UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Office Properties Income Trust

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Notice of 2022 Annual Meeting
of Shareholders and Proxy Statement

Thursday, June 16, 2022 at 9:30 a.m., Eastern time

Live Webcast Accessible at
https://www.viewproxy.com/OfficePropertiesIncomeTrust/2022

LETTER TO OUR SHAREHOLDERS FROM YOUR
BOARD OF TRUSTEES

Dear Fellow Shareholders:

Please join us for our 2022 Annual Meeting of Shareholders, which will be held virtually at 9:30 a.m. on Thursday, June 16, 2022. The business to be conducted at the meeting is explained in the attached Notice of Meeting and Proxy Statement. We believe furnishing these materials over the internet expedites your receipt of these important materials while reducing the cost and environmental impact of our annual meeting.

Despite disruptions to the office market as a result of the COVID-19 pandemic in 2021, we had strong leasing momentum and solid financial performance and steadily executed our capital recycling strategy. Key accomplishments since the beginning of 2021 include:

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Executing 2.5 million square feet of leasing activity for a weighted average lease term of 9.5 years and a roll up in rent of 6.3%;

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Selling nine properties for more than $250 million that contained approximately 2.9 million square feet with an average age of 26 years and a weighted average lease term of 1.2 years;

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Acquiring two core properties in Chicago and Atlanta for $550 million, one of which added Google to our roster of top tenants;

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Launching the redevelopment of two properties, one in Washington D.C. and one in Seattle, which are collectively 32% preleased and have projected stabilized cash returns of 8% and 10%, respectively; and

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Issuing $1.1 billion of senior notes, reducing our cost of debt and increasing our average debt maturities.

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We take seriously our role in the oversight of our Company’s long term business strategy, which we believe is the best path to long term value creation for our shareholders.

We thank you for your investment in our Company and for the trust you place in us to oversee your interests in our business.

TABLE OF CONTENTS

 

 

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Our Board has adopted a resignation policy pursuant to which an incumbent Trustee who fails to receive a majority of votes cast in an uncontested election will submit an 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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Non-binding advisory vote.

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You can vote in advance in one of three ways:

If the meeting is postponed or adjourned, these times will be extended to 11:59 p.m., Eastern time, on the day before the reconvened meeting.

PLEASE VISIT: www.proxyvote.com

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To review and download easy to read versions of our Proxy Statement and Annual Report.

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To sign up for future electronic delivery to reduce the impact on the environment.

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PROXY SUMMARY

This proxy summary highlights information which may be provided elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. Page references are supplied to help you find further information in this Proxy Statement.

ELIGIBILITY TO VOTE

You can vote if you were a shareholder of record at the close of business on March 22, 2022, the record date for our 2022 Annual Meeting.

HOW TO CAST YOUR VOTE (Page 51)

You can vote by any of the following methods:

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By Telephone or Internet.   All shareholders of record can authorize a proxy to vote their shares by touchtone telephone by calling 1-800-690-6903, or through the internet at www.proxyvote.com, using the procedures and instructions described in your Notice Regarding the Availability of Proxy Materials or proxy card.

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By Written Proxy.   All shareholders of record also can submit voting instructions by written proxy card. If you are a shareholder of record and receive a Notice Regarding the Availability of Proxy Materials, you may request a written proxy card by following the instructions included in the notice.

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Electronically at our 2022 Annual Meeting.   All shareholders of record may vote electronically at the meeting. Beneficial owners may vote electronically at our 2022 Annual Meeting if they have a legal proxy.

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CORPORATE GOVERNANCE PRINCIPLES (Page 4)

We pride ourselves on continuing to observe and implement best practices in our corporate governance.

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Our Board has adopted a resignation policy pursuant to which an incumbent Trustee who fails to receive a majority of votes cast in an uncontested election will submit an 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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Non-binding advisory vote.

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CORPORATE GOVERNANCE PRINCIPLES AND
BOARD MATTERS

Review of Corporate Governance Policies and Shareholder Engagement

Our Board is committed to upholding the values of good corporate governance. In recognition of the relationship between corporate governance and long term performance, and as a result of our ongoing engagement with our shareholders, our Board continues to proactively evaluate our corporate governance principles. Based on these principles, over the past two years our Board:

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expanded our Board by adding a new Trustee with significant experience in the commercial real estate industry and increased the size of our Board to nine members and the percentage of our Board comprised of Independent Trustees to 77.8%;

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amended our Declaration of Trust to declassify our Board so that all of our Trustees will stand for election annually beginning with our 2023 annual meeting of shareholders, a measure which was supported by more than 71% of our shareholders;

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conducted a shareholder outreach to all of our shareholders who hold 1% or more of our Common Shares;

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retained Korn Ferry, a leading executive search and consulting firm, to identify and vet candidates to expand and refresh our Board; and

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enhanced our compensation and sustainability disclosure and reporting in response to shareholder feedback.

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This year, our Board continued to engage Korn Ferry to assist in board refreshment and expansion. We also conducted a shareholder outreach to all of our shareholders who hold 1% or more of our Common Shares and actively engaged with shareholders who hold approximately 42% of our Common Shares.

We appreciate your support of our Board on these initiatives.

Board Composition, Expansion and Refreshment

We are currently governed by a nine member Board of Trustees, including seven Independent Trustees and two Managing Trustees. In 2020, with the support of more than 71% of our shareholders, we amended our Declaration of Trust to declassify our Board. Beginning with our 2021 Annual Meeting, the Trustees whose terms expire at an annual meeting will stand for election at the meeting for one-year terms and all Trustees will stand for election at the 2023 annual meeting of shareholders and, thereafter, for one-year terms. On June 17, 2021, David M. Blackman resigned as one of our Managing Trustees, and pursuant to a recommendation of our Nominating and Governance Committee, our Board elected Jennifer B. Clark as a Managing Trustee to fill the vacancy created by Mr. Blackman’s resignation.

Ensuring our Board is comprised of Trustees who bring diverse viewpoints and perspectives, have a variety of skills, professional experience and backgrounds and effectively represent the long term interests of our shareholders is a top priority of our Board and our Nominating and Governance Committee. Our Board continues to actively evaluate its composition. Our Board’s expansion and refreshment activities have increased the ratio of Independent Trustees to Managing Trustees, created more skill mix and diversity and ensured a smooth transition as Trustees retire from our Board. Our Nominating and Governance Committee and our Board have an ongoing engagement with Korn Ferry, a leading executive search and consulting firm, to act as an advisor and to assist our Nominating and Governance Committee in:

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identifying and evaluating potential trustee candidates;

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creating an even playing field among candidates identified regardless of source;

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using the criteria, evaluations and references to prioritize candidates for consideration regardless of source; and

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assisting in attracting and vetting candidates.

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Process for Selecting Trustees

Our Nominating and Governance Committee screens and recommends candidates for nomination by our full Board. On April 12, 2022, our Board increased its size from eight members to nine members and, following the recommendation of our Nominating and Governance Committee, elected Mark A. Talley to fill the vacancy created by the increase in the size of our Board. Our Nominating and Governance Committee is assisted with its recruitment efforts by its ongoing engagement with Korn Ferry, which recommends candidates that satisfy our Board’s criteria. They also provide research and pertinent information regarding candidates, as requested.

 

 

Shareholder Engagement and Outreach

We conduct shareholder outreach throughout the year to engage with shareholders on issues important to them. Our Board receives reports on this engagement as well as any specific issues to be addressed.

Sustainability

Overview.   Our business strategy incorporates a focus on sustainable approaches to operating our properties in a manner that benefits our shareholders, tenants and the communities in which we are located. We seek to operate our properties in ways that improve the economic performance of their operations, while simultaneously ensuring tenant comfort and safety and managing energy and water consumption, as well as greenhouse gas emissions.

Our environmental, social and governance initiatives are primarily implemented by our manager, RMR, and focus on a complementary set of objectives, including the following:

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Responsible Investment: We seek to invest capital in our properties that both improves environmental performance and enhances asset value. During the property acquisition process, RMR assesses, among other things, environmental sustainability opportunities and physical and policy driven climate related risks as part of the due diligence process.

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Environmental Stewardship: We seek to improve the environmental footprint of our properties, including by reducing greenhouse gas emissions, energy consumption and water usage, especially when doing so may reduce operating costs and enhance the properties’ competitive position. As a result of these ongoing efforts, we have achieved the following:

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Certifying more than 7.4 million square feet across 47 properties (32% of portfolio square feet) through the Environmental Protection Agency’s (“EPA”) ENERGY STAR® program;

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Being recognized in 2018 and 2019 as an ENERGY STAR® Partner of the Year;

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Being recognized in 2020 and 2021 as an ENERGY STAR® Partner of the Year, Sustained Excellence;

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Certifying more than 6.2 million square feet across 39 properties (27% of portfolio square feet) through the U.S Green Building Council’s (“USGBC”) Leadership in Energy & Environmental Design (“LEED”) certification program; and

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Earning Green Lease Leader Silver recognition in 2019-2021 from the Department of Energy Better Buildings Initiative and the Institute for Market Transformation.

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Investments in Human Capital: We have no employees of our own. We rely on our manager, RMR, to hire, train, and develop a workforce that meets the needs of our business, contributes positively to our society and helps reduce our impact on the natural environment. RMR employs approximately 600 real estate professionals across the United States.

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In 2021, RMR was recognized by The Boston Globe for the second consecutive year as one of “The Top Places to Work in Massachusetts” in the “Large Employers” category, received the Excellence Award from the Institute of Real Estate Management, and by the EPA as an “ENERGY STAR Partner of the Year, Sustained Excellence.” In 2020, RMR was recognized by the Boston Business Journal as the “Fastest Growing Middle Market Company in Massachusetts,” and by Commercial Property Executive as 9th in its list of Top Commercial Property Management Companies. In 2019, RMR received the Real Estate Management Excellence Award for Employee & Leadership Development from the Institute of Real Estate Management and was ranked 75th on Fortune Magazine’s list of 100 fastest growing companies.

RMR’s recruiting programs, on-boarding, retention programs and its development and training programs currently include the following:

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LiveWell Employee Wellness Program: RMR’s LiveWell program has steadily gained traction since it was launched in 2016 with the goal of providing resources and incentives to enhance employees’ physical, emotional and financial wellness. LiveWell includes a range of educational presentations, webinar series and wellness competitions.

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Managing with Impact: Since 2016, RMR hosted Managing with Impact workshops for managers throughout the company to expand their perspectives and increase their confidence as a new manager. Within their first year, managers complete the workshop and learn how to effectively delegate, solve problems and give meaningful performance feedback.

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Tuition Reimbursement Program: RMR offers tuition assistance up to $20,000 annually for work-related education from accredited colleges and universities in order to deepen employees’ skillsets and support personal enrichment.

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Accelerated Women in Leadership Program: RMR’s Accelerated Women in Leadership Program (“AWLP”) is a targeted learning experience that helps women strengthen and leverage their contribution and impact as professionals and leaders. Participants explore a variety of topics that help them manage biases that can be limiting, strengthen their executive presence, influence and negotiate more effectively, and integrate work and home life. In 2020 and 2021, two cohorts of women professionals participated in AWLP. A third cohort kicked off in the first quarter of 2022.

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Next Generation Executive Program (“NGE”): In 2021 and 2022, RMR is sponsoring three rising leaders in The Partnership, Inc.’s NGE. Admission to NGE is highly competitive and limited to a select group of America’s most promising multicultural leaders. The program prepares future leaders to meet the unique challenges facing today’s senior executive. Program areas include strategic innovation, organizational change, operating in a global market, team leadership and executive resiliency.

RMR also prioritizes on-going education and training for all employees across their organization as follows:

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Engineering Development Program: Given the increasing challenges within the real estate industry of attracting a qualified and diverse pool of engineers throughout the country, RMR made it a strategic focus to develop the next generation of qualified building engineers. RMR’s Engineering Development Program standardizes the recruitment and development of engineering candidates to prepare them for open positions and to plan for future engineering needs. RMR recruits from various trade schools and job fairs to identify candidates for the two-year program with a curriculum that includes specific onboarding plans for training in electrical, HVAC, or plumbing trades and covers a range of essential engineering staff development topics.

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Industry Associations & Credentials: In order to further their professional development, many of RMR’s employees seek out credentials and association memberships, with any membership costs reimbursed by RMR. Examples of credentials and association memberships include: Building Owners and Managers Association Membership and Event Participation, Certified Property Manager, Certified Public Accountant, National Association

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of Industrial and Office Properties, LEED Accredited Professional, Certified Energy Manager and Fitwel Ambassador.

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Corporate Citizenship: We seek to be a responsible corporate citizen and to strengthen the communities in which we own properties through our policies and charitable giving. We have no employees, but RMR regularly encourages its employees to engage in a variety of charitable and community programs, including participation in a RMR company-wide service day and a charitable giving matching program.

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Diversity & Inclusion: We value a diversity of backgrounds, experience and perspectives. Our Board is comprised of 44.4% women and 11.1% African American. RMR is an equal opportunity employer, with all qualified applicants receiving consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability or protected veteran status. RMR is committed to racial equality and fostering a culture of diversity and inclusion. As of September 30, 2021, 37% and 27% of RMR’s employees were female and members of underrepresented communities, respectively.

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We have no employees of our own, but RMR has made diversity and inclusion an important part of its hiring, retention and development programs. RMR has enhanced its hiring policies to support increasing diversity within its workforce. For every open position not filled by internal candidates, hiring managers are required to have at least one qualified woman or member of underrepresented community candidate in the final round interviews before an offer is extended to fill the position. An RMR manager who is a woman and/or member of an underrepresented community is required to be part of the final round interview team. In addition, RMR works with strategic industry partners like Commercial Real Estate Women (“CREW”) and The Partnership, Inc. for posting new positions and supporting multicultural professionals.

To learn more about RMR’s and our sustainability initiatives, visit www.rmrgroup.com/corporate-sustainability.

Sustainability Accounting Metrics.   The following disclosures are informed by the guidance of the Sustainability Accounting Standards Board (“SASB”) Industry Standard for Real Estate Version 2018-10. To the extent an accounting metric, as defined by the SASB Standard, is not applicable to our portfolio or data to report on the applicable accounting metric is not available to us, we have not made any disclosure.

For the following disclosures, our properties are considered a single subsector property type (“office”), consistent with how these properties and our operating results are presented in our other Securities and Exchange Commission (“SEC”) filings. The information presented is as of December 31, 2021, unless otherwise noted. Additionally, for all sustainability accounting metrics, Same Property includes properties we owned continuously since January 1, 2020 and excludes properties classified as held for sale and properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.

In 2020 and 2021 the Covid-19 pandemic, along with local, state and Federal social distancing recommendations, created an environment of reduced building utilization. This lower property utilization is evident in the presented sustainability metrics below. It is our expectation that, in a post-pandemic environment, as businesses return to normal and our property utilization improves, the energy and water consumption of our buildings may increase above 2020 or 2021 levels.

I.

Energy management integration discussion (SASB Accounting Metric Code: IF-RE-130a.5).

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RMR deploys on our behalf energy management best practices, which include:

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Centralized utility bill processing and payment system;

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ENERGY STAR® benchmarking;

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Real-time energy monitoring;

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Daytime and nighttime energy audits; Light Emitting Diodes (“LED”) lighting upgrades;

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Annual energy engagement competitions;

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Energy performance training for property operations teams;

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Energy performance review for end-of-life heating, ventilation and air conditioning (“HVAC”) equipment replacements; and

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Capital deployment dedicated to generating returns on energy efficiency upgrades.

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As a result of these energy management efforts, we have reduced energy and water usage helping to generate both economic and environmental benefits.

Sections II, III and IV below provide SASB-aligned energy-related metrics.

II.

Energy consumption data coverage as a percentage of total floor area (SASB Accounting Metric Code: IF-RE-130a.1).

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The following illustrates energy data available as compared to the total population of all our properties.

A majority of the properties not included in the percentage of square feet covered are properties where the tenant manages energy utility accounts directly and data is not currently shared with us.

III.

Total energy consumed in gigajoules (“GJ”) by portfolio area with data coverage, percentage grid electricity and percentage renewable (SASB Accounting Metric Codes: IF-RE-130a.2).

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None, or 0%, of the renewable energy consumed was directly purchased through power purchase agreements or by other explicit contractual means. 15.3% of the total energy consumed by the portfolio was renewable by default using location-based calculation methodology for grid electricity.

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Same Property percentage change in energy consumption for the portfolio area with data coverage (SASB Accounting Metric Code: IF-RE-130a.3)

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Percentage of eligible portfolio that (i) has obtained an energy rating and (ii) is certified to ENERGY STAR® (SASB Accounting Metric Code: IF-RE-130a.4).

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See SASB Accounting Metric Code 130a.5 in Section I for a description of how building energy management considerations are integrated into property investment analysis and operational strategy.

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Water management integration discussion (SASB Accounting Metric Code: IF-RE-140a.4).

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On our behalf, RMR supports water management practices that reduce operating costs as well as our impact on the consumption of natural resources. Water usage is managed by benchmarking water performance to establish a baseline and to measure performance improvements resulting from

 

conservation measures. Benchmarking is performed through the EPA’s ENERGY STAR® Portfolio Manager online platform.

Some cities and states in which we own properties require annual whole-building energy and water use disclosure. In these jurisdictions, RMR engages with tenants to collect and report any direct tenant-paid energy and water consumption.

RMR also routinely implements water efficiency and water use reduction projects, which include upgrades for indoor plumbing fixtures, low-flow water closets and urinals, low-flow flush valves, low-flow automatic faucet controls, low-flow faucet aerators and shower heads, water-efficient landscaping and cooling tower water management.

Sections VII, VIII and IX below provide SASB-aligned water-related metrics.

VII.

Water withdrawal data coverage as a percentage of total floor area and a percentage of floor area in regions with High or Extremely High Baseline Water Stress (“BWS”) (SASB Accounting Metric Codes: IF-RE-140a.1).

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A majority of the properties not included in the percentage of square feet with water data coverage are properties where the tenant manages water utility accounts directly and data is not currently shared with us.

Baseline Water Stress measures total annual water withdrawals (municipal, industrial, and agricultural) expressed as a percent of the total annual available flow. Higher values indicate more users are competing for available resources.

 

VIII.

Total water withdrawn by portfolio area with data coverage and percentage in regions with High or Extremely High Baseline Water Stress (SASB Accounting Metric Code: IF-RE-140a.2).

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IX.

Same Property percentage change in water withdrawn for portfolio area with data coverage (SASB Accounting Metric Code: 140a.3).

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X.

Description of approach to measuring, incentivizing, and improving sustainability impacts of tenants (SASB Accounting Metric Code: IF-RE-410a.3).

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On our behalf, RMR seeks to provide best-in-class property operations and healthy, efficient environments for our tenants and encourages continual engagement that promotes long-lasting relationships and sustainable behaviors.

RMR has internal policies that govern environmentally responsible property operations. We also utilize green lease language, where possible, to promote mutual commitment to environmentally friendly practices and operational efficiencies with our tenants. These efforts earned us Green Lease Leader recognitions in 2019 through 2021.

RMR prioritizes LEED certification and recertification projects by reviewing a variety of sustainability and leasing criteria such as high ENERGY STAR® scores and access to public transportation and

 

near-by amenities. We believe that taking the initiative to submit for and attain LEED certification adds value to our properties and enhances tenant satisfaction, which reflects our commitment to environmental sustainability and healthy buildings.

XI.

Area of properties located in FEMA Special Flood Hazard Areas or foreign equivalent, by property subsector (SASB Accounting Metric Code: IF-RE-450a.1).

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Approximately 1,198,001 square feet, or 5%, of our properties’ total square footage are located in FEMA Special Flood Hazard Areas.

XII.

Description of climate change risk exposure analysis, degree of systematic portfolio exposure, and strategies for mitigating risks. (SASB Accounting Metric Code: IF-RE-450a.2).

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We define climate change resilience as our ability to anticipate, prepare for and recover from adverse physical climate activity including increased severity of acute weather events and chronic changes to weather patterns as well as identify and plan for climate-related transitional activities such as changes in policy and market-driven expectations.

In preparation for and in response to property-level natural hazards, our manager, RMR, utilizes dynamic geographic mapping tools which allows it to quickly assess the risk to our properties from the rapidly changing natural hazards related to coastal and river flooding.

In advance of a natural hazard event, resources are directed to properties identified as potentially impacted through these mapping tools. The resources made available include access to senior management and mobilization of equipment and personnel. Rapid response personnel may also be directed to properties after a weather event has occurred.

Properties susceptible to inundation from flood waters are evaluated routinely. The evaluation may include implementing tenant and local agency coordination protocols, property incident response plan reviews, insurance provider assessments and the implementation of physical protection elements, such as flood protection barriers.

We routinely utilize technology to evaluate our properties for energy and water performance. Such activities support lower operating expenses, improve comfort for our tenants and reduce our exposure to impacts from policies targeting greenhouse gas emissions.

Our portfolio strategy includes the development of hazard and vulnerability assessments of our existing properties and scenario planning and economic risk reviews of property development opportunities over long-term ownership periods. In 2021 RMR, in coordination with a third-party consultant, began physical climate scenario analyses for substantially all our properties. The climate scenario assessments under evaluation include current physical climate risk exposure and assessments of future physical climate risk exposure models that consider a “business as usual” approach, a 2.0°C emissions mitigation approach in line with the Paris Climate Agreement and a “middle” approach, all based on the Intergovernmental Panel on Climate Change (“IPCC”) sixth assessment Representative Concentration Pathway (“RCP”) 8.5, 2.6, and 4.5, respectively. The outcome of these assessments will include qualitative exposures to long term acute and chronic climate risks for future climate. We anticipate this information will aid in ensuring investment strategies and operational protocols are effective in mitigating future physical climate risk.

 

Our Board’s Role in Oversight of Risk Management

Our Board is elected by our shareholders to, among other things, oversee our business and long term strategy. As part of fulfilling its responsibilities, our Board oversees the maintenance of appropriate financial and other internal controls and our compliance with applicable laws and regulations. Inherent in these responsibilities is our Board’s understanding and oversight of the various risks we face. Our Board considers that risks should not be viewed in isolation and should be considered in virtually every business decision and as part of our business strategy.

Our Board oversees risk as part of its general oversight of our Company. Oversight of risk is addressed as part of various Board and Board committee activities and through regular and special Board and Board committee meetings. Our day to day business is conducted by our manager, RMR, and RMR and our officers and Director of Internal Audit are responsible for incorporating risk management in their activities. Our Director of Internal Audit reports to our Audit Committee and provides us with advice and assistance with our risk management function.

In discharging their oversight responsibilities, our Board and Board committees regularly review a wide range of reports provided by RMR and other service providers, including:

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reports on market and industry conditions;

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reports on the impact of the COVID-19 pandemic on our business;

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operating and regulatory compliance reports;

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financial reports;

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reports on risk management and our Environmental, Social and Governance activities and initiatives;

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regulatory and legislative updates that may impact us;

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reports on the security of our information technology processes and our data; and

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legal proceedings updates and reports on other business related matters.

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Our Board and Board committees discuss these matters among themselves and with representatives of RMR, our officers, our Director of Internal Audit, legal counsel, our independent auditors and other professionals, as appropriate.

Our Audit Committee takes a leading role in helping our Board fulfill its responsibilities for oversight of our financial reporting, internal audit function, risk management, including cybersecurity, and our compliance with legal and regulatory requirements. Our Board and Audit Committee review reports annually from our independent auditors regarding potential risks, including risks related to our internal control over financial reporting, and at other times, as may be warranted. Our Audit Committee also annually reviews and approves an internal audit plan developed by our Director of Internal Audit and oversees its execution with the goal of helping us systematically evaluate the effectiveness of our risk management, control and governance processes on an annual basis. Our Audit Committee meets at least quarterly and reports its findings and results of its monitoring activities and oversight on our financial reporting, internal audit function, risk management, including cybersecurity, and our compliance with legal and regulatory requirements, as applicable, to our Board. Our Audit Committee also meets quarterly with our Director of Internal Audit to review the results of our internal audits and receive reports, and directs or recommends to our Board actions or changes it determines appropriate to enhance or improve the effectiveness of our risk management, including cybersecurity, as it determines appropriate.

Our Audit Committee considers risks related to cybersecurity and receives annual reports from our management regarding cybersecurity risks and countermeasures being undertaken or considered by us, including updates on the internal and external cybersecurity landscape and relevant technical developments, and more frequent reports as it may direct or as warranted. RMR has conducted an external assessment of its cybersecurity controls using a qualified third party. In addition, RMR’s cybersecurity program is aligned to the National Institute of Standards and Technology Cybersecurity Framework. RMR conducts annual data security education and testing for its employees, including RMR employees who provide services to us, in addition to unannounced email penetration testing and phishing exercises.

Our Compensation Committee whose duties are detailed in its charter, among other duties, evaluates the performance of our Director of Internal Audit and RMR’s performance under our business and property management agreements, including any perceived risks created by compensation arrangements. Also, our Compensation Committee and our Board consider that we have a share award program that requires share awards to executive officers to vest over a period of years. We believe that the use of share awards vesting over time rather than stock options mitigates the incentives for our management to undertake undue risks and encourages management to make long term and appropriately risk balanced decisions.

It is not possible to identify all of the risks that may affect us or to develop processes and controls to eliminate all risks and their possible effects, and processes and controls employed to address risks may be limited in their effectiveness. Moreover, it is necessary for us to bear certain risks to achieve our objectives. As a result of the foregoing and other factors, our ability to manage risk is subject to substantial limitations.

To learn more about the risks we face, you can review the matters discussed in Part I, “Item 1A. Risk Factors” and “Warning Concerning Forward-Looking Statements” in our Annual Report to Shareholders for the fiscal year ended December 31, 2021 (the “Annual Report”). The risks described in the Annual Report are not the only risks we face. Additional risks and uncertainties not currently known or that may currently be deemed to be immaterial also may materially adversely affect our business, financial condition or results of operations in future periods.

Trustee Independence

Under the corporate governance listing standards of the Nasdaq and our governing documents, our Board must consist of a majority of Independent Trustees. Under our governing documents, Independent Trustees are Trustees who are not employees of RMR, are not involved in our day to day activities and who meet the qualifications for independence under the applicable rules of the Nasdaq and the SEC.

Our Board affirmatively determines whether Trustees have a direct or indirect material relationship with us, including our subsidiaries, other than serving as our Trustees or trustees or directors of our subsidiaries. In

 

making independence determinations, our Board observes the Nasdaq and SEC criteria, as well as the criteria set forth in our governing documents. When assessing a Trustee’s relationship with us, our Board considers all relevant facts and circumstances, not merely from the Trustee’s standpoint, but also from that of the persons or organizations with which the Trustee has an affiliation. Based on this review, our Board has determined that Donna D. Fraiche, Barbara D. Gilmore, John L. Harrington, William A. Lamkin, Elena B. Poptodorova, Jeffrey P. Somers and Mark A. Talley currently qualify as independent trustees under applicable Nasdaq and SEC criteria and as Independent Trustees under our governing documents. In making these independence determinations, our Board reviewed and discussed additional information provided by us and the Trustees with regard to each of the Trustees’ relationships with us, RMR or The RMR Group Inc. (“RMR Inc.”), the managing member of RMR, and the other companies to which RMR provides management services (the “RMR Clients”). Our Board has concluded that none of these seven Trustees possessed or currently possesses any relationship that could impair his, her or their judgment in connection with his, her or their duties and responsibilities as a Trustee or that could otherwise be a direct or indirect material relationship under applicable Nasdaq and SEC standards.

Executive Sessions of Independent Trustees

Pursuant to our Governance Guidelines, our Independent Trustees are expected to meet at least twice per year in regularly scheduled meetings at which only Independent Trustees are present. Our Independent Trustees also meet separately with our officers, with our Director of Internal Audit and with our independent auditors. The presiding Trustee for purposes of leading Independent Trustee sessions will be the Lead Independent Trustee, unless the Independent Trustees determine otherwise.

Board Leadership Structure

All Trustees play an active role in overseeing our business both at our Board and committee levels. As set forth in our Governance Guidelines, the core responsibility of our Trustees is to exercise sound, informed and independent business judgment in overseeing our Company and our strategic direction. Our Trustees are skilled and experienced leaders and currently serve or have served as members of senior management in public and private for profit and nonprofit organizations and law firms, and have also served as government officials and in academia. Our Trustees may be called upon to provide solutions to various complex issues and are expected to, and do, ask hard questions of our officers and advisers.

Adam Portnoy serves as Chair of our Board. Our Board believes that Mr. Portnoy’s leadership of RMR and extensive familiarity with our day to day business provide valuable insight for our Board.

Seven of our Trustees, including four of the five Trustee nominees for election at our 2022 Annual Meeting, are independent under the applicable Nasdaq and SEC criteria and our governing documents. All of the members of our Audit Committee, Nominating and Governance Committee and Compensation Committee are independent under the applicable listing requirements and rules of the Nasdaq and other applicable laws, rules and regulations, including those of the SEC. As set forth in our governing documents, two of our Trustees are Managing Trustees, persons who have been employees, officers or directors of RMR or who have been involved in our day to day activities for at least one year prior to his, her or their election as Trustees.

Lead Independent Trustee

We have a Lead Independent Trustee who is selected annually by the vote of a majority of our Independent Trustees. Currently, Ms. Poptodorova serves as our Lead Independent Trustee. Our Lead Independent Trustee has well-defined, robust responsibilities that include:

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presiding at all meetings of our Board at which the Chair or a Managing Trustee is not present;

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presiding at all meetings and executive sessions of the Independent Trustees;

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having the authority to call meetings of the Independent Trustees or executive sessions of the Independent Trustees;

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serving as the principal liaison between the Independent Trustees and the senior management team;

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arranging, together with the Chair of our Board, for appropriate information (including quality and quantity) to be timely provided to our Board and the Independent Trustees;

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assisting our Compensation Committee in its annual evaluation of the performance of our management and of our manager, RMR;

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assisting with setting Board meeting agendas and arranging meeting schedules, including to ensure that there is sufficient time for discussion of all agenda items;

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considering suggestions for meeting agenda items from other Independent Trustees;

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authorizing the retention of advisors and consultants who report directly to the Independent Trustees when appropriate; and

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if requested, and in coordination with the Chair of our Board and our management, being reasonably available for consultation and direct communication with shareholders.

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Code of Business Conduct and Ethics and Committee Governance

Our Board is committed to corporate governance that promotes the long term interests of our shareholders. Our Board has established Governance Guidelines that provide a framework for effective governance. Our Board regularly reviews developments in corporate governance and updates our Governance Guidelines and other governance materials as it deems necessary and appropriate.

We have also adopted a Code of Business Conduct and Ethics (the “Code”) to, among other things, provide guidance to our and RMR’s board members, officers and in the case of RMR, employees, and ensure compliance with applicable laws and regulations.

Our Board has an Audit Committee, Compensation Committee and Nominating and Governance Committee. Our Audit Committee, Compensation Committee and Nominating and Governance Committee each have a written charter, and each Board committee reviews its written charter on an annual basis to consider whether any changes are required.

Our corporate governance materials are available for review in the governance section of our website, including our Governance Guidelines, the charter for each Board committee, the Code, information about how to report concerns or complaints about accounting, internal accounting controls or auditing matters and any violations or possible violations of the Code, and how to communicate with our Trustees. To access these documents on our website visit www.opireit.com. We intend to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of the Code that apply to the principal executive officer, principal financial officer or controller, or persons performing similar functions, by posting such information on our website.

Trustee Resignation Policy

Our Governance Guidelines provide that if an incumbent Trustee does not receive a majority of the votes cast in an uncontested election, the Trustee will submit an offer to resign from our Board. In such circumstance, our Nominating and Governance Committee will make a recommendation to our Board on whether to accept or reject the resignation offer, or whether other action should be taken. Our Board will act on the resignation offer taking into account the recommendation of our Nominating and Governance Committee and make its decision within 90 days following the certification of the election results.

Prohibition on Hedging

Our Insider Trading Policies and Procedures expressly prohibit members of our Board and our officers from engaging in hedging transactions involving our securities.

 

Recommendations for Trustees

Shareholders who would like to recommend a Trustee nominee should submit their recommendations in writing by mail to the Chair of our Nominating and Governance Committee, in care of our Secretary, Office Properties Income Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or by email to secretary@opireit.com. Any such recommendation should include a description of the candidate’s qualifications for Board service, the candidate’s written consent to be considered for nomination and to serve if nominated and elected, as well as the addresses and telephone numbers for contacting the shareholder and the candidate for more information. Our Nominating and Governance Committee may request additional information about the shareholder recommended nominee or about the shareholder recommending the nominee. Recommendations by shareholders will be considered by our Nominating and Governance Committee in its discretion using the same criteria as other candidates it considers.

Communications with Our Board

Our Board has established a process to facilitate communication by shareholders and other stakeholders with our Trustees. Communications should be addressed to our Trustees in care of our Secretary, Office Properties Income Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or by email to secretary@opireit.com.

 

The foregoing description of the deadlines and other requirements for shareholders to submit a nomination for election to our Board or a proposal of other business for consideration at an annual meeting of shareholders is only a summary and is not a complete listing of all requirements. A copy of our Bylaws, including the requirements for proxy access or other shareholder nominations and other shareholder proposals, may be obtained by writing to our Secretary at Office Properties Income Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458, or from the SEC’s website, www.sec.gov. Any shareholder considering making a nomination or proposal should carefully review and comply with those provisions.

 

 

Snapshot of 2022 Board Nominees

Presented below is a snapshot of the expected composition of our Board, assuming the election of Mses. Gilmore and Poptodorova and Messrs. Harrington, Lamkin and Portnoy at our 2022 Annual Meeting. Our Board of Trustees believes that, collectively, our Trustees exhibit an effective mix of qualifications, experience and diversity.

A plurality of all the votes cast is required to elect a Trustee at our 2022 Annual Meeting.

The names, principal occupations and certain other information regarding the Trustee nominees that led our Nominating and Governance Committee and our Board to conclude that such persons are currently qualified to serve as Trustees are set forth on the following pages.

Our Board of Trustees recommends a vote “FOR” the election of all Trustee nominees.

 

 

 

 

 

 

 

 

Executive Officers

Our executive officers serve at the discretion of our Board. There are no family relationships among any of our Trustees or executive officers.

 

 

BOARD MEETINGS

In 2021, our Board held seven meetings. In 2021, each then Trustee attended 75% or more of the aggregate of all meetings of our Board and the committees on which he, she or they served or that were held during the period in which the Trustee served as Trustee or committee member. All of the then Trustees attended last year’s annual meeting of shareholders. Our policy with respect to Board members’ attendance at meetings of our Board and annual meetings of shareholders can be found in our Governance Guidelines, the full text of which appears at our website, www.opireit.com.

TRUSTEE COMPENSATION

Compensation of Trustees

Our Board believes that competitive compensation arrangements are necessary to attract and retain qualified Independent Trustees.

Under the currently effective Trustee compensation arrangements, each Independent Trustee receives an annual fee of $75,000 for services as a Trustee. The annual fee for any new Independent Trustee is prorated for the initial year. Each Independent Trustee who serves as a committee chair of our Audit Committee, Compensation Committee or Nominating and Governance Committee also receives an additional annual fee of $17,500, $12,500 and $12,500, respectively, and our Lead Independent Trustee also receives an additional annual fee of $15,000 for serving in this role. Trustees are reimbursed for travel expenses they incur in connection with their duties as Trustees and for out of pocket costs they incur in connection with their attending certain continuing education programs.

Each Independent Trustee and Managing Trustee also receives an award of Common Shares annually, which was 3,500 Common Shares in 2021. Managing Trustees do not receive cash compensation for their services as Trustees.

Trustee Share Ownership Guidelines

Our Board believes it is important to align the interests of our Trustees with those of our shareholders, and for our Trustees to hold equity ownership positions in our Company. Accordingly, each Trustee is expected to retain at least 20,000 Common Shares (which number shall automatically adjust in respect of stock splits or similar events) within five years following: (i) if elected by shareholders, the annual meeting of shareholders of our Company at which such Trustee was initially elected, or (ii) if elected by our Board, the first annual meeting of shareholders of our Company following the initial election of such Trustee to our Board. Compliance with these ownership guidelines is measured annually. Solely for purposes of determining compliance with these ownership guidelines, Common Shares of our Company owned as of immediately prior to our one-for-four reverse share split effected on December 31, 2018, by Trustees who were serving as our Trustees or trustees of Select Income REIT (“SIR”) as of immediately prior to SIR’s merger with and into a subsidiary of our Company on December 31, 2018, and which shares are owned continuously thereafter through the end of the applicable compliance measurement period, will not be adjusted to give effect to that reverse share split. Any Trustee who is prohibited by law or by applicable regulation of his, her or their employer from owning equity in our Company is exempt from this requirement. Our Nominating and Governance Committee may consider whether exceptions should be made for any Trustee on whom this requirement could impose a financial hardship.

As of March 22, 2022, all Trustees have met or, within the applicable period, are expected to meet, these share ownership guidelines or, at the discretion of the Board, receive a waiver.

 

(1)

On April 12, 2022, Mr. Talley was elected to our Board to fill the vacancy created by the increase in the size of our Board. Because Mr.Talley received no compensation during 2021, he is not included in this table.

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(2)

The amounts reported in the Fees Earned or Paid in Cash column reflect the cash fees earned by each Independent Trustee in 2021, consisting of a $75,000 annual cash fee and each of Ms. Fraiche and Messrs. Lamkin and Somers earned an additional $12,500, $17,500 and $12,500, respectively, for service as a committee chair in 2021. Ms. Poptodorova also earned an additional $15,000 for service as the Lead Independent Trustee. Ms. Gilmore also received $5,000 for her role as chair of the special committee of our Board, which was comprised solely of Independent Trustees, in connection with the negotiations relating to the 30-year lease agreement with a subsidiary of Sonesta International Hotels Corporation in June 2021.

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(3)

Equals 3,500 Common Shares multiplied by the closing price of such shares on June 17, 2021, the award date. Amounts shown are also the compensation cost for the award recognized by us for financial reporting purposes pursuant to Financial Accounting Standards Board Accounting Standards CodificationTM Topic 718, “Compensation—Stock Compensation” ​(“ASC 718”) (which equals the closing price of the shares on the award date, multiplied by the number of shares subject to the award). No assumptions were used in this calculation. All Common Share awards fully vested on the award date.

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(4)

Mr. Blackman served as a Managing Trustee until his resignation on June 17, 2021.

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(5)

Managing Trustees do not receive cash compensation for their services as Trustees.

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