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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
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Fee paid previously with preliminary materials.
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Jennifer F. Francis
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David A. Pierce
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John L. Harrington
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Adam D. Portnoy
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Lisa Harris Jones
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Jeffrey P. Somers
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| | | | Daniel F. LePage | | | | |
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Location:
Live Webcast Accessible at
https://www.viewproxy.com/ DiversifiedHealthcareTrust/ 2022
Date:
Thursday, June 2, 2022
Time:
9:30 a.m., Eastern time
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Agenda:
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Elect the Trustee nominees identified in the accompanying Proxy Statement to our Board of Trustees;
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Advisory vote to approve executive compensation;
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Approve the Amended and Restated 2012 Equity Compensation Plan;
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Ratify the appointment of Deloitte & Touche LLP as our independent auditors to serve for the 2022 fiscal year; and
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Transact such other business as may properly come before the meeting and at any postponements or adjournments of the meeting.
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Record Date: You can vote if you were a shareholder of record as of the close of business on March 22, 2022.
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Attending Our 2022 Annual Meeting: Due to the continuing public health impact of the COVID-19 pandemic and to protect the health and well-being of our shareholders and other stakeholders, our 2022 Annual Meeting will be a completely virtual meeting of shareholders which will be conducted exclusively by webcast. No physical meeting will be held.
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Record Owners: If you are a shareholder as of the close of business on the record date who holds shares directly, you may participate in our 2022 Annual Meeting via internet webcast by visiting the following website and following the registration and participation instructions contained therein: https://www.viewproxy.com/DiversifiedHealthcareTrust/2022. Please have the control number located on your proxy card or voting information form available.
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Beneficial Owners: If you are a shareholder as of the record date who holds shares indirectly through a brokerage firm, bank or other nominee, you must register in advance to attend our 2022 Annual Meeting. You will need to present evidence of your beneficial ownership of shares. You will not be able to vote your shares at our 2022 Annual Meeting without a legal proxy. Beneficial owners should complete the registration process at least three days in advance of our 2022 Annual Meeting to ensure that all documentation and verifications are in order.
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Please see the accompanying Proxy Statement for additional information.
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By Order of our Board of Trustees,
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Jennifer B. Clark
Secretary
March 29, 2022
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR OUR
2022 ANNUAL MEETING TO BE HELD ON THURSDAY, JUNE 2, 2022. |
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The Notice of 2022 Annual Meeting, Proxy Statement and Annual Report to Shareholders for the fiscal year ended December 31, 2021 are available at www.proxyvote.com.
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PROPOSAL
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MORE
INFORMATION |
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BOARD
RECOMMENDATION |
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VOTES REQUIRED
FOR APPROVAL |
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1
Election of Trustees
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Page 22
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✓ FOR
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Plurality of all
votes cast* |
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2
Advisory vote to approve executive compensation**
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Page 38
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✓ FOR
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Majority of all
votes cast |
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3
Approval of the Amended and Restated 2012 Equity Compensation Plan
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Page 48
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✓ FOR
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Majority of all
votes cast |
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4
Ratification of independent auditors**
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Page 52
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✓ FOR
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Majority of all
votes cast |
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via the internet
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Visit www.proxyvote.com and enter your 16 digit control number provided in your Notice Regarding the Availability of Proxy Materials, proxy card or voting instruction form before 11:59 p.m., Eastern time, on June 1, 2022 to authorize a proxy VIA THE INTERNET.
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by phone
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Call 1-800-690-6903 if you are a shareholder of record and 1-800-454-8683 if you are a beneficial owner before 11:59 p.m., Eastern time, on June 1, 2022 to authorize a proxy BY TELEPHONE. You will need the 16 digit control number provided on your Notice Regarding the Availability of Proxy Materials, proxy card or voting instruction form.
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by mail
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Sign, date and return your proxy card if you are a shareholder of record or voting instruction form if you are a beneficial owner to authorize a proxy BY MAIL.
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2022 Proxy Statement
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1
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PROPOSAL
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BOARD
RECOMMENDATION |
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VOTES REQUIRED
FOR APPROVAL |
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1
Election of Trustees
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✓ FOR
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Plurality of all
votes cast* |
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2
Advisory vote to approve executive compensation**
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✓ FOR
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Majority of all
votes cast |
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3
Approval of the Amended and Restated 2012 Equity Compensation Plan
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✓ FOR
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Majority of all
votes cast |
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4
Ratification of independent auditors**
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✓ FOR
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Majority of all
votes cast |
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2
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2022 Proxy Statement
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NAME OF TRUSTEES
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INDEPENDENT
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COMMITTEE MEMBERSHIP
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Jennifer F. Francis | | | | | | None | |
John L. Harrington | | |
✓
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Audit
Compensation
Nominating and Governance (Chair)
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Lisa Harris Jones | | |
✓
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Audit
Compensation
Nominating and Governance
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Daniel F. LePage | | |
✓
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Audit (Chair)
Compensation
Nominating and Governance
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David A. Pierce | | |
✓
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Adam D. Portnoy | | | | | | None | |
Jeffrey P. Somers | | |
✓
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Audit
Compensation (Chair)
Nominating and Governance
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2022 Proxy Statement
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2022 Proxy Statement
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ISG Principle
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Our Practice
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Principle 1:
Boards are accountable to shareholders.
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We amended our Declaration of Trust to declassify our Board. Beginning in 2023, all of our Trustees will stand for election annually.
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We adopted a proxy access bylaw.
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We have a resignation policy pursuant to which an incumbent Trustee who fails to receive a majority of votes cast in an uncontested election will offer to resign from our Board and, in such circumstance, our Board will decide whether to accept or reject the resignation offer.
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Principle 2:
Shareholders should be entitled to voting rights in proportion to their economic interest.
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We do not have a dual class structure; each shareholder gets one vote per share.
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Principle 3:
Boards should be responsive to shareholders and be proactive in order to understand their perspectives.
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In 2021, our proactive shareholder outreach extended to all of our shareholders who hold 1% or more of our Common Shares. We had active engagements with shareholders owning 37.33% of our Common Shares.
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Our engagement topics included the impact of the COVID-19 pandemic on our business, governance reform priorities, sustainability and social strategy, Board composition, leadership and refreshment, succession planning and executive compensation program disclosure.
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Principle 4:
Boards should have a strong, independent leadership structure.
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We have a Lead Independent Trustee with clearly defined duties and robust responsibilities that are disclosed to shareholders.
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Our Board considers the appropriateness of its leadership structure at least annually.
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We have strong Independent Committee Chairs.
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2022 Proxy Statement
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ISG Principle
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Our Practice
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Principle 5:
Boards should adopt structures and practices that enhance their effectiveness.
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71.4% of Board members are independent.
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Our Board includes members of underrepresented communities and is comprised of 28.6% women and 14.3% African American.
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We have an active Board refreshment plan, including an ongoing engagement with an executive search and consulting firm to identify and evaluate candidates to expand and refresh our Board; four new Board members have joined our Board in the last five years.
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Our Trustees then in office attended at least 75% of all Board and applicable committee meetings in 2021, and each of our Trustees then in office attended the 2021 annual meeting of shareholders.
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Principle 6:
Boards should develop management incentive structures that are aligned with the long term strategy of the company.
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Our Compensation Committee annually reviews and approves incentive compensation program design, goals and objectives for alignment with compensation and business strategies.
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Although we do not pay any cash compensation directly to our officers and have no employees, we have adopted the 2012 Equity Compensation Plan (the “Share Award Plan”) to reward our named executive officers and other employees of RMR who provide services to us and to align their interests with those of our shareholders.
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RMR’s compensation is tied to our performance.
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2022 Proxy Statement
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2022 Proxy Statement
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2022 Proxy Statement
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2022 Proxy Statement
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Oversight of Strategy
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Oversight of Risk
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Succession Planning
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✓
Our Board oversees and monitors strategic planning.
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Business strategy is a key focus of our Board and embedded in the work of Board committees.
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Company management is charged with executing business strategy and provides regular performance updates to our Board.
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Our Board oversees risk management.
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Board committees, which meet regularly and report back to our full Board, play significant roles in carrying out the risk oversight function.
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Company management is charged with managing risk, through robust internal processes and effective internal controls.
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✓
Our Board oversees succession planning and talent development for senior executive positions.
✓
Our Nominating and Governance Committee makes an annual report to our Board on succession planning.
✓
In the event of a succession, our entire Board may work with our Nominating and Governance Committee, or the Independent Trustees, as applicable, to nominate and evaluate potential successors.
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2022 Proxy Statement
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2022 Proxy Statement
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2022 Proxy Statement
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DIVERSITY OF SKILLS AND EXPERIENCES
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Risk oversight/management expertise
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Familiarity with the public capital markets
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Accounting and finance, including a high level of financial literacy and understanding of the impact of financial market trends on the real estate industry
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Knowledge of the asset management industry, commercial real estate (“CRE”) industry and real estate investment trusts (“REITs”), including medical office, life sciences and senior living markets
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Corporate Governance
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Understanding of healthcare policy, trends and regulations, and medical office, life science and healthcare business trends
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Sustainability
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Service on other public company boards and committees
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Experience at a strategic or policymaking level
in a business, government, non-profit or academic organization of high standing |
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CORE QUALIFICATIONS AND EXPERIENCES
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High standards of integrity and ethics
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Diverse perspectives, backgrounds and experiences, including professional background, gender, ethnicity and skills
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Business acumen, practical wisdom, ability to exercise sound judgment in a congenial manner and ability to make independent analytical inquiries
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Commitment to serve on our Board over a period of years in order to develop knowledge about our operations and have sufficient time and availability to devote to Board and committee matters
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Strong record of achievements, including work
experience with a proven record of success |
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2022 Proxy Statement
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Total Number of Trustees
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7
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Part I: Gender Identity
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Female
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Male
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Non-Binary
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Did Not Disclose
Gender |
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| | Trustees | | | |
2
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5
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| | Part II: Demographic Background | | | | | | | | | | | | | | | | | | |
| | African American or Black | | | |
1
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| | Native Hawaiian or Pacific Islander | | | |
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| | White | | | |
1
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5
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—
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—
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| | LGBTQ+ | | | | | | | | | | | |
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| | Did Not Disclose Demographic Background | | | | | | | | | | | |
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2022 Proxy Statement
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2022 Proxy Statement
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Jennifer F. Francis
Age: 57
Managing Trustee since 2021
Chief Executive Officer since 2021
President since 2018
Term: Annual term expiring at our 2022 Annual Meeting
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Board Committees: None
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Other RMR Managed Public Company Boards(1): None
Other Non-RMR Managed Public Company Boards: None
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Ms. Francis previously served as our Chief Operating Officer from 2018 until 2021, when she was elected as our Chief Executive Officer. Ms. Francis joined RMR in 2006 and became a senior vice president of RMR in 2014 and an executive vice president of RMR in 2020. Ms. Francis is responsible for the asset management division of RMR, which includes asset management and leasing activities at all RMR managed properties as well as asset management for the senior living and hotel properties owned by RMR’s managed REITs. Prior to joining RMR, Ms. Francis was a partner at CBRE/NE Partners, where she performed brokerage and corporate advisory services for a number of large corporate clients on their national commercial real estate portfolios. Previously, Ms. Francis was a vice president at The Gunwyn Company where she was responsible for the asset management of a portfolio of commercial, retail and residential assets. Ms. Francis has over 30 years of experience working in the commercial real estate industry. She is on the executive board of the American Seniors Housing Association (ASHA), a member of the National Association of Industrial and Office Properties (NAIOP), a member of the Commercial Real Estate Women (CREW) and a member of the Nareit Advisory Board of Governors.
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Specific Qualifications, Attributes, Skills and Experience:
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Leadership position with RMR and demonstrated management ability
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Extensive experience in, and knowledge of, the CRE industry and REITs
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Institutional knowledge earned through prior service as an officer of our Company and in leadership positions with RMR
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Professional skills and expertise in real estate matters and experience as a senior level executive officer
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Identifies as a Caucasian and as female
•
Qualifying as a Managing Trustee in accordance with the requirements of our governing documents
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2022 Proxy Statement
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John L. Harrington
Age: 85
Independent Trustee since 1999
Term: Annual term expiring at our 2022 Annual Meeting
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Board Committees:
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Audit
•
Compensation
•
Nominating and Governance (Chair)
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Other RMR Managed Public Company Boards(1):
•
Service Properties Trust (since 1995)
•
Office Properties Income Trust (since 2009)
Other Non-RMR Managed Public
Company Boards: None
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Mr. Harrington has been chairman of the board of trustees of the Yawkey Foundation (a charitable foundation) since 2007 and prior to that from 2002 to 2003. He served as a trustee of the Yawkey Foundation since 1982 and as executive director from 1982 to 2006. He was also a trustee of the JRY Trust from 1982 through 2009. Mr. Harrington was chief executive officer and general partner of the Boston Red Sox Baseball Club from 1986 to 2002 and served as that organization’s vice president and chief financial officer prior to that time. Mr. Harrington was an independent trustee of RMR Mortgage Trust (and its predecessors) from 2003 to 2021 and of Tremont Mortgage Trust from 2017 to 2021. He was president of Boston Trust Management Corp. from 1981 to 2006 and a principal of Bingham McCutchen Sports Consulting LLC from 2007 to 2008. Mr. Harrington represented the Boston Red Sox majority interest in co-founding The New England Sports Network, managing it from 1981 to 2002. Mr. Harrington served as a director of Fleet Bank from 1995 to 1999 and of Shawmut Bank of Boston from 1986 to 1995, a member of the Major League Baseball Executive Council from 1998 to 2001, assistant secretary of administration and finance for the Commonwealth of Massachusetts in 1980, treasurer of the American League of Professional Baseball Clubs from 1970 to 1972, assistant professor and director of admissions, Carroll Graduate School of Management at Boston College from 1967 through 1970 and as supervisory auditor for the U.S. General Accounting Office from 1961 through 1966. He was an independent trustee of RMR Funds Series Trust from shortly after its formation in 2007 until its dissolution in 2009. Mr. Harrington has held many civic leadership positions and received numerous leadership awards and honorary doctorate degrees. Mr. Harrington holds a Massachusetts license as a certified public accountant.
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Specific Qualifications, Attributes, Skills and Experience:
•
Demonstrated leadership capability
•
Work on public company boards and board committees and in key management roles in various enterprises
•
Service on the boards of several private and charitable organizations
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Professional skills and expertise in accounting, finance and risk management and experience as a chief executive officer and chief financial officer
•
Expertise in compensation and benefits matters
•
Institutional knowledge earned through prior service on our Board
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Identifies as Caucasian and as male
•
Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing documents
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2022 Proxy Statement
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Lisa Harris Jones
Age: 54
Independent Trustee since 2015
Lead Independent Trustee since December 2018
Term: Annual term expiring at our 2022 Annual Meeting
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Board Committees:
•
Audit
•
Compensation
•
Nominating and Governance
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Other RMR Managed Public Company Boards(1):
•
TravelCenters of America Inc. (since 2013)
•
Industrial Logistics Properties Trust (since 2018)
Other Non-RMR Managed Public
Company Boards: None
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Ms. Harris Jones is the founding and managing member of Harris Jones & Malone, LLC (HJM), a Maryland based law firm that focuses on state and local lobbying, government relations and procurement. Ms. Harris Jones’s practice includes representation of small and large business enterprises, both publicly and privately held, municipalities and related quasi-public agencies, and nonprofit organizations. Ms. Harris Jones represents clients on a wide range of business interests’ concerns including, but not limited to, public and private real estate development, land use zoning and financing, construction, energy, retail sales, education, transportation, public safety, healthcare, gaming, telecommunications, intellectual technology, procurement, corporate, taxation, labor and employment, insurance, public interest, election, and environmental law. Prior to founding HJM, Ms. Harris Jones was associated with other Maryland law firms where she practiced corporate securities, mergers and acquisitions, government relations, real estate financing and land use law. Ms. Harris Jones has dedicated a great deal of her time and resources to matters of public interest. She has worked in a pro bono capacity for dyslexia education, community development in Baltimore City’s most challenging areas, and the advancement of minority and women business enterprises. In addition, she has served in leadership positions on several non-profit boards including the Baltimore Museum of Art and Everyman Theatre. Ms. Harris Jones has been recognized for both her professional and civic work by multiple entities including Savoy Magazine where she gained national recognition by being named one of the Most Influential Black Corporate Directors.
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Specific Qualifications, Attributes, Skills and Experience:
•
Professional skills and experience in legal and business finance matters
•
Experience in public policy matters
•
Experience in real estate matters
•
Demonstrated leadership capability as an entrepreneur and founding member of a law firm
•
Work on public company boards and board committees
•
Institutional knowledge earned through prior service on our Board
•
Identifies as African American and as female
•
Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing documents
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Adam D. Portnoy
Age: 51
Managing Trustee since 2007
Chair of our Board since 2019
Term: Term expiring at our 2022 Annual Meeting
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Board Committees: None
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Other RMR Managed Public Company Boards(1):
•
Service Properties Trust (since 2007)
•
Office Properties Income Trust (since 2009)
•
Seven Hills Realty Trust (formerly known as RMR Mortgage Trust) (including its predecessor companies, since 2009)
•
The RMR Group Inc. (since 2015)
•
Industrial Logistics Properties Trust (since 2017)
•
AlerisLife Inc. (since 2018)
•
TravelCenters of America Inc. (since 2018)
Other Non-RMR Managed Public
Company Boards: None
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Mr. Portnoy has been president and chief executive officer of RMR Inc. since shortly after its formation in 2015. Mr. Portnoy has been president and chief executive officer of RMR since 2005 and was a director of RMR from 2006 until June 5, 2015 when RMR became a majority owned subsidiary of RMR Inc. and RMR Inc. became RMR’s managing member. Mr. Portnoy has been a director of Tremont Realty Capital LLC (formerly known as Tremont Realty Advisors LLC) since March 2016, and served as its president and chief executive officer from March 2016 through December 2017. Mr. Portnoy is the sole trustee and controlling shareholder and an officer of ABP Trust. Mr. Portnoy is a director and controlling shareholder of Sonesta International Hotels Corporation and its parent. Mr. Portnoy served as a director of RMR Advisors LLC from 2007 to 2021 when it merged with Tremont Realty Capital LLC, and he served as its president from 2007 to 2017 and its chief executive officer from 2015 to 2017. Mr. Portnoy served as president and chief executive officer of Seven Hills Realty Trust (then known as RMR Real Estate Income Fund) from 2007 to 2015 and as president of Office Properties Income Trust from 2009 to 2011. Mr. Portnoy was a managing trustee of Tremont Mortgage Trust from 2017 until it merged with Seven Hills Realty Trust in September 2021 and of Select Income REIT from 2011 until it merged with a wholly owned subsidiary of Office Properties Income Trust in December 2018. Prior to joining RMR in 2003, Mr. Portnoy held various positions in the finance industry and public sector, including working as an investment banker at Donaldson, Lufkin & Jenrette and working in private equity at DLJ Merchant Banking Partners and at the International Finance Corporation (a member of The World Bank Group). In addition, Mr. Portnoy previously founded and served as chief executive officer of a privately financed telecommunications company. Mr. Portnoy currently serves as the Honorary Consul General of the Republic of Bulgaria to Massachusetts, as chair of the board of directors of the Pioneer Institute, as a member of the executive committee of the board of directors of the Greater Boston Chamber of Commerce and as a member of AJC New England’s Leadership Board, and previously served on the board of governors for the National Association of Real Estate Investment Trusts and the board of trustees of Occidental College.
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Specific Qualifications, Attributes, Skills and Experience:
•
Extensive experience in, and knowledge of, the CRE industry and REITs
•
Leadership position with RMR and demonstrated management ability
•
Public company trustee and director service
•
Experience in investment banking and private equity
•
Experience in starting a telecommunications company and serving as its senior executive
•
Institutional knowledge earned through prior service on our Board and in leadership positions with RMR
•
Identifies as Caucasian and as male
•
Qualifying as a Managing Trustee in accordance with the requirements of our governing documents
Our Nominating and Governance Committee and our Board believe that, because Mr. Portnoy is the president and chief executive officer of RMR and the business of all the companies (including our Company) for which he serves as a managing trustee or managing director is integral to his day to day work, service on these additional boards does not impair the amount of attention or time that Mr. Portnoy spends on service on our Board. Our Board believes that Mr. Portnoy’s extensive familiarity with our day to day business provides valuable insight for our Board.
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2022 Proxy Statement
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Daniel F. LePage
Age: 67
Independent Trustee since 2020
Term: Term expiring at our 2023 annual meeting
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Board Committees:
•
Audit (Chair)
•
Compensation
•
Nominating and Governance
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Other RMR Managed Public Company Boards(1): None
Other Non-RMR Managed Public Company Boards: None
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Mr. LePage is the founder and managing partner of DFL Capital LLC, a New York based real estate investment firm formed in April 2019. He was a managing director and head of the U.S. real estate corporate banking group at RBC Capital Markets from 2006 to 2019. Prior to his involvement with RBC Capital Markets and its affiliates, Mr. LePage held senior leadership positions in commercial real estate lending at Emigrant Savings Bank and Citigroup, Inc. Mr. LePage serves on the board of the National Eating Disorders Association, a non-profit organization supporting individuals and families affected by eating disorders, and is a member of Urban Land Institute. He is a Chartered Financial Analyst and a member of the CFA Institute.
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Specific Qualifications, Attributes, Skills and Experience:
•
Professional skills and experience in business finance matters
•
Experience in and knowledge of capital markets
•
Demonstrated leadership and management abilities
•
Experience in real estate matters
•
Experience in capital raising and strategic business transactions
•
Identifies as a Caucasian and as male
•
Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing documents
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David A. Pierce
Age: 59
Independent Trustee since 2022
Term: Term expiring at our 2023 annual meeting
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Board Committees: None
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Other RMR Managed Public Company Boards(1): None
Other Non-RMR Managed Public Company Boards: None
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Mr. Pierce has served in various capacities at Boston Scientific Corporation since 1991. Since 2018 he has served as the Executive Vice President and President, MedSurg and since 2020 as President, Endoscopy for Boston Scientific Corporation. Prior to that time from 2016 until 2018, he was a Senior Vice President and President of the Urology Division and from 2010 until 2016, he was the Senior Vice President and President of the Endoscopy Division. Mr. Pierce has served as a director of the Medical Device Manufacturers Association since 2014. Mr. Pierce has served as a director of MassMedic since 2020, and as a trustee of Norwich University since 2020. Mr. Pierce served as the strategic advisory board chair of the American Gastroenterology Association Center for GI Innovation from 2014 until 2016, and as a director of the American Society of Gastrointestinal Endoscopy Foundation from 2011 until 2012. Mr. Pierce served in the United States Army from 1985 until 1989, serving in multiple line and staff positions, providing transportation and logistics management, attaining the rank of Captain.
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Specific Qualifications, Attributes, Skills and Experience:
•
Professional skills and experience in business matters
•
Knowledge and experience in the healthcare industry
•
Demonstrated leadership and management abilities
•
Experience as operator of healthcare business units
•
Identifies as Caucasian and as male
•
Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing documents
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2022 Proxy Statement
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Jeffrey P. Somers
Age: 79
Independent Trustee since 2009
Lead Independent Trustee from 2015 – 2018
Term: Term expiring at our 2023 annual meeting
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Board Committees:
Board Committees:
•
Audit
•
Compensation (Chair)
•
Nominating and Governance
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Other RMR Managed Public Company Boards(1):
•
Office Properties Income Trust (since 2009)
•
Seven Hills Realty Trust including its predecessor companies (since 2009)
Other Non-RMR Managed Public
Company Boards: None
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Mr. Somers has been, since 2010, of counsel to, and from 1995 to 2009, was a member, and for six of those years the managing member, of the law firm of Morse, Barnes-Brown & Pendleton, PC. Prior to that time, he was a partner for more than 20 years at the law firm of Gadsby Hannah LLP (now McCarter & English, LLP) and for eight of those years was managing partner of the firm. Mr. Somers served as an independent trustee of Tremont Mortgage Trust from 2017 to 2020 and of Select Income REIT from 2012 until it merged with a wholly owned subsidiary of Office Properties Income Trust in December 2018. Mr. Somers served as a director of Cantella Management Corp., a holding company of Cantella & Co., Inc., an SEC registered broker-dealer, from 2002 until January 2014, when the company was acquired by a third party. From 1995 to 2001, he served as a trustee of the Pictet Funds. Before entering private law practice, Mr. Somers was a staff attorney at the SEC in Washington, D.C. He previously served as a trustee of Glover Hospital, a private not for profit regional hospital, which is currently part of Beth Israel Deaconess Hospital, among various other civic leadership roles.
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Specific Qualifications, Attributes, Skills and Experience:
•
Expertise in legal, corporate governance and regulatory matters
•
Leadership role as a law firm managing member
•
Experience as a hospital trustee, including guiding the hospital’s sale process
•
Service as a trustee of public REITs and investment companies
•
Service with government and extensive experience in public policy matters and complex business transactions
•
Sophisticated understanding of finance and accounting matters
•
Work on public company boards and board committees
•
Institutional knowledge earned through prior service on our Board
•
Identifies as Caucasian and as male
•
Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing documents
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Jennifer F. Francis
Age: 57
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Chief Executive Officer since 2021 and President since 2018
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Ms. Francis’s background and qualifications are described above.
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Richard W. Siedel, Jr.
Age: 42
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Chief Financial Officer and Treasurer since 2016
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Mr. Siedel has been a senior vice president of RMR since 2016 and was a vice president of RMR prior to then in 2016. Mr. Siedel has been chief financial officer and treasurer of Industrial Logistics Properties Trust since 2018. Mr. Siedel was chief accounting officer of AlerisLife Inc. from 2014 through 2015, and he previously served as controller of RMR from 2013 to 2014. Mr. Siedel’s former experience also includes various accounting leadership positions, including corporate controller at Sensata Technologies (NYSE: ST) from 2010 to 2013 and an auditor at Ernst & Young LLP from 2001 to 2010. Mr. Siedel identifies as Caucasian and as male.
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2022 Proxy Statement
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Members
Daniel F. LePage (Chair)
John L. Harrington Lisa Harris Jones Jeffrey P. Somers
8 meetings during 2021
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Our Audit Committee is comprised solely of Independent Trustees. Its primary role is to help our Board fulfill its oversight responsibilities related to the integrity of our financial statements and financial reporting process, the qualifications, independence and performance of our independent registered public accounting firm, the performance of our internal audit function, risk management and our compliance with legal and regulatory requirements. Our Audit Committee is responsible for the appointment, compensation, retention and oversight, and the evaluation of the qualifications, performance and independence, of our independent auditor and the resolution of disagreements between management and our independent auditor. Our independent auditor reports directly to our Audit Committee. Our Audit Committee also has final authority and responsibility for the appointment and assignment of duties to our Director of Internal Audit. Our Audit Committee reviews the overall audit scope and plans of the audit with our independent auditor. Our Audit Committee also reviews with management and our independent auditors our quarterly reports on Form 10-Q, annual reports on Form 10-K and earnings releases.
Our Board has determined that each member of our Audit Committee is financially literate and that Mr. Harrington is our Audit Committee’s “financial expert.”
Mr. Harrington served as Chair of our Audit Committee until June 3, 2021, and since then, Mr. LePage has served as Chair of our Audit Committee.
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Members
Jeffrey P. Somers (Chair)
John L. Harrington Lisa Harris Jones Daniel F. LePage
5 meetings during 2021
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| | Our Compensation Committee is comprised solely of Independent Trustees. Its primary responsibilities pertain to evaluating the performance and compensation of RMR, our executive officers and our Director of Internal Audit, evaluating and approving any changes in our agreements with RMR and approving equity compensation awards. Our Compensation Committee recommends to our Board the cash compensation payable to our Trustees for Board and committee service. Our Compensation Committee determines and approves the equity based compensation payable to our Trustees for Board and committee service, and any compensation payable to the Lead Independent Trustee in his, her or their capacity as such. Our Compensation Committee administers our Share Award Plan and determines all awards granted pursuant to the Share Award Plan. It also reviews amounts payable by us to RMR under our business and property management agreements and approves any proposed amendments to or termination of those agreements. | |
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Members
John L. Harrington (Chair)
Lisa Harris Jones Daniel F. LePage Jeffrey P. Somers
1 meeting during 2021
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Our Nominating and Governance Committee is comprised solely of Independent Trustees. Its primary role is to identify individuals qualified to become Board members, consistent with criteria approved by our Board, and to recommend candidates to our entire Board for nomination or selection as Board members for each annual meeting of shareholders or when vacancies occur, to perform certain assessments of our Board and Board committees, including to assess the independence of Trustees and Trustee nominees, and to develop and recommend to our Board governance principles for our Company. Under its charter, our Nominating and Governance Committee is also responsible for considering and reporting on our succession planning to our Board.
Ms. Harris Jones served as Chair of our Nominating and Governance Committee until June 3, 2021, and since then, Mr. Harrington has served as Chair of our Nominating and Governance Committee.
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2022 Proxy Statement
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34
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2022 Proxy Statement
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Name
|
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Fees Earned or Paid
in Cash ($)(2) |
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Stock Awards ($)(3)
|
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All Other
Compensation ($) |
| |
Total ($)
|
| ||||||||||||
Jennifer B. Clark(4)(5) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Jennifer F. Francis(4) | | | | | — | | | | | | 74,000 | | | | | | — | | | | | | 74,000 | | |
John L. Harrington | | | | | 87,500 | | | | | | 74,000 | | | | | | — | | | | | | 161,500 | | |
Lisa Harris Jones | | | | | 90,000 | | | | | | 74,000 | | | | | | — | | | | | | 164,000 | | |
Daniel F. LePage | | | | | 92,500 | | | | | | 74,000 | | | | | | — | | | | | | 166,500 | | |
Adam D. Portnoy(4) | | | | | — | | | | | | 74,000 | | | | | | — | | | | | | 74,000 | | |
Jeffrey P. Somers | | | | | 87,500 | | | | | | 74,000 | | | | | | — | | | | | | 161,500 | | |
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2022 Proxy Statement
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Name and Address
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Aggregate
Number of Shares Beneficially Owned* |
| |
Percent of
Outstanding Shares** |
| |
Additional Information
|
| |||
Adam D. Portnoy | | | | | 2,724,392 | | | |
1.14%
|
| |
Includes 2,550,019 Common Shares
owned by ABP Trust. Voting and investment power with respect to Common Shares owned by ABP Trust may be deemed to be shared by Adam D. Portnoy as ABP Trust’s sole trustee. |
|
Jennifer F. Francis | | | | | 123,944 | | | |
Less than 1%
|
| | | |
John L. Harrington | | | | | 20,000 | | | |
Less than 1%
|
| | Includes 20,000 Common Shares owned by the John L. Harrington Revocable Trust. Mr. Harrington may be deemed to hold voting and investment power as a trustee and beneficiary of the John L. Harrington Revocable Trust. | |
Jeffrey P. Somers | | | | | 58,500 | | | |
Less than 1%
|
| | | |
Richard W. Siedel Jr. | | | | | 63,306 | | | |
Less than 1%
|
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Lisa Harris Jones | | | | | 47,632 | | | |
Less than 1%
|
| | | |
Daniel F. LePage | | | | | 30,322 | | | |
Less than 1%
|
| | | |
David A. Pierce | | | | | — | | | |
Less than 1%
|
| | | |
All Trustees, the Trustee nominees and named executive officers as a group (eight persons) | | | | | 3,068,096 | | | |
1.28%
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2022 Proxy Statement
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Name and Address
|
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Aggregate
Number of Shares Beneficially Owned* |
| |
Percent of
Outstanding Shares** |
| |
Additional Information
|
| ||||||
BlackRock, Inc. (“BlackRock”)
55 East 52nd Street New York, New York 10055 |
| | | | 44,904,470 | | | | | | 18.79% | | | |
Based on a Schedule 13G/A filed with the SEC
on January 27, 2022 by BlackRock reporting that, at December 31, 2021, BlackRock beneficially owned 44,904,470 Common Shares and had sole voting power over 43,073,828 Common Shares and sole dispositive power over 44,904,470 Common Shares. |
|
The Vanguard Group, Inc. (“Vanguard”)
100 Vanguard Boulevard Malvern, Pennsylvania 19355 |
| | | | 38,695,697 | | | | | | 16.19% | | | |
Based on a Schedule 13G/A filed with the SEC
on February 9, 2022 by Vanguard reporting that, at December 31, 2021, Vanguard beneficially owned 38,695,697 Common Shares and had shared voting power over 430,672 Common Shares, sole dispositive power over 38,051,165 Common Shares and shared dispositive power over 644,532 Common Shares. |
|
State Street Corporation
(“State Street” One Lincoln Street Boston, Massachusetts 02111 |
| | | | 13,948,685 | | | | | | 5.84% | | | |
Based on a Schedule 13G/A filed with the SEC
on February 11, 2022 by State Street reporting that, at December 31, 2021, State Street beneficially owned 13,948,685 Common Shares and had shared voting power over 11,848,156 Common Shares and shared dispositive power over 13,948,685 Common Shares. |
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2022 Proxy Statement
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37
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PROPOSAL 2:
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| | ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION | |
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38
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2022 Proxy Statement
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2022 Proxy Statement
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The key principle of RMR’s compensation philosophy for all employees, including our named executive officers, is to pay for performance. RMR maintains a rigorous and thorough talent and compensation review process to ensure that its employees are in appropriate roles that maximize their full potential. This process also ensures that there is strong leadership guiding employees and that there is a succession and development plan for each role. RMR’s goal is to make employee and leadership development an integral part of its culture, supporting each employee and the continued success of RMR, our Company and other RMR Clients.
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2022 Proxy Statement
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Compensation Element
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What It Does
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Key Measures
|
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Base Salary | | |
•
Provides a level of fixed pay appropriate to an executive’s role and responsibilities
•
Evaluated on an annual basis
|
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•
Experience, duties and scope of responsibility
•
Internal and external market factors
|
|
Discretionary Cash Bonus | | |
•
Provides a competitive annual cash incentive opportunity
•
Links executives’ interests with shareholders’ interests
•
Incentivizes and rewards superior group, individual and Company performance
|
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•
Based on holistic performance evaluation
|
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Equity Compensation | | |
•
Links executives’ interests with long-term interests of shareholders
•
Incentivizes and rewards superior group, individual and Company performance
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•
Based on holistic performance evaluation by the compensation committee of RMR Inc.
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2022 Proxy Statement
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42
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2022 Proxy Statement
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2022 Proxy Statement
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44
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2022 Proxy Statement
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Name and Principal Position
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Year
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Salary
|
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Bonus
|
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Stock Awards ($)(1)
|
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All Other
Compensation ($)(2) |
| |
Total ($)
|
| ||||||||||||
Jennifer F. Francis(3)
President and Chief Executive Officer |
| | | | 2021 | | | |
—
|
| |
—
|
| | | | 278,600 | | | | | | 1,824 | | | | | | 280,424 | | |
| | | 2020 | | | |
—
|
| |
—
|
| | | | 113,100 | | | | | | 3,321 | | | | | | 116,421 | | | ||
| | | 2019 | | | |
—
|
| |
—
|
| | | | 130,650 | | | | | | 7,992 | | | | | | 138,642 | | | ||
Richard W. Siedel Jr.(3)
Chief Financial Officer and Treasurer |
| | | | 2021 | | | |
—
|
| |
—
|
| | | | 102,300 | | | | | | 1,189 | | | | | | 103,489 | | |
| | | 2020 | | | |
—
|
| |
—
|
| | | | 75,400 | | | | | | 2,757 | | | | | | 78,157 | | | ||
| | | 2019 | | | |
—
|
| |
—
|
| | | | 87,100 | | | | | | 8,829 | | | | | | 95,929 | | |
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2022 Proxy Statement
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45
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Name
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Grant Date
|
| |
All Other Stock Awards:
Number of Shares of Stock or Units (#) |
| |
Grant Date Fair Value of
Stock and Option Awards ($)(1) |
| |||||||||
Jennifer F. Francis | | | | | 9/15/2021 | | | | | | 60,000 | | | | | | 204,600 | | |
Richard W. Siedel Jr. | | | | | 9/15/2021 | | | | | | 30,000 | | | | | | 102,300 | | |
| | | | | | | | |
Stock Awards
|
| |||||||||
Name
|
| |
Year Granted
|
| |
Number of Shares or Units
of Stock That Have Not Vested (#)(1) |
| |
Market Value of Shares or
Units of Stock That Have Not Vested ($)(2) |
| |||||||||
Jennifer F. Francis
|
| | | | 2021 | | | | | | 48,000 | | | | | | 148,320 | | |
| | | 2020 | | | | | | 18,000 | | | | | | 55,620 | | | ||
| | | 2019 | | | | | | 6,000 | | | | | | 18,540 | | | ||
| | | 2018 | | | | | | 1,500 | | | | | | 4,635 | | | ||
Richard W. Siedel Jr.
|
| | | | 2021 | | | | | | 24,000 | | | | | | 74,160 | | |
| | | 2020 | | | | | | 12,000 | | | | | | 37,080 | | | ||
| | | 2019 | | | | | | 4,000 | | | | | | 12,360 | | | ||
| | | 2018 | | | | | | 1,500 | | | | | | 4,635 | | |
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2022 Proxy Statement
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Stock Awards
|
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Name
|
| |
Number of Shares Acquired
on Vesting (#) |
| |
Value Realized on
Vesting ($)(1) |
| ||||||
Jennifer F. Francis (2) | | | | | 22,800 | | | | | | 77,742 | | |
Richard W. Siedel Jr. | | | | | 14,300 | | | | | | 48,832 | | |
Name
|
| |
Number of Shares Vested Upon
Termination Event (#) |
| |
Value Realized on Termination Event
as of December 31, 2021 ($)(1) |
| ||||||
Jennifer F. Francis | | | | | 73,500 | | | | | | 227,115 | | |
Richard W. Siedel Jr | | | | | 41,500 | | | | | | 128,235 | | |
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2022 Proxy Statement
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PROPOSAL 3:
|
| | APPROVAL OF THE AMENDED AND RESTATED 2012 EQUITY COMPENSATION PLAN | |
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48
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2022 Proxy Statement
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2022 Proxy Statement
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49
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Year
|
| |
Awards Granted
(number of shares) |
| |
Weighted Average
Shares Outstanding |
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2019 | | | | | 202,500 | | | | | | 237,604,000 | | |
2020 | | | | | 420,000 | | | | | | 237,739,000 | | |
2021 | | | | | 838,000 | | | | | | 237,967,000 | | |
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2022 Proxy Statement
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Number of
securities to be issued upon exercise of outstanding options, warrants and rights |
| |
Weighted-average
exercise price of outstanding options, warrants and rights |
| |
Number of securities
remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
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(a)
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(b)
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(c)
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Equity compensation plans approved by security holders—2012 Equity Compensation Plan | | | | | None | | | | | | None | | | | | | 1,122,101 | | |
Equity compensation plans not approved by security holders | | | | | None | | | | | | None | | | | | | None | | |
Total | | | | | None | | | | | | None | | | | | | 1,122,101 | | |
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PROPOSAL 4:
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| | RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS | |
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2021 Fees
|
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2020 Fees
|
| ||||||
Audit Fees | | | | $ | 1,266,688 | | | | | $ | 1,141,552 | | |
Audit Related Fees | | | | | 0 | | | | | | — | | |
Tax Fees | | | | | 7,350 | | | | | | — | | |
All Other Fees | | | | | 812 | | | | | | 948 | | |
| | |
2020 Fees
|
| |||
Audit Fees | | | | $ | 137,000 | | |
Audit Related Fees | | | | | — | | |
Tax Fees | | | | | 7,000 | | |
All Other Fees | | | | | 992 | | |
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B-7
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