre-weighted annual company and individual performance goals established by the compensation committee (at least 80% of which are objective, calculable company performance measurements). Individual performance goals are assessed subjectively and are focused, depending on position, on matters such as process efficiencies, capital transactions, investor relations activities, rollover rent and retention results, achievement of department initiatives and others.
The table below provides a summary of our annual cash incentive bonus program, including the 20202021 performance goals and their relative weighting:
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Each performance goal was assigned a weighting relative to the other annual performance goals. Results between threshold and target or between target and maximum will be based on linear interpolation. Performance below threshold earns 0%, and performance above the maximum is capped at the maximum level (no additional amounts are paid for exceeding the maximum performance goal).The total annual cash incentive bonus earned by an executive officer is the sum of the weighted annual incentive amounts earned with respect to each goal. As discussed in more detail below under “—Company Performance Goals—Acquisition Volume,” the compensation committee did not adjust the 2020 performance goals in response to the unprecedented COVID-19 pandemic.
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Company Performance Goals
For 2020,2021, 80% of the annual cash incentive bonuses was based on the following company performance goals:
| | | Core FFO per Share | | | |||
| | | ![[MISSING IMAGE: tm223531d1-bc_coreffopn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-036721/tm223531d1-bc_coreffopn.jpg) | | | Why we use this measure: We believe that Core FFO, which excludes items that by their nature are not comparable from period to period and tend to obscure actual operating results, is useful to compare our operating performance over a given time period to that of other companies and other time periods in a consistent manner. 2021 performance: For 2021, our Core FFO per Share was $2.06, or 3.0% greater than the maximum Core FFO per Share goal. As a result, our chief executive officer earned 93.8 percentage points and the other named executive officers earned 75.0 percentage points under this component. | | |
| | | Acquisition Volume | | | |||
| | | ![[MISSING IMAGE: tm223531d1-bc_acquisitpn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-036721/tm223531d1-bc_acquisitpn.jpg) | | | Why we use this measure: We are a growth-oriented company, and much of our growth is external, from acquisitions. Moreover, a significant portion of our employees and resources are directed toward acquisitions. Accordingly, our annual Acquisition Volume measures one of our core operations. 2021 performance: For 2021, our Acquisition Volume was approximately $1.4 billion, or 14.4% greater than the maximum Acquisition Volume goal. As a result, our chief executive officer earned 18.8 percentage points and the other named executive officers earned 15.0 percentage points under this component. | | |
| | | Net Debt to Run Rate Adjusted EBITDAre | | | |||
| | | ![[MISSING IMAGE: tm223531d1-bc_netdebtpn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-036721/tm223531d1-bc_netdebtpn.jpg) | | | Why we use this measure: We believe Net Debt to Run Rate Adjusted EBITDAre is an important measurement of the strength of our balance sheet, the strength or riskiness of our earnings and our ability to withstand negative economic trends (such as a decrease in our stock price). 2021 performance: For 2021, our Net Debt to Run Rate Adjusted EBITDAre was 5.0x, or 2.5% better than the target Net Debt to Run Rate Adjusted EBITDAre goal. As a result, our chief executive officer earned 14.6 percentage points and the other named executive officers earned 11.7 percentage points under this component. | | |
FFO is a widely recognized measure of the performance of REITs. We calculate FFO in accordance with the standards established by Nareit. FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating buildings, impairment write-downs of depreciable real estate, real estate related depreciation and amortization (excluding amortization of deferred financing costs and fair market value of debt adjustment) and after adjustments for unconsolidated partnerships and joint ventures. “Core FFO” excludes transaction costs, amortization of above and below market leases, net, loss on extinguishment of debt, gain (loss) on involuntary conversion, gain (loss) on swap ineffectiveness, and non-recurring other expenses. We believe that Core FFO, which excludes items that by their nature are not comparable from period to period and tend to obscure actual operating results, is useful to compare our operating performance over a given time period to that of other companies and other time periods in a consistent manner.
With the 50% weighting of the Core FFO per Share component, our chief executive officer can earn between 31.3 percentage points (at the threshold level) and 93.8 percentage points (at the maximum level) and our other named executive officers can earn between 25.0 (at the threshold level) and 75.0 (at maximum level) under this performance goal component. As shown in the chart below, for 2020, our Core FFO per Share, assuming bonuses were paid at target levels, was $1.90, or 0.5% greater than the target Core FFO per Share goal. As a result, our chief executive officer earned 72.9 percentage points and the other named executive officers earned 58.3 percentage points under the Core FFO per Share performance goal component.
| | | Same Store Cash NOI Growth | | | |||
| | | ![[MISSING IMAGE: tm223531d1-bc_noigropn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-036721/tm223531d1-bc_noigropn.jpg) | | | Why we use this measure: Same Store Cash NOI Growth is a measurement of our internal growth and a primary measure for evaluating the core operating performance of our properties. Comparing Cash NOI on a “same store” basis (i.e., looking at the same set of stabilized properties over the applicable periods) allows for apples-to-apples comparisons. 2021 performance: For 2021, our Same Store Cash NOI Growth was 3.8%, or 26.7% greater than the maximum Same Store Cash NOI Growth goal. As a result, our chief executive officer earned 18.8 percentage points and the other named executive officers earned 15.0 percentage points under this component. | | |
See the table below under “—20202021 Company Performance Results” for more detail oninformation about the calculation.
Acquisition Volume
We are a growth-oriented company, and much of our growth is external, from acquisitions. Moreover, a significant portion of our employees and resources are directed toward acquisitions. Accordingly, our annual Acquisition Volume measures one of our core operations.
With the 10% weightingcalculation of the Acquisition Volume component, our chief executive officer can earn between 6.3 percentage points (at the threshold level) and 18.8 percentage points (at the maximum level) and our other named executive officers can earn between 5.0 (at the threshold level) and 15.0 (at maximum level)earned under thiseach company performance goal component. As shown in the chart below,Also, see Appendix A attached hereto for 2020, our Acquisition Volume was approximately $775.8 million, which was below the threshold Acquisition Volume goal. Due to the COVID-19 pandemic, related government shutdowns and other actions, the reactionsdefinitions of various market participants and the uncertainty of the
pandemic’s effects on pricing and leasing, for a full quarter of the year we were limited in our ability to source, underwrite and complete acquisitions. Despite this, we made significant efforts once acquisition market activity resumed that resulted in a near achievement of our Acquisition Volume goal. The compensation committee deliberated as to whether to adjust the Acquisition Volume goal in light of the challenges created by the COVID-19 pandemic, including whether to evaluate the metric on an annualized basis, which would have resulted in a payout under this performance component. Ultimately, the compensation committee concluded that maintaining the Acquisition Volume goal, as originally established, was appropriate. As a result, our named executive officers did not earn any percentage points under the Acquisition Volume performance goal component. See the table below under “—2020 Company Performance Results” for more detail on the calculation.
Core FFO, Net Debt, to Run Rate Adjusted EBITDAre
We define “Net Debt” as our total long-term indebtedness less cash and cash equivalents on hand. We define “EBITDAre” in accordance with the standards established by Nareit. EBITDAre represents net income (loss) (computed in accordance with GAAP) before interest income and expense, tax, depreciation and amortization, gains or losses on the sale of rental property, and loss on impairments. “Adjusted EBITDAre” further excludes transaction costs, termination income, solar income, revenue associated with one-time tenant reimbursements of capital expenditures, straight-line rent adjustments, non-cash compensation expense, amortization of above and below market leases, net, gain (loss) on involuntary conversion, loss on extinguishment of debt, and other non-recurring items. “Run Rate Adjusted EBITDAre” is Adjusted EBITDAre plus incremental Adjusted EBITDAre adjusted for a full period of acquisitions and dispositions. Run Rate Adjusted EBITDAre does not reflect our historical results and does not predict future results, which may be substantially different. We believe that EBITDAre, Adjusted EBITDAre and Run Rate Adjusted EBITDAre are helpful to investors as supplemental measures of the operating performance of a real estate company because they are direct measures of the actual operating results of our properties. We also use these measures in ratios to compare our performance to that of our industry peers, such as Net Debt to Run Rate Adjusted EBITDAre, which we view as an important measurement of the strength of our balance sheet, the strength or riskiness of our earnings and our ability to withstand negative economic trends such as a decrease in our stock price.
With the 10% weighting of the Net Debt to Run Rate Adjusted EBITDAre component, our chief executive officer can earn between 6.3 percentage points (at the threshold level) and 18.8 percentage points (at the maximum level) and our other named executive officers can earn between 5.0 (at the threshold level) and 15.0 (at maximum level) under this performance goal component. As shown in the chart below, for 2020, our Net Debt to Run Rate Adjusted EBITDAre was 4.6x, or 3.2% better than the maximum Net Debt to Run Rate Adjusted EBITDAre goal. As a result, our chief executive officer earned 18.8 percentage points and the other named executive officers earned 15.0 percentage points under the Net Debt to Run Rate Adjusted EBITDAre performance goal component. See the table below under “—2020 Company Performance Results” for more detail on the calculation.
Same Store Cash NOI GrowthNOI.
Same Store Cash NOI Growth is a measurement of our internal growth and a primary financial measure for evaluating the core operating performance of our properties. We define “NOI” as rental income, including reimbursements, less property expenses, which excludes depreciation, amortization, loss on impairments, general and administrative expenses, interest expense, interest income, transaction costs, gain (loss) on involuntary conversion, loss on extinguishment of debt, gain on sales of rental property, and other expenses. We define “Cash NOI” as NOI less straight-line rent adjustments and less intangible amortization of above and below market leases, net. We believe that NOI and Cash NOI are appropriate supplemental performance measures because they help investors and management understand the core operations of our buildings. Comparing Cash NOI on a “same store” basis (i.e., looking at the exact same set of stabilized properties over the periods being compared) allows for an apples-to-apples comparison. We also exclude lease termination fees, solar income and revenue associated with one-time tenant reimbursements of capital expenditures when calculating Cash NOI on a “same store” basis.
With the 10% weighting of the Same Store Cash NOI Growth component, our chief executive officer can earn between 6.3 percentage points (at the threshold level) and 18.8 percentage points (at the maximum level) and our other named executive officers can earn between 5.0 (at the threshold level) and 15.0 (at maximum level) under this performance goal component. As shown in the chart below, for 2020, our Same Store Cash NOI Growth was 1.7%, or 13.3% greater than the target Same Store Cash NOI Growth goal. As a result, our chief executive officer earned 15.0 percentage points and the other named executive officers earned 12.0 percentage points under the Same Store Cash NOI Growth performance goal component. See the table below under “—2020
2021 Company Performance Results” for more detail on the calculation.
2020 Company Performance Results
In January 2021,2022, the compensation committee evaluated our performance against the company performance goals, which are set forth in the table below.
Performance Metrics (Weighting) | Percentage Points Available | Performance Goals | Percentage Points (CEO / Other NEOs) | ||||||||||||
Threshold | Target (CEO / Other | Maximum | Threshold | Target | Maximum | ||||||||||
Core FFO per Share (50%) | 31.3 / 25.0 | 62.5 / 50.0 | 93.8 / 75.0 | $1.86 | $1.89 | $1.92 | 72.9 / 58.3 (33rd percentile between target and maximum)
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Actual $1.90 | |||||||||||||||
Acquisition Volume (10%) | 6.3 / 5.0 | 12.5 / 10.0 | 18.8 / 15.0 | $800 million | $900 million | $1 billion | 0.0 / 0.0 (below threshold) | ||||||||
Actual $775.8 million
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Net Debt to Run Rate Adjusted EBITDAre (10%) | 6.3 / 5.0 | 12.5 / 10.0 | 18.8 / 15.0 | 6.00x | 5.38x | 4.75x | 18.8 / 15.0 (above maximum) | ||||||||
Actual 4.60x
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Same Store Cash NOI Growth (10%) | 6.3 / 5.0 | 12.5 / 10.0 | 18.8 / 15.0 | 1.0% | 1.5% | 2.0% | 15.0 / 12.0 (40th percentile between target and maximum) | ||||||||
Actual 1.70% | |||||||||||||||
| Total Percentage Points Earned (CEO / Other NEOs): | 106.7 / 85.3 | ||||||||||||||
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Individual Performance Goals
For 2020,2021, 20% of the annual cash incentive bonuses was based on the compensation committee’s (and the chief executive officer’s with respect to the other named executive officers) assessment of the following individual goals and contributions:
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with respect to Mr. Butcher, our overall success, achievement of strategic objectives, including our sustainability and other ESG initiatives, and succession planning, including talent development;
•
with respect to Mr. Crooker, acquisition activity, our balance sheet (including equity and debt transactions) and financial covenants, investor relations matters, accounting accuracy and compliance with the requirements of the Sarbanes-Oxley Act of 2002, and achievement of department initiatives, as well as performance in the contextassumption and execution of additional responsibilities as president;
•
with respect to Mr. Mecke, data and process efficiencies, information (cyber) security, achievement of department initiatives (including sustainability initiatives) and assumption of direct management responsibility of asset management; and
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with respect to Mr. Sullivan, scalability of the COVID-19 pandemic:
legal and credit departments balanced against responsiveness to asset management and acquisitions, corporate governance developments (including succession matters), capital markets transactions and the achievement of department initiatives.
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