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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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Filed by a Party other than the Registrant    ☐
Check the appropriate box:

Preliminary Proxy Statement

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under § 240.14a-12

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
PIEDMONT OFFICE REALTY TRUST, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box)

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Fee paid previously with preliminary materials.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

 

 

 

 

 

 

 

 

 

 

 

 

Notice of Annual Meeting of Stockholders 

and Proxy Statement

 

Dear Stockholder:

 

On Tuesday, May 7, 2024, Piedmont Office Realty Trust, Inc., a Maryland corporation, will hold its 2024 Annual Meeting of Stockholders (the “Annual Meeting”) virtually via live webcast. The meeting will begin at 11:00 a.m. Eastern time. If you were a registered stockholder of the Company as of the record date you will be able to attend the Annual Meeting, ask a question, and vote online by visiting www.meetnow.global/M4VTKNX and following the instructions on your Notice of Internet Availability of Proxy Materials or proxy card. If you are a beneficial holder and hold your shares through an intermediary, such as a bank or broker, and want to attend the webcast with the ability to ask questions and/or vote, you must register in advance of the Annual Meeting by submitting proof of your proxy power from your broker or bank to Computershare by no later than 5:00 p.m, Eastern time, on May 2, 2024.

 

The purpose of this Annual Meeting is to:

 

I.Elect seven directors identified in the 2024 proxy statement to hold office for terms expiring at our 2025 annual meeting and until their successors are duly elected and qualified;

 

II.Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2024;

 

III.Approve, on an advisory basis, the compensation of our named executive officers;

 

IV.Approve Amendment to our Second Amended and Restated 2007 Omnibus Incentive Plan;

 

V.Transact any other business as may properly come before the meeting, or any postponement or adjournment thereof.

 

Your board of directors has selected March 6, 2024 as the record date for determining stockholders entitled to vote at the meeting.

 

On March 27, 2024, we will begin mailing our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials, including our 2024 proxy statement and our Annual Report to Stockholders for fiscal 2023, and how to vote online.

 

Whether or not you plan to attend the Annual Meeting remotely, your vote is very important, and we encourage you to vote promptly. You may vote via a toll-free telephone number or over the Internet. If you received a paper copy of the proxy card by mail, you may sign, date, and mail the proxy card in the envelope provided.

 

Instructions regarding all three methods offered for voting are contained in the proxy card or Notice of Internet Availability of Proxy Materials. If you execute a proxy but later decide, for any reason, to revoke your proxy, you may do so at any time before 11:59 p.m. Eastern time on May 6, 2024. You may also revoke your proxy by voting online prior to the poll closing at the Annual Meeting.

 

BY ORDER OF THE BOARD OF DIRECTORS
/s/ THOMAS A. MCKEAN

 

Thomas A. McKean

Associate General Counsel and Corporate Secretary

March 14, 2024

5565 Glenridge Connector | Suite 450 | Atlanta, GA 30342

 

Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be Held on May 7, 2024: Our 2024 Proxy Statement and our Annual Report to Stockholders for Fiscal 2023 are available at www.envisionreports.com/PDM.

 

Piedmont 2024 Proxy | 3

 

 

 

 

 

 

2024 Proxy Statement

 

Table of Contents

 

 

2024 Proxy Statement at a Glance 06  
PROPOSAL 1: Election of Directors 11  
PROPOSAL 2: Ratification of Deloitte & Touche LLP as Independent Registered Public Accounting Firm for Fiscal 2024 15  
PROPOSAL 3: Advisory Vote to Approve Named Executive Officer Compensation 17  
PROPOSAL 4: Approval of Amendment to our Second Amended and Restated 2007 Omnibus Incentive Plan 18  
Certain Information about Management 30  
Information Regarding the Board of Directors and Committees 32  
Independence and Leadership Structure 32  
Board Committees 32  
Selection of Directors 35  
Board Membership Criteria 36  
Board Self-Evaluation Process 37  
Majority Voting Policy 37  
Term Limits 37  
Risk Oversight 38  
CyberRisk Management and Strategy 38  
CyberSecurity Governance 39  
Corporate Governance Guidelines and Code of Ethics 40  
Anti-Bribery, Corruption, and Money Laundering 40  
Environmental and Social Management Committees 42  
Corporate Social Responsibility 43  
Corporate Environmental Responsibility 46  
Stockholder Engagement and Outreach 48  
Communications with Stockholders or Other Interested Parties 48  
Executive Compensation 49  
Compensation Discussion and Analysis 49  
Elements of 2023 Executive Compensation 55  
Employment Agreements with our NEOs 62  
Stock Ownership Guidelines 62  
Hedging, Pledging, and Insider Trading Policy 63  
Impact of Regulatory Requirements on Compensation 63  
     
     

 

4 | Piedmont 2024 Proxy 

 

 

 

 

 

 

2023 Executive Compensation Tables 64
Summary Compensation Table 64
Grants of Plan Based Awards 66
Outstanding Equity Awards at Fiscal Year End 68
Stock Vested 70
Potential Payments Upon Termination or Change of Control 70
Compensation Committee Report 72
Director Compensation 73
Equity Compensation Plan Information 74
CEO Pay Ratio 75
Pay Versus Performance 76
Compensation Policies and Practices as they Relate to Risk Management 79
Certain Relationships and Related Transactions 80
Stock Ownership 81
Audit Committee Report 83
Stockholder Proposals 84
Householding 84
Attending the Annual Meeting 85
Other Matters 86
Questions and Answers 87
   
APPENDIX A: Amendment to Second Amended and Restate Omnibus Incentive Plan 92
APPENDIX B: Amended Omnibus Incentive Plan 96
APPENDIX C: Reconciliation of Non-GAAP Measures 116

 

Piedmont 2024 Proxy | 5

 

 

 

 

 

 

2024 PROXY STATEMENT AT A GLANCE

 

 

 

 

If you were a stockholder as of the close of business on March 6, 2024 and hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the Annual Meeting. To register you must submit proof of your proxy power (legal proxy) reflecting your holdings of our stock, along with your name and email address to Computershare. Registration requests must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern time, on May 2, 2024. You will receive a confirmation email from Computershare of your registration. If you do not have your control number, you may attend as a guest (non-stockholder) but will not have the option to ask questions or vote at the Annual Meeting. Registration requests should be directed to Computershare either: (i) by forwarding the email from your broker, or attaching an image of your legal proxy, to legalproxy@computershare.com; or (ii) by mail at Computershare, Piedmont Office Realty Trust, Inc. Legal Proxy, P.O. Box 43006, Providence, RI 02940-3006.

 

Proposal For more information,
see page:
Board
Recommendation
Proposal 1 Elect seven (7) directors nominated by the board of directors for one year terms. Page 11 FOR ALL
Proposal 2 Ratify the appointment of Deloitte & Touche, LLP as our independent registered public accounting firm for fiscal year 2024. Page 15 FOR
Proposal 3 Approve, on an advisory basis, the compensation of our named executive officers. Page 17 FOR
Proposal 4 Approval of Amendment to our Second Amended and Restated 2007 Omnibus Incentive Plan. Page 18 FOR

 

6 | Piedmont 2024 Proxy

 

 

 

 

Proposal 1

 

 

PROPOSAL 1:

ELECTION OF DIRECTORS

 

The board of directors is asking you to elect the seven nominees listed below for terms that expire at the 2025 annual meeting of stockholders or until their successors are duly elected and qualified. Each director nominee will be elected if he or she receives a majority of the votes cast at the 2024 annual meeting (i.e. more votes cast “FOR” than cast “AGAINST”).

 

  Primary Role Age Director Since Independent Committee
Kelly H. Barrett Former SVP - Home Services, The Home Depot 59 2016 Audit*, Nominating & Governance
Glenn G. Cohen EVP, Chief Financial Officer, Kimco Realty Corp. 60 2020 Compensation*, Audit, Capital
Venkatesh S. Durvasula Chief Executive Officer and Member of the Board of Directors of Africa Data Centres 57 2022 Capital
Mary M. Hager Senior Advisor and Member of the Board of Directors of Greystar 64 2022 Nominating & Governance
Barbara B. Lang Managing Principal and Chief Executive Officer, Lang Strategies, LLC 80 2015 Compensation, Nominating & Governance*
C. Brent Smith President and Chief Executive Officer, Piedmont Office Realty Trust, Inc. 48 2019    
Dale H. Taysom Former Global Chief Operating Officer, Prudential Real Estate Investors 75 2015 Vice-Chair of Board of Directors, Audit, Capital

 

*Denotes committee chair

 

Piedmont 2024 Proxy | 7

 

 

 

Proposal 2 and 3  

 

 

 

PROPOSAL 2: RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The board of directors is asking you to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2024. Deloitte & Touche LLP has served as the Company’s independent registered public accounting firm since 2018.

 

 

 

PROPOSAL 3: APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

 

The board of directors is asking you to approve, on an advisory basis, the compensation of the named executive officers as disclosed in this proxy statement. We believe our compensation programs are designed to:

attract and retain candidates capable of performing at the highest levels in our industry;

create and maintain a performance-focused culture, by rewarding company and individual performance based upon objective pre-determined metrics;

reflect the qualifications, skills, experience and responsibilities of each named executive officer;

link incentive compensation levels with the creation of stockholder value;

align the interests of our executives and stockholders by creating opportunities and incentives for executives to increase their equity ownership in us; and

motivate our executives to manage our business to meet and appropriately balance our short- and long-term objectives.

 

8 | Piedmont 2024 Proxy

 

 

 

Proposal 3

 

 

 

Compensation and Governance Practices

 

 

What We Do   What We Don’t Do
DO require stockholder approval in the event a staggered board is ever proposed. NO staggered board.
DO have a board comprised of a super-majority of independent directors. Six of our seven director nominees are independent in accordance with New York Stock Exchange (“NYSE”) listing standards and our Corporate Governance Guidelines. NO compensation or incentives that encourage risks reasonably likely to have a material adverse effect on the company.
DO have a separate Board Chair and Chief Executive Officer. NO tax gross ups for any executive officers.
DO require a majority vote for election of directors in uncontested elections. NO re-pricing or buyouts of underwater stock options.
DO permit stockholders to amend the bylaws. NO reportable transactions with any of our directors or executive officers.
DO restrict board terms to 15 years. NO hedging or pledging transactions involving our securities.
DO require an annual performance evaluation of our board. NO guaranteed cash incentive compensation or equity grants with executive officers.
DO align pay and performance by linking a majority of total compensation to the achievement of a balanced mix of company and individual performance period by the Compensation Committee and the board.    
DO deliver a substantial portion of the value of equity awards in multi-year performance shares. For 2023, 60%of all executive officers equity award opportunity was tied to our company’s 3-year total stockholder return relative to our peer group.    
DO maintain stock ownership guidelines for directors and executive officers.    
DO have a claw back policy covering all of our executive officers in accordance with applicable law and NYSE listing standards.    
DO conduct annual assessments of compensation at risk.    
DO have a Compensation Committee comprised solely of independent directors.    
DO retain an independent compensation consultant that reports directly to the Compensation Committee.    
DO cap incentive compensation. Incentive awards include minimum and maximum performance thresholds with funding that is based on actual results measured against the pre-approved goals that are clearly defined.    
DO have a board committee focused upon important Environmental, Social, and Governance (“ESG”) issues that meets quarterly with management and reports to the board.    
DO require a 12-month holding period of stock issued to our employees with a title of Senior Vice President or higher.    

 

  

Piedmont 2024 Proxy | 9

 

 

 

Proposal 3 and 4  

 

 

 

Focus on Performance-Based Pay

85% of our NEO’s opportunity under our 2023 short-term cash incentive compensation program was tied to specific quantitative performance metrics derived from critical components of our annual business plan.

100% of our NEO’s opportunity under the performance share component of our 2023 long-term equity incentive compensation program is tied to our total stockholder return over a three-year performance period relative to a pre-determined peer group.

The majority of our chief executive officer and other named executive officers’ (“NEO’s”) compensation opportunities during 2023 was performance-based and at risk:

 

CEO Target Pay OpportunityAll Other NEOs Target Pay Opportunity
  
  
  

 

 

PROPOSAL 4: APPROVE AMENDMENT TO OUR SECOND AMENDED AND RESTATED 2007 OMNIBUS INCENTIVE PLAN

 

 

The board of directors is asking you to approve an amendment to the Piedmont Office Realty Trust, Inc. Second Amended and Restated 2007 Omnibus Incentive Plan (the "Piedmont Office Realty Trust, Inc. Second Amended and restated 2007 Omnibus Incentive Plan” or the "A&R Incentive Plan") to:

 

(i) increase the number of shares of common stock available for issuance by 5,000,000 shares from 8,666,667 to 13,666,667;

(ii) add a minimum holding period requirement and minimum vesting period requirement with respect to incentive awards under the A&R Incentive Plan; and

(iii) make certain other amendments to the 2007 Omnibus Incentive Plan; as further described below.

 

The board of directors approved the amendment to the A&R Incentive Plan on March 12, 2024, subject to stockholder approval. For a full description of the amendment to the A&R Incentive Plan, see Proposal 4.

 

10 | Piedmont 2024 Proxy

 

 

 

Proposal 1

 

 

PROPOSAL 1:

ELECTION OF DIRECTORS

 

Our current nine member board of directors is comprised of eight independent members and our Chief Executive Officer. Frank C. McDowell and Jeffrey L. Swope, who currently serve on our board, are each approaching their 15-year term limit and will retire from our board at the Annual Meeting. Effective with Mr. McDowell and Mr. Swope’s retirement, the size of the board will be reduced to seven members.

 

At the Annual Meeting, you will vote on the election of seven directors. Each nominee elected will serve as a director until the next annual meeting of stockholders and until his or her successor is duly elected and qualified, or until his or her death, resignation or removal from office. Each of the following nominees has served as a director since our 2023 annual meeting of stockholders. Each nominee has been nominated for re-election at the Annual Meeting by our board of directors in accordance with our established nomination procedures discussed in this proxy statement.

 

Your board of directors unanimously recommends a vote “FOR” all seven nominees listed for election as directors.

 

 

 

Kelly H. Barrett

Director*
Director Since 2016
Age: 59

 

Former SVP-Home Services, among other roles, for The Home Depot (NYSE:HD) for sixteen years. While at Home Depot, Ms. Barrett served in various roles including Senior Vice President — Home Services, Vice President Corporate Controller, Senior Vice President of Enterprise Program Management, and Vice President of Internal Audit and Corporate Compliance. Prior to her employment by The Home Depot, Ms. Barrett was employed by Cousins Properties Incorporated for eleven years in various financial roles, ultimately including that of Chief Financial Officer. During that time, she was very active in the National Association of Real Estate Investment Trusts (NAREIT) as an Accounting Committee Co-Chairperson and member of the Best Financial Practices Council as well as the Real Estate Group of Atlanta. She has been a licensed CPA in Georgia for over thirty years, is certified as a director by the National Association of Corporate Directors (NACD), and holds a Certificate in Cybersecurity oversight from the NACD. In addition, Ms. Barrett currently serves as a director, Audit Committee Chair, and member of the Compensation Committee of The Aaron’s Company, Inc. (NYSE:AAN); director and member of both the Audit and Compensation Committees of Americold Realty Trust (NYSE:COLD); and director and member of the Compensation Committee and Information Technology Committee of EVERTEC, Inc (NYSE: EVTC). Her leadership positions in the Atlanta community include currently serving on the NACD Atlanta Chapter Board, Board of the Metro Atlanta YMCA, where she was formerly Chair of the Board, a member of the Georgia Tech Foundation Board of Trustees and the Advisory Board of Scheller College of Business at Georgia Tech where she was formerly the Chair of the Board. She has previously served on the Board of the Girl Scouts of Greater Atlanta, Partnership Against Domestic Violence and the Atlanta Rotary Club.

 

Ms. Barrett brings over 30 years of leadership and financial management expertise to the board. As a former member of NAREIT’s Accounting Committee and Best Financial Practices Council and former chief financial officer of an office REIT, she is well qualified to provide oversight and guidance for Piedmont and serve as Chair of the Audit Committee and an audit committee financial expert.

 

* Indicates that director has been determined by our board of directors to be independent under NYSE listing standards.

 

Piedmont 2024 Proxy | 11

 

 

 

 

 

 

 

Glenn G. Cohen

Director*
Director Since 2020
Age: 60

 

Executive Vice President, Chief Financial Officer of Kimco Realty Corp. (NYSE:KIM), North America’s largest publicly traded owner and operator of open-air, grocery-anchored shopping centers and a growing portfolio of mixed-use assets. Additionally, Mr. Cohen is a member of the Cybersecurity committee and oversees the technology group, including the Cybersecurity team, at Kimco. Prior to his appointment as Kimco’s Chief Financial Officer in 2010, Mr. Cohen served in various other positions at Kimco including Treasurer from 1997 - 2024, as well as Director of Accounting and Taxation, since joining them in 1995. From 2016 to 2018, Mr. Cohen served as a director and member of the Audit Committee of Quality Care Properties, Inc. (formerly NYSE: QCP). He is a CPA and member of NAREIT and the International Council of Shopping Centers (ICSC).

 

Mr. Cohen brings approximately 25 years of leadership and financial management experience to the board. As a Chief Financial Officer, Mr. Cohen is responsible for Kimco’s financial and capital strategy and oversees the accounting, financial reporting and planning, tax, treasury and capital market activities for another large, publicly traded REIT, making him well qualified to provide oversight and guidance for Piedmont and to serve as member and financial expert of the Audit Committee, and member of the Capital Committee. In addition to his long history in the REIT industry, his knowledge of typical public company compensation programs and first-hand knowledge of the importance of fair and effective compensation plans for both management and stockholders makes him well qualified to serve as Chair of the Compensation Committee.

 

 

 

Venkatesh S. Durvasula

Director*
Director Since 2022
Age: 57

 

Chief Executive Officer (“CEO”) and member of the board of directors of Africa Data Centres, a London-based, Cassava Technology company responsible for the executive leadership of a $1.5 billion data center and renewable energy business on the continent of Africa. Prior to joining Africa Data Centres, from 2012-2020, Durvasula served in various leadership roles ultimately culminating in CEO and President of CyrusOne (previously NASDAQ: CONE), an approximately $12 billion data center REIT recently acquired by funds managed by global investment firm KKR and infrastructure investor Global Infrastructure Partners. While at Cyrus One, Durvasula grew the business into the third-largest data center REIT and successfully pivoted the company’s growth strategy to hyper-scale deployment in the United States and the European Union. He also oversaw the implementation of cyber-threat, cyber-detection, and cyber-security tools. Mr. Durvasula is also a member of the board of directors of Elea Digital, an operator of Brazilian data centers.

 

Mr. Durvasula brings approximately 30 years of leadership, management, marketing, and operational experience with both public and private, domestic and international, technology companies. He has been responsible for sales, marketing, and strategy for various data centers, interconnection providers, complex enterprises, making him well qualified to serve as a member of the Capital Committee, provide oversight and guidance regarding Piedmont’s capital allocation decisions, as well as cyber risk management expertise.

 

* Indicates that director has been determined by our board of directors to be independent under NYSE listing standards.

 

12 | Piedmont 2024 Proxy 

 

 

 

Proposal 1

 

 

 

Mary M. Hager

Director*
Director Since 2022
Age: 64

 

Senior Advisor at global real estate investment management firm, Greystar. Ms. Hager co-leads the Greystar-Thackeray business as well as Greystar’s commercial real estate businesses and serves on the Greystar Global Investment Committee, Greystar Executive Committee, and Greystar Board of Directors.

 

Prior to joining Greystar in 2021, Ms. Hager was the Co-CEO and co-founder of Thackeray Partners, a diversified private real estate company based in Dallas, TX. Since its inception in 2005, Thackeray Partners sponsored five private equity funds where Ms. Hager was responsible for overall strategy, partner communications, deal sourcing, asset management, and fund administration.

 

Prior to founding Thackeray Partners, Ms. Hager was with Trammell Crow Company and other Crow-affiliated entities for sixteen years working in a variety of roles.

 

Ms. Hager is a member of the Urban Land Institute, where she currently serves on the Board and is former Chair of the Investment Committee for the ULI Foundation. She is also a past Americas Global Governing Trustee and a past Chair of a national small-scale development product council. She brings to the board over 30 years of experience in virtually all aspects of managing and leading a real estate portfolio as well as a wealth of industry contacts, particularly in one of our largest markets, making her well qualified to serve as a member of our Nominating and Corporate Governance Committee.

 

 

 

Barbara B. Lang

Director*
Director Since 2015
Age: 80

 

Managing Principal & Chief Executive Officer of Lang Strategies, LLC, a business consulting firm, located in Washington, D.C. Ms. Lang served as president and Chief Executive Officer of the D.C. Chamber of Commerce from 2002 to 2014 and prior to joining the Chamber was the Vice President of Corporate Services and Chief Procurement Officer for Fannie Mae. Ms. Lang also had a long career with IBM where she served in several management positions in finance, administration and product forecasting. She has received numerous awards and accolades throughout her career, including being twice named one of Washingtonian Magazine’s 150 Most Powerful People in the Washington, D.C. region, Business Leader of the Year by the District of Columbia Building Industry Association and a Lifetime Legacy Award from Washington Business Journal. Ms. Lang also served on the board of Cardinal Financial Corporation (NASDAQ: CFNL) from 2014 to 2017 and currently serves on the board of the Sibley Hospital Foundation, Chair of Conservation Nation and as a board member of Pyxera Global. Ms. Lang is the author of Madame President: Leadership Lessons from the Top of the Ladder, a book on leadership skills, particularly focused upon the challenges of race and gender facing African-Americans and women in corporate and governmental America.

 

Ms. Lang brings to the board a broad personal network of corporate and governmental contacts in one of the Company’s key operating markets. In addition, she has extensive senior management expertise with both private corporations and governmental agencies. Ms. Lang’s diverse business, financial, and governance expertise, as well as her life experience breaking leadership “glass ceilings” for women and minorities, make her highly qualified to serve as Chair of the Nominating and Corporate Governance Committee, which also oversees the Company’s ESG Activities, and a member of the Compensation Committee. The Company’s most recent annual ESG report is available on the Company’s website, www.piedmontreit.com.

 

* Indicates that director has been determined by our board of directors to be independent under NYSE listing standards.

 

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C. Brent Smith

President, Chief Executive Officer, & Director
Director Since 2019
Age: 48

 

President and Chief Executive Officer since July of 2019. For four years prior to his promotion to Chief Executive Officer, Mr. Smith served as our Chief Investment Officer. In addition, until February of 2019, Mr. Smith served as EVP of Piedmont’s Northeast Region where he was responsible for all leasing, asset management, acquisition, disposition and development activity for the Company’s over three million square foot Boston and New York/New Jersey portfolio. Prior to joining Piedmont in 2012, Mr. Smith served as an Executive Director with Morgan Stanley in the Real Estate Investment Banking division advising a wide range of public and private real estate clients. He brings approximately 20 years of entity and asset level real estate transaction experience across both North America and Asia.

 

Mr. Smith brings this approximately 20 years of experience plus a detailed working knowledge of each of Piedmont’s operating markets, experience in handling some of Piedmont’s largest and most complex tenants and properties, as well as negotiating complex purchase and sale agreements and mergers and acquisitions transactions, in addition to working relationships with each of Piedmont’s equity analysts. Furthermore, his extensive network of private and public pension equity investors and top-tier investment bankers is invaluable to the Company.

 

 

 

Dale H. Taysom

Vice-Chair of the Board*
Director Since 2015; Vice-Chairman since 2017
Age: 74

 

Former Global Chief Operating Officer for Prudential Real Estate Investors (“PREI”). Prior to his retirement in 2013, during his 36-year career with PREI, Mr. Taysom held various positions including Head of United States Transactions and Global Head of Transactions, among others, prior to completing his tenure as Global Chief Operating Officer (“COO”). He was a member of PREI’s domestic and international investment committees and a member of the Global Management Committee and is a former member of ULI, the National Multi-Housing Council, and the National Association of Real Estate Investment Managers (“NAREIM”).

 

Mr. Taysom brings many years of experience dealing with almost every facet of owning and operating commercial real estate. He is familiar with many of the markets in which our properties are located and has an extensive personal network of contacts throughout the real estate industry. In addition to his financial and budgetary responsibilities as COO of PREI, Mr. Taysom also participated with the management committee in formulating the strategic vision of the company including the review, approval, and responsibility for financial performance. This financial and operational experience makes him well suited to serve as a member of the Audit and Capital Committees.

 

* Indicates that director has been determined by our board of directors to be independent under NYSE listing standards.

 

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Proposal 2

 

 

PROPOSAL 2:

RATIFICATION OF DELOITTE & TOUCHE LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2024

 

 

Engagement of Deloitte & Touche LLP

 

On February 20, 2024, the Audit Committee approved the engagement of Deloitte & Touche LLP as our independent registered public accounting firm to audit our financial statements for the year ending December 31, 2024. This proposal asks you to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm. Although we are not required to obtain such ratification from our stockholders, the board of directors believes it is good practice to do so. Notwithstanding the ratification, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that the change would be in the best interests of Piedmont and our stockholders. If the appointment of Deloitte & Touche LLP is not ratified, the Audit Committee will consider the appointment of another independent registered public accounting firm but will not be required to appoint a different firm. Deloitte & Touche LLP has served as the Company’s independent registered public accounting firm since 2018.

 

A representative of Deloitte & Touche LLP will be available at the Annual Meeting, will have the opportunity to make a statement, and will be available to respond to appropriate questions from stockholders.

 

Your board of directors unanimously recommends a vote “FOR” the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2024.

 

Pre-approval Policies

 

The Audit Committee must pre-approve all auditing services performed for us by our independent registered public accounting firm, as well as all permitted non-audit services (including the fees and terms thereof), in order to ensure that the provision of such services does not impair the registered public accounting firm’s independence. Unless a type of service to be provided by our independent registered public accounting firm has received “general” pre-approval, it will require “specific” pre-approval by the Audit Committee.

 

All requests or applications for services to be provided by our independent registered public accounting firm that do not require specific pre-approval by the Audit Committee will be submitted to management and must include a detailed description of the services to be rendered. Management will determine whether such services are included within the list of services that have received the general pre-approval of the Audit Committee. The Audit Committee will be informed on a timely basis of any such services rendered by our independent registered public accounting firm.

 

Requests or applications to provide services that require specific pre-approval by the Audit Committee will be submitted to the Audit Committee by both our independent registered public accounting firm and our chief financial officer, treasurer, or chief accounting officer, and must include a joint statement as to whether, in their view, the request or application is consistent with the rules of the Securities and Exchange Commission (the “SEC”) on registered public accounting firm independence. The Chair of the Audit Committee has been delegated the authority to specifically pre-approve all services not covered by the general pre-approval guidelines, up to an amount not to exceed $75,000 per occurrence. Amounts requiring pre-approval in excess of $75,000 per occurrence require specific pre-approval by our Audit Committee prior to engagement of Deloitte & Touche LLP, our current independent registered public accounting firm.

 

All amounts specifically pre-approved by the Chair of the Audit Committee in accordance with this policy must be disclosed to the full Audit Committee at its next regularly scheduled meeting.

 

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Proposal 2  

 

 

For the year ended December 31, 2023, all services rendered by Deloitte & Touche LLP were pre-approved by the Audit Committee in accordance with the policies and procedures described above.

 

Fees Paid to Independent Registered Public Accounting Firms

 

The Audit Committee reviewed the audit and non-audit services performed by Deloitte & Touche LLP and Deloitte Tax LLP (collectively, “Deloitte”) for fiscal 2023 and 2022, as well as the fees charged for such services. In its review of any non-audit service fees, the Audit Committee considered whether the provision of such services was compatible with maintaining the independence of our independent registered public accounting firms. The following table sets forth the aggregate fees paid to Deloitte during the years ended December 31, 2023 and 2022:

 

  2023 2022
Audit Fees $1,205,000 $1,105,000
Audit-Related Fees - -
Tax Fees $403,191 $659,184
All Other Fees - -
Total $1,608,191 $1,764,184

 

For purposes of the preceding table, the professional fees are classified as follows:

 

Audit Fees - These are fees for professional services performed for the audit of our annual financial statements and the required review of quarterly financial statements and other procedures to be performed by the independent registered public accounting firm to be able to form an opinion on our consolidated financial statements. These fees also cover services that are normally provided by independent registered public accounting firms in connection with statutory and regulatory filings or engagements, and services that generally only the independent registered public accounting firm reasonably can provide, such as services associated with filing registration statements, periodic reports, and other filings with the SEC.

 

Audit-Related Fees - These are fees for assurance and related services that traditionally are performed by independent registered public accounting firms, such as due diligence related to acquisitions and dispositions, attestation services that are not required by statute or regulation, internal control reviews, non recurring agreed-upon procedures and other professional fees associated with transactional activity.

 

Tax Fees - These are fees for all professional services performed by professional staff in our independent registered public accounting firm’s tax division, except those services related to the audit of our financial statements. These include fees for tax compliance filings, tax planning, and tax advice, including federal, state, and local issues. Services may also include assistance with tax notices, audits and appeals before the Internal Revenue Service and similar state and local agencies.

 

All Other Fees - These are fees for other permissible work performed that do not meet the above- described categories, including assistance with internal audit plans and risk assessments.

 

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Proposal 3

 

 

PROPOSAL 3:

ANNUAL ADVISORY VOTE TO APPROVE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS

 

 

Pay that reflects performance and alignment of pay with the long-term interests of our stockholders are key principles that underlie our compensation program. In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), stockholders have the opportunity to vote, on an advisory basis, on the compensation of our named executive officers. This is often referred to as a “say on pay” and provides you, as a stockholder, with the ability to cast a vote with respect to our 2023 executive compensation programs and policies and the compensation paid to the named executive officers as disclosed in this proxy statement through the following resolution:

 

“RESOLVED, that the stockholders approve the compensation of the named executive officers, as described in the Compensation Discussion and Analysis section and in the compensation tables and accompanying narrative disclosure in this proxy statement.”

 

As discussed in “Executive Compensation — Compensation Discussion and Analysis” below, the compensation paid to our named executive officers is designed to meet the following objectives:

 

to attract and retain candidates capable of performing at the highest levels of our industry;

 

to create and maintain a performance-focused culture, by rewarding outstanding company and individual performance based upon objective pre-determined metrics;

 

to reflect the qualifications, skills, experience and responsibilities of each named executive officer;

 

to link incentive compensation levels with the creation of stockholder value;

 

to align the interests of our executives and stockholders by creating opportunities and incentives for executives to increase their equity ownership in us; and

 

to motivate our executives to manage our business to meet and appropriately balance our short and long-term objectives.

 

This proposal is an advisory proposal, which means it is non-binding. Although the vote is non-binding, the Compensation Committee will review the voting results and consider the outcome in making decisions about future compensation arrangements for our named executive officers.

 

As required by the Dodd-Frank Act, this vote does not overrule any decisions by the board of directors, will not create or imply any change to or any additional fiduciary duties of the board of directors, and will not restrict or limit the ability of stockholders generally to make proposals for inclusion in proxy materials related to executive compensation.

 

Your board of directors unanimously recommends a vote “FOR” the approval, on an advisory basis, of the compensation of our named executive officers.

 

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Proposal 4  

 

 

PROPOSAL 4:

APPROVAL OF AMENDMENT TO THE SECOND AMENDED AND RESTATED 2007 OMNIBUS INCENTIVE PLAN

 

 

General

 

We maintain the Piedmont Office Realty Trust, Inc. Second Amended and Restated 2007 Omnibus Incentive Plan (the “Piedmont Office Realty Trust, Inc. Second Amended and Restated 2007 Omnibus Incentive Plan,” or the “A&R Incentive Plan”), which was approved by our stockholders and became effective on March 18, 2021. Management has determined that it is in our best interest to adopt an amendment to the A&R Incentive Plan (as amended by the proposed amendment, the “Amended Incentive Plan”) to (i) increase the number of shares of common stock available for issuance by 5,000,000 shares, from 8,666,667 to 13,666,667, (ii) add a minimum holding period requirement and minimum vesting period requirement with respect to awards under the A&R Incentive Plan and (iii) make certain other amendments to the A&R Incentive Plan, as further described below.

 

The Board believes that increasing the number of shares of our common stock reserved and available for awards, adding a minimum holding period and minimum vesting period, and making the other amendments reflected in the Amended Incentive Plan, which are summarized below, are in the best interest of the Company and our stockholders.

 

To ensure an adequate supply of shares for future awards, the Board has approved, and recommends that stockholders approve, the amendment to the A&R Incentive Plan. The Amended Incentive Plan will authorize the issuance of up to 5,000,000 additional shares of our common stock pursuant to awards, subject to adjustment as provided in the Amended Incentive Plan. In determining the number of additional shares of common stock requested for availability under the Amended Incentive Plan, we considered that no shares of our common stock are currently available for issuance, our historic and anticipated award grant practices, and the estimated number of shares needed for awards over the next two to three years. The Company believes that the additional shares authorized under the Amended Incentive Plan will provide it with a sufficient number of shares of common stock to ensure that equity-based long-term incentive awards remain a meaningful component of the overall compensation of our employees, officers and non-employee directors.

 

Effect of Proposal

 

Approval of the amendment to the A&R Incentive Plan as requested by this Proposal 4 will (i) increase the number of shares available for issuance by 5,000,000 shares from 8,666,667 to 13,666,667, (ii) add a minimum holding period requirement and minimum vesting period requirement with respect to awards , and (3) make certain other amendments to the A&R Incentive Plan as described below.

 

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Summary of Changes to Amended Incentive Plan

 

In addition to authorizing the issuance of up to 5,000,000 additional shares of our common stock pursuant to awards and extending the term of the 2007 Omnibus Incentive Plan, the Amended Incentive Plan makes several changes to the A&R Incentive Plan which we believe are beneficial to stockholders, including:

 

Adding a minimum holding requirement providing that certain award agreements under the Amended Incentive Plan will provide that stock issued on exercise, vesting or settlement of an award must be held for 12 months (or termination of service due to death, disability, or retirement, if earlier) for employees of the Company with a title of Senior Vice President or higher.

 

Adding a minimum vesting requirement providing that awards under the Amended Incentive Plan may not vest or be settled or be exercisable prior to the one year anniversary of the date of grant, except in the event of a participant’s death or disability as provided by the Committee; provided, however, that up to 5% of the shares of stock reserved and available for issuance may be issued pursuant to awards subject to any or no vesting conditions (including the one-year vesting limitation).

 

Eliminating the “Long-Term Incentive Compensation Program” or “LTIC program”, which was previously established and is maintained as a sub-plan of the A&R Incentive Plan. Performance-based awards that were previously granted under the LTIC program will now be granted directly under the Amended Incentive Plan.

 

Dividend equivalent rights may be paid on unvested awards.

 

Clarifying that all awards to executive officers will be subject to reduction, cancellation, forfeiture and recoupment to the extent necessary to comply with the Company’s clawback policy now in effect and/or any future clawback policy in effect from time to time and/or to comply with applicable law, regulation or stock exchange listing requirement.

 

As of March 6, 2024, the closing price of shares of our common stock, as reported on NYSE, was $6.27 per share. As of March 6, 2024, 1,238,512 shares of common stock underlying deferred stock awards and 2,487,812 shares of common stock underlying performance-based awards were granted and remain outstanding under the A&R Incentive Plan.

 

If the Amended Incentive Plan is not approved by our stockholders, it could materially adversely affect us because we may be unable to retain the services of our senior management and may be unable to provide the incentives necessary to attract qualified replacements and other personnel.

 

 

 

 

 

 

 

 

 

Summary of the A&R Incentive Plan

 

A summary of the material terms of the Amended Incentive Plan is set forth below and the full text of the proposed amendment to the A&R Incentive Plan is attached hereto as Appendix A. A copy of the Amended Incentive Plan is attached hereto as Appendix B. The below summary of the provisions of the Amended Incentive Plan is qualified in its entirety by reference to the full text of the Amended Incentive Plan. To the extent that there is a conflict between this summary and the Amended Incentive Plan, the Amended Incentive Plan will govern. Capitalized terms used but not defined herein will have the meanings ascribed to them in the Amended Incentive Plan. The adoption of the Amended Incentive Plan is subject to stockholder approval.

 

Background and Purpose

 

The Amended Incentive Plan modifies our existing A&R Incentive Plan, which was approved by our stockholders and became effective on March 18, 2021. The Amended Incentive Plan was approved by the Board, which consulted with its legal advisors and an employment compensation consultant to survey and study the market compensation ranges of our competitors. The purpose of the Amended Incentive Plan is to provide us with the flexibility to offer performance-based compensation, including stock-based and incentive cash awards as part of an overall compensation package to attract and retain qualified personnel. Certain officers, key employees, non-employee directors, or consultants of ours and our subsidiaries would be eligible to be granted cash awards, stock options, stock appreciation rights, restricted stock, deferred stock awards, other stock-based awards, dividend equivalent rights, and performance-based awards (collectively, “awards”) under the Amended Incentive Plan. We anticipate that providing such persons with interests and awards of this nature will result in a closer alignment of their interests with our interests and those of our stockholders, thereby incentivizing their efforts on our behalf and strengthening their desire to remain with us. In addition, we have certain employment agreements with our senior management which may provide, among other things, for incentive compensation awards and performance bonuses that will be paid pursuant to the Amended Incentive Plan.

 

Administration

 

The Amended Incentive Plan is administered by a compensation or other committee consisting of at least two individuals, each of whom shall be a “non-employee director” as defined under Rule 16b-3 under the Exchange Act, or, if no committee is designated by our Board to act for these purposes, our Board. The Amended Incentive Plan is administered by the Compensation Committee of our Board. References below to our Compensation Committee include a reference to our Board for those periods in which our Board is administering the Amended Incentive Plan.

 

The Compensation Committee will have the power and authority to administer and interpret the Amended Incentive Plan, including the power and authority: (1) to authorize the granting of awards (2) to determine the eligibility of officers, key employees, directors, or consultants of ours to receive an award (3) to determine the number of shares of common stock to be covered by each stock-based award (subject to the individual participant limitations provided in the Amended Incentive Plan) (4) to determine the terms, conditions and restrictions of each award, including setting applicable performance criteria (which may not be inconsistent with the terms of the Amended Incentive Plan) (5) to accelerate the exercisability or vesting of the awards (6) to extend the time period for exercising stock options (7) to correct any defect, omission or inconsistency in the Amended Incentive Plan or in any award agreement, in a manner and to the extent it shall deem necessary or expedient to make the Amended Incentive Plan fully effective (8) to waive any restrictions, conditions or limitations imposed on an Award at the time the Award is granted or at any time thereafter including but not limited to forfeiture, vesting and treatment of Awards upon a Termination of Service and (9) to take any other actions and make all other determinations that it deems necessary or appropriate in connection with the Amended Incentive Plan or the administration or interpretation thereof. In connection with this authority, the Compensation Committee may, among other things, establish performance goals that must be met in order for awards to be granted or to vest, or for the restrictions on any such awards to lapse. In addition, the Compensation Committee may, in its discretion, delegate to our Chief Executive Officer, or his or her delegate, all or part of the Committee’s authority and duties with respect to awards. The Amended Incentive Plan also has certain limitations of liability for Compensation Committee and Board members as long as such members are not acting in bad faith or committing fraud.

 

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Eligibility and Types of Awards

 

Certain of our officers, employees, non-employee directors and consultants are eligible to be granted awards under the Amended Incentive Plan. Eligibility for awards under the Amended Incentive Plan will be determined by the Compensation Committee. No new award may be granted under the Amended Incentive Plan after March 17, 2031. There are approximately six officers, 29 employees, six non-employee directors and no consultants eligible to be granted Awards under the Amended Incentive Plan.

 

Available Shares

 

Subject to adjustment upon certain corporate transactions or events, the total number of shares of our common stock subject to past or future awards under the Amended Incentive Plan may not exceed 13,666,667. The 13,666,667 shares of common stock available for issuance under the Amended Incentive Plan shall be reduced by (i) the number of shares of common stock issuable pursuant to outstanding awards granted under the 2007 Omnibus Incentive Plan prior to the effective date of the Amended Incentive Plan and (ii) the number of shares of common stock issued pursuant to awards granted under the 2007 Omnibus Incentive Plan prior to the effective date of the Amended Incentive Plan that have been exercised, vested or settled and are no longer outstanding, and increased by the number of shares of common stock underlying awards that are outstanding under the 2007 Omnibus Incentive Plan as of the effective date of the Amended Incentive Plan and that again become available for grant under the Amended Incentive Plan. In determining the number of shares of common stock available for grant under the Amended Incentive Plan at any time: (1) any shares of stock subject to an award granted under the Amended Incentive Plan (including awards granted prior to the effective date of the Amended Incentive Plan) that terminate by expiration, forfeiture, cancellation or otherwise without the issuance of common stock, are settled in cash in lieu of common stock, or are exchanged with the Compensation Committee’s permission prior to the issuance of common stock for an award not involving common stock, shall become available again for grant under the Amended Incentive Plan; (2) any shares of common stock that are withheld by the Company or tendered (by either actual delivery or attestation) to pay the exercise price of a stock option shall not become available again for grant under the Amended incentive Plan; (3) any shares of common stock that are withheld by the Company or tendered (by either actual delivery or attention) to satisfy tax withholding obligations associated with an award, shall not become available again for grant under the Amended Incentive Plan; (4) any shares of stock that were subject to a stock-settled stock appreciation right under the plan that were not issued upon the exercise of such stock appreciation right shall not become available again for grant under the Amended Incentive Plan; (5) any shares of common stock that were purchased by the Company on the open market with the proceeds from the exercise of a stock option shall not become available again for grant under the Amended Incentive Plan; and (6) any shares of stock subject to “substitute awards” pursuant to Section 3(e) of the Amended Incentive Plan shall not be counted against the number of shares of common stock available for grant under the Amended Incentive Plan, nor shall they reduce the shares of common stock authorized for grant to any person in any calendar year.

 

Subject to potential adjustments upon the occurrence of certain corporate transactions or events, award grants will be subject to the following limitations: (1) the maximum number of shares of common stock subject to stock options or stock appreciation rights that can be awarded under the Amended Incentive Plan to any person eligible for an award is 3,500,000 per calendar year; (2) the maximum number of shares of common stock that can be awarded in an award under the Amended Incentive Plan, other than pursuant to stock options or stock appreciation rights, to any person eligible for an award is 1,000,000 per calendar year; and (3) the maximum value that any grantee may receive with respect to any fiscal year included in the applicable performance period is $10 million. To conform to industry best practices, the board has established compensation caps so that the maximum aggregate fair value of awards granted to any non-employee director during any calendar year shall not exceed $250,000 provided that this annual award limit shall not apply to awards granted in lieu of all or any portion of such non-employee director’s cash-based director fees.

 

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Awards Under the Amended Incentive Plan

 

Stock Options. The terms of stock options, including whether options will constitute “incentive stock options” for purposes of Section 422(b) of the Internal Revenue Code of 1986, as amended (the “Code”), will be determined by the Compensation Committee. The exercise price of an option will be determined by the Compensation Committee and reflected in the applicable award agreement. Incentive stock options will only be granted to our key employees or a “subsidiary corporation” within the meaning of Section 424(f) of the Code. The exercise price with respect to incentive stock options may not be less than 100% (or 110% in the case of an incentive stock option granted to a 10% stockholder) of the fair market value of our shares of common stock on the date of grant. Each stock option will be exercisable after the period or periods specified in the award agreement, which will not exceed 10 years from the date of grant (or five years from the date of grant in the case of an incentive stock option granted to a 10% stockholder). Options will be exercisable at such times and subject to such terms as determined by the Compensation Committee. If the aggregate fair market value of all shares of common stock subject to a grantee’s “incentive stock option” which are exercisable for the first time during any calendar year exceeds $100,000, the excess options shall be treated as non-qualified options. The Company has not awarded stock options since the inception of the 2007 Omnibus Incentive Plan.

 

Stock Appreciation Rights. Subject to the requirements of the Amended Incentive Plan, the Compensation Committee may grant stock appreciation rights in tandem with a stock option or alone and unrelated to a stock option. Stock appreciation rights may be exercised by the delivery to us of a written notice of exercise. The exercise of a stock appreciation right will entitle the grantee to receive shares of common stock having a value equal to the fair market value of a share of common stock on the date of exercise over the exercise price of the stock appreciation right. The exercise price of a stock appreciation right will be no less than the fair market value of the common stock on the date of grant. In its sole discretion, the Compensation Committee may settle the stock appreciation rights in a combination of shares of common stock and cash, or exclusively with cash. The Company has not awarded stock appreciation rights since the inception of the 2007 Omnibus Incentive Plan.

 

Restricted Stock. A restricted stock award is an award of shares of common stock that is subject to restrictions on transferability and such other restrictions, if any, as the Compensation Committee may impose at the date of grant. Grants of restricted stock will be subject to vesting schedules as determined by the Compensation Committee. The restrictions may lapse separately or in combination at such times, under such circumstances, including, without limitation, a specified period of employment or the satisfaction of pre-established criteria, in such installments or otherwise, as the Compensation Committee may determine. Except to the extent restricted under the award agreement relating to the restricted stock, a participant granted restricted stock has all of the rights of a stockholder, including, without limitation, the right to vote and the right to receive cash dividends on the restricted stock. Although dividends are paid on all restricted stock, whether or not vested, at the same rate and on the same date as our shares of common stock, such dividends will be held by us and not distributed to participants until the applicable restrictions lapse. Holders of restricted stock are prohibited from selling such shares with certain limited exceptions as provided under the Amended Incentive Plan.

 

Deferred Stock Awards. A deferred stock award is an award of phantom stock units subject to restrictions and conditions as the Compensation Committee may determine at the time of the grant. The granting of deferred stock will be contingent on the execution of a deferred stock agreement by the grantee. The terms of such agreements will be determined by the Compensation Committee and may differ among awards and grantees. A phantom stock unit represents a right to receive the fair market value of a share of our common stock or, if provided by the Compensation Committee, the right to receive a share of our common stock. Phantom stock units will be settled with a single-sum distribution however, the Compensation Committee may, in its discretion and under certain circumstances, permit a participant to receive as settlement of the phantom stock units, installments over a period not to exceed ten years. Unless otherwise provided in the applicable award agreement, or pursuant to a permissible election, the settlement date with respect to a phantom stock unit generally is the first day of the month to follow the date on which the phantom stock unit vests. During the deferral period, a grantee shall have no rights as a stockholder however, the grantee may be granted dividend equivalent rights (as described below).

 

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Other Stock-Based Awards. The Amended Incentive Plan authorizes the granting of other awards based upon (1) the shares of common stock (including the grant of securities convertible into shares of common stock and stock appreciation rights), and subject to terms and conditions established at the time of grant, (2) equity interests in one of our subsidiaries, (3) awards valued by reference to book value, fair value or performance parameters relative to us or any subsidiary or group of subsidiaries, and (4) any class of profits interest or limited liability company interest created or issued that qualifies as a “profits interest” within the meaning of IRS Revenue Procedures 93-27 and 2001-43. Our Compensation Committee will determine the specific terms of such awards and the conditions, if any, which will need to be satisfied before the grant will be effective and the conditions, if any, under which the grantee’s interest in the other awards will be forfeited. Dividends may be payable with respect to such other stock-based awards and will be subject to the same vesting conditions as the award with respect to which such dividends were paid (and forfeited if the award is forfeited. The Compensation Committee may also award dividend equivalent rights under these awards as described below.

 

Dividend Equivalent Rights. A dividend equivalent right is an award entitling the grantee credits based on the amount of cash dividends declared on shares of common stock specified in the dividend equivalent right (or other award to which it relates) in the same manner as if such shares had been issued to and held by the grantee. The Compensation Committee may provide that amounts payable with respect to dividend equivalents will be converted into cash or additional shares of common stock. The Compensation Committee will establish all other limitations and conditions of awards of dividend equivalents as it deems appropriate.

 

Performance Awards. An award may be granted as a performance award that vests, becomes exercisable, is settled or payable or is granted contingent upon the attainment during one or more performance cycles of one or more performance goals, each as specified by the Compensation Committee. A performance award may, but need not, also require the completion of a specified period of employment or other service with the Company or our subsidiaries.

 

The performance goals may be based on the performance criteria selected by the Compensation Committee for purposes of establishing the performance goals for a performance award, which include, but are not limited to the following criteria, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group and any of which may be measured on an aggregate or per share basis: earnings before any one or more of the following items: interest, taxes, depreciation or amortization for the applicable period, as reflected in our financial reports for the applicable period; net income either before or after interest, taxes, depreciation and/or amortization; changes (or the absence of changes) in the per share or aggregate market price of our common stock; economic value-added; FFO or similar measure; sales or revenues; acquisitions or strategic transactions; operating income; cash flow; return on capital, assets, equity or investment; total return to stockholders; various “non-GAAP” financial measures customarily used in evaluating the performance of REITs; return on sales; gross or net profit levels; productivity; expense levels or management; margins; operating efficiency; customer tenant satisfaction; working capital; earnings per share of stock; revenue or earnings growth; number of securities sold; our ranking against selected peer groups; same store performance from period to period; leasing or occupancy rates; objectively determinable capital deployment; objectively determinable expense management; sales or market shares; number of customers; and establishment of a trading market for our stock. Performance goals are to be established at the beginning of any applicable performance cycle or at such other date as determined by the Compensation Committee. In the discretion of the Compensation Committee, settlement of performance awards shall be in cash, common stock, other awards, or property. Subject to potential adjustments upon the occurrence of certain corporate transactions or events, the maximum value that any grantee may receive with respect to any fiscal year included in the applicable performance period shall be $10 million.

 

Awards Under the Amended Incentive Plan

 

In the event of certain corporate reorganizations or other events, the Compensation Committee will generally make certain adjustments in its discretion to the manner in which the Amended Incentive Plan operates (including, for example, to the number of shares available under the Plan), and may otherwise take actions which, in its judgment, are necessary to preserve the rights of participants.

 

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Adjustments upon Changes in Capitalization

 

In the event of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, spin-off, or similar change in the shares of our common stock or our other securities, as determined by the Compensation Committee, pursuant to which outstanding shares of common stock are increased, decreased or exchanged for a different kind or number of securities, the Compensation Committee shall make an appropriate or proportionate adjustment in (1) the maximum number of shares reserved for issuance under the Amended Incentive Plan, (2) the maximum number of stock options or stock appreciation rights or other awards that can be granted to any one individual grantee, (3) the number and kind of shares or other securities subject to any then outstanding awards under the Amended Incentive Plan, (4) the repurchase price, if any, per share subject to each outstanding restricted stock award, and (5) the price for each share subject to any then outstanding stock options and stock appreciation rights under the Amended Incentive Plan, without changing the aggregate exercise price as to which such stock options and stock appreciation rights remain exercisable. Our Compensation Committee may also adjust the number of shares subject to outstanding awards and the exercise price and the terms of outstanding awards to take into consideration extraordinary dividends, acquisitions or dispositions of stock or property or any other similar corporate event to the extent necessary to avoid a material distortion in the value of the awards.

 

Change in Control or Merger

 

In the event of certain mergers, consolidations, the sale of substantially all of our assets, our reorganization or a liquidation, or change of control as defined in the Amended Incentive Plan, the Compensation Committee may, in lieu of making the adjustments described above, provide that all outstanding awards shall terminate as of consummation of such event, and (i) accelerate the exercisability of, or cause all vesting restrictions to lapse on, all outstanding awards to a date that is at least ten days but no earlier than 60 days prior to such date, and/or (ii) provide that holders of awards will receive a payment in respect of cancellation of their awards based on the amount of the per share consideration being paid for our common stock in connection with such event, subject to various restrictions and other determinations of value. Payment may be subject to any escrow, holdback, or other contingency applicable to Company stockholders. In the event an award has an exercise or purchase price per share equal to or greater than fair market value, the award may be canceled without notice or payment of consideration. In addition, the Compensation Committee may grant awards under the Amended Incentive Plan in substitution for stock and stock based awards held by employees, directors or other key persons of another corporation in connection with the merger or consolidation of the employing corporation with the Company or a subsidiary or the acquisition by the Company or a subsidiary of property or stock of the employing corporation. In the event of a change in control, (i) any service-vesting condition under an outstanding award shall be treated as satisfied in full as of immediately prior to the date of consummation of the change in control and (ii) with respect to any outstanding performance award for which the performance cycle is incomplete as of the date of the change in control, the performance cycle will be treated as ending on the date of such change in control and the Compensation Committee shall (x) determine the extent to which the performance goals with respect to such performance cycle have been met based upon such audited or unaudited financial information then available as it deems relevant; or (y) if not determinable, deem the applicable “target” levels of the performance goals to have been attained with respect to such performance cycle.

 

The resulting performance award will be pro-rated to reflect the portion of the performance cycle that was completed prior to the change in control.

 

The Amended Incentive Plan provides a Section 280G “cutback” to avoid the imposition of any excise tax under Code Sections 280G and 4999. To the extent that a grantee is a “disqualified individual” (as defined in Section 280G of the Code) and is entitled to payments or benefits that would be “parachute payments” (as defined in Section 280G of the Code), such payments or benefits will be reduced or eliminated so as to avoid having the payments or benefits under the Amended Incentive Plan being deemed a “parachute payment” under Section 280G of the Code.

 

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Trading and Other Policies

 

Option exercises and other awards are subject to the Company’s insider trading policy and procedures, stock ownership guidelines and other applicable policies and procedures governing the issuance or holding of stock, as in effect from time to time.

 

During a grantee’s lifetime, his or her awards are only exercisable by the grantee, or by the grantee’s legal representative or guardian in the event of the grantee’s incapacity. No awards may be sold, assigned, transferred or otherwise encumbered or disposed of by a grantee other than by will or by the laws of descent and distribution.

 

All awards under the Plan, including shares of common stock or other cash or property received with respect to such award, are subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (1) the Company’s Clawback Policy and any other clawback, forfeiture or other similar policy adopted by the Board or the Committee and as in effect from time to time, and (2) applicable law, regulation or stock exchange listing requirement. By accepting an award under the Amended Incentive Plan, a Participant will be deemed to have acknowledged and consented to the Company’s Clawback Policy and the Company’s application, implementation and enforcement of any clawback, forfeiture or other similar policy adopted by the Board or the Committee, whether adopted prior to or following the date of grant of the award, and any provision of applicable law or stock exchange listing requirement relating to reduction cancellation, forfeiture or recoupment, and to have agreed that the Company may take such actions as may be necessary to effectuate any such policy, requirement or applicable law, without further consideration or action. If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, then any grantee who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 must reimburse the Company for the amount of any award received by such individual under the Amended Incentive Plan during the 12-month period following the first public issuance or filing with the SEC, as the case may be, of the financial document embodying such financial reporting requirement.

 

Amendment and Termination

 

Our Board may at any time amend or terminate the Amended Incentive Plan; however, we must obtain stockholder approval of any amendment to the Amended Incentive Plan (other than amendments that curtail the scope of the plan) that would materially amend the Amended Incentive Plan, including any amendment that would:

 

Increase the maximum number of shares of common stock that may be issued under the Amended Incentive Plan;

 

Expand the types of awards available under, materially expand the eligibility to participate in, or materially extend the term of the Amended Incentive Plan; or

 

Materially change the method of determining the fair market value of shares on the date of grant of an option or stock appreciation right.

 

In addition, to the extent determined by the Compensation Committee to be required by the Code to ensure that incentive stock options are qualified under Section 422 of the Code or the extent required by the shareholder approval requirements of any national securities exchange, amendments to the Amended Incentive Plan will be subject to approval by stockholders.

 

The Compensation Committee may at any time amend or cancel any previously granted award under the Amended Incentive Plan for the purpose of satisfying changes in law or for any other lawful purpose, but no such action may adversely affect in any material way the rights under an previously granted award without the consent of the grantee. Notwithstanding the above, any amendment to an award or other action by the Compensation Committee that (i) decreases the exercise price or other similar price applicable thereto, (ii) cancels an award at a time when its exercise price or other similar price exceeds the fair market value of the underlying stock in exchange for another award or any cash payment or (iii) constitutes the repricing of the exercise price or base value of an option, stock appreciation right, or any other award granted under the Amended Incentive Plan, will be subject to the approval of our stockholders unless undertaken in connection with a merger or other transaction as set forth in Section 3(c) or Section 3(d) of the Amended Incentive Plan. If adopted by our stockholders, the Amended Incentive Plan shall terminate on March 17, 2031. Any awards outstanding under the Amended Incentive Plan at the time of its termination shall remain outstanding until they expire by their terms.

 

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Certain U.S. Federal Income Tax Consequences

 

The following discussion is not intended or written to be used, and cannot be used by any person, for the purpose of avoiding U.S. federal income tax penalties, and was written to support the “promotion or marketing” (within the meaning of Internal Revenue Service Circular 230) of the Amended Incentive Plan.

 

Non-Qualified Stock Options

 

No income will be recognized by an option holder at the time a non-qualified stock option is granted. At the time a non-qualified stock option is exercised, however, ordinary income will generally be recognized by an option holder in an amount equal to the excess of the fair market value of the underlying shares of common stock on the exercise date over the exercise price of the option. We will generally be entitled to a deduction for U.S. federal income tax purposes in the same amount as the amount included in ordinary income by the option holder with respect to his or her non-qualified stock option. Gain or loss on a subsequent sale or other disposition of the shares acquired upon the exercise of a non-qualified stock option will be measured by the difference between the amount realized on the disposition and the tax basis of such shares, and will generally be long-term or short-term capital gain depending on the holding period involved. The tax basis of the shares acquired upon the exercise of any non-qualified stock option will be equal to the sum of the exercise price of the non-qualified stock option and the amount included in income with respect to the option. Notwithstanding the foregoing, in the event that exercise of the option is permitted other than pursuant to a cash payment of the exercise price, various special tax rules may apply.

 

Incentive Stock Options

 

In general, neither the grant nor the exercise of an incentive stock option will result in taxable income to an option holder or a deduction for us. To receive this tax treatment, however, shares acquired upon the exercise of an incentive stock option, must not be disposed of within two years after the incentive stock option is granted nor within one year after the transfer of the shares to the option holder pursuant to his or her exercise of the option. In addition, the option holder must be an employee of us or a qualified subsidiary at all times between the date of grant and the date which is three months (one year in the case of disability) before exercise of the option. (Special rules apply in the case of the death of the option holder.) Incentive stock option treatment under the Code generally allows the sale of our shares of common stock received upon the exercise of an incentive stock option to result in any gain being treated as a capital gain to the option holder, and we will not be entitled to a tax deduction. The exercise of an incentive stock option (if the holding period rules described in this paragraph are satisfied), however, will give rise to income includable by the option holder in his or her alternative minimum taxable income for purposes of the alternative minimum tax in an amount equal to the excess of the fair market value of the stock acquired on the date of the exercise of the option over the exercise price.

 

If the holding period rules noted above are not satisfied, gain recognized on the disposition of the shares acquired upon the exercise of an incentive stock option will be characterized as ordinary income. This gain will be equal to the difference between the exercise price and the fair market value of the shares at the time of exercise. (Special rules may apply to disqualifying dispositions where the amount realized is less than the value at exercise.) We would generally then be entitled to a deduction equal to the amount of such gain included by an option holder as ordinary income. Any excess realized upon such a disposition over the fair market value at the date of exercise will generally be long-term or short-term capital gain depending on the holding period involved. Notwithstanding the foregoing, in the event that exercise of the option is permitted other than pursuant to a cash payment of the exercise price, various special tax rules may apply.

 

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Restricted Stock

 

Unless a holder of restricted stock makes an “83(b) election” (as discussed below), there generally will be no tax consequences as a result of a grant of restricted stock until the restricted stock is either no longer subject to a substantial risk of forfeiture or is transferable (free of the risk). Generally, when the restrictions are lifted, the holder will recognize ordinary income, and we will be entitled to a deduction, equal to the difference between the fair market value of the stock at that time and the amount, if any, paid by the holder for the restricted stock. Subsequently realized changes in the value of the stock generally will be treated as long-term or short-term capital gain or loss, depending on the length of time the shares are held prior to disposition of the shares. In general terms, if a holder makes an 83(b) election (under Section 83(b) of the Code) upon the award of restricted stock, the holder will recognize ordinary income on the date of the award of restricted stock, and we will be entitled to a deduction, equal to (1) the fair market value of the restricted stock as though the stock were (A) not subject to a substantial risk of forfeiture or (B) not transferable, minus (2) the amount, if any, paid for the restricted stock. If an 83(b) election is made, there will generally be no tax consequences to the holder upon the lifting of restrictions, and all subsequent appreciation in the restricted stock generally would be eligible for capital gains treatment. In the event of a forfeiture after an 83(b) election is made, no deduction or loss will be available, other than with respect to amounts actually paid for the stock.

 

Dividend Equivalents

 

There generally will be no tax consequences as a result of the award of a dividend equivalent. When payment of the dividend equivalent is made, the holder of the dividend equivalent generally will recognize ordinary income, and we will be entitled to a deduction, equal to the amount received in respect of the dividend equivalent.

 

Stock Appreciation Rights

 

No income will be recognized at the time a stock appreciation right (“SAR”) is granted. At the time an SAR is exercised, however, the holder will recognize ordinary income equal to the amount of cash and the fair market value of any shares received as a result of the exercise (less the amount paid for such shares, if any). If the SAR was granted in connection with employment, this taxable income would also constitute “wages” subject to withholding and employment taxes. We will receive an income tax deduction in an amount equal to the ordinary income that the participant recognizes upon exercise of the SAR.

 

Deferred Stock Awards

 

No income will be recognized at the time a deferred stock award is granted. A participant who receives a deferred stock award will recognize ordinary income equal to the amount of cash and the fair market value of any shares received upon settlement (generally, the vesting date). If the deferred stock award was granted in connection with employment, this taxable income would also constitute “wages” subject to withholding and employment taxes. We will receive an income tax deduction in an amount equal to the ordinary income that the participant recognizes.

 

Section 409A

 

Section 409A of the Code imposes restrictions on non-qualified deferred compensation. Failure to satisfy these rules results in accelerated taxation, an additional tax to the holder of the amount equal to 20% of the deferred amount, and a possible interest charge. While certain awards under the Amended Incentive Plan could be subject to Section 409A of the Code, deferred stock awards under the Amended Incentive Plan are intended to be exempt from, or to comply with, the requirements of Section 409A of the Code.

 

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Other Tax Consequences

 

Section 162(m) of the Code prevents us from taking a federal income tax deduction for compensation paid in excess of $1 million to our “covered employees” which generally includes the CEO, CFO and the three other most highly compensated executive officers of the Company. Any award we grant pursuant to the Amended Incentive Plan to covered employees, whether performance-based or otherwise, will be subject to the $1 million annual deduction limitation.

 

The foregoing is only a summary of the effect of federal income taxation on the grantee and us with respect to the grant and exercise of awards made under the Amended Incentive Plan, does not purport to be complete, and does not discuss the tax consequences of the grantee’s death or the income tax laws of any municipality, state or foreign country in which a grantee may reside.

 

Plan Benefits

 

Benefits, if any, payable under the Amended Incentive Plan for 2024 and future years are dependent on the actions of the Compensation Committee and are therefore not determinable at this time. Our executive officers are eligible to receive awards under the A&R Incentive Plan and will be eligible to receive awards under the Amended Incentive Plan and, accordingly, our executive officers have an interest in this Proposal. In 2023, the following grants were made under the A&R Incentive Plan to the persons and groups listed below:

 

Name and Position Stock Awards(1)(2)
  Number of Shares Dollar Value ($)
C. Brent Smith | President and Chief Executive Office 488,621 5,377,972
Robert E. Bowers | EVP and Chief Financial and Administrative Officer 149,200 1,638,875
Christoper A. Kollme | EVP - Investments and Strategy 57,607 633,889
George M. Wells | EVP - Real Estate Operations 74,599 821,867
Robert K. Wiberg | EVP - Northeast Region and Head of Development 52,362 576,811
All Executive Officers, as a group (7 persons)(3) 897,234 9,865,622
All Non-Employee Directors, as a group 121,765 800,000
All Non-Executive Officer Employees, as a group 393,022 4,066,935

 

(1) In accordance with SEC rules, the stock awards presented in this table include the annual deferred stock grant and the estimated aggregate grant date fair value of the Performance Share Component of our 2023 Long-Term Incentive Compensation Program at target levels, even though there is no guarantee that any amounts will ultimately be earned by and paid to the executive. See “Stock Vested for 2023” tables for the value of actual stock awards vested during the year ended December 31, 2023.

 

(2) As further described under “Long-Term Incentive Compensation Plan” in the Compensation Discussion and Analysis section below, beginning in 2023, the Compensation Committee decided to conform the Annual Deferred Stock Unit component of our LTIC plan to prevailing market practice by decreasing the percentage of our NEOs’ LTIC opportunity allocated to Annual Deferred Stock Units and granting discretionary, time-based awards at the beginning of each calendar year with no immediate vesting. As such, in accordance with SEC rules, the deferred stock units awarded in early 2023 for both the 2022 (in arrears) and 2023 (prospective) service periods are included in the table above.

 

(3) Includes all persons who served as executive officers during 2023.

 

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No Appraisal Rights in Connection with the Approval of the Amendment to the A&R Incentive Plan

 

Under Maryland law, stockholders will not have appraisal rights in connection with the proposal to adopt the amendment to the A&R Incentive Plan.

 

Vote Required

 

Approval of the amendment to the A&R Incentive Plan requires the affirmative vote of the holders of a majority of the votes cast thereon to pass. Abstentions and broker non-votes will not have an effect on the vote, but they will count toward the establishment of a quorum.

 

Our Board has determined it to be advisable and in the best interests of us and our stockholders to approve the amendment to the A&R Incentive Plan. Our Board unanimously approved the form of the amendment to the A&R Incentive Plan and recommends that you vote FOR the approval of the amendment to the A&R Incentive Plan.

 

Consequences of Failure to Approve the Amendment to the A&R Incentive Plan

 

If the amendment to the A&R Incentive Plan is not approved by our stockholders, it could materially adversely affect us because we could be unable to retain of our senior management and may be unable to provide the incentives necessary to attract qualified replacements and other personnel.

 

 

 

 

 

 

 

 

 

CERTAIN INFORMATION ABOUT

MANAGEMENT

 

Executive Officers

 

  Age Role
C. Brent Smith 48 President, Chief Executive Officer and Director
Robert E. Bowers 67 Executive Vice President, Chief Financial and Administrative Officer
Christopher A. Kollme 53 Executive Vice President, Investments and Strategy
Laura P. Moon 53 Senior Vice President, Chief Accounting Officer and Treasurer
George M. Wells 61 Executive Vice President, Chief Operating Officer
Robert K. Wiberg 68 Executive Vice President, Northeast Region and Head of Development

 

The following is detailed information about each of our executive officers other than Mr. Smith whose biographical information is included under “Proposal 1: Election of Directors” above.

 

 

 

Robert E. Bowers has served as Chief Financial and Administrative Officer since 2007. A veteran of the public financial services industry, including having served as Chief Financial Officer for three other public companies, Mr. Bowers’ experience includes investor relations, debt and capital offerings, mergers and acquisitions, asset allocation, financial management and strategic planning. Mr. Bowers is also responsible for management of our information technology, risk management and human resource functions. From 2004 until 2007, he served as Chief Financial Officer and Vice President of Wells Real Estate Funds, Inc. (“WREF”) and was a Senior Vice President of Wells Capital. Mr. Bowers was Chief Financial Officer and Director of NetBank, Inc. (formerly NASDAQ: NTBK) from 1997 to 2002. From 1984 to 1996, Mr. Bowers was Chief Financial Officer and Director of Stockholder Systems, Inc. (formerly NASDAQ: SSIAA), an Atlanta, Georgia-based financial applications company and its successor, CheckFree Corporation (formerly NASDAQ:CKFR). Mr. Bowers has provided strategic financial counsel to a range of organizations, including venture capital funds, public corporations and businesses considering listing on a national securities exchange. Mr. Bowers is a member of NAREIT, a board member of the Office Technology and Operations Council (“OTOC”), and a CPA who began his career in 1978 with Arthur Andersen & Company in Atlanta. Additionally, Mr. Bowers serves, or has served, on several non-profit boards, primarily in the educational, religious and medical service areas. He previously served for approximately 20 years as the Chairman of Woodward Academy’s Board of Governors in College Park, Ga., the largest college-preparatory private school in the continental United States, and also for approximately 20 years as the Chairman & Treasurer of Southwest Christian Hospice and Hope House Respite for Medically Fragile Children, both in Union City, Georgia. He currently serves as an Advisory Board member to the Harbert School of Business and The School of Accountancy at Auburn University.

 

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Christopher A. Kollme has served as Executive Vice President — Investments and Strategy since October 2021. In this role, he is responsible for acquisitions, dispositions, and portfolio strategy. Prior to his transition to his current role, Mr. Kollme served as Executive Vice President — Capital and Strategy since joining the Company in 2017. In that role, he worked with the Piedmont senior management team to further establish and advance the strategic initiatives of the company and provided counsel on capital raising activities and banking relationships. Prior to joining Piedmont, Mr. Kollme served as Managing Director & Head of Real Estate Investment Banking for SunTrust Robinson Humphrey where he managed the origination of advisory and capital raising transactions on behalf of the bank’s public and private real estate clients. Mr. Kollme’s approximately 20-year career has also included tenures with Morgan Keegan & Company, Inc.’s Real Estate Investment Banking group as Managing Director & Group Head and Duke Realty as Vice President of Acquisitions.

 

Laura P. Moon has served as Senior Vice President and Chief Accounting Officer since 2007 and Treasurer since 2023. She has over thirty years of experience with accounting and reporting for public companies and at Piedmont she is responsible for all treasury, general ledger accounting, SEC and tax reporting functions. Prior to joining us, Ms. Moon served as Vice President and Chief Accounting Officer at our former advisor where she had responsibility for all general ledger accounting, financial and tax reporting, and internal audit supervision for 19 public registrants as well as several private real estate partnerships. Ms. Moon is a CPA and began her career in 1991 with Deloitte & Touche LLP.

 

George M. Wells has served as Executive Vice President and Chief Operating Officer since 2021. His responsibilities include leading our company’s asset and property management divisions and providing oversight to our construction management team with regard to developments, re-developments and tenant build outs. Prior to assuming this role, Mr. Wells served as Executive Vice-President — Real Estate Operations for two years and Executive Vice-President of our Southeast Region for approximately four years. Mr. Wells has over 30 years of commercial real estate experience including almost twenty years of service with Piedmont and its former advisor, and previous tenures with Lend Lease Real Estate Investments and Equitable Real Estate. Mr. Wells is a member of NAIOP.

 

Robert K. Wiberg has served as Executive Vice President — Northeast Region since 2019 and Head of Development since 2012. Prior to being appointed Executive Vice President for the Northeast Region, Mr. Wiberg served as Executive Vice President of the Mid-Atlantic region which was consolidated into the Northeast Region during 2019. Mr. Wiberg is responsible for all leasing, property management, asset management, and acquisitions and dispositions for approximately four million square feet of office space located in Arlington, VA, Boston, New York, and metropolitan Washington, D.C., as well as for various development projects throughout the portfolio. Mr. Wiberg’s previous work tenures include Brandywine Realty Trust, Prentiss Properties, Cadillac Fairview and Coldwell Banker (now CBRE). As a recognized industry leader, he has served on the board of directors of the Northern Virginia Chapter of NAIOP and the board of the Arlington Partnership for Affordable Housing and currently serves on the Executive Committee of board of the Ballston Business Improvement District.

 

 

 

There are no family relationships among our directors or executive officers. Officers are elected annually by our board of directors, and each officer serves until his or her successor is duly elected and qualified, or until his or her death, resignation, or removal from office. The board of directors retain the power to remove any officer at any time.

 

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INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES

 

Independence and Leadership Structure

 

Each NYSE-listed company is required to have a majority of independent board members and a nominating/ corporate governance committee, compensation committee and audit committee each comprised solely of independent directors. Our board of directors has adopted the NYSE independence standards as part of its Corporate Governance Guidelines and, in accordance with NYSE rules, the board of directors has affirmatively determined that each of the following current board members is independent within the meaning of the NYSE’s director independence standards:

 

Kelly H. Barrett

 

Jeffrey L. Swope

 

Glenn G. Cohen

 

Venkatesh S. Durvasula

 

Mary M. Hager

 

Barbara B. Lang

 

Frank C. McDowell

 

Dale H. Taysom

 

C. Brent Smith, who serves as our President and Chief Executive Officer, is not independent.

 

Each of our board members is subject to re-election on an annual basis.

 

The board of directors has determined to separate the roles of Board Chair and CEO, and Mr. McDowell currently serves as Chair of the Board. The Chair is elected by the board of directors on an annual basis and presides at regularly scheduled executive sessions of the independent directors. The board currently has no formal policy with respect to the separation of the positions of Chair of the Board and Chief Executive Officer; however, the board believes that the separation of the positions is in our best interests as it provides leadership for the independent board and the benefit of additional support, experience and oversight for the management team.

 

Board Committees

 

Our board of directors has established four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, and the Capital Committee. Each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee has adopted a written charter and complies with the listing requirements and other rules and regulations of the SEC and the NYSE, each as amended or modified from time to time. You can access each of our committee charters on the Investor Relations pages of our website at www.piedmontreit.com. The board of directors has also determined that each of the current members of our Audit, Compensation, and Nominating and Corporate Governance Committees is independent within the meaning the NYSE’s director independence standards applicable to members of such committees. Additionally, our Audit Committee members satisfy the enhanced independence standards set forth in Rule 10A-3(b)(1)(i) and Ms. Barrett and Mr. Cohen meet the definition of an audit committee financial expert as defined under the Exchange Act and NYSE listing standards. Our Compensation Committee members satisfy the enhanced independence standards set forth in NYSE listing standards.

 

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The table below shows the current chairs and membership of the board and each standing board committee, the independence status of each board member and the number of board and board committee meetings held during the year ended December 31, 2023.

 

  Board of
Directors
Audit
Committee
Nominating
& Corporate
Governance
Committee(1)
Compensation
Committee
Capital
Committee
Frank C. McDowell C    
Kelly H. Barrett** C    
Venkatesh S. Durvasula      
Glenn G Cohen**   C
Mary Hager      
Barbara B. Lang   C  
C. Brent Smith*        
Jeffrey L. Swope     C
Dale H. Taysom VC    
Number of 2023 Meetings 9 6 4 6 5

 

C Chair VC Vice Chair Member * Non-Independent Director ** Financial Expert

 

(1) Piedmont’s Nominating and Corporate Governance Committee has responsibility for overseeing Environmental, Corporate Social Responsibility, Health and Safety, and Sustainability matters.

 

Each member of the 2023 board of directors attended in excess of 75% of the board and committee meetings on which such director served during 2023.

 

We do not have a formal policy regarding board member attendance at our annual stockholder meetings. All of the individuals who were members of our board of directors at the time attended the 2023 annual meeting of stockholders virtually.

 

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The Audit Committee

 

The Audit Committee assists the board of directors in the oversight of the integrity of our financial statements, our compliance with legal and regulatory requirements, the system of internal controls which our management has established, risk assessment, the performance of our internal audit function, and oversight of our technology platform, including cyber risk assessment and management. The Audit Committee is also directly responsible for the appointment, independence, compensation, retention, and oversight of the work of our independent registered public accounting firm, which reports directly to the Audit Committee.

 

The Audit Committee meets alone with our senior management, our internal audit personnel, and with our independent registered public accounting firm, which has free access to the Audit Committee.

 

The Compensation Committee

 

The Compensation Committee assists the board of directors in setting the overall compensation strategy and compensation policies for our executive officers and directors; overseeing the assessment of risk associated with the Company’s compensation policies and practice; reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer; and evaluating the Chief Executive Officer’s performance in light of those goals and objectives. In addition, the Compensation Committee determines our Chief Executive Officer’s compensation, reviews and approves the compensation of other named executive officers and non-employee directors and administers our Second Amended and Restated 2007 Omnibus Incentive Plan.

 

The Nominating and Corporate Governance Committee

 

The Nominating and Corporate Governance Committee assists the board of directors in identifying individuals qualified to serve on the board of directors consistent with criteria approved by the board of directors, recommending a slate of director nominees for election by our stockholders at the annual meeting of our stockholders, evaluating the independence of candidates for the board of directors, developing and implementing the process necessary to identify prospective members of our board of directors, determining the advisability of retaining any search firm or consultant to assist in the identification and evaluation of candidates for membership on the board of directors, overseeing an annual evaluation of the board of directors, each of the committees of the board and management, developing and recommending to our board of directors a set of corporate governance principles and policies, periodically reviewing our corporate governance structures and procedures and suggesting improvements thereto to our board of directors.

 

Additionally, the Nominating and Corporate Governance Committee is also responsible for reviewing stockholder communications and overseeing our governance practices, succession planning of our management team, business ethics and corporate conduct, as well as reviewing and promoting the continuing education of our directors. Finally, the Nominating and Corporate Governance Committee also provides oversight of risks, policies, and guidance to the board regarding environmental, social and corporate governance (“ESG”) issues, trends and best practices (in conjunction with Compensation and Capital Committees, to the extent these committees address similar issues). The Nominating and Corporate Governance Committee receives quarterly reports from management regarding the Company’s ESG strategy, initiatives, and policies, including recommended changes necessary to comply with existing legal requirements or emerging trends and best practices and updates the board quarterly regarding such matters.

 

The Capital Committee

 

The Capital Committee assists the board of directors by reviewing and advising the board of directors on our overall financial performance, including issues related to capital structure, operating earnings, dividends and budgetary, forecasting, and reporting processes, and reviewing and advising the board of directors on investment criteria and acquisition and disposition policies, general economic environment in various real estate markets, existing or prospective properties or tenants, and portfolio diversification goals. The Capital Committee also provides oversight and counsel related to sustainability and wellness practices at the Company’s portfolio of properties.

 

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Selection of Directors

 

The board of directors is responsible for selecting its own nominees and recommending them for election by the stockholders. The board delegates the screening process necessary to identify qualified candidates to the Nominating and Corporate Governance Committee, in consultation with the Chief Executive Officer.

 

The Nominating and Corporate Governance Committee annually reviews director suitability and the continuing composition of the board of directors and recommends director nominees who are voted on by the full board of directors. All director nominees then stand for election by the stockholders annually.

 

In recommending director nominees to the board of directors, the Nominating and Corporate Governance Committee solicits candidate recommendations from its own members, other directors, outside legal counsel, the investment banking community, and members of our management. The Nominating and Corporate Governance Committee may engage the services of a search firm to assist in identifying potential director nominees and will also consider recommendations for director candidates made by stockholders and other interested persons. Candidates for director must meet the established director criteria discussed below. In addition, under our Bylaws, stockholders may directly nominate candidates for election as directors. In order for a stockholder to make a nomination, the stockholder must satisfy the procedural requirements for such nomination as provided in Article II, Section 12 of our Bylaws. Any stockholder may request a copy of our Bylaws free of charge by writing to our Secretary at our corporate address. In evaluating candidates for director, the Nominating and Corporate Governance Committee will consider each candidate without regard to the source of the recommendation and weigh those factors that the Nominating and Corporate Governance Committee determines are relevant, including the factors set forth below under “Board Membership Criteria.”

 

 

 

 

 

 

 

 

 

Board Membership Criteria

 

The Nominating and Corporate Governance Committee annually reviews with the board of directors the appropriate experience, skills and characteristics required of directors, both in the context of the current membership of the board as well as in the context of potential turnover of the existing board to determine whether director refreshment is needed. The table below summarizes the key characteristics that are considered and which of our independent board nominees the board particularly relies on with regard to each characteristic.

 

Experience, Skill, or Characteristic Barrett Cohen Durvasula Hager Lang Taysom
Audit committee financial expert        
Financial experience
Chief executive or chief financial officer experience (with a preference for REIT-specific experience)    
Public company experience    
Industry specific knowledge    
Strategic planning experience or expertise
Experiences mentoring top level leaders
General management experience
Real estate development/construction expertise    
Investment banking experience            
Racial diversity        
Gender diversity      
Risk management expertise        
Marketing expertise        
ESG Initiatives  
International experience  
Information security experience    

 

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The board considers all of these characteristics when assessing candidates for board membership. Other considerations included in both the annual assessment of existing members and the assessment of new candidates include the candidate or incumbent’s status and tenure as an independent director, the ability of the candidate or incumbent to attend board meetings regularly and to devote an appropriate amount of effort in preparation for those meetings, and whether the candidate’s knowledge and experience of a particular aspect of the real estate industry or particular skill set is additive to the existing experience or skill sets of incumbent members of the board. While we have not adopted a formal policy regarding diversity of our board, the board believes that a diverse membership having a variety of skills, styles, experiences, and competencies is an important aspect of a well-functioning board. Accordingly, the board believes that diversity, inclusive of gender and race, should be a central component in board searches, succession planning and recruiting. The board is committed to considering board slates that are as diverse as possible and that this is consistent with nominating only the most qualified candidates for the board who bring the required skills, competencies and fit to the boardroom.

 

It is also expected that independent directors nominated by the board of directors shall be individuals who possess a reputation and hold positions or affiliations befitting a director of a large publicly held company and are active in their occupation, profession, or community. Further, the board annually considers each directors’ tenure on the Board with regard to the pre-established term limits further described below, as well as the board membership criteria above, and plans for refreshment as needed.

 

Board Self-Evaluation Process

 

Annually, the board of directors undertakes a robust self-evaluation process which is administered by the Nominating and Corporate Governance Committee with the assistance of outside counsel. Members of the board complete a detailed, confidential questionnaire which provides for ratings in key areas and also seeks subjective comments. Outside counsel collects and analyzes the data and reports the results and information compiled from the questionnaires to the Nominating and Corporate Governance Committee. Comments pertaining to Board Committees are shared with each respective Committee chairperson, and comments regarding the full board are shared with the full board. Matters requiring follow up are addressed by the Chair of the Nominating and Corporate Governance Committee, the Chair of the Board, or Chair of the applicable Board Committee, as appropriate.

 

Majority Voting Policy

 

Our Bylaws provide for majority voting for the election of directors in uncontested elections. Therefore, each director nominee will be elected if he or she receives a majority of the votes cast. A majority of votes cast means that the number of shares voted FOR a director must exceed the number of shares voted AGAINST that director. To enhance the power of our stockholders to influence the composition of the board of directors, our Corporate Governance Guidelines provide that in an uncontested election of directors, any non-employee nominee who receives a greater number of votes AGAINST his or her election than votes FOR his or her election will promptly tender his or her resignation for consideration by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee will promptly consider the resignation offer and make a recommendation to the board of directors. The board will act on the Nominating and Corporate Governance Committee’s recommendation within 90 days following the certification of the stockholder vote. We will publicly disclose, in a Form 8-K furnished to the SEC, the board’s decision regarding whether to accept the resignation offer. Any director who tenders his or her resignation shall not participate in the Nominating and Corporate Governance Committee’s recommendation or board of directors’ action regarding whether to accept such resignations. However, if each member of the Nominating and Corporate Governance Committee was not elected at the same election, then the independent directors who were elected shall appoint a committee among themselves to consider such resignations and recommend to the board of directors whether to accept them. However, if the only directors who were elected in the same election constitute three or fewer directors, all directors may participate in the action regarding whether to accept such resignations.

 

Term Limits

 

Our Corporate Governance Guidelines provide that the board of directors will not nominate for re-election any non-employee director who has served 15 years or more prior to the applicable election, subject to exceptions granted by the board of directors.

 

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Risk Oversight

 

The board of directors has specifically delegated responsibility for oversight of the enterprise risk assessment to the Audit Committee. The board of directors is involved in risk oversight through direct decision-making authority on significant matters as well as through the oversight of management and appropriate advice and counsel from legal, financial, and compensation advisors. In particular, the board of directors manages risk by reviewing and discussing periodic reports with management including, but not limited to, reports detailing Piedmont’s risk related to its geographic, tenant, industry, and lease expiration concentrations as well as internal controls and cyber risk. Through its various committees, the board monitors acquisition, disposition, leasing, financing, and cyber activities and has delegated authority to the appropriate levels of management to carry out such activities with appropriate governance reporting at respective committee meetings.

 

The Audit Committee monitors major issues regarding accounting principles and financial statement presentation and disclosures, including any significant changes in the application of accounting principles, and major issues regarding the adequacy of Piedmont’s internal controls and analyses prepared by management and/or the independent registered public accounting firm setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements. In addition, the Audit Committee follows the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on Piedmont’s financial statements and the type and presentation of financial information to be included in earnings press releases, reports, and earnings guidance provided to analysts and rating agencies. The Audit Committee annually reviews and discusses with management Piedmont’s major financial and cyber risk exposures and the steps management has taken to monitor and control such exposures. The Audit Committee is also briefed annually on Piedmont’s processes and policies with respect to risk assessment and risk management and the Audit Committee Chair is interviewed in conjunction with Piedmont’s annual risk assessment process. The Audit Committee is briefed annually on insurance coverage limits and any significant change in Piedmont’s insurance policies. Finally, the Audit Committee is briefed quarterly on monitoring of Piedmont’s code of ethics, whistle-blower policy, and insider trading policies, cyber activities, information security matters, as well as quarterly REIT test and debt covenant compliance calculations. Piedmont’s Insider Trading policy specifically prohibits trading in the Company’s stock when an employee is aware of material, nonpublic information including, among other things, information concerning data security breaches or other cybersecurity events impacting the Company or any of its substantial tenants or business partners.

 

Cyber Risk Management and Strategy

 

To identify and assess material risks from cybersecurity threats, our enterprise risk management program considers cybersecurity threats alongside other company risks as part of our overall risk assessment process. In addition, we perform an external, specific cybersecurity risk assessment every eighteen months. Included in our management of cybersecurity risk is our annual review of our Incident Response Plan/Policy, involving employees from all responsibility levels of the company. Our Chief Financial and Administrative Officer has primary responsibility for overseeing our information systems and information technology resources, including risks from cybersecurity threats. To assist our Chief Financial and Administrative Officer in discharging these responsibilities, we have a standing management committee to address information technology and cybersecurity risk matters comprised of our Chief Financial and Administrative Officer, the principal of a third-party, managed security service provider (an “MSSP”), our Vice President of Risk Management, our Chief Accounting Officer, our Senior Vice President of Human Resources and certain other members of our information technology staff and property management. This committee meets on a quarterly basis, with additional meetings held as-needed throughout the year, to:

 

monitor emerging data protection laws and implement changes to our processes designed to comply with these laws;

 

identify and assess material risks from cybersecuirty threats;

 

provide guidance on our cubersecurity strategy development and implementation;

 

ensure that regular risk assessments and appropriate mitigation strategies are in place;

 

ensure the performance of regular vulnerability and penetration testing and remediation of findings;

 

oversee the implementation of new information technology systems and business applications and cyber security around such changes;

 

oversee the implementation and management of cybersecurity-related tools such as security information and event management systems;

 

review relevant service organization controls reports for the MSSP that serves as our Security Operation Center; and

 

require training and security awareness programs for our employees.

 

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Our Vice President of Risk Management monitors and tests these initiatives on a periodic basis. Additionally, our Chief Financial and Administrative Officer partners with the MSSP and our information technology staff throughout the organization to manage material risks from cybersecurity threats, as well as to provide managerial and operational support for our information systems and information technology resources on a daily basis.

 

We also maintain an incident response plan to coordinate the actions we take to prepare for, detect, respond to and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate, and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate brand and reputational damage. The incident response plan is tested annually with tabletop exercises to assess the validity of the plan and to make necessary modifications, as needed on a bi-annual basis.

 

We utilize qualified external risk advisory and accounting firms to perform an audit focusing on entity-level, application and information technology general computer controls annually, as well as the full cybersecurity risk assessment. Audit results and the risk assessments are reviewed by our Chief Financial and Administrative Officer, the principal of the MSSP, and our Vice President of Risk Management. Any exceptions are addressed with a remediation plan and implemented with appropriate resources. Audit results, risk assessments and remediation plans are discussed with the Audit Committee of the board of directors, who has responsibility for cybersecurity risk oversight, each quarter until all points are fully resolved.

 

We also identify and oversee cybersecurity risk from third-party service providers through our vendor management policy, which requires increasing levels of due diligence and required insurance coverages in proportion to each provider’s access to our information systems.

 

Although we have never experienced a material information security breach nor have we incurred any expenses related to such a breach, we take a proactive approach to managing information security risk. Our process for managing existing and new service providers evaluates the degree to which such service providers will interface with our systems. This process dictates minimum insurance requirements and increased security documentation and protocols as interaction with our systems increases. We also have an information security training and compliance program which includes cybersecurity updates, notices, reminders, and simulated cyber-attacks emailed to all employees bi-weekly and that all employees are required to participate in at least annually. Further, we have a documented business continuity plan that is updated and tested on an annual basis and we carry an information security risk insurance policy.

 

Cybersecurity Governance

 

The Audit Committee of the board of directors oversees cybersecurity risk and is comprised of three independent members with diverse expertise including, risk management, technology, and finance, equipping them to oversee cybersecurity risks effectively. The chair of our Audit Committee holds a Certificate in Cybersecurity Oversight from the National Association of Corporate Directors and has previous work experience at a large retailer with point-of-sale cybersecurity exposure. The Audit Committee receives quarterly updates summarizing on-going information technology and cybersecurity initiatives from our Chief Financial and Administrative Officer and reviews the results of the Company’s annual risk assessment and regular cyber risk assessment upon completion. Any significant issues identified are reported to the Audit Committee of the board of directors on a quarterly basis.

 

As described above, our management team is responsible for the day-to-day assessment and management of material risks from cybersecurity threats through our Chief Financial and Administrative Officer, our standing management committee on information technology and cybersecurity risk matters and the MSSP. This group would be notified through our Incident Response Plan/Policy and appropriate actions undertaken in accordance with the plan document if a cyber attack were to occur.

 

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Corporate Governance Guidelines and Code of Ethics

 

Our board of directors, upon the recommendation of the Nominating and Corporate Governance Committee, has adopted Corporate Governance Guidelines establishing a common set of expectations to assist the board of directors in performing their responsibilities. The Corporate Governance Guidelines, which meet the requirements of the NYSE’s listing standards, address several topics, including, among other things, director qualification standards, director responsibilities, the responsibilities and composition of the board committees, director access to management and independent advisers, director compensation, and evaluations of the performance of the board. Our board of directors has also adopted a Code of Ethics, including a conflicts of interest policy, that applies to all our employees, officers and directors. Where appropriate, the principles of the Code also extend to the Company’s business partners, vendors and suppliers. Certain employees, including among others, our principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions are required to read the policy and confirm their compliance on an annual basis and all employees, including management, are periodically required to participate in training sessions on workplace ethics, including anti-corruption. The Code of Ethics meets the requirements of the rules and regulations of the SEC. A copy of our Corporate Governance Guidelines and our Code of Ethics is available on our website at www.piedmontreit.com. Any amendments to, or waivers of, the Code of Ethics will be disclosed on our website promptly following the date of such amendment or waivers.

 

Additionally, because some of Piedmont’s subsidiaries contract with various federal agencies (typically as a landlord, and sometimes as a construction manager), Piedmont and/or these affiliates are required to comply with certain rules regarding business ethics compliance programs and mandatory disclosure requirements in connection with the performance of government contracts and subcontracts. To help ensure adherence with these requirements, Piedmont has developed a Federal Government Contractor Business Ethics Compliance Program that outlines specific procedures to be followed, including annual training for relevant employees.

 

Anti-Bribery, Corruption, and Money Laundering

 

All of Piedmont’s operations and employees are based in the United States. We typically lease to credit-worthy corporate tenants, the majority of whom are investment grade or nationally recognized corporations or governmental agencies. These corporations are subject to credit review procedures prior to being accepted as a tenant and our vendor list is compared to the Office of Foreign Assets Control database on a quarterly basis. We do not accept cash payments of any type and typically payments that we make or receive are not issued to or from individuals. We reserve the right to refuse to accept funds from or to do business with shell banks or customers whose funds we reasonably believe are derived from criminal activity or from a sanctioned source. Business gifts to governmental officials are strictly prohibited in accordance with Piedmont’s Code of Business Conduct & Ethics policy outlined above. Vendors must provide an IRS Form W-9 prior to receiving payment for their services and payments are annually reported to the IRS in accordance with the Internal Revenue Code. Piedmont has never been subject to a legal or regulatory fine, or settlement associated with violations of bribery, corruption, or anti-competitive standards.

 

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ENVIRONMENTAL AND SOCIAL

MANAGEMENT COMMITTEES

 

Environmental & Social Steering Committee

 

The Environmental & Social Steering Committee (the “Steering Committee”) supports our on-going commitment to environmental, health and safety, corporate social responsibility, and other relevant public policy matters. The Steering Committee is co-chaired by our Chief Operating Officer and our Chief Financial Officer, both of whom report directly to our CEO. Other members of the Steering Committee include our Executive Vice President of Property Management, Vice President of Sustainability and National Initiatives, Senior Vice President of Human Resources, Chief Accounting Officer, and consultants as needed. The Steering Committee regularly reports to both the Chief Executive Officer and the Nominating and Corporate Governance Committee. The cross-functional team meets quarterly and assists our executive leadership team in:

 

Setting general strategy relating to environmental and social matters;

 

Developing, implementing, and monitoring initiatives and policies based on that strategy;

 

Overseeing communications with employees, investors, and stakeholders with respect to environmental and social matters;

 

Efficient and timely disclosure of environmental and social matters to internal and external stakeholders; and

 

Identifying and creating processes to manage risks and opportunities associated with climate change.

 

The Human Resources department, along with the support of the Regional Management team, facilitates and implements our social programs. To date, Piedmont has never been involved in a major environmental controversy or major controversy linked to human rights or corruption. As an owner/ operator of commercial office buildings, Piedmont does not produce consumer products and, as such, has never received a notice of violation for non-conformance with regulatory labeling and/or marketing codes or a legal/regulatory fine, settlement, or enforcement action associated with false, deceptive, or unfair marketing, labeling, and advertising.

 

Energy & Sustainability Committee

 

The Energy & Sustainability Committee is responsible for carrying out our environmental management policy and programs and is comprised of the Executive Vice President of Property Management, Director of Property Management Operations, Vice President of Sustainability and National Initiatives, Director of Engineering, all Regional Managers, and consultants as needed. The Energy & Sustainability Committee meets bi-weekly to determine how to effectively achieve our corporate environmental management targets.

 

Assurance

 

Piedmont’s Internal Audit performs assessments of the underlying control framework supporting publicly available information and validating the completeness and accuracy of the data used in reporting. This department actively reviews policies, controls, and responsibilities as well as provides a deeper dive into specific areas where stockholders have highlighted concerns. Internal Audit has adopted an integrated approach, incorporating environmental, social, and governance risks into their broader audit plans, ensuring environmental, social and governance activities are being tracked, considered, and documented. During 2023, our 2022 asset-level energy, water, emissions, and waste data submitted in our 2023 GRESB Real Estate Assessment and used as the foundation of our metrics reported in our annual ESG report was examined by a third-party according to the Accountability 1000 Assurance Standard v3 (“AA1000AS”). Please refer to the Appendix of our 2022 ESG report for further details and a copy of the Letter of Assurance.

 

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CORPORATE SOCIAL

RESPONSIBILITY

 

Human Rights

 

All individuals should be provided with equal opportunities and treated with dignity and respect. Piedmont intends to provide an environment that is pleasant, healthful, comfortable, and free from intimidation, hostilities, or other offenses that might interfere with work performance. Discriminatory conduct of any sort — verbal, physical, or visual — will not be tolerated, whether it is sexual or racial in nature or related to national origin, age, religion, citizenship status, disability, genetic predisposition, or any other characteristic protected by law. Piedmont applies this policy to all its employees, suppliers, and vendors, regardless of their geographic location. Further, the use of child or forced labor, either by the Company or, indirectly, by the Company’s vendors, is specifically prohibited. A copy of our Human Rights Policy is available on our website at www.piedmontreit.com under the ESG tab.

 

Diversity, Equity, & Inclusion

 

Piedmont is committed to demonstrating fairness, equality, and respect to all individuals that we interact with in our communities. Our commitment includes employee training to raise awareness of how to avoid any prejudice or discrimination as well as regularly monitoring and updating our policies, conduct, and actions.

 

As of December 31, 2023, we had 150 employees, with approximately one-third of our employees working in our corporate office located in Atlanta, Georgia. Our remaining employees work in local management offices located in each of the office markets we serve. These employees are involved in acquiring, developing, redeveloping, leasing, and managing our portfolio of properties. We outsource various functions where cost efficiencies can be achieved, such as certain areas of information technology, construction, building engineering, security, housekeeping, and leasing. Approximately two-thirds of our workforce is salaried, with the remainder compensated on an hourly basis. Piedmont is an equal opportunity employer. It is the policy of the Company, from recruitment through employment and promotion, to always provide equal opportunity without regard to race, color, religion, sex, national origin, age, disability, veteran’s status, genetic information, or any other characteristic protected by federal, state, or local anti-discrimination laws. Physical or mental disabilities will be considered only as they may relate to essential functions of each particular job, and only in accordance with applicable law. This policy of equal employment opportunity applies to all of Piedmont’s policies relating to recruitment and hiring, promotion, compensation, benefits, training, working conditions, termination and all other terms and conditions of employment.

 

We strive and are committed to hiring and supporting a diverse workforce which is reflective of the communities we serve and that fosters skilled and motivated people working together to deliver results in support of our core business goals and values. We encourage all employees, tenants, and vendors to mutually respect one another’s diversity to maintain a cohesive work environment that values fairness and equal treatment. Piedmont uses diversity and inclusion initiatives for both compliance obligations and to increase the overall bottom line with a more diverse workforce. We are a gold-level sponsor of Project REAP (Real Estate Associate Program), the industry’s leading nationwide effort to bridge the gap between multicultural professionals and the world of commercial real estate. Project REAP provides an 8-week educational program to diverse professionals on the foundations of the business and is taught by esteemed faculty and senior-level industry experts. In addition, we have established partnerships with two Historically Black Colleges and Universities (HBCUs), Morehouse College in Atlanta, GA and Howard University in Washington, D.C., whereby we sponsor a need-based Piedmont Office Realty Trust Scholarship Program. The program provides three years of scholastic support to selected rising sophomore students seeking a degree in economics, finance, accounting, engineering, or real estate. The scholarship also offers each student the opportunity to intern with Piedmont, acquire a firsthand experience in commercial real estate, and participate in a board level mentoring program. We believe that developing a diverse, talented, and skilled pipeline of future candidates for Piedmont and the commercial real estate industry begins with supporting the education and career paths of students today. Our hope is that the Piedmont Office Realty Trust Scholarship Program provides career success and an expanded knowledge of commercial real estate for participating students.

 

Additional statistical information regarding our workforce and details regarding Piedmont’s Diversity and Inclusion Initiatives are available on our website at www.piedmontreit.com under the ESG tab.

 

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Performance & Career Development

 

The results that the Company achieves are determined in large part by how we perform — as individuals, as teams, and as a company. The means by which we focus our efforts, use our talents, manage our time and work together will also impact the degree of our success. Performance management is the organized method of monitoring results of work activities, collecting and evaluating performance results to determine achievement of goals, and using performance information to make decisions, allocate resources and communicate whether objectives are met. All employees receive an annual performance review. These evaluations are typically done in the same time frame as the review of annual incentive compensation.

 

Training & Education

 

In 2023, our training programs for our employees, managers, and contractors included professional training on workplace harassment and cybersecurity. In addition, employees and managers received collaboration, discrimination, conflict management, ethics, and safety training. Select managers also received individual management development. All employees receive information security training multiple times per year and cybersecurity updates, notices, reminders, and simulated cyber-attacks are emailed to all employees bi-weekly.

 

Health & Safety

 

The Company endeavors to maintain a safe and secure workplace for all its tenants, contractors, and employees. The Company does not tolerate fighting, threats, or other acts of violence against employees, co- workers, job applicants, clients, or vendors. The Company’s Employee Handbook prohibits workplace harassment and harassment of our employees by third parties, such as contractors, suppliers, vendors, and clients in conjunction with their work. Further, the Company provides medical, dental, vision, disability, and life insurance for each of its employees and their families. Piedmont also emphasizes wellness through its property operations including redesigning common areas and expanding outdoor spaces; adding more touchless features throughout our properties, parking garages and amenity areas; heightened cleaning protocols; and increased fresh air ventilation.

 

Vendor Code of Conduct

 

The Piedmont Office Realty Trust, Inc. Vendor Code of Conduct (the “Vendor Code of Conduct”) describes Piedmont’s expectations of how its vendors conduct business. All vendors engaged in providing products and services to Piedmont are expected to embrace this commitment to integrity by complying with the Vendor Code of Conduct and communicating and enforcing the Vendor Code of Conduct provisions throughout their organization and across their supply chain, including to sub-vendors and subcontractors. We require that our vendors understand the requirements of the Vendor Code of Conduct, operate in accordance with the expectations outlined in the Vendor Code of Conduct and comply, at a minimum, with all applicable laws, rules, regulations, and standards within the geographies in which they operate. In addition, our standard vendor contract form requires our vendors to comply with our Code of Business Conduct and Ethics and policies on conflicts of interest and gifts. A copy of the Vendor Code of Conduct is available on our website at www.piedmontreit.com under the ESG tab.

 

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Political Advocacy

 

Piedmont does not contribute to or make expenditures on behalf of any federal, state, or local candidates for election, referenda, or initiatives; contribute to or make expenditures on behalf of political parties, contribute to or make expenditures on behalf of political committees or other political entities organized and operating under 26 U.S.C. Sec. 527 of the Internal Revenue Code (the “Code”), contribute to any charity or non-profit organization at the request of any federal, state, or local governmental office holder or any candidate for such an office; donate Company time, resources, products or services to any of the foregoing, or pay for advertisements, printing or other campaign expenses. A copy of Piedmont’s Political Spending Policy is available on our website at www.piedmontreit.com under the ESG tab. During the year ended December 31, 2023, the company made no political contributions.

 

Piedmont Purpose

 

Our Piedmont Purpose Initiative focuses on collaboration, commitment, and community. We strive not only to provide the highest quality services to our tenants daily, but also to help meet the needs of each local community that we serve by volunteering and/or financially supporting programs related to medical or human needs and children’s programs that improve the overall quality of life, particularly through charities tied to the real estate industry or our tenants.

 

Piedmont recognizes the value and benefit of employee volunteerism and fully appreciates its positive impact on the community, the employees, and ultimately the Company, by promoting team building, collaboration, and unity. To promote volunteerism among Piedmont employees, the Company provides a matching program whereby an employee may request time away from work to support a community service project or activity. Preference is given to those organizations that are tied to real estate industry programs or that have a major tenant sponsorship. Our employees have partnered with Piedmont to donate thousands of dollars and hundreds of hours annually to numerous organizations in each of the markets that Piedmont serves.

 

For further details on our Piedmont Purpose initiative as well as our social responsibility policies, please refer to our latest ESG Report available on our website at www.piedmontreit.com under the ESG tab.

 

 

 

 

 

 

 

 

 

CORPORATE ENVIRONMENTAL

RESPONSIBILITY

 

Environmental & Climate-Related Risk Management

 

At Piedmont, we consider sustainability to be a long-term commitment which we willingly undertake on behalf of all our stakeholders. We measure and report on our environmental impact and performance annually according to The Task Force on Climate-related Financial Disclosure (TCFD) and Sustainability Accounting Standards Board (SASB) frameworks. We also participate in the annual GRESB Real Estate Assessment. GRESB (formerly known as Global Real Estate Sustainability Benchmark) is the standard by which ESG performance is measured in the real estate industry. As part of our participation in the GRESB assessment, we also receive GRESB’s Transition Risk Report and TCFD Alignment Report. The Transition Risk Report anlyzes our transition risk based on carbon emissions intensity and the Carbon Risk Real Estate Monitor decarbonization pathways. The TCFD Alignment Report indicates our alignment with the processes outlined by the TCFD to address climate-related risks. For 2023, we earned the maximum level of alignment of “A”, outperforming our peer group whose average alignment was “B”.

 

Our Environmental Management System is aligned with ISO 14001 and is comprised of programs and policies that support our identified climate risks. It is a continuous improvement model that allows us to update, expand, and improve our approach over time. Our methods of risk-identification include:

 

Material topics identified by SASB and GRESB;

 

Physical risks specific to our property locations identified by FEMA and World Resources Initiatives;

 

Information learned through industry groups and peers, well as short-term impacts we are already experiencing such as increasing utility and insurance rates.

 

For a more detailed discussion of the physical and transitional risks that we have identified and our efforts to mitigate them, please refer to our latest ESG Report available on our website at www.piedmontreit.com under the ESG tab.

 

Performance Targets & Utility Management Programs

 

We have committed to energy, water, and greenhouse gas (GHG) performance targets to align with the U.S. Department of Energy’s Better Buildings Challenge. In addition, in 2023, we committed and were approved for the Small and Medium-Sized Enterprises (SMEs) Science Based Targets Initiative in line with the level of decarbonization required to meet the goals of the Paris Agreement – to limit global warming to well-below 2°C above pre-industrial levels and pursue efforts to limit warming to 1.5°C. We utilize the following utility management programs to achieve these targets:

 

 

 

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Industry Partnerships

 

We leverage industry partnerships including BOMA, ENERGY STAR, IWBI, U.S. Green Building Council, Green Lease Leaders, and GRESB to confirm and advance the environmental performance of our assets. During 2023, we were recognized as an ENERGY STAR® Partner of the Year for the third consecutive year, as well as an ENERGY STAR® Certification Nation Premier Member, and selected as a 2023 Green Lease Leader by the Institute for Market Transformation and the U.S. Department of Energy’s Better Buildings Alliance. We also made our second submission to the GRESB Real Estate Assessment, achieving a maximum 5 star designation and “Green Star” recognition. Finally, we are among five companies nationwide with the most BOMA360 certified buildings. Regarding our industry partnerships:

 

We certify all eligible properties to ENERGY STAR every year. Ineligible properties include those that are tenant-managed, have low occupancy, or have a score under 75.

 

We certify every eligible property to BOMA 360 every three years. Ineligible properties include those that are tenant-managed or have low occupancy.

 

Our LEED O&M assets are routinely re-certified as required by the LEED program.

 

The Green Lease Leader program recognizes landlords, tenants, and partnering real estate practitioners from a variety of sectors that incorporate green leasing to drive high-performance and healthy buildings. Piedmont was awarded the Silver recognition for using green leases to protect occupancy health, increase energy efficiency, modernize buildings and improve tenant-landlord relationships.

 

 

 

Employee Training and Tenant Engagement

 

All levels of Piedmont employees participate in events throughout the year with BOMA, NAREIT, NAREIM, and NAIOP which regularly cover environmental and climate change topics. In addition, we provide formal, on-demand, environmental training to all of our employees covering topics such as climate change, environmental impacts of the commercial real estate industry, and guidelines around Piedmont’s efforts to reduce its environmental impact.

 

Tenant activities can contribute to or hinder our success and it is our responsibility to engage with them to ensure they can help us be successful. Our property teams collect and analyze tenant feedback via our Kingsley Survey that is conducted every two years. We track the energy and water usage of all Piedmont-managed buildings and enter it into ENERGY STAR Portfolio Manager monthly. This information, as well as each building’s ENERGY STAR score, is available to tenants upon request. Additionally, our teams share information with tenants via email communications and newsletters. Contents may include information about community events such as bike-to-work day, resources provided by the local utility company with energy-saving recommendations, or on- site e-waste collection events. In accordance with SASB disclosure IF-RE-410a.1, we track the portion of our tenants with green leases, and in accordance with SASB Disclosure IF-RE- 410a.2, we track the portion of our tenants with separate electricity and water meters.

 

For further details on our Environmental and Climate-Related risk management strategies, Environmental performance targets, utility management programs, and an update on our progress against these targets, please refer to our latest ESG Report available on our website at www.piedmontreit.com under the ESG tab.

 

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STOCKHOLDER ENGAGEMENT AND OUTREACH

 

Our commitment to understanding the interests and perspectives of our stockholders is a key component of our corporate governance strategy and compensation philosophy. Throughout the year, we meet with our investors to share our perspective and to solicit their feedback on our strategy and performance. During 2023, our executive management team participated in several investor conferences and held hundreds of individual meetings with our investors and analysts. Periodically, we also hold investor days where our management team meets with stockholders and industry research analysts to discuss our strategy and performance and respond to questions, as well as to tour selected properties in our portfolio. Further, our board has periodically invited significant investors to meet with them directly and our management team has periodically engaged third parties to conduct perception surveys so that we can hear our stockholders’ perspectives and opinions about the Company as we believe the insights provided by our stockholders provide valuable information to be considered in our strategic decisions. Our Charter states that our stockholders have the right to amend the Bylaws.

  

COMMUNICATIONS WITH STOCKHOLDERS OR OTHER INTERESTED PARTIES

 

We have established several means for stockholders or other interested parties to communicate their concerns to the board of directors. If the concern relates to our financial statements, accounting practices or internal controls, the concerns should be submitted in writing to the Chair of our Audit Committee in care of our Secretary at our headquarters address. If the concern relates to our governance practices, ESG programs, business ethics or corporate conduct, the concern may be submitted in writing to the Chair of our Nominating and Corporate Governance Committee in care of our Secretary at our headquarters address. If a stockholder is uncertain as to which category his or her concern relates, he or she may communicate it to any one of the independent directors in care of our Secretary at our headquarters address. Stockholders or other interested parties who wish to communicate with our Board Chair or with the non-management directors as a group may do so by writing to our Board Chair at our headquarters address.

 

 

 

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EXECUTIVE

COMPENSATION

 

Compensation Discussion and Analysis

 

The following Compensation Discussion and Analysis explains our compensation philosophy, objectives, policies and practices and the decisions made with respect to our 2023 compensation of our President and Chief Executive Officer (“CEO”), Chief Financial and Administrative Officer (“CFO”) and three other most highly compensated executive officers for the year ended December 31, 2023 (our “NEOs”).

 

2023 Performance Highlights

 

Despite facing a continued challenging financing and transactional environment during 2023, we were able to accomplish several key objectives for the year, including:

 

the execution of approximately 2.2 million square feet of leasing at meaningfully higher rental rates, including the largest amount of annual new tenant leasing since 2018;

 

pro-actively addressing our 2024 and 2025 debt maturities in a difficult financing environment;

 

awarded ENERGY STAR Partner of the Year for the third consecutive year;

 

significantly increasing our GRESB scores after an impressive inaugural year in 2022, earning the maximum overall “5 star” designation and a second consecutive “Green Star” Recognition.

 

Key financial metrics for the year ended December 31, 2023 included:

 

Core Funds From Operations (“Core FFO”) per share was $1.74 per diluted share for the year ended December 31, 2023, as compared to $2.00 per diluted share for the year ended 2022. During the year ended December 31, 2023, the Company took advantage of a constructive debt market to issue $600 million in aggregate principal amount of senior notes, using the net proceeds to repay or pay down various outstanding debt balances with 2024 or 2025 maturities thereby extending Piedmont’s debt maturity profile. This refinancing activity, however, resulted in increased interest expense during the year which negatively impacted Core FFO.

 

Same Store Net Operating Income (“Same Store NOI”)-cash basis, which was originally forecasted to increase approximately 1%, increased approximately 2%, primarily as a result of rental rate rollups associated with new and renewal leasing activity.

 

Annual average net debt to Core EBITDA ratio for the year ended December 31, 2023 was 6.4x.

 

Our total shareholder return (“TSR”), as well as the TSR for our peer companies, declined sharply for the three year performance period ended December 31, 2023, reflecting a 44% loss.

 

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2023 Compensation Highlights

 

Our Compensation Committee noted the following compensation highlights for the year ended December 31, 2023:

 

Performance-based Compensation. The majority of our executive compensation program is performance-based with payouts under our Short-Term Cash Incentive Compensation Plan (“STIC” or “STIC Plan”) and the Performance Share Component of our Long-Term Equity Incentive Plan (“LTIC” or “LTIC Plan”) calculated in accordance with board-approved, pre-established formulas.

 

2023 STIC - Payouts under the STIC were calculated in accordance with the formula and performance goals established by the board and based on this formula, we achieved approximately 104% of our STIC target, with our CEO’s individual STIC award representing 100% of his established target.

 

2021-2023 Performance Shares - Our TSR for the three-year performance period ended December 31, 2023 was a 44% loss and ranked in the bottom quartile compared to our peers. Consequently, no shares were paid out related to the Performance Share Component of our LTIC Plan.

 

Time-Based Grants of Deferred Stock Units.

 

2022 Program - Historically, half of our NEOs’ LTIC opportunity has been comprised of annual deferred stock units (“Annual Deferred Stock Units”) granted in arrears (e.g., in early 2023 for the 2022 service period) and, in accordance with SEC rules, included in the Summary Compensation Table in the year granted.

 

2023 Program - Beginning in 2023, the Compensation Committee decided to conform the Annual Deferred Stock Unit component of our LTIC Plan to prevailing market practice by decreasing the percentage of our NEOs’ LTIC opportunity allocated to annual deferred stock units to 40%, and granting discretionary, time-based awards at the beginning of each calendar year with no immediate vesting. Awards will vest over a four-year period, beginning on the anniversary of the date of grant in 2024.

 

Effects of LTIC Program Transition. Due to the transition of LTIC programs this year, in accordance with SEC rules, the deferred stock units awarded in early 2023 for both the 2022 (in arrears) and 2023 (prospective) performance periods are included in the 2023 Summary Compensation Table. Beginning in 2024, all awards of Annual Deferred Stock Units will be granted prospectively and included in the Summary Compensation Table in the same year. The table below illustrates the effect of the “double” equity grants had on each NEO’s total compensation reported for 2023:

 

  C. Brent Robert E. Christopher A. George M. Robert K.
  Smith Bowers Kollme Wells Wiberg
2023 Summary
Compensation
Amount per SEC
Disclosure Rules
$7,150,720 $2,599,048 $1,377,889 $1,677,117 $1,196,985
Less 2022 LTIC
Paid in Arrears
$1,590,001 $537,997 $189,995 $230,001 $162,502
2023 Compen-
sation Excluding
the Effects of the
LTIC Program
Transition
$5,560,719 $2,061,051 $1,187,894 $1,447,116 $1,034,483

 

Consideration of “Say on Pay” Voting Results and Key Compensation Highlights

 

At our 2023 annual meeting, we held a stockholder advisory vote on the compensation of our NEOs. Our stockholders overwhelmingly approved the compensation of our NEOs, with approximately 95% of stockholder votes cast in favor of our “say on pay” resolution. Based on these results, we believe our programs are effectively designed and working well in alignment with the interests of our stockholders. Further, we believe that our 2023 compensation programs include several best practices such as:

 

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Approximately 86% of our Chief Executive Officer’s pay opportunity is performance based and at risk;

 

65% of our Chief Executive Officer’s 2023 pay opportunity was in the form of long-term equity based compensation;

 

60% of our NEO’s target from our LTIC Plan is delivered in the form of performance shares, which are earned based on our multi-year TSR relative to our peers;

 

Our short-term and long-term incentive program contain caps on payouts;

 

Our Performance Share Program includes an absolute TSR modifier which reduces above target payouts in the event of negative absolute TSR;

 

The quantitative metrics of our STIC Plan are tied to operational, financial, or market performance measures derived from our annual business plan, and our Compensation Committee reserves the right to decrease payouts in their discretion;

 

All of our NEOs are subject to the Company’s Clawback Policy, which requires them to reimburse us for erroneously awarded incentive-based compensation they have received if we are required to prepare an accounting restatement (see “Executive Clawback Provisions” below for further details);

 

Our NEOs and directors are required to meet stock ownership guidelines;

 

Our executive officers are required to hold any shares received pursuant to our 2007 Omnibus Incentive Plan for a minimum of one year after vesting;

 

Our Insider Trading Policy prohibits hedging and pledging of our stock by our executive officers and directors;

 

We do not award perquisites or supplemental executive benefits to our NEOs; and

 

We do not provide tax gross ups to our NEOs.

 

As a result of the above considerations, our Compensation Committee decided to retain our general approach to executive compensation for 2023, which links the compensation of our NEOs to our operating objectives and emphasizes the enhancements of TSR.

 

Compensation Philosophy and Objectives

 

We seek to maintain a total compensation package that provides fair, reasonable and competitive compensation for our executives while also permitting us the flexibility to differentiate actual pay based on the level of individual and organizational performance. We place significant emphasis on annual and long-term performance-based incentive compensation, including cash and equity-based incentives, which are designed to reward our executives based on the achievement of predetermined individual and company goals, including, among others, TSR relative to a comparative peer group as further described below.

 

The objectives of our executive compensation programs are:

 

to attract and retain candidates capable of performing at the highest levels of our industry;

 

to create and maintain a performance-focused culture, by rewarding company and individual performance based upon objective predetermined metrics;

 

to reflect the qualifications, skills, experience, and responsibilities of each NEO;

 

to link incentive compensation levels with the creation of stockholder value;

 

to align the interests of our executives and stockholders, creating opportunities and incentives for executives to increase their equity ownership; and

 

to motivate our executives to manage our business to meet and appropriately balance our short and long-term objectives.

 

Compensation Committee Responsibilities

 

Our executive compensation program is administered by the Compensation Committee. The Compensation Committee sets the overall compensation strategy and compensation policies for our executive officers and directors. The Compensation Committee has the authority to determine the form and amount of compensation appropriate to achieve our strategic objectives, including salary, bonus, incentive or performance-based compensation, and equity awards. The Compensation Committee reviews its compensation strategy at least annually to confirm that it supports our objectives and stockholders’ interests and that executive officers are being rewarded in a manner that is consistent with our strategy.

 

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With respect to the compensation of our CEO, the Compensation Committee is responsible for:

 

analyzing peer company compensation awards;

 

reviewing and approving our corporate goals and objectives with respect to the compensation of the CEO;

 

evaluating the CEO’s performance considering those goals and objectives; and

 

evaluating the CEO’s compensation (including annual base salary level, annual cash bonus, long-term incentive compensation awards, perquisites and any special or supplemental benefits) based on such evaluations.

 

With respect to the compensation of NEOs other than the CEO, the Compensation Committee is responsible for:

 

analyzing peer company compensation awards;

 

reviewing and approving the compensation; and

 

reviewing and approving grants and awards under all incentive-based compensation plans and equity-based plans.

 

Role of the Compensation Consultant

 

To assist in establishing our 2023 compensation plans and analyzing competitive executive compensation levels for 2023, the Compensation Committee utilized the services of Ferguson Partners Consulting L.P. (“FPC”), a nationally recognized compensation consulting firm. FPC was not engaged by management to perform any work other than routine personnel searches and the Compensation Committee considered FPC to be independent regarding services performed on its behalf during 2023.

 

During 2023, FPC provided advice and recommendations regarding our short and long term incentive compensation plans for our employees, including our NEOs. In addition, FPC provided our Compensation Committee input on our director compensation program, competitive market compensation data and recommendations for target pay levels for each component of our 2023 executive compensation program.

 

The FPC compensation consultant periodically attended Compensation Committee meetings as requested by the Compensation Committee and consulted with our Compensation Committee Chair, our Senior Vice President of Human Resources, our CEO, and our CFO as directed by the Compensation Committee on compensation-related issues.

 

Compensation Consultant Independence Assessment

 

During 2023, the Company requested and received information from FPC addressing its independence and potential conflicts of interest, including the following factors: (1) other services provided to us by the consultant; (2) fees paid by us as a percentage of the consulting firm’s total revenue; (3) policies or procedures maintained by the consulting firm that are designed to prevent a conflict of interest; (4) any business or personal relationships between the individual consultants involved in the engagement and a member of the Compensation Committee; (5) any company stock owned by the individual consultants involved in the engagement; and (6) any business or personal relationships between our executive officers and the consulting firm or the individual consultants involved in the engagement. Based on an assessment of these factors, including information gathered from directors and executive officers addressing business or personal relationships with the consulting firm or the individual consultants, the Compensation Committee concluded that FPC is independent and that the work of FPC did not raise any conflict of interest.

 

Role of Executive Officers in Compensation Decisions

 

Our CEO reviews the performance of each of the other NEOs and considers the recommendations of our independent compensation consultant regarding each of the other NEOs. Based on this review and input, he makes compensation recommendations to the Compensation Committee for all the NEOs other than himself, including recommendations for performance targets, base salary adjustments, the discretionary components of our short-term cash incentive compensation, and long-term equity-based incentive awards. The Compensation Committee considers these recommendations along with data and input provided by our independent compensation consultant. The Compensation Committee retains full discretion to set all compensation for the executive officers.

 

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Market Reference and Benchmark Compensation Data

 

In October 2023, FPC provided our Compensation Committee with a competitive market analysis of our NEOs’ pay levels relative to the practices of a peer group of 13 public REITs. The peer group utilized for 2023 was consistent with the peer group utilized for 2022 and includes companies that either primarily invest in office properties or select other REITs that may invest in other asset classes but are similar in terms of size and scope of operations.

 

The following table provides the names and estimated financial information for each peer company at the time the Compensation Committee reviewed the market data in October 2023:

 

Company Implied Equity
Market
Capitalization ($B)
Total
Capitalization ($B)
Sector
Acadia Realty Trust 1.4 3.6 Retail REIT
American Assets Trust, Inc. 1.5 3.2 Diversified REIT
Brandywine Realty Trust .8 2.9 Office REIT
COPT Defense Properties
(fka Corporate Office Properties Trust)
5.2 3.0 Office REIT
Cousins Properties Incorporated 3.1 5.6 Office REIT
Easterly Government Properties, Inc. 1.2 2.4 Office REIT
Elme Communities 2 1.7 Residential REIT
Empire State Realty Trust, Inc. 2.2 4.5 Office REIT
Highwoods Properties 2.9 5.5 Office REIT
JBG SMITH Properties 1.7 4.3 Diversified REIT
LXP Indsutrial Trust 2.6 4.3 Industrial REIT
Paramount Group, Inc. 1.1 5.5 Office REIT
Tanger Factory Outlet Centers, Inc. 2.5 4.0 Retail REIT
Median 1.7 4.0  
Piedmont Office Realty Trust .7 2.7 Office REIT

 

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We apply our compensation policies to all of our NEOs on the same basis, with differences in compensation opportunities between each of our executive officers reflecting each of the officers’ roles, responsibilities and personal performance within our Company, as well as market pay practices. In October 2023, FPC provided our Compensation Committee with an analysis of our NEO’s 2023 target pay opportunity relative to the compensation paid to executives employed by the peer group above in comparable positions. The analysis utilized the most recently filed proxy for each company in the peer group and FPC’s proprietary compensation database. The pay opportunities of our CEO, CFO, and COO were benchmarked to the peer group based on positional match as disclosed in 2023 proxy statements. Both proxy data and supplemental peer group data for applicable benchmark peers based on FPC’s proprietary compensation database were utilized for Mr. Kollme and Mr. Wiberg’s pay analysis. Benchmark results were generally as follows:

 

Total 2023 Benchmark Compensation(1)

 

    25th Percentile
($M)
50th Percentile
($M)
75th Percentile
($M)
Average ($M)
President & Chief
Executive Officer
Proxy Data of
Peer Group
4.5 5.5 7.4 5.8
EVP, & Chief
Financial &
Administrative
Officer
Proxy Data of
Peer Group
1.8 2.1 2.7 2.5
EVP -
Investments and
Strategy
Proxy and
Supplemental
Data of Peer
Group
0.9 1.3 1.5 1.2
EVP - Chief
Operating Officer
Proxy Data of
Peer Group
1.7 1.9 2.0 1.9
EVP, Northeast
Region &
Head of
Development
Proxy and
Supplemental
Data of Peer
Group
0.6 0.7 0.8 0.7

 

(1)Total 2023 Benchmark Compensation includes most recently reported base salary, target annual cash incentive, target long-term equity incentives (if target is not reported, market or notional value of equity award on grant date) for peer companies.

 

Additional results of the benchmark peer data included the following key findings:

 

On an absolute dollar basis, Piedmont is slightly below the 25th percentile of the Peer Group.

 

Our CEO’s target pay opportunity is approximately 7% below the median of the peer group.

 

Piedmont’s relative pay positioning for the other NEOs is generally consistent with prior year, with NEOs ranging from the 20th to 40th percentile of the peer group.

 

In addition to considering market reference data set forth above in making decisions about our NEOs’ compensation opportunities and actual compensation to be paid, the Compensation Committee considers other factors such as each executive officer’s experience, scope of responsibilities, performance and prospects; internal equity in relation to other executive officers with similar levels of experience, scope of responsibilities; and individual performance of each NEO during their tenure with Piedmont.

 

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Elements of 2023 Executive Compensation

 

Base Salary

 

Our Compensation Committee believes that payment of a competitive base salary is a necessary element of any compensation program that is designed to attract and retain talented and qualified executives. The goal of our base salary program is to provide salaries at a level that allows us to attract and retain qualified executives while preserving significant flexibility to recognize and reward individual performance with other elements of the overall compensation program. Base salary levels also affect short-term cash incentive compensation because each NEO’s target opportunity is expressed as a percentage of base salary. The following items are generally considered by the Compensation Committee when determining base salary annual increases; however, no particular weight is assigned to an individual item:

 

market data provided by the compensation consultant;

 

comparability to compensation practices of other office REITs of similar size;

 

our financial resources

 

the executive officer’s experience, scope of responsibilities, performance and prospects;

 

internal equity in relation to other executive officers with similar levels of experience, scope of responsibilities, performance, and prospects; and

 

individual performance of each NEO during the preceding calendar year.

 

In February of 2023, after considering the recommendations made by FPC, as well as the CEO’s feedback regarding individual performance on all NEOs other than himself, our Compensation Committee awarded salary increases to each of our NEOs ranging from 1-3% with the exception of Mr. Smith and Mr. Wells. Mr. Smith’s and Mr. Well’s salaries were increased approximately 8% and 7%, respectively, to bring their total pay more in line with the median of the reference peer group (see Market Reference and Benchmark Compensation Data above).

 

 

Short-Term Cash Incentive Compensation Plan

 

We provide an annual STIC Plan for our NEOs that sets forth target cash incentive payments as a percentage of each NEO’s base salary as follows:

 

  Annual Short-Term Cash Incentive Compensation as a %
    of Base Salary  
Name and Position Threshold Target Maximum
C. Brent Smith
President & Chief Executive Officer
75% 150% 225%
Robert E. Bowers
EVP - Chief Financial & Administrative Officers
50% 100% 150%
Christopher A. Kollme
EVP - Investments & Strategy
50% 100% 150%
George M. Wells
Chief Operating Officer
50% 100% 150%
Robert K. Wiberg
Northeast Region and Head of Development
35% 70% 105%

 

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The actual amounts earned under the STIC Plan may be greater or less than the NEO’s respective target based on actual performance against the performance goals established by the Compensation Committee at the beginning of each year, as well as assessment of each NEO’s personal contributions and performance for the year. The following table sets forth the relative weighting of each of the performance goals established by the Compensation Committee for the 2023 STIC Plan:

 

Components of NEO 2023 Short Term Incentive Plan

 

 

 

All of the performance measures established by the Compensation Committee for 2023 were based on specific corporate metrics measured on a quantitative basis, with the exception of the Strategic Priorities (including ESG) measure which the Compensation Committee considered on a qualitative basis. Those qualitative considerations included, but were not limited to, the CEO’s assessment of each NEO’s performance other than his own, as well as the board’s assessment of certain overall corporate goals, such as relative ESG performance as compared to our peers. The performance goals that the Compensation Committee established for each of the quantitative metrics were derived from critical components of our annual business plan and were considered achievable, but not without above average performance. 2023 target and actual performance for each of the STIC performance goals were as follows:

 

Performance Measure Threshold
Performance
Goal
Target
Performance
Goal
Maximum
Performance
Goal
Actual
Performance
% Over
(Under)
Performance vs. Target Goal
Core FFO per share relative to budget $1.71 $1.80 $1.89 $1.74 (3.3)
Net Debt to Core EBITDA relative to budget (in x) 7.0 6.4 5.8 6.4 --
Increase in Same Store Net Operating Income (cash) -0.8% 1.2% 3.2% 2.2% 1.0
Leasing Volume (in thousands of square feet)        
New SF Leasing 525 700 875 820 17.1
Renewal SF Leasing 675 900 1,125 1,407 56.3
Strategic Priorities (including ESG)   Qualitative   Target  

 

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Core FFO performance is a non-GAAP financial measure that is considered important because our ability to meet consensus estimates of Core FFO is a key factor for equity analysts and when present or potential stockholders make investment decisions about our securities. See the definition of Core FFO and the reconciliation of GAAP net income applicable to common stock to Core FFO in Appendix C. During 2023, the Compensation Committee decreased the target performance goal for this metric by $0.04/share to partially reflect the negative impact of increased interest expense as a result of the earlier than planned refinancing of some of our outstanding bonds that were scheduled to mature in 2024.

 

Net Debt to Core EBITDA is important because maintaining the appropriate capital structure, including the magnitude of total debt relative to our earnings, is critical to the overall financial strength of the Company. Additionally, as a REIT, we are required to pay out 90% of our taxable income each year in the form of dividends to our stockholders. Therefore, we must constantly manage credit ratios and proactively seek new sources of capital for our Company which requires careful management of the magnitude, timing, and cost of our borrowings. Every 1% variance in performance increases or decreases the targeted award by 10%, based on relative weighting.

 

Same Store NOI is important as a supplemental comparative performance measure, which measures income generated from the same group of properties from one period to the next. The measure is an area of focus for equity analysts and our current and prospective investors. Every 1% variance in performance in this measure increases or decreases the targeted award by 2.5%, based on relative weighting. See Appendix C for the calculation of Net Debt to Core EBITDA and for the reconciliation of Net income/(loss) applicable to Piedmont to Same Store NOI.

 

Leasing Volumes are important as managing lease renewals, leasing up vacant space, and keeping our portfolio as fully leased as possible directly impacts our cash flow, financial results, and long-term growth of our funds from operations and value of our equity securities. Targets are tied to our annual business plan. Every 1% variance in performance increases or decreases the targeted award by 2%, based on relative weighting.

 

Strategic Priorities, including ESG, are considered important as they allow the Compensation Committee to appropriately reward aspects of the management team’s or individual’s performance that may not be captured by purely quantitative metrics.

 

For 2023, our Compensation Committee and the board of directors considered the management team’s ESG accomplishments, including the Company’s ISS ESG scores relative to its peer group, earning ENERGY STAR® Partner of the Year for the third consecutive year, and significantly improving its GRESB scores, as well as the Company’s progress on various diversity and inclusion initiatives. Further, the Compensation Committee and the board of directors considered the strong leasing results achieved and management’s successful balance sheet management, including addressing near-term debt maturities. As a result of these considerations, our Compensation Committee and the board of directors determined to assess the achievement of the strategic priorities component within our NEO’s STIC Plan at target level.

 

Based on the above performance metrics in the aggregate, the STIC payout pool was approximately 104% of target for the year, with individual awards subject to further adjustment based on individual performance and other considerations as described below.

 

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Actual awards are calculated based on performance against the above metrics with performance below threshold for an individual component resulting in no payout for that particular component and out performance for each component being capped at 150%. In February 2024, after (i) reviewing the results of the quantitative performance measures as set forth in the table above; (ii) considering the CEO’s assessment of each of the other NEO’s performance; and (iii) assessing the CEO’s performance, the Compensation Committee determined actual awards for the 2023 performance period for each individual NEO as follows:

 

Name 2023 Target Annual
Incentive ($)
2023 Actual Annual
Incentive ($)
2023 Actual Annual
Incentive as a % of Target
 
 
Mr. Smith 1,050,000 1,050,000 100%  
Mr. Bowers 465,000 465,000 100%  
Mr. Kollme 373,750 340,000 91%  
Mr. Wells 400,000 425,000 106%  
Mr. Wiberg 252,000 230,000 91%  

 

Long-Term Incentive Compensation Plan

 

The objective of our LTIC Plan is to attract and retain qualified personnel by offering an equity-based program that is competitive with our peer companies and that is designed to encourage each of our NEOs to balance long-term company performance with short-term company goals and to foster employee retention.

 

Historically, our NEOs’ LTIC opportunity was divided equally between a multi-year Performance Share Program and Annual Deferred Stock Units granted in arrears (e.g. in early 2023 for the 2022 service period). Beginning in 2023, the Compensation Committee decided to conform the Annual Deferred Stock Unit component of our LTIC plan to prevailing market practice by decreasing the percentage of our NEOs’ LTIC opportunity allocated to annual deferred stock units to 40%, and granting discretionary, time-based awards at the beginning of each calendar year with no immediate vesting. As such, in accordance with SEC rules, the deferred stock units awarded in early 2023 for both the 2022 (in arrears) and 2023 (prospective) service periods are included in the 2023 Summary Compensation Table below. Beginning in 2024, all awards of Annual Deferred Stock Units will be granted prospectively and included in the Summary Compensation Table in the same year.

 

Components of NEO 2023 Long Term Incentive Plan

 

 

 

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Each of our NEO’s LTIC opportunity is established by the Compensation Committee based on recommendations from our compensation consultant and our CEO for each NEO, other than himself, regarding comparability with awards to officers of our peer group of office REITs as well as taking into consideration each officer’s salary and experience level. A summary of each of our NEO’s LTIC opportunity for the year ended December 31, 2023 is as follows:

 

Name 2023 Target - Performance
Share Program(1) ($)
2023 Deferred Stock Unit
Award(2) ($)
Total 2023 LTIC
Opportunity ($)
 
 
Mr. Smith 1,920,000 1,280,000 3,200,000  
Mr. Bowers 558,000 372,000 930,000  
Mr. Kollme 225,000 150,000 375,000  
Mr. Wells 300,000 200,000 500,000  
Mr. Wiberg 210,000 140,000 350,000  

 

(1)  As further described below, actual Performance Share Program awards may range from 0%-200% of target based on Piedmont’s relative TSR performance for the three-year performance period ended December, 31, 2025.

 

(2) Shares granted vest over four years beginning on the anniversary of the grant date.

 

To date, LTIC awards have only been granted in the form of performance shares or deferred stock units pursuant to the 2007 Omnibus Incentive Plan approved by our stockholders. The Compensation Committee has determined that, as a REIT, the grant of such awards is appropriate because our high dividend distribution requirements lead to a significant portion of our total stockholder return being delivered through our dividends. Although our 2007 Omnibus Incentive Plan permits the issuance of other types of equity awards, including stock options, we have never issued stock options to any of our employees, including our NEOs, and anticipate that any future equity awards granted will continue to be similar in form to our previous awards. Further, our Compensation Committee has prohibited the cash buyout of underwater options, should any options ever be issued. Finally, we have applied a minimum one-year holding period after vesting for our equity-based awards and each of our executive officers, including our NEOs, is subject to a stock ownership requirement (see Stock Ownership Guidelines below). We feel that appropriately designed equity-based awards, particularly those with future vesting provisions, promote a performance-focused culture and align our employees’ interests with those of our stockholders, thereby motivating their efforts on our behalf and strengthening their desire to remain with us for an extended period of time.

 

Performance Share Program

 

The purpose of the Performance Share Program is to motivate and reward long term performance. Participants are provided with the opportunity to earn shares of Piedmont stock based on our TSR performance relative to a broad, pre-determined peer group over a three-year performance period. Performance cycles overlap, with a new three-year performance cycle beginning each year. The TSR Percentile Rank for each active plan will continue to change throughout the respective performance period. After the end of each three-year performance period, any earned awards will be paid by the Company based upon actual relative performance against the board-determined peer group.

 

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The peer group for each of our active Performance Share Programs was established at the beginning of the Performance Period and included the following companies:

 

2023-25 and 2022-24 2021-2023 Reason for Change
Brandywine Realty Trust --
City Office REIT, Inc. Columbia Property Trust Acquired
Corporate Office Properties Trust --
Cousins Properties Incorporated --
Douglas Emmett, Inc. --
Empire State Realty Trust, Inc. --
-- Equity Commonwealth Limited office properties
Franklin Street Properties Corp. --
Highwoods Properties, Inc. --
Hudson Pacific Properties, Inc. --
JBG SMITH Properties --
Kilroy Realty Corporation --
Orion Office REIT Inc. Veris Residential
(FKA Mack-Cali Realty Corporation)
Transitioned to multi-family
Paramount Group, Inc. --
Vornado Realty Trust Elme Communities
(fka Washington Real Estate
Investment Trust)
Transitioned to multi-family

 

The peer group used for the Performance Share Program includes many of the same companies that our compensation consultant uses for market reference and benchmarking purposes (See “Market Reference and Benchmark Compensation Data” above); however, peers chosen for the Performance Share Program are typically chosen based on the asset class and geography of their portfolio, whereas peers chosen by our compensation consultant for market reference and benchmarking purposes are typically chosen because they fit a desired size or cost of living profile so as not to unfairly skew the market compensation data used for comparison purposes.

 

Participants in the Performance Share Program have a defined target award expressed as a number of shares which is calculated at the beginning of each performance period by dividing each participant’s targeted value (see table above) by the closing price of Piedmont’s stock on the grant date. The target number of shares established for each participant may be earned if Piedmont’s TSR is at the median of the peer group, up to 200% of target may be earned if Piedmont’s TSR is at or above the 75th percentile of the peer group, and 50% of target may be earned if Piedmont’s TSR is at the 25th percentile of the peer group. No shares are earned if Piedmont’s TSR is below the 25th percentile. If our return is between the 25th and 75th percentile, the payout will generally be determined by linear interpolation; however, any shares that would have been earned above target levels are subject to a reduction of up to 30% in the event of negative absolute TSR performance.

 

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The following table sets forth the status of each active Performance Share Program as of December 31, 2023:

 

  TSR Percentile Rank
as of December 31, 2023
Actual or Estimated Payout
Percentages of Target Based
on Percentile Rank
as of December 31, 2023
2021 - 23 Performance Share Program 14th 0% (Actual)
2022 - 24 Performance Share Program 27th 53% (Estimated)
2023 - 25 Performance Share Program 20th 0% (Estimated)

 

The range of shares that could be earned by each NEO for the 2023 – 25 performance period is set forth in the Grants of Plan Based Awards table below.

 

Annual Deferred Stock Unit Opportunity

 

The purpose of the Annual Deferred Stock Unit opportunity is to reward annual performance and encourage employee retention.

 

As mentioned above, each of our NEO’s LTIC opportunity is established by the Compensation Committee based on recommendations from our compensation consultant and our CEO. After considering these recommendations, as well as our CEO’s evaluation of the performance of each NEO other than himself, on February 13, 2023, the Compensation Committee determined the number of deferred stock units to be granted to each of our NEOs pursuant to the 2022 Annual Deferred Stock Unit opportunity. For the awards granted, 25% vested immediately, while the remaining 75% vests in 25% increments over the next three years on the anniversary of the date of grant. Any dividend equivalent rights are paid out upon vesting of the underlying shares.

 

Further, as mentioned above, to affect the transition from awarding Annual Deferred Stock Units in arrears to awarding deferred stock units prospectively at the beginning of the service period, on February 23, 2023, the Compensation Committee made an additional award of deferred stock units to each NEO with such awards vesting over a four-year period, beginning on the anniversary of the date of grant. Any dividend equivalent rights are paid out upon vesting of the underlying shares.

 

See “Grants of Plan Based Awards for 2023” table below for information on the number of deferred stock units granted to each of the NEOs pursuant to each of these awards during 2023.

 

Benefits

 

All our NEOs currently participate in the health and welfare benefit programs, including medical, dental and vision care coverage, disability, long-term care and life insurance, and our 401(k) plan that are generally available to the rest of our employees. We do not have any special benefits or retirement plans for our NEOs.

 

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Employment Agreements with Our Named Executive Officers

 

Employment Agreements

 

We are currently party to employment agreements with all our NEOs that work at our corporate headquarters and that have company-wide decision making authority including Messrs. Smith, Bowers, Kollme, and Wells. Mr. Bowers’ agreement was originally entered into in 2007. Messrs. Smith and Kollme’s agreements were entered into during 2019, and Mr. Wells’ agreement was entered into during 2022. Each of these agreements renews annually unless either party gives 90 days written notice prior to the end of the renewal term or his employment otherwise terminates in accordance with the terms of the agreement. Significant terms include executive claw back provisions and severance in the event of certain circumstances as further described below.

 

Executive Claw Back Provisions

 

All our executive officers, including our NEOs, are subject to a claw back policy that complies with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Rule 10D-1 under the Exchange Act and NYSE listing standards (the “Clawback Policy”). The provisions of the Company’s Clawback Policy require that in the event of an accounting restatement, our executive officers must promptly repay or return certain excess incentive-based compensation (whether cash or equity-based) received during an applicable three-year recovery period to the Company. In addition to the Company’s Clawback Policy above, our NEOs that are subject to employment agreements are also subject to claw-back provisions required by Section 304 of the Sarbanes-Oxley Act of 2002. If we are required to prepare an accounting restatement due to our material noncompliance, as a result of misconduct, with any financial reporting requirement under the securities laws, our employment agreements contain provisions that provide for the executive to reimburse us, to the extent required by Section 304 of the Sarbanes-Oxley Act of 2002, for any incentive-based (whether cash or equity-based) compensation received by the executives from us during the 12-month period following the first public issuance or filing with the SEC (whichever occurs first) of the financial document embodying such financial reporting requirement. In addition, each executive will reimburse us for any profits realized from the sale of our securities during that 12-month period.

 

Severance

 

Messrs. Smith, Bowers, Kollme, and Wells’ employment agreements entitle them to receive severance payments under certain circumstances if their employment is terminated. These circumstances and payments are described below under “Potential Payments Upon Termination or Change of Control.” Our Compensation Committee believes that these severance payments were an important factor in attracting these individuals to join our Company and/or are an important factor in their retention. The agreements with these individuals do not provide for tax “gross ups” in the event such payments are made.

 

Stock Ownership Guidelines

 

Our board of directors has established stock ownership guidelines whereby our NEOs are required to own stock equal to the lesser of shares with a value equal to a specified multiple of their base salary or a specific number of shares as follows:

 

  Lesser of:
  Multiple of Salary Shares of Stock
President & Chief Executive Officer 5x 195,000
EVP - Chief Financial & Administrative Officer 3x 75,000
EVP - Investments and Strategy 2x 30,000
EVP - Chief Operating Officer 2x 30,000
EVP - Northeast Region and Head of Development 2x 30,000

 

Each of our NEOs has met his respective ownership requirement. In addition, each NEO is required to hold any shares received pursuant to our 2007 Omnibus Incentive Plan for a minimum of one year after vesting. Each member of our board of directors is required to own the lesser of 22,000 shares or $400,000. All our directors currently meet this requirement, with the exception of Mr. Durvasula and Ms. Hager who recently joined our Board and have until 2028 to meet the requirement.

 

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Hedging, Pledging, and Insider Trading Policy

 

Our insider trading policy prohibits our employees, officers, and directors from hedging their ownership of our stock, including a prohibition on short sales and buying or selling of puts and calls. Our insider trading policy also prohibits our employees, officers and directors from purchasing or selling our securities while in possession of material non-public information including, among other things, information concerning data securities breaches or other cybersecurity events impacting the Company or any of its substantial tenants or business partners.

 

Our insider trading policy also prohibits our executive officers and directors from pledging our securities or otherwise using our securities as collateral. None of our executive officers or directors holds any of our stock subject to pledge.

 

Impact of Regulatory Requirements on Compensation

 

The Compensation Committee’s policy is to consider the tax treatment of compensation paid to our executive officers while simultaneously seeking to provide our executives with appropriate rewards for their performance. Section 162(m) of the Code limits to $1.0 million a publicly held company’s tax deduction each year for compensation to any “covered employee.” As a REIT, to the extent that any part of our compensation expense does not qualify for deduction under Section 162(m), a larger portion of stockholder distributions may be subject to federal income tax as ordinary income rather than return of capital, and any such compensation allocated to our taxable REIT subsidiary, whose income is subject to federal income tax, would result in an increase in income taxes due to the inability to deduct such compensation.

 

Substantially all the services rendered by our NEOs were performed on behalf of our operating partnership or its subsidiaries. The Internal Revenue Service has issued a series of private letter rulings which indicate that compensation paid by an operating partnership to executive officers of a REIT that serves as its general partner is not subject to limitation under Section 162(m) to the extent such compensation is attributable to services rendered to the operating partnership. We have not obtained a ruling on this issue, but we have no reason to believe that the same conclusion would not apply to us. To the extent that compensation paid to our executive officers is subject to and does not qualify for deduction under Section 162(m), our Compensation Committee is prepared to exceed the limit on deductibility under Section 162(m) to the extent necessary to establish compensation programs that we believe provide appropriate incentives and reward our executives related to their performance.

 

Although we and the Compensation Committee are mindful of the limits imposed by Section 162(m), even if Section 162(m) applies to certain compensation packages, we nevertheless reserve the right to structure compensation packages and awards in a manner that may exceed the limitation on deduction imposed by Section 162(m).

 

 

 

 

 

 

 

 

 

2023 EXECUTIVE

COMPENSATION TABLES

 

The following tables set forth information concerning the compensation of our NEOs for the three years ended December 31, 2023, reported in accordance with SEC rules.

 

Summary Compensation Table

 

Name & 

Principle Position 

Year 

Salary ($) 

Stock Awards 

($)(1)(2) 

Non-Equity

Incentive Plan

Compensation ($)

All Other

Compensation

($) 

Total ($) 

C. Brent Smith

President & Chief

Executive Officer

2023

700,000

5,377,972(3)

1,050,000

22,748(6)

7,150,720

2022

650,000

2,478,040(4)

877,500

20,748

4,026,288

2021

600,000

2,040,930(5)

900,000

19,748

3,560,678

Robert E. Bowers

Executive Vice President & Chief Financial & Administrator Officer

2023

465,000

1,638,875(3)

465,000

30,173(6)

2,599,048

2022

455,000

1,032,936(4)

440,000

27,173

1,955,109

2021

450,000

1,141,165(5)

510,000

26,248

2,127,413

Christopher A. Kollme

Executive Vice President - Investments & Strategy

2023

373,750

633,889(3)

340,000

30,250(6)

1,377,889

2022

363,750

366,748(4)

340,000

27,250

1,097,748

2021

358,750

441,301(5)

360,000

21,415

1,181,466

George M. Wells

Executive Vice President & Chief Operating Officer

2023

400,000

821,867(3)

425,000

30,250(6)

1,677,117

2022

375,000

432,712(4)

365,000

27,250

1,199,962

2021

360,000

458,189(5)

425,000

26,250

1,269,439

Robert K. Wiberg

Executive Vice President - Northwest & Head of Development

2023

360,000

576,811(3)

230,000

30,174(6)

1,196,985

2022

355,000

371,752(4)

230,000

27,174

983,926

2021

348,500

424,306(5)

270,000

26,250

1,069,056

 

(1) In accordance with SEC rules, the stock award column includes the estimated aggregate grant date fair value of the Performance Share Component of our LTIC program at target level, even though there is no guarantee that any amounts will ultimately be earned by and paid to the executive. See “Stock Vested” table below for the value of actual stock awards that vested during the year ended December 31, 2023.

 

(2) As further described under Long-Term Incentive Compensation Plan above, beginning in 2023, the Compensation Committee decided to conform the Annual Deferred Stock Unit component of our LTIC Plan to prevailing market practice by decreasing the percentage of our NEOs’ LTIC opportunity allocated to Annual Deferred Stock Units and granting discretionary, time-based awards at the beginning of each calendar year with no immediate vesting. As such, in accordance with SEC rules, the deferred stock units awarded in early 2023 for both the 2022 (in arrears) and 2023 (prospective) service periods are included in the 2023 Summary Compensation Table above; however, beginning in 2024, such awards will be granted and included in the Summary Compensation Table in the same year.

 

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(3) Represents the aggregate grant date fair value of potential awards under the 2023-25 Performance Share Program at target levels and deferred stock awards granted in 2023 under our LTIC program. Values are estimated as the total expense associated with each grant to be recognized for financial statement reporting purposes over the respective service period associated with each grant calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Share-Based Payments (“ASC Topic 718”). Pursuant to SEC rules the values are not reduced by an estimate for the probability of forfeiture. The aggregate grant date fair values of the annual deferred stock awards granted in 2023 were based on the closing price of our common stock on the February 13, 2023 and February 23, 2023 grant dates of $10.55 per share and $9.47 per share, respectively. The aggregate grant date fair value of the 2023 Performance Share Program was based on an estimated fair value per share as of the February 23, 2023, grant date of $12.37 per share utilizing a Monte Carlo valuation model that models the plan’s potential payoff depending on Piedmont’s and its peer group’s future stock price movements. The potential value of the 2023-25 Performance Share Program award at the grant date assuming the highest level of performance conditions were achieved would have been (in 000’s): Smith — $5,016; Bowers — $1,458; Kollme — $588, Wells — $784, and Wiberg — $549.

 

(4) Represents the aggregate grant date fair value of potential awards under the 2022-24 Performance Share Program at target levels and the deferred stock awards granted in 2022 for 2021 performance, both under our LTIC program. Values are estimated as the total expense associated with each grant to be recognized for financial statement reporting purposes over the respective service period associated with each grant calculated in accordance with ASC Topic 718. Pursuant to SEC rules the values are not reduced by an estimate for the probability of forfeiture. The aggregate grant date fair value of the 2021 annual deferred stock award granted in 2022 was based on the closing price of our common stock on the February 10, 2022 grant date of $16.85 per share. The aggregate grant date fair value of the 2022 Performance Share Program was based on an estimated fair value per share as of the February 17, 2022 grant date of $17.77 per share utilizing a Monte Carlo valuation model that models the plan’s potential payoff depending on Piedmont’s and its peer group’s future stock price movements. The potential value of the 2022-24 Performance Share Program award at the grant date assuming the highest level of performance conditions were achieved would have been (in 000’s): Smith — $2,856; Bowers — $966; Kollme — $364, Wells — $415, and Wiberg — $364.

 

(5) Represents the aggregate grant date fair value of potential awards under the 2021-23 Performance Share Program at target levels and the deferred stock awards granted in 2021 for 2020 performance, both under our LTIC program. Values are estimated as the total expense associated with each grant to be recognized for financial statement reporting purposes over the respective service period associated with each grant calculated in accordance with ASC Topic 718. Pursuant to SEC rules the values are not reduced by an estimate for the probability of forfeiture. The aggregate grant date fair value of the 2020 annual deferred stock award granted in 2021 was based on the closing price of our common stock on the February 17, 2021 grant date of $17.15 per share. The aggregate grant date fair value of the 2021 Performance Share Program was based on an estimated fair value per share as of the February 18, 2021 grant date of $23.04 per share utilizing a Monte Carlo valuation model that models the plan’s potential payoff depending on Piedmont’s and its peer group’s future stock price movements. The potential value of the 2021-23 Performance Share Program award at the grant date assuming the highest level of performance conditions were achieved would have been (in 000’s): Smith — $2,482; Bowers — $1,282; Kollme -$483, Wells — $496, and Wiberg — $483.

 

(6)All other compensation for 2023 was comprised of the following:

 

Name

Matching Contributions 

to 401(k)* ($) 

Premium for Company 

Paid Life Insurance* ($) 

Total Other 

Compensation ($) 

C. Brent Smith 22,500 248 22,748
Robert E. Bowers 30,000 173 30,173
Christopher A. Kollme 30,000 250 30,250
George M. Wells 30,000 250 30,250
Robert K. Wiberg 30,000 174 30,174

 

*Paid pursuant to the same benefit plans offered to all our employees.

 

Piedmont 2024 Proxy | 65

 

 

 

 

 

 

Grants of Plan-Based Awards

 

The table below sets forth: (1) the threshold, target, and maximum of our 2023 STIC Plan and Performance Share Component of our 2023-25 LTIC Plan, and (2) the actual shares that were granted in 2023 pursuant to the Deferred Stock Component of our LTIC Plan.

 

 

Grant

Date

Estimated Potential Payouts

Under Non-Equity

Incentive Plan Awards(1)

Estimated Potential Payouts 

Under Equity 

Incentive Plan Awards(2)

All Other Stock Awards

Grant Date Fair Value of Stock Awards

Threshold

Target

Maximum

Threshold

(Number of Shares)

Target

(Number of Shares)

Maximum

(Number of Shares)

Number of

Shares of Stock

C. Brent Smith
2023 STIC Plan   $525,000 $1,050,000 $1,575,000  

2023 LTIC Plan -

2023-25 Performance Share Component Deferred Stock Component

February

23, 2023

               
  101,373 202,746 405,492   $2,507,968(5)
           

135,164(3)

$1,280,003

2022 LTIC Plan - Deferred Stock Component

February

13, 2023

           

150,711(4)

$1,590,001(5)

Robert E. Bowers
2023 STIC Plan   $232,500 $465,000 $697,500  

2023 LTIC Plan -

2023-25

Performance Share

Component

Share Component Deferred Stock Component

February

23, 2023

               
               
     

29,462

58,923

117,846

 

$728,878(5)

           

39,282(3)

$372,001

2022 LTIC Plan - Deferred Stock Component

February

13, 2023

           

50,995(4)

$537,997

Christopher A. Kollme
2023 STIC Plan   $186,875 $373,750 $560,625          

2023 LTIC Plan -

2023-25

Performance Share

Component

Share Component Deferred Stock Component

February

23, 2023

               
               
      11,880 23,759 47,518   $293,899(5)
           

15,839(3)

$149,995

2022 LTIC Plan - Deferred Stock Component

February

13, 2023

           

18,009(4)

$189,995

 

66 | Piedmont 2024 Proxy 

 

 

 

 

 

 

 

Grant 

Date 

Estimated Potential Payouts

Under Non-Equity

Incentive Plan Awards(1) 

Estimated Potential Payouts 

Under Equity 

Incentive Plan Awards(2) 

All Other Stock Awards

Grant Date Fair Value of Stock Awards

Threshold 

Target

Maximum

Threshold

(Number of Shares)

Target

(Number of Shares)

Maximum (Number of Shares)

Number of

Shares of Stock

George M. Wells
2023 STIC Plan   $200,000 $400,000 $600,000  

2023 LTIC Plan - 

2023-25 

Performance Share 

Component 

Share Component Deferred Stock Component 

February 

23, 2023

               
               
     

15,840 

31,679 

63,358 

 

$391,869(5)

           

21,119(3)

$199,997

2022 LTIC Plan - Deferred Stock Component

February 

13, 2023

           

21,801(4)

$230,001

Christopher A. Kollme
2023 STIC Plan   $126,000 $252,000 $378,000          

2023 LTIC Plan - 

2023-25 

Performance Share Component Share Component Deferred Stock Component 

February 

23, 2023 

               
               
      11,088 22,175 44,350   $274,305(5)
           

14,784(3)

$140,004 

2022 LTIC Plan -

Deferred Stock Component

February 

13, 2023 

           

15,403(4)

$162,502 

 

(1) Represents cash payout opportunity for 2023 under the STIC Plan. The amounts actually earned for 2023 are included in the non-equity incentive plan compensation column of the Summary Compensation Table.

 

(2) Represents the potential number of shares associated with the payout opportunity under the 2023-25 Performance Share Component of the 2023 LTIC Plan. Any amounts earned will be granted in the form of common stock in 2026.

 

(3) Represents shares awarded in 2023 pursuant to the Deferred Stock Component of the 2023 LTIC Plan. Shares vest over a four-year period, beginning on the anniversary of the date of grant.

 

(4) Represents shares awarded in 2023 pursuant to the Deferred Stock Component of the 2022 LTIC Plan. 25% of the shares vested immediately, while the remaining 75% vests in 25% increments over the next three years on the grant anniversary date.

 

(5) Based on an estimated fair value per share as of the grant date calculated utilizing a Monte Carlo valuation model that models the plan’s potential payoff depending on Piedmont’s and its peer group’s future stock price movements.

 

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Outstanding Equity Awards at Fiscal Year End

 

The following table provides information regarding unvested time-based stock awards and equity incentive plan awards held by our NEOs that had not been earned or vested as of December 31, 2023. All market values were determined by multiplying the number of shares of stock that have not vested or the number of unearned unvested shares by the closing price of our common stock on December 31, 2023 of $7.11 per share and adding the value of any unvested dividend equivalent rights as of December 31, 2023. All equity incentive programs were established pursuant to the 2007 Omnibus Incentive Plan and no options to purchase shares of our common stock have ever been awarded or granted to our NEOs.

 

  Deferred Stock Component Performance Share Component
 

Number of Shares of Stock That Have Not Vested (#) 

Market Value of Shares or Units of Stock That Have Not Vested ($) 

Equity Incentive Plan Awards Number of Shares of Stock That Have Not Vested (#) 

Equity Incentive Plan Awards Market Value or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)

C. Brent Smith        

May 3, 2019 (Special One-Time CEO Award)(6) (10) 

9,505 101,894    
February 18, 2021 plan award(1)     -- --
February 17, 2021 award(2)(7) 11,661 110,313    
February 17, 2022 plan award(4)(8)     42,592 367,142
February 10, 2022 award(2)(8) 31,157 268,573    
February 13, 2023 award(2)(9) 113,033 879,397    
February 23, 2023 plan award(5)     -- --
February 23, 2023 award(3)(9) 135,164 1,051,576    
Total 300,520 2,411,753    
Robert E. Bowers        
February 18, 2021 plan award(1)     -- --
February 17, 2021 award(2)(7) 7,288 68,944    
February 17, 2022 plan award(4)(8)     14,404 124,161
February 10, 2022 award(2)(8) 16,320 140,678    
February 13, 2023 award(2)(9) 38,246 297,554    
February 23, 2023 plan award(5)     -- --
February 23, 2023 award(3)(9) 39,282 305,614    
Total 101,136 812,790    
Christopher A. Kollme        
February 18, 2021 plan award(1)     -- --
February 17, 2021 award(2)(7) 2,915 27,516    
February 17, 2022 plan award(4)(8)     5,421 46,728
February 10, 2022 award(2)(8) 5,489 47,315    
February 13, 2023 award(2)(9) 13,506 105,077    
February 23, 2023 plan award(5)     -- --
February 23, 2023 award(3)(9) 15,839 123,277    
Total 37,749 303,195    

 

68 | Piedmont 2024 Proxy 

 

 

 

 

 

 

  Deferred Stock Component Performance Share Component
 

Number of Shares of Stock That Have Not Vested (#) 

Market Value of Shares or Units of Stock That Have Not Vested ($) 

Equity Incentive Plan Awards Number of Shares of Stock That Have Not Vested (#) 

Equity Incentive Plan Awards Market Value or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)

George M. Wells        
February 18, 2021 plan award(1)     -- --
February 17, 2021 award(2)(7) 3,061 28,957    
February 17, 2022 plan award(4)(8)     6,195 53,402
February 10, 2022 award(2)(8) 6,676 57,547    
February 13, 2023 award(2)(9) 16,350 127,203    
February 23, 2023 plan award(5)     -- --
February 23, 2023 award(3)(9) 21,119 164,306    
Total 47,206 378,013    
Robert K. Wiberg        
February 18, 2021 plan award(1)     -- --
February 17, 2021 award(2)(7) 2,667 25,230    
February 17, 2022 plan award(4)(8)     5,421 46,728
February 10, 2022 award(2)(8) 5,638 48,600    
February 13, 2023 award(2)(9) 11,552 89,875    
February 23, 2023 plan award(5)     -- --
February 23, 2023 award(3)(9) 14,784 115,020    
Total 34,641 278,723    

 

(1) Estimated based on Piedmont’s actual relative TSR performance for the three-year performance period ended December 31, 2023. Final awards will be determined by the board during 2024 and any shares actually awarded to NEOs will vest immediately upon issuance.

 

(2) Awards vest in 25% increments with 25% vesting immediately upon grant and additional 25% increments vesting on the following three anniversary dates of the grant.

 

(3) Awards vest ratably over four years beginning on the anniversary of the date of grant.

 

(4) Estimated based on Piedmont’s actual-to-date relative TSR performance for the three-year performance period ended December 31, 2024 as of December 31, 2023. Actual awards to be paid to NEOs will be determined during 2025 based on Piedmont’s actual relative TSR performance for the three-year period ended December 31, 2024 and any shares awarded will vest immediately upon issuance.

 

(5) Estimated based on Piedmont’s actual-to-date relative TSR performance for the three-year performance period ended December 31, 2025 as of December 31, 2023. Actual awards to be paid to NEOs will be determined during 2026 based on Piedmont’s actual relative TSR performance for the three-year period ended December 31, 2025 and any shares awarded will vest immediately upon issuance.

 

(6) Market value of unearned shares is based on our closing stock price as of December 31, 2023 of $7.11 per share, plus $3.61 per share of dividend equivalent rights that vest upon vesting of the underlying shares.

 

(7) Market value of unearned shares is based on our closing stock price as of December 31, 2023 of $7.11 per share, plus $2.35 per share of dividend equivalent rights that vest upon vesting of the underlying shares.

 

(8) Market value of unearned shares is based on our closing stock price as of December 31, 2023 of $7.11 per share, plus $1.51 per share of dividend equivalent rights that vest upon vesting of the underlying shares.

 

(9) Market value of unearned shares is based on our closing stock price as of December 31, 2023 of $7.11 per share, plus $.67 per share of dividend equivalent rights that vest upon vesting of the underlying shares.

 

(10) Awards vest ratably over 5 years beginning July 1, 2020.

 

Piedmont 2024 Proxy | 69

 

 

 

 

 

 

Stock Vested

 

The following table provides information regarding the actual number of shares vested for each of our NEOs during the year ended December 31, 2023. No options to purchase shares of our common stock have ever been awarded or granted to our NEOs. 

 

  Stock Awards
Name

Number of Shares

Acquired on Vesting (#)

Value Realized

on Vesting ($)(1)

C. Brent Smith 112,073 1,290,148
Robert E. Bowers</