Proposal 1:

Election of Directors

 

 

Our Board has nominated eleven directors, who, if elected by stockholders at our 2022 Annual Meeting of Stockholders (Annual Meeting), have agreed to serve until next year’s annual meeting. All nominees are currently directors of the Company.

RECOMMENDATION:

Vote FOR all nominees

 

PS Business Parks • 2022 Proxy Statement • 16

PROPOSAL 1:

ELECTION OF DIRECTORS

EXECUTIVE SUMMARY

Our Board has nominated eleven directors for election at this year’s Annual Meeting to hold office until the next annual meeting of stockholders.

Each of the eleven nominees has agreed to be named in this proxy statement and to serve on the Board if elected. We currently expect all nominees to attend the Annual Meeting.

If any of our nominees becomes unavailable to stand for election, the proxies named on the proxy card intend to vote your Common Stock for the election of any substitute nominee proposed by the Board.

We believe that each nominee has the skills, experience, and personal qualities that the Board seeks and that the combination of these nominees creates an effective, well-functioning Board that serves the best interests of PS Business Parks and our stockholders.

The Board is responsible for overseeing management and providing sound governance on behalf of our stockholders. The Board and each of its committees have an active role in overseeing management of the Company’s risks, a responsibility that the Board believes is one of its most important areas of oversight.

The Board carries out its responsibilities through (1) the effective collaboration of our highly capable and experienced directors; (2) a well-crafted Board structure, which includes separate individuals holding the positions of the CEO, the Chairman of the Board, and the Lead Independent Director; (3) a strong committee structure that enables directors to provide the appropriate level of focused oversight and subject-matter expertise; and (4) adherence to our Corporate Governance Guidelines and Directors’ Code of Ethics.

 

PS Business Parks • 2022 Proxy Statement • 17

BOARD COMPOSITION HIGHLIGHTS

Board diversity is important because having a variety of viewpoints improves the quality of dialogue, contributes to a more effective decision-making process, and enhances overall culture in the boardroom. Our directors represent a diversity of professional experience, race, ethnicity, gender, age, and Board tenure, including:

 

 

*

Racial diversity includes self-identification as a member of an underrepresented community.

**

Average tenure is 9 years.

 

PS Business Parks • 2022 Proxy Statement • 18

BOARD EVALUATIONS AND NOMINATIONS

In evaluating potential candidates for service on the Board, the NGS Committee and the Board select director candidates who will best serve the Board and PS Business Parks in the current and anticipated business environment. The goal in the vetting and nomination process is to achieve an appropriate balance of knowledge, experience, diversity, and capabilities on the Board. The Board, through the NGS Committee, considers the following non-exclusive list of experiences, qualifications, attributes, and skills of both potential director nominees and existing members of the Board:

 

●   Senior leadership experience		●   Governance experience
●   Accounting/financial expertise		●   Technology and cybersecurity expertise
●   Industry experience		●   Risk and crisis management experience
●   Operational management experience		●   Legal and regulatory compliance expertise
●   Capital markets/investment banking expertise		●   Real estate development experience
●   Executive recruitment, compensation, and development experience		●   Mergers and acquisitions experience
●   Risk management experience		●   Diversity (gender, race, nationality, and other attributes)

Our director nominees have qualifications, skills, and experience relevant to our business. Each director has experience, mainly at senior executive levels, in other organizations, and a majority of the directors hold or have held directorships at other U.S. public companies. Five of our directors have served as CEO, and all have demonstrated superb leadership, intellectual, and analytical skills gained from deep experience in management, finance, and corporate governance.

BOARD FOCUS ON REFRESHMENT

Our Board and the NGS Committee understand the importance of Board refreshment and aim to strike a balance between the knowledge that comes from longer-term service on the Board with the new experience, ideas, and energy that can come from adding directors to the Board. Four of our eleven directors have joined our Board within the past three years. Our NGS Committee annually considers the long-term make up of our Board and how the members of our Board have changed over time, including the use of annual director questionnaires on the Board’s composition and effectiveness and the completion of rigorous director evaluations to ensure a continued match of each director’s skill sets against the Company’s needs.

In addition, as part of our stockholder engagement dialogue, we routinely ask our investors for input regarding Board performance. Our NGS Committee also regularly considers whether the range of our Board’s tenure appropriately encompasses directors who have historic institutional knowledge of PS Business Parks and the competitive environment, complemented by newer directors with varied backgrounds, perspectives, and skills. To facilitate Board refreshment, our Corporate Governance Guidelines provide that directors will not be nominated or appointed to the Board unless they will be 75 years of age or younger on the first day of their term of service. The robustness of our refreshment strategy combines experience and continuity with new perspectives.

Assuming the election of this year’s proposed director nominees, we believe we will have a good balance between tenured directors with significant experience with the Company and more recently appointed or elected directors with fresh perspectives, constituting a strong, independent Board that will be well-positioned to navigate the current challenging business environment and accelerate the Company’s growth and accomplishment of key corporate objectives for the benefit of all of our stakeholders.

 

PS Business Parks • 2022 Proxy Statement • 19

COMMITMENT TO DIVERSITY

The Company is committed to ensuring that a diversity of experiences and viewpoints are represented on the Board as well as the Company’s senior management team. As a reflection of the Company’s commitment, the NGS Committee’s Charter provides that, when evaluating possible director candidates, the NGS Committee should consider whether each director reflects a diversity of experience, skills, background, gender, race, and/or ethnicity. In addition, the NGS Committee will ask any search firm that it engages for the purpose of identifying potential director candidates to include diverse candidates who meet applicable search criteria in the pool of potential candidates. Our commitment has led to a Board that reflects diverse perspectives, including a complementary mix of skills, experience, and backgrounds that we believe are paramount to our ability to represent the interests of our stakeholders. Our Board comprises 36% women, and two directors self-identify as being racially diverse or belonging to an underrepresented community. Our Board recognizes the importance of diversity and supports management’s efforts to enhance all aspects of diversity throughout the Company.

NOMINEE QUALIFICATIONS

The NGS Committee has recommended to the Board, and the Board has nominated, eleven of our incumbent directors listed below for re-election to the Board. On March 23, 2022, Dan M. Chandler, III, who served as President and CEO and a member of the Board since 2021, stepped down from his positions with the Company for health reasons and thus has not been nominated for re-election. The Board believes that these nominees provide the Company with the combined skills, experience, diversity, and personal qualities needed for an effective and engaged Board. Seven of the eleven director nominees are independent. If elected, each of the eleven nominees will serve for a one-year term beginning with our Annual Meeting and until our 2023 annual meeting of stockholders, or until their successors, if any, are elected or appointed. Each nominee has agreed to serve if elected.

 

PS Business Parks • 2022 Proxy Statement • 20

We recommend that you vote FOR each nominee.

 

Nominee		Age		Principal Business Background		Director   Since		Committee     Membership
Ronald L. Havner, Jr.		64		Chairman of the Board and Retired Chief Executive Officer of Public Storage and PS Business Parks, Inc.		1998		Investment
Maria R. Hawthorne(1)		62		Interim Chief Operating Officer and Former President and Chief Executive Officer of PS Business Parks, Inc.		2016		Investment (Chair) and Capital
Jennifer Holden Dunbar Presiding Independent Director for 2022(2)		59		Former Partner of Leonard Green & Partners, L.P.		2009		Compensation (Chair) and Audit
M. Christian Mitchell Independent Director		67		Managing partner of THG Advisory Services, LLC		2021		Compensation and Investment
Irene H. Oh Independent Director		44		Executive Vice President and Chief Financial Officer of East West Bancorp, Inc. and East West Bank		2021		Audit and NGS
Kristy M. Pipes Independent Director		62		Retired Managing Director and Chief Financial Officer of Deloitte Consulting		2019		Audit (Chair) and NGS
Gary E. Pruitt Independent Director		72		Retired Chairman and Chief Executive Officer of Univar N.V.		2012		Audit, Compensation, and NGS
Robert S. Rollo Independent Director		74		Retired Senior Partner of Heidrick and Struggles		2013		NGS (Chair) and Compensation
Joseph D. Russell, Jr.		62		President and Chief Executive Officer of Public Storage and former President and Chief Executive Officer of PS Business Parks, Inc.		2003		Capital and Investment
Peter Schultz Independent Director Presiding Independent Director for 2021(2)		74		Retired Chief Executive Officer of The Beacon Group, Inc.		2012		Audit and Capital (Chair)
Stephen W. Wilson(1)		65		Interim President and Chief Executive Officer of PS Business Parks, Inc. and Retired Executive Vice President–Development of AvalonBay Communities, Inc.		2019		Capital and Investment

 

(1)

As previously disclosed, Mr. Chandler took a leave of absence from the Company for health reasons effective January 17, 2022 and stepped down as President and CEO and as a member of the Board on March 23, 2022 due to such health reasons. Mr. Wilson was appointed as Interim President and CEO and Ms. Hawthorne was appointed as Interim Chief Operating Officer effective January 17, 2022. Prior to his appointment as Interim President and CEO, Mr. Wilson qualified as an independent director and, following his interim service as an executive, we expect he will again qualify as an independent director. Mr. Wilson previously served on the Compensation Committee throughout 2021 and until his appointment as Interim President and CEO.

 

(2)	Please see “Corporate Governance and Board Matters—Presiding Independent Director” on page 30.

 

PS Business Parks • 2022 Proxy Statement • 21

DIRECTOR NOMINEES SKILLS SUMMARY

The Board believes that our director nominees provide PS Business Parks with the combined skills, experience, and personal qualities needed for an effective and engaged Board.

 

CEO or Executive Experience

●

●

●

●

●

●

●

●

●

●

Other Public Board Experience

●

●

●

●

●

●

●

●

Relevant Industry Experience

●

●

●

●

●

●

●

Financial Expert or Tax Expertise

●

●

●

●

●

●

●

●

●

Corporate Governance Experience

●

●

●

●

●

●

●

●

●

●

●

M&A / Capital Markets / Capital Allocation Experience

●

●

●

●

●

●

●

●

●

●

Succession Planning / Management Development Experience

●

●

●

●

●

●

●

●

●

Cybersecurity or Risk / Crisis Management Experience

●

●

●

●

●

●

●

●

●

Gender Diversity

●

●

●

●

Racial Diversity (including self-identification as being from an underrepresented community)

●

●

 

PS Business Parks • 2022 Proxy Statement • 22

DIRECTOR NOMINEE BIOGRAPHIES

 

Age: 64   Director since: 1998   Committees: Investment   Director Qualification Highlights:   Extensive leadership experience and Company and industry knowledge; financial and M&A expertise; risk management expertise		Ronald L. Havner, Jr. Chairman of the Board of Public Storage   Mr. Havner has been Chairman of the Board of PS Business Parks since March 1998 and previously served as the Company’s Chief Executive Officer. Mr. Havner has been Chairman of the Board of Trustees of Public Storage (NYSE: PSA), a PS Business Parks affiliate, since August 2011 and was Chief Executive Officer from November 2002 until his retirement effective January 1, 2019. Mr. Havner has served as Chairman of the Board of Directors of another PS Business Parks affiliate, Shurgard Self Storage SA (EURONEXT: SHUR) (Shurgard) since completion of its initial public offering in October 2018. Mr. Havner also serves as a director of AvalonBay Communities, Inc. (NYSE: AVB) and served as director of California Resources Corp. (NYSE: CRC) from December 2014 to May 2018. Mr. Havner was the 2014 Chairman of the Board of Governors of the National Association of Real Estate Investment Trusts, Inc. (NAREIT).   In considering Mr. Havner’s nomination for re-election to the Board, the NGS Committee and the Board considered Mr. Havner’s extensive leadership experience, his knowledge of the Company and the industry from his service as Chairman since 1998 and as the Company’s previous Chief Executive Officer, and his public company board experience.

 

PS Business Parks • 2022 Proxy Statement • 23

Age: 62   Director since: 2016   Committees: Investment (Chair) and Capital   Director Qualification Highlights:   Extensive Company knowledge; operational, leadership, and risk management experience		Maria R. Hawthorne Interim Chief Operating Officer and Former President and Chief Executive Officer of PS Business Parks   Ms. Hawthorne has been the Company’s Interim Chief Operating Officer since January 17, 2022. Previously, she served as Chief Executive Officer and President of the Company from July 2016 and August 2015, respectively, until her retirement on September 1, 2020. In addition, Ms. Hawthorne also served as the Company’s acting Chief Financial Officer from September 2017 to September 2018. Ms. Hawthorne was elected as a member of our Board in July 2016. Ms. Hawthorne previously served as Executive Vice President, Chief Administrative Officer of the Company from July 2013 to August 2015. Prior to that, Ms. Hawthorne served as the Company’s Executive Vice President, East Coast, from February 2011 to July 2013. Ms. Hawthorne served as the Company’s Senior Vice President from March 2004 to February 2011, with responsibility for property operations on the East Coast, including Northern Virginia, Maryland, and South Florida. From June 2001 through March 2004, Ms. Hawthorne was a Vice President of the Company, responsible for property operations in Virginia. From July 1994 to June 2001, Ms. Hawthorne was a Regional Manager of the Company in Virginia. From August 1988 to July 1994, Ms. Hawthorne was a General Manager, Leasing Director, and Property Manager for American Office Park Properties.   Ms. Hawthorne also serves on the Board of Directors for Essex Property Trust (NYSE: ESS), a fully integrated REIT that acquires, develops, redevelops, and manages multifamily apartment communities on the West Coast. She also serves on the Board of Directors for ASGN Incorporated (NYSE: ASGN), a leading provider of IT services and professional solutions, including technology, creative, and digital, across the commercial and government sectors. She is a member of the audit committee of both boards.   In considering Ms. Hawthorne’s nomination for re-election to the Board, the NGS Committee and the Board considered Ms. Hawthorne’s position as Interim Chief Operating Officer, deep Company knowledge, and her expertise in commercial real estate, financial and operational strategies, acquisitions and development, capital markets, enterprise risk management, and leadership development.

 

Age: 59   Director since: 2009   Committees: Compensation (Chair) and Audit   Director Qualification Highlights:   Extensive financial expertise; experience in private equity, investments, and M&A		Jennifer Holden Dunbar Former Partner of Leonard Green & Partners, L.P.   Ms. Dunbar has been a director of PS Business Parks since February 2009. From 1994 to 1998, Ms. Dunbar was a partner with Leonard Green & Partners, L.P., a private equity firm she joined in 1989. Ms. Dunbar is also a director of Big 5 Sporting Goods Corporation (NASDAQ: BGFV), where she serves on the compensation committee and chairs the nominating and corporate governance committee. Since 2015, Ms. Dunbar has served on the board of trustees of various funds in the PIMCO Funds complex, where she is the chair of the investment performance committee and is a member of the audit, governance, and valuation oversight committee of each board. Each of the PIMCO entities is a registered investment company under the Investment Company Act of 1940.   Ms. Dunbar qualifies as one of the Company’s Audit Committee financial experts, and in considering Ms. Dunbar’s nomination for re-election to the Board, the NGS Committee and the Board considered Ms. Dunbar’s financial expertise, experience in private equity, and experience with investments and mergers and acquisitions. She also has valuable experience as a member of several public company boards.

 

PS Business Parks • 2022 Proxy Statement • 24

Age: 67   Director since: 2021   Committees: Compensation and Investment   Director Qualification Highlights:   Extensive operational, leadership, risk management, and corporate governance experience; knowledge and expertise in M&A and management succession and development		M. Christian Mitchell Managing Partner of THG Advisory Services, LLC   Mr. Mitchell has been a director of PS Business Parks since September 2021. Mr. Mitchell serves as a managing partner of THG Advisory Services, LLC, an alternative investment and advisory firm. Mr. Mitchell is a retired senior partner at Deloitte & Touche LLP, where he served as the national or regional managing partner for various practices of the firm and was a founding member of the Board of Directors of Deloitte Consulting USA. Mr. Mitchell is a director of Pacific Premier Bancorp, Inc. (NASDAQ: PPBI), a regional bank holding company; Western Asset Mortgage Capital Corporation (NYSE: WMC), a mortgage REIT; and Parsons Corp. (NYSE: PSN), a global solutions provider to the defense, intelligence, and critical infrastructure markets. Mr. Mitchell also serves as the vice chairman of the Board of Directors of Marshall & Stevens, a national valuation and financial advisory firm; as a director of Huntington Memorial Hospital, a not-for-profit hospital; and as chairman emeritus of the National Association of Corporate Directors (NACD), Pacific Southwest Chapter.   In considering Mr. Mitchell’s nomination for re-election to the Board, the NGS Committee and the Board considered Mr. Mitchell’s deep management and leadership experience, having held several senior leadership positions during his career, along with his experience in corporate governance.

 

Age: 44   Director since: 2021   Committees: Audit and NGS   Director Qualification Highlights:   Extensive leadership, financial, and risk management experience		Irene H. Oh Executive Vice President and Chief Financial Officer of East West Bancorp, Inc. and East West Bank   Ms. Oh has been a director of PS Business Parks since April 2021. Ms. Oh has served as Executive Vice President and Chief Financial Officer of East West Bancorp, Inc. and East West Bank (NASDAQ: EWBC) (East West), a bank holding company and its subsidiary bank that operates over 120 locations in the U.S. and Greater China, since January 2010. She has held various leadership roles at East West since joining in 2004. Prior to joining East West, Ms. Oh held positions at Deloitte and Goldman Sachs. Ms. Oh serves on the Board of Directors and the audit committee of the United Way of Greater Los Angeles.   Ms. Oh qualifies as one of the Company’s Audit Committee financial experts, and in considering Ms. Oh’s nomination for re-election to the Board, the NGS Committee and the Board considered Ms. Oh’s extensive financial analysis and operational expertise. Ms. Oh also brings deep management and leadership experience to the Board, having held several senior leadership positions during her career.

 

PS Business Parks • 2022 Proxy Statement • 25

Age: 62   Director since: 2019   Committees: Audit (Chair) and NGS   Director Qualification Highlights:   Financial and operational expertise; extensive leadership and risk management experience		Kristy M. Pipes Retired Managing Director and Chief Financial Officer of Deloitte Consulting   Ms. Pipes has been a director of PS Business Parks since July 2019. Ms. Pipes was Managing Director and Chief Financial Officer of Deloitte Consulting, a management consultancy firm with operations in the United States, India, Germany, and Mexico, where she managed the finance function. Ms. Pipes held various leadership positions, including serving on the firm’s Management Committee and Consulting Operations Committee. Prior to joining Deloitte in 1999, Ms. Pipes was Vice President and Manager, Finance Division, at Transamerica Life Companies and Senior Vice President and Chief of Staff for the President and Chief Executive Officer (among other senior management positions) at First Interstate Bank of California. Ms. Pipes serves as a trustee of Public Storage (NYSE: PSA) and as a director of ExlService Holdings, Inc. (NASDAQ: EXLS) and Savers/ValueVillage.   Ms. Pipes qualifies as one of the Company’s Audit Committee financial experts, and in considering Ms. Pipes’s nomination for re-election to the Board, the NGS Committee and the Board considered Ms. Pipes’s extensive financial analysis, operational, technology, and risk management expertise. Ms. Pipes also brings deep management and leadership experience to the Board, having held several senior leadership positions during her career.

 

Age: 72   Director since: 2012   Committees: Audit, Compensation, and NGS   Director Qualification Highlights:   Extensive leadership, financial, and risk management experience; experience as trustee of Public Storage		Gary E. Pruitt Retired Chairman and Chief Executive Officer of Univar N.V.   Mr. Pruitt has served as a director of PS Business Parks since February 2012. He served as Chairman and Chief Executive Officer of Univar N.V. (Univar) from 2002 until his retirement as Chief Executive Officer in 2010 and as Chairman in 2011. Univar is a chemical distribution company with distribution centers in the United States, Canada, and Europe. Mr. Pruitt is also a director of Itron, Inc. (NASDAQ: ITRI). He is a former trustee of Public Storage (NYSE: PSA) and a former director of Esterline Technologies Corp. (NYSE: ESL).   Mr. Pruitt qualifies as one of the Company’s Audit Committee financial experts, and in considering Mr. Pruitt’s nomination for re-election to the Board, the NGS Committee and the Board considered Mr. Pruitt’s leadership, financial, and risk management experience as Chairman and Chief Executive Officer at Univar and his public company board experience.

 

PS Business Parks • 2022 Proxy Statement • 26

Age: 74   Director since: 2013   Committees: NGS (Chair) and Compensation   Director Qualification Highlights:   Extensive knowledge and expertise in executive recruitment, compensation, and talent management; experience in corporate governance		Robert S. Rollo Retired Senior Partner of Heidrick and Struggles   Mr. Rollo has served as a director of PS Business Parks since October 2013. Mr. Rollo most recently served as a Senior Partner at Heidrick and Struggles, an international leadership advisory and executive search firm, from 2006 until his retirement in 2012. Mr. Rollo is a past trustee of the University of Southern California and is chairman emeritus of the NACD, Southern California Chapter.   In considering Mr. Rollo’s nomination for re-election to the Board, the NGS Committee and the Board considered Mr. Rollo’s extensive knowledge of and expertise in executive recruitment, compensation, and development and talent management, along with his experience in corporate governance.

 

Age: 62   Director since: 2003   Committees: Capital and Investment   Director Qualification Highlights:   Leadership and risk management experience; extensive Company and industry knowledge		Joseph D. Russell, Jr. President and Chief Executive Officer of Public Storage   Mr. Russell has been a director of PS Business Parks since August 2003. Mr. Russell has been President and Chief Executive Officer of Public Storage since July 2016 and January 2019, respectively. Mr. Russell also joined the Public Storage Board of Trustees in January 2019. Previously, Mr. Russell was Chief Executive Officer of PS Business Parks from August 2003 until July 2016 and President of PS Business Parks from September 2002 to August 2015. Mr. Russell serves on the Advisory Board of Governors of NAREIT and previously served on the Board of Directors of the Self-Storage Association. Before joining PS Business Parks, Mr. Russell was employed by Spieker Properties (Spieker; previously listed on the NYSE), an owner and operator of office and industrial properties in Northern California, and its predecessor, for more than ten years, becoming an officer of Spieker when it became a publicly held REIT in 1993.   In considering Mr. Russell’s nomination for re-election to the Board, the NGS Committee and the Board considered Mr. Russell’s leadership and risk management experience; Company and industry knowledge, including his more than 25-year involvement with publicly held REITs; and extensive experience with office and industrial real estate.

 

PS Business Parks • 2022 Proxy Statement • 27

Age: 74   Director since: 2012   Committees: Audit and Capital (Chair)   Director Qualification Highlights:   Leadership and senior management experience; extensive knowledge of the real estate industry		Peter Schultz Retired Chief Executive Officer and Director of The Beacon Group, Inc.   Mr. Schultz has been a director of PS Business Parks since February 2012. He served as President, Chief Executive Officer, and a director of The Beacon Group, Inc. (Beacon) and its affiliates for more than 25 years until his retirement in 2010. Beacon and its affiliates were engaged in the development and management of more than three million square feet of retail, industrial, hospitality, and residential projects. Prior to working at Beacon, Mr. Schultz was employed by Arthur Andersen as a certified public accountant in its tax department.   Mr. Schultz is a member of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants.   Mr. Schultz qualifies as one of the Company’s Audit Committee financial experts, and in considering Mr. Schultz’s nomination for re-election to the Board, the NGS Committee and the Board considered Mr. Schultz’s leadership and extensive real estate experience as President, Chief Executive Officer, and director of Beacon and its affiliates and his extensive financial expertise gained from his almost forty years of experience in finance.

 

Age: 65   Director since: 2019   Committees: Capital and Investment   Director Qualification Highlights:   Extensive leadership, operational, and financial experience, as well as knowledge of the real estate industry		Stephen W. Wilson Interim President and Chief Executive Officer PS Business Parks Retired Executive Vice President—Development of AvalonBay Communities, Inc.   Mr. Wilson has been the Company’s Interim President and Chief Executive Officer since January 17, 2022. Mr. Wilson has been a director of PS Business Parks since July 2019. Mr. Wilson was Executive Vice President—Development of AvalonBay Communities, Inc. (NYSE: AVB) (AvalonBay), a real estate investment trust that develops, redevelops, acquires, and manages multifamily communities in the United States. Mr. Wilson held various senior leadership positions and was responsible for development activities on the West Coast and Mid-Atlantic at AvalonBay. Prior to joining AvalonBay in 1988, Mr. Wilson was Senior Vice President and Chief Operating Officer of SU Development, Inc. and Senior Vice President of Continental Pacific, Inc., with responsibilities in development, debt and equity financing, property management, and institutional sales.   Mr. Wilson is a member of the Urban Land Institute (ULI), former chair of the ULI Transit Oriented Development Council, and a member of The American Institute of Certified Public Accountants.   In considering Mr. Wilson’s nomination for re-election to the Board, the NGS Committee and the Board considered Mr. Wilson’s position as Interim President and Chief Executive Officer and extensive real estate development, finance, and accounting experience. In addition, the Board considered Mr. Wilson’s service in several senior leadership positions at public and private companies.

 

PS Business Parks • 2022 Proxy Statement • 28

CORPORATE GOVERNANCE AND BOARD MATTERS

CORPORATE GOVERNANCE FRAMEWORK

The Board has adopted the following corporate governance documents, which, along with our charter and bylaws, establish the framework for our corporate governance and outline the general practice of our Board with respect to Board structure, function, conduct, and Board and committee organization:

 

●

Corporate Governance Guidelines

 

●

Charters of our standing committees of the Board (the Committee Charters)

 

●

Business Conduct Standards applicable to our officers and employees

 

●

Directors’ Code of Ethics

 

●

Code of Ethics for Senior Financial Executives

Our current Corporate Governance Guidelines, Business Conduct Standards, Directors’ Code of Ethics, Code of Ethics for Senior Financial Executives, and Committee Charters are available online in the Investor Relations section of our website, psbusinessparks.com, or will be delivered to you by mail upon your request in writing to the Company’s Investor Services Department, 701 Western Avenue, Glendale, California 91201.

The NGS Committee reviews the Corporate Governance Guidelines at least annually and makes recommendations for any changes to the Board. We will disclose any substantive amendments or waivers to our ethics policies and standards on our website or in accordance with the Securities and Exchange Commission (SEC) and New York Stock Exchange (NYSE) requirements.

BOARD ENGAGEMENT AND OVERSIGHT

The Board and our senior leadership team engage regularly and collaborate closely to ensure the Company meets its commitments to all stakeholders, including our employees, customers, and our stockholders. One of the Board’s highest priorities continues to be guiding the development and execution of the Company’s long-term strategy. The Board remains focused on working with management to develop strategies to accelerate growth and generate value to stockholders.

The Board is also actively overseeing management’s efforts and activities on ESG initiatives. For example, the NGS Committee assists the Board in overseeing the Company’s (i) human capital development, including matters of diversity and inclusion, (ii) sustainability initiatives, including ESG matters, and (iii) governance policies.

BOARD LEADERSHIP

We have separate individuals serving as Chairman of the Board and as CEO. Ronald L. Havner, Jr., has served as Chairman of the Board since March 1998. Mr. Havner has been involved with the Company since its founding and has extensive knowledge of the Company, the markets in which it operates, and the real estate industry. Stephen W. Wilson was appointed Interim President and CEO effective January 17, 2022.

We do not have a policy against one individual holding the positions of Chairman and CEO. Rather, the Board evaluates the desirability of having a combined or separate Chairman and CEO from time to time and adopts a structure based on what it believes to be in the best interests of PS Business Parks and its stockholders. Currently, the Board believes that having separate Chairman and CEO roles serves the interests of the Company and its stockholders well.

 

PS Business Parks • 2022 Proxy Statement • 29

PRESIDING INDEPENDENT DIRECTOR

The Board has established a position of Presiding Independent Director to provide an independent director with a leadership role on the Board. The Presiding Independent Director presides at meetings of all independent directors or all non-management directors in executive sessions without the presence of management. These meetings are held regularly in connection with each regularly scheduled Board meeting and at the request of any independent or non-management director. In addition, the independent directors meet separately at least once annually. These sessions are designed to encourage open discussion of any matter of interest without the CEO or any other members of management present. The position of Presiding Independent Director generally rotates annually among the chairs of the standing committees of the Board. Peter Shultz was the Presiding Independent Director for 2021. Jennifer Holden Dunbar is the Presiding Independent Director for 2022.

COMMITTEES OF THE BOARD

Our Board has five standing committees: the Audit Committee, the Compensation Committee, the NGS Committee, the Capital Committee, and the Investment Committee. Each of the standing committees other than the Investment Committee operates pursuant to a written charter, which can be viewed online in the Investor Relations section of our website, psbusinessparks.com. Any stockholder may obtain a printed copy by writing to the Company’s Corporate Secretary at PS Business Parks, Inc., 701 Western Avenue, Glendale, California 91201.

The following table sets forth the current membership of the Board’s five standing committees, each of which is described below:

 

Director

Audit

Compensation

NGS

Capital

Investment

Ronald L. Havner, Jr.

Member

Maria R. Hawthorne

Member

Chair

Jennifer H. Dunbar

Member

Chair

M. Christian Mitchell

Member

Member

Irene H. Oh

Member

Member

Kristy M. Pipes

Chair

Member

Gary E. Pruitt

Member

Member

Member

Robert S. Rollo

Member

Chair

Joseph D. Russell, Jr.

Member

Member

Peter Schultz

Member

Chair

Steven W. Wilson(1)

Member

Member

(1)   Mr. Wilson was removed from the Compensation Committee effective January 17, 2022 in connection with his appointment as Interim President and Chief Executive Officer.

Audit Committee

The primary functions of the Audit Committee, as set forth in its charter, are to:

 

●

oversee the integrity of our financial statements;

 

●

oversee compliance with legal and regulatory requirements;

 

●

consider the qualifications, independence, and performance of the independent registered public accounting firm;

 

●

appoint, evaluate, and determine the compensation of the independent registered public accounting firm;

 

PS Business Parks • 2022 Proxy Statement • 30

●

approve all services performed by the independent registered public accounting firm and related fees;

 

●

review the scope and results of internal audits, the Company’s internal controls over financial reporting, and the performance of the Company’s internal audit function;

 

●

review and approve the scope of the annual audit, the audit fee, and the financial statements;

 

●

prepare the Audit Committee Report for inclusion in the annual proxy statement;

 

●

oversee the accuracy and reliability of the Company’s quantitative public disclosures relating to ESG matters; and

 

●

annually review its charter and performance.

Each member of the Audit Committee: (1) meets the financial literacy and independence standards of the NYSE; (2) qualifies as an audit committee financial expert pursuant to the rules of the SEC; and (3) qualifies as independent pursuant to the rules of the SEC and NYSE.

Additionally, the Audit Committee reviews and discusses with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment policies.

The Audit Committee also oversees cybersecurity and other IT risks affecting the Company. Management reports regularly to the Audit Committee regarding information security. We consider each member of our Audit Committee to possess information security experience by way of their oversight responsibilities over this area. See “Corporate Governance and Board Matters—Cybersecurity” on page 35 for more information about how the Audit Committee and the Company are committed to properly addressing cybersecurity risks we face in today’s global business environment.

Compensation Committee

The primary functions of the Compensation Committee, as set forth in its charter, are to:

 

●

determine, either as a committee or together with other independent directors, the compensation of the Company’s CEO;

 

●

determine the compensation of other executive officers;

 

●

administer the Company’s equity and incentive compensation plans;

 

●

review and discuss with management the Compensation Discussion and Analysis (CD&A) to be included in the proxy statement and incorporated by reference into the Annual Report on Form 10-K and to recommend to the Board for inclusion of the CD&A in the Annual Report on Form 10-K and proxy statement;

 

●

provide a description of the processes and procedures for the consideration and determination of executive compensation for inclusion in the Company’s annual proxy statement;

 

●

periodically review and evaluate the compensation for directors and recommend changes as appropriate;

 

●

annually review the Company’s process for evaluating potential risks related to the Company’s compensation policies and practices and the Company’s management of such risks;

 

●

review the advisory stockholder votes on the Company’s executive compensation programs;

 

PS Business Parks • 2022 Proxy Statement • 31

●

produce the Compensation Committee Report for inclusion in the annual proxy statement; and

 

●

annually review its charter and performance.

The Compensation Committee has not delegated any of its responsibilities to individual members of the Compensation Committee or to a subcommittee of the Compensation Committee, although it has the discretion to do so. As required by its charter, the Compensation Committee and, in some instances, the Compensation Committee and all other independent members of the Board, made final compensation decisions for executive officers in 2021, including the NEOs set forth in the Summary Compensation Table on page 53 below. The Compensation Committee has the sole authority to retain outside compensation consultants for advice, but historically and for 2021 has not done so, relying instead on surveys of publicly available information about senior executive compensation at similar companies.

Each member of the Compensation Committee qualifies as independent pursuant to the rules of the SEC and NYSE, including the heightened independence requirements for compensation committee members.

Compensation Committee Interlocks and Insider Participation. No executive officer of PS Business Parks served on the compensation committee or board of directors of any other entity that has an executive officer who also served on our Compensation Committee or Board at any time during 2021, and no member of the Compensation Committee had any relationship with the Company requiring disclosure under Item 404 of SEC Regulation S-K.

Nominating, Governance, and Sustainability Committee

The primary functions of the NGS Committee, as set forth in its charter, are to:

 

●

identify, evaluate, and make recommendations to the Board for director nominees for each annual meeting of stockholders and fill any vacancy on the Board;

 

●

oversee the Company’s corporate governance policies and review and assess the adequacy of those policies on an ongoing basis and recommend any changes to the Board;

 

●

oversee the annual Board assessment of Board performance;

 

●

assist the Board in overseeing the Company’s strategies for human capital development, including matters of diversity and inclusion;

 

●

oversee the Company’s sustainability initiatives, including ESG matters;

 

●

oversee the Company’s political and charitable contributions; and

 

●

annually review its charter and performance.

Our Board has delegated to the NGS Committee responsibility for recommending nominees for election to the Board. Other duties and responsibilities of the NGS Committee include periodically reviewing the structure, size, composition, and operation of the Board and each Board committee; recommending assignments of directors to Board committees; conducting a preliminary review of director independence; and overseeing director orientation. The principles set forth in its charter further guide the NGS Committee.

Director Qualifications. We believe that members of the Board should have high professional and personal ethics and values. They should have broad experience at the policy-making level in business or other relevant experience. They should be committed to enhancing stockholder value and should have sufficient time to carry

 

PS Business Parks • 2022 Proxy Statement • 32

out their duties and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform all director duties responsibly. In general, the Board seeks to add directors who meet the independence requirements of the NYSE rules. In addition, director candidates must annually submit a completed director questionnaire concerning matters related to the determination of their independence, including the heightened independence standards for audit committee and compensation committee members, and whether a candidate qualifies as an audit committee financial expert, and all director candidates must satisfactorily complete a background investigation by a third-party firm prior to joining the Board.

Identifying and Evaluating Nominees for Directors. The NGS Committee utilizes a variety of methods for identifying and evaluating nominees for director.

The NGS Committee regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated or otherwise arise, the NGS Committee considers various potential candidates for director.

Candidates may come to the attention of the NGS Committee through current Board members, professional search firms, stockholders, or other persons. These candidates are evaluated at meetings of the NGS Committee and may be considered at any point during the year.

The NGS Committee considers properly submitted stockholder nominations of candidates for the Board in the same manner as other candidates. Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by the NGS Committee prior to the issuance of the proxy statement for the annual meeting. Any materials provided by a stockholder in connection with the recommendation of a director candidate are forwarded to the NGS Committee. The NGS Committee may also review materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder. In evaluating such nominations, the NGS Committee seeks to achieve a balance of knowledge, experience, and capability on the Board. Consistent with our commitment to Board diversity, the NGS Committee will ask any search firm that it engages for the purpose of identifying potential director candidates to include diverse candidates who meet applicable search criteria in the pool of potential candidates.

We do not have any other policies or guidelines that limit the selection of director candidates by the NGS Committee, and the NGS Committee and the Board have and continue to exercise broad discretion to select director candidates who will best serve the Board and the Company in the current and anticipated business environment.

Capital Committee

The Capital Committee focuses on assessing, monitoring, and optimizing the Company’s capital expenditures, including development and redevelopment opportunities and the Company’s annual recurring capital expenditures, which include maintenance capital, tenant improvements, and leasing commissions. The goal is to position the Company to maximize the long-term benefits of its capital expenditures while ensuring its assets are well maintained and positioned in the marketplace to meet the needs of the Company’s current and prospective customers. The Capital Committee operates pursuant to a formal charter.

Investment Committee

The Investment Committee focuses on the Company’s acquisitions, dispositions, and other investment transactions, and has the authority to approve such transactions up to a cumulative maximum value of $30 million per fiscal quarter. The Investment Committee meets as needed as and when potential transactions arise, and is intended to provide a forum through which the Board can more quickly review and approve qualifying transactions. The unanimous consent of all Investment Committee members is required for all approvals, and

 

PS Business Parks • 2022 Proxy Statement • 33

management provides a report to the Board at each regularly scheduled Board meeting of all transactions approved by the Investment Committee. The Investment Committee does not operate pursuant to a formal charter but does operate pursuant to these Board-approved guidelines.

PROXY ACCESS

In 2021, our Board amended our bylaws to provide for proxy access, thereby giving our stockholders an even greater voice in director elections. A stockholder, or a group of up to 20 stockholders, owning at least 3% of the Company’s outstanding Common Stock continuously for at least three years may include in our proxy materials director nominees constituting up to the greater of two directors or 20% of the number of directors on the Board, provided that the stockholder and the nominees satisfy the eligibility requirements in our bylaws.

MAJORITY VOTE REQUIREMENTS FOR DIRECTORS

Our bylaws provide that, in an uncontested election of directors, a majority of all the votes cast for and against a nominee at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director. Our Corporate Governance Guidelines provide that each director nominee who does not receive at least a majority of the votes cast with respect to that director must submit his or her resignation to the Board. The NGS Committee will then make a recommendation to the Board about whether to accept or reject the resignation or take other action. The Board will act on any such recommendation within 90 days from the date the election results were certified by the Inspector of Election and publicly disclose its decision and rationale in a Form 8-K. If a director’s resignation is accepted by the Board, the Board may fill the resulting vacancy or decrease the size of the Board in accordance with our bylaws.

BOARD RETIREMENT POLICY

Our Corporate Governance Guidelines provide that no person will be nominated for election to the Board for any term unless he or she is 75 years of age or younger on the first day of the term. The Board has discretion to make exceptions to the policy, including to provide for a transition period.

BOARD RESPONSIBILITIES AND OVERSIGHT OF RISK MANAGEMENT

The Board is responsible for overseeing our Company’s approach to major risks and our policies for assessing and managing these risks. In connection with its oversight function, the Board regularly receives presentations from management on areas of risk facing our business. The Board and management actively engage in discussions about these potential and perceived risks to the business.

The Board’s risk management processes include a comprehensive ERM framework focused on:

 

●

evaluating the risks facing the Company and aligning the Company’s efforts to mitigate those risks with its strategy and risk appetite;

 

●

communicating and improving the Company’s understanding of its key risks and responsive actions; and

 

●

providing the Board with a measurable way to exercise its oversight responsibilities over the Company’s risk assessment and risk management efforts.

In addition, the Board is assisted in its risk oversight responsibilities by the five standing Board committees (as described below), which have assigned areas of risk oversight responsibility for various matters, as described in the Committee Charters and as provided in the NYSE rules.

The Audit Committee, which comprises entirely independent directors and financial experts, is responsible for assisting the Board in fulfilling its oversight of the effectiveness of the accounting and financial reporting

 

PS Business Parks • 2022 Proxy Statement • 34

processes of the Company and audits of its financial statements, including the integrity of the Company’s financial statements; the Company’s compliance with legal and regulatory requirements; the independent registered public accountants’ qualifications, independence, and performance; and the scope and results of internal audits, the Company’s internal controls over financial reporting, and the performance of the Company’s internal audit function.

The Audit Committee also oversees cybersecurity and other information technology risks affecting the Company. Management reports quarterly to the Audit Committee regarding information security. All five members of our Audit Committee have cybersecurity experience from their principal occupation or other professional experience or education. See “Corporate Governance—Cybersecurity” on page 35 for more information about how the Audit Committee and the Company are committed to properly addressing the cybersecurity risks we face.

The Compensation Committee, which comprises entirely independent directors, oversees the compensation of our CEO and other executive officers and evaluates compensation incentives to ensure they will motivate senior management to grow long-term stockholder return without taking undue risk. The Compensation Committee annually considers a report from management in their review of the Company’s processes for evaluating potential risks related to compensation policies and practices applicable to all employees and the Company’s management of such risks.

In early 2022, the Compensation Committee considered management’s review of the target metrics for all of our employee incentive compensation plans and management’s conclusion that the Company’s incentive compensation plans, practices, and policies (1) properly incentivized employees to achieve short- and long-term Company goals, (2) did not create any significant motivation or opportunity for employees to take undue risks to achieve an incentive compensation award, and (3) are not reasonably likely to have a material adverse effect on the Company. The Compensation Committee, following discussion, reached a similar conclusion. The Compensation Committee expects to further review compensation risks from time to time.

The Nominating, Governance, and Sustainability Committee, which comprises entirely independent directors, assists the Board by identifying individuals qualified to become Board members and makes recommendations on Board appointments and nominations. The NGS Committee also supports the Board in identifying and overseeing risks associated with ESG and sustainability matters and, as appropriate, coordinates with other Board committees on such matters (such as the Audit Committee with respect to internal controls regarding ESG reporting and the Compensation Committee with respect to ESG-related compensation metrics).

The Capital Committee oversees the optimization of the Company’s capital expenditures. The Capital Committee’s goal is to position the Company to maximize the long-term benefit of its capital expenditures while also ensuring the Company’s assets are well maintained and positioned to meet the needs of its current and prospective customers.

The Investment Committee assists the Board with its review and approval of proposed acquisitions, dispositions, and other investment transactions. The Investment Committee’s goal is to facilitate the expeditious review of the Company’s investment transactions and to provide oversight and Board-level direction to management so that management can execute on these transactions against the Company’s strategic plan.

The Board committees also hear reports from members of management to enable each committee to identify, discuss, understand, and manage risk. The chair of each of the Board’s standing committees reports on interim individual committee discussions to the full Board at each Board meeting. All directors have access to management in the event a director wishes to follow up on items discussed outside of Board meetings.

CYBERSECURITY

PS Business Parks devotes significant resources to protecting and continuing to improve the security of our computer systems, software, networks, and other technology assets. Our security efforts are designed to preserve the confidentiality, integrity, and continued availability of all information owned by, or in the care of, the

 

PS Business Parks • 2022 Proxy Statement • 35

Company and protect against, among other things, cybersecurity attacks by unauthorized parties attempting to obtain access to confidential information, destroy data, disrupt or degrade service, sabotage systems, or cause other damage.

Board Oversight

Our Board considers cybersecurity risk as one of the most significant risks to our business. The Board has delegated to the Audit Committee oversight of cybersecurity and other information technology risks affecting the Company. The Audit Committee periodically evaluates our cybersecurity strategy to ensure its effectiveness. Management provides quarterly reports to the Audit Committee regarding cybersecurity and other information technology risks, and the Audit Committee in turn provides reports to the full Board.

As part of our board refreshment efforts in recent years we have focused on adding directors with information technology skills. Currently, nine members of our Board, including all five members of our Audit Committee, have cybersecurity experience from their principal occupation or other professional experience or education. In addition, several members of our Audit Committee attended third-party director education courses on cybersecurity and privacy issues and trends in 2021.

Cybersecurity Risk Identification and Management

We identify and address information security risks by employing a defense-in-depth methodology that provides multiple, redundant defensive measures in case a security control fails or a vulnerability is exploited. We leverage internal resources, along with strategic external partnerships, to mitigate cybersecurity threats to the Company. We deploy both commercially available solutions and proprietary systems to actively manage threats to our information technology environment. We are audited and certified by a third-party information security firm to ensure we comply with these rigorous threat reduction control standards. We regularly engage appropriate external resources regarding emerging threats and the security posture of our systems in order to navigate the diverse cybersecurity landscape.

The Company takes data protection seriously and ensures every employee understands their role in keeping PS Business Parks safe from cyber-attacks. We employ a robust information security and training program for our employees, including mandatory computer-based training, regular internal communications, and ongoing end-user testing to measure the effectiveness of our information security program. As part of this commitment, we require our employees to complete a Cybersecurity Awareness eCourse each year. In addition, we have an established schedule and process for regular phishing awareness campaigns that are designed to emulate real-world contemporary threats and provide immediate feedback (and, if necessary, additional training or remedial action) to employees. As an additional measure, the Company performs an annual table-top incident response simulation.

We have experienced no material information security breaches in the last three years. As such, we have not spent any material amount of capital on addressing information security breaches in the last three years, nor have we incurred any material expenses from penalties and settlements related to a material breach during this same time.

POLITICAL AND CHARITABLE CONTRIBUTIONS

Our NGS Committee oversees the Company’s political and charitable contributions and other public policy matters. In order to facilitate accountability and informed decision-making with respect to the Company’s political and charitable contributions, the NGS Committee has adopted certain Political and Charitable Contribution Guidelines, which apply to contributions or expenditures of corporate funds to various political entities, charitable organizations, and certain causes. Contributions subject to these guidelines must be approved by management and/or the NGS Committee. All contributions are required to be reported quarterly to the NGS Committee.

 

PS Business Parks • 2022 Proxy Statement • 36

BOARD ORIENTATION AND EDUCATION

Each new director participates in an orientation program and receives materials and briefings concerning our business, industry, management, and corporate governance policies and practices. Continuing education is provided for all directors through Board materials and presentations, discussions with management, and the opportunity to attend external board education programs. In addition, all Board members have access to resources of the NACD through a Company membership.

DIRECTOR INDEPENDENCE

The Board evaluates the independence of each director annually based on information supplied by the directors and the Company, and on the recommendations of the NGS Committee. The Corporate Governance Guidelines require that a majority of the directors be independent in accordance with the requirements of the NYSE. A director qualifies as independent unless the Board determines, in accordance with NYSE rules, that the director does not satisfy the minimum requirements for independence or determines that the director has a material relationship with PS Business Parks, based on all relevant facts and circumstances. Material relationships may include commercial, industrial, consulting, legal, accounting, charitable, family, professional, personal, and other relationships. The Board also considers the director’s relationships with Public Storage, our largest stockholder.

Following its annual review of each director’s independence, the NGS Committee in February 2022 recommended to the Board, and the Board determined, that (i) each of Jennifer Holden Dunbar, M. Christian Mitchell, Irene H. Oh, Kristy M. Pipes, Gary E. Pruitt, Robert S. Rollo, and Peter Schultz is independent pursuant to the rules of the NYSE, and (ii) each Audit Committee member and each Compensation Committee member meets the additional independence requirements of the rules of the NYSE and SEC. Stephen W. Wilson, who has historically qualified as an independent director, will not qualify as such during his term as Interim President and CEO. The Company expects that following this interim service he will again qualify as independent.

COMMUNICATIONS WITH THE BOARD

The Company provides a process by which stockholders and interested parties may communicate with the Board. Communication to the Board should be addressed to: Board of Directors, c/o Corporate Secretary, PS Business Parks, Inc., 701 Western Avenue, Glendale, California 91201. Communications intended for a specified individual director or group of directors should be addressed to the director(s) c/o  Corporate Secretary at the above address, and all such communications received will be forwarded to the designated director(s).

BOARD AND COMMITTEE MEETINGS AND ATTENDANCE

The Board meets at regularly scheduled intervals and may hold additional special meetings as necessary or desirable in furtherance of its oversight responsibilities. As described above, the non-management directors generally meet in executive session without the presence of management in connection with each regularly scheduled Board meeting.

In 2021, the Board held eleven meetings, including videoconference and telephonic meetings. During 2021, all directors attended at least 75% of the meetings held by the Board and all committees of the Board on which each director served. We do not have a policy regarding directors’ attendance at the annual meeting of stockholders, but directors are encouraged to attend. All of our directors attended the 2021 annual meeting of stockholders.

 

PS Business Parks • 2022 Proxy Statement • 37

The following lists the number of meetings held by each committee in 2021:

 

Committee		Number of  Meetings in 2021
Audit		4
Compensation		8
Nominating, Governance, and Sustainability		7
Capital		3
Investment		–

COMPENSATION OF DIRECTORS

The Compensation Committee periodically reviews the Company’s non-employee director compensation and recommends any changes to the Board. The Board makes the final determination as to director compensation. The Board has approved the mix of cash and equity compensation described below.

Retainers and Meeting Fees. Non-employee directors (except for current executives of PS Business Parks or its affiliates, including Public Storage and Shurgard) receive annual cash retainers (paid quarterly and pro-rated for any partial year of service) for serving on the Board and for chairing a committee, and cash payments for attending Board and committee meetings (including all videoconference and telephonic meetings).

The following is the current retainer/fee schedule:

 

Compensation		Amount
Board member retainer (annual)		$	25,000
Chairman of the Board supplemental retainer (annual)			15,000
Audit Committee Chair’s supplemental retainer (annual)			10,000
Other standing committee chairs’ supplemental retainer (annual)			5,000
Board or committee per meeting attendance fee			1,000

Equity Awards. Each new non-employee director whom the Board determines to be independent, upon the date of his or her initial election by the Board or the stockholders to serve as a non-employee director, is granted a non-qualified stock option to purchase 10,000 shares of Common Stock, which vests in five equal annual installments beginning one year from the date of grant or the annual stockholders meeting date in that year, whichever is earlier, subject to continued service. Directors who previously served as Company executives are not eligible to receive this award.

Annually, each non-employee director receives a non-qualified stock option to purchase 2,000 shares of Common Stock, which vests in five equal annual installments beginning one year from the date of grant or the annual stockholders meeting date in that year, whichever is earlier, subject to continued service. The annual grants are made immediately following the annual meeting of stockholders at the closing price of the Common Stock on the NYSE on such date.

Upon retirement of a non-employee director from the Board, all outstanding options vest effective on the date of retirement and the director has one year to exercise all vested options. A retirement shall have occurred if (i) a non-employee director is not nominated for re-election pursuant to the Company’s mandatory retirement policy; or (ii) a non-employee director ceases service on the Board and the non-employee director has a combined age and years of service of at least 80 years, where the non-employee director is at least age 55 and has provided at least

 

PS Business Parks • 2022 Proxy Statement • 38

10 years of Service (as defined in the 2012 Equity and Performance-Based Incentive Compensation Plan (the 2012 Plan)) to the Company (including its subsidiaries and affiliates).

Each non-employee director who joins the Board receives a grant of 10,000 deferred stock units that vest in ten equal annual installments on each of the first ten anniversaries of the date the director commences service on the Board, subject to certain conditions. The awards are intended to retain and reward long-term service on the Board and to provide equity compensation to Board members. Directors receive dividend equivalents on vested retirement shares. Directors who are former Company employees do not earn retirement shares for Board service until their completion of participation in the Company’s equity incentive plans as a former employee (i.e., until all unvested outstanding equity awards received by the former employee for his/her service as an employee have vested).

Director Stock Ownership Guidelines. Pursuant to the Corporate Governance Guidelines, each non-management director is encouraged to have a significant stock ownership in the Company. All directors are expected, within three years of initial election, to own at least $100,000 of Common Stock of the Company, as determined using the per-share value on the date of acquisition. All of our directors are in compliance with this stock ownership requirement.

Director Compensation in 2021. The following table presents the compensation provided by the Company to our directors for the year ended December 31, 2021.

 

Director		Fees Earned or Paid in Cash				Director Retirement Shares(2)				Option Awards(3)				All Other Compensation(4)				Total
Dan “Mac” Chandler, III(1)			-				-				-				-				-
Ronald L. Havner, Jr.			$49,000				-				$30,860				$88,000				$167,860
Maria R. Hawthorne			37,000				-				30,860				95,659				163,519
Jennifer Holden Dunbar			55,000				-				30,860				88,000				173,860
M. Christian Mitchell			7,250				-				135,600				-				142,850
Irene H. Oh			22,500				-				154,300				-				176,800
Kristy M. Pipes			54,000				$175,480				30,860				15,500				275,840
Gary E. Pruitt			41,000				175,480				20,700				79,200				316,380
Robert S. Rollo			53,000				80,870				20,700				67,250				221,820
Joseph D. Russell			-				-				30,860				-				30,860
Peter Schultz			47,000				175,480				30,860				79,200				332,540
Stephen W. Wilson			42,000				173,330				30,860				15,500				261,690
Total		$	407,750			$	780,640			$	547,320			$	528,309			$	2,264,019

 

(1)	Dan “Mac” Chandler, III, our former President and CEO, did not receive any compensation for service as a director during 2021.

 

(2)

Upon commencement of board service, each non-employee director receives a grant of 10,000 deferred stock units that vest in ten equal annual installments over the duration of their board service and are payable in shares of Common Stock upon retirement, subject to certain conditions. For a more detailed discussion, refer to “Compensation of Directors—Equity Awards” above. The amounts shown for each director reflect the portion of the grant date fair value allocable to units that vested in 2021. At December 31, 2021, Mr. Havner and Ms. Dunbar were each entitled to receive 10,000 fully-vested shares of Common Stock upon retirement; Messrs. Pruitt and Schultz were each entitled to receive 9,000 shares; Mr. Rollo was entitled to receive 8,000 shares; Ms. Pipes and Mr. Wilson were each entitled to receive 2,000 shares; and Messrs. Mitchell and Russell and Ms. Oh were not entitled to receive any shares. As of December 31, 2021, the value of each award of 10,000 shares was $1,841,700, the value of each award of 9,000 shares was $1,657,530, the value of each award of 8,000 shares was $1,473,360, and the value of each award of 2,000 shares was $368,340, each based on the closing price of $184.17 of our Common Stock as of December 31, 2021.

 

(3)	Reflects the fair value on the date of grant of option awards granted during 2021. As of December 31, 2021, each director had the following number of options outstanding: Mr. Havner, 20,770, of which 14,560 are vested; Ms. Dunbar, 10,350, of which 4,140 are vested;

 

PS Business Parks • 2022 Proxy Statement • 39

Ms. Hawthorne, 2,070, none of which are vested; Mr. Mitchell, 10,349, none of which are vested; Ms. Oh, 10,350, none of which are vested; Ms. Pipes,14,513, of which 4,563 are vested; Mr. Pruitt, 31,473, of which 25,263 are vested; Mr. Rollo, 16,218, of which 10,008 are vested; Mr. Russell, 10,350, of which 4,140 are vested; Mr. Schultz, 18,630, of which 12,420 are vested; and Mr. Wilson, 14,497, of which 4,557 are vested. For a more detailed discussion of assumptions used in the calculation of these amounts, refer to Note 10 to the Company’s audited financial statements for the fiscal year ended December 31, 2021, included in the Annual Report on Form 10-K filed with the SEC on February 22, 2022.

 

(4)	All other compensation consists of dividend equivalents paid on vested retirement shares.

The Board recommends voting FOR all director nominees.

 

PS Business Parks • 2022 Proxy Statement • 40