DEF 14A 1 nc10021623x1_def14a.htm DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

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☒ Definitive Proxy Statement

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☐ Soliciting Material under §240.14a-12

EQUITY COMMONWEALTH

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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EQUITY COMMONWEALTH

Two North Riverside Plaza, Suite 2100

Chicago, IL 60606

April 27, 2021

Dear Shareholder:

You are cordially invited to the 2021 Annual Meeting of Shareholders of Equity Commonwealth. The Board of Trustees will hold the 2021 Annual Meeting of Shareholders in a virtual-only format in lieu of an in-person meeting to prioritize the health and well-being of meeting participants.

At the Annual Meeting, you will be asked to (i) elect the 8 trustees named in our proxy materials to the Board of Trustees, (ii) approve, on a non-binding advisory basis, the compensation of our named executive officers, (iii) ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021, and (iv) transact such other business as may properly come before the Annual Meeting. The accompanying Notice of the Annual Meeting describes these matters.

We have elected to provide access to our proxy materials on the Internet under the U.S. Securities and Exchange Commission’s “notice and access” rules, instead of mailing printed copies of those materials to each shareholder. Our proxy materials are available at www.proxyvote.com. We have sent to our shareholders a Notice of Internet Availability of Proxy Materials that provides instructions on how to access our proxy materials on the Internet. Please read the enclosed information carefully before submitting your proxy.

The Board of Trustees appreciates and encourages your participation in the Annual Meeting. Regardless of whether you plan to attend the Annual Meeting, it is important that your shares be represented. Accordingly, please vote your shares by following the instructions contained in our proxy materials. If you do attend the Annual Meeting, you may withdraw your proxy and vote at the Annual Meeting.

			Sincerely,


			Sam Zell
			Chairman of the Board of Trustees

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EQUITY COMMONWEALTH

Two North Riverside Plaza, Suite 2100

Chicago, IL 60606

NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS

To be Held on June 23, 2021

To the Shareholders of Equity Commonwealth:

NOTICE IS HEREBY GIVEN that the 2021 Annual Meeting of Shareholders, and any adjournments or postponements thereof (the “Annual Meeting”), of Equity Commonwealth, a Maryland real estate investment trust (the “Company”), will be held in a virtual-only format on June 23, 2021, at 9:00 a.m., Central Time. You will be able to attend the Annual Meeting, vote your shares electronically and submit your questions during the live webcast of the meeting by visiting www.virtualshareholdermeeting.com/EQC2021 and entering your control number included in the notice containing instructions on how to access Annual Meeting materials or your proxy card. The Annual Meeting will be held for the following purposes:

1.	to elect the 8 trustees named in our proxy statement to the Board of Trustees (the “Board”);

2.	to approve, on a non-binding advisory basis, the compensation of our named executive officers;

3.	to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021; and

4.	to transact such other business as may properly come before the Annual Meeting.

The Board of Trustees will hold the 2021 Annual Meeting of Shareholders in virtual-only format in lieu of an in-person meeting to prioritize the health and well-being of meeting participants. Broadridge, a global proxy services firm, will host the virtual-only Annual Meeting. In order to participate in the virtual-only Annual Meeting, vote during the Annual Meeting and submit questions, please log into the meeting platform at: www.virtualshareholdermeeting.com/EQC2021. The virtual-only Annual Meeting will begin promptly at 9:00 a.m. Central Time, on June 23, 2021. Online access will begin at 8:45 a.m. Central Time. We encourage you to access the virtual-only Annual Meeting prior to the start time. Broadridge will have personnel ready to assist you with any technical difficulties you may have accessing the virtual-only Annual Meeting. Shareholders who hold their shares in “street name” through a broker or other financial institution or are registered shareholders may use the 16-digit control number and the instructions previously distributed to them to join the virtual-only Annual Meeting. We know of no other matters to come before the Annual Meeting. Only holders of record of common shares at the close of business on April 15, 2021 are entitled to notice of and to vote at the Annual Meeting or at any adjournments or postponements thereof.

Regardless of the number of shares you hold, as a shareholder your role is very important, and the Board strongly encourages you to exercise your right to vote. Pursuant to the U.S. Securities and Exchange Commission’s “notice and access” rules, our Proxy Statement, proxy card and 2020 Annual Report to Shareholders are available online at www.proxyvote.com.

We encourage you to contact the firm assisting us in the solicitation of proxies, D.F. King & Co., Inc. (“D.F. King”), if you have any questions or need assistance in voting your shares. Banks and brokers may call D.F. King collect at (212) 269-5550. Shareholders may call D.F. King toll-free at (877) 783-5524.

			By Order of the Board of Trustees,

			Orrin S. Shifrin
April 27, 2021			Executive Vice President,
Chicago, Illinois 60606			General Counsel and Secretary

REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO VOTE AT YOUR EARLIEST CONVENIENCE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE AT THE ANNUAL MEETING.

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PROXY STATEMENT SUMMARY			1
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING			6
PROPOSAL 1: ELECTION OF TRUSTEES			10
Trustee Nominees			10
Vote Required and Recommendation			14
PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION			15
Vote Required and Recommendation			15
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			16
Vote Required and Recommendation			16
Principal Accountant Fees and Services			16
Pre-Approval Policies and Procedures			17
AUDIT COMMITTEE REPORT			18
CORPORATE GOVERNANCE AND BOARD MATTERS			19
Corporate Governance Profile			19
Board Leadership Structure			19
Executive Sessions			20
Attendance of Trustees at 2020 Board Meetings and Annual Meeting of Shareholders			20
Committees of the Board			20
Trustee Nominee Selection Process			23
Board Oversight of Risk Management			24
Corporate Governance Guidelines			25
Code of Business Conduct and Ethics			25
Sustainability and Social Responsibility			26
Communications with the Board			26
Compensation Committee Interlocks and Insider Participation			26
EXECUTIVE OFFICERS			27
COMPENSATION DISCUSSION AND ANALYSIS			28
Compensation Overview			28
Overview of Company Performance during 2020			28
Outperformance Over One, Three, and Five Years .			29
Compensation Objectives and Philosophy			31
Compensation Snapshot			31
Executive Compensation Program Highlights			33
Compensation Determination Process			34
Elements of Compensation			35
Other Compensation Practices and Policies			43
2021 Compensation Actions			44
COMPENSATION COMMITTEE REPORT			46
EXECUTIVE COMPENSATION			47
Summary Compensation Table			47
Grants of Plan-Based Awards			48
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table			48
Outstanding Equity Awards at 2020 Fiscal Year-End			49
Option Exercises and Stock Vested			50
Potential Payments Upon Termination or Change in Control			50
Pay Ratio Disclosure			55
TRUSTEE COMPENSATION			56
Overview of Trustee Compensation Program			56
Equity Awards Granted to Independent Trustees			56

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Compensation for the Chairman of the Board			57
Stock Ownership Guidelines			58
Trustee Compensation Table for Fiscal Year 2020			58
EQUITY COMPENSATION PLAN INFORMATION			59
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			60
Section 16(a) Beneficial Ownership Reporting Compliance			61
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS			62
Review and Approval or Ratification of Transactions with Related Persons			62
Related Person Transactions			62
Indemnification			62
MISCELLANEOUS			64
Other Matters to Come Before the Annual Meeting			64
Shareholder Proposals and Nominations for the 2022 Annual Meeting of Shareholders			64
Householding of Annual Meeting Materials			64
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON JUNE 23, 2021			65

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EQUITY COMMONWEALTH

Two North Riverside Plaza, Suite 2100

Chicago, IL 60606

PROXY STATEMENT

This Proxy Statement and related proxy materials are being made available to shareholders of Equity Commonwealth (“Equity Commonwealth,” the “Company” or “EQC”) on or about April 27, 2021 in connection with the solicitation by our Board of Trustees (the “Board”) of proxies to be voted at the Company’s 2021 Annual Meeting of Shareholders (the “Annual Meeting”) to be held on June 23, 2021, at 9:00 a.m., Central Time. In light of the COVID-19 pandemic, the Board will hold the Annual Meeting in a virtual-only format in lieu of an in-person meeting to prioritize the health and well-being of meeting participants.

PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider. You should read the entire Proxy Statement carefully before voting.

Overview

With the difficult circumstances caused by the COVID-19 pandemic, 2020 was both a challenging and successful year for EQC as we continued to execute on our business strategy. We sold three properties for an aggregate sale price of $757 million. We repaid at par our last remaining debt obligation of $25 million of mortgage debt, distributed $427 million to our common shareholders and repurchased $21 million of our common stock while ending the year with $3 billion of cash. We continued reshaping our portfolio, strengthening our balance sheet, improving leasing and operations and fostering a cohesive culture to serve as the foundation for long-term growth. We remain focused on creating value through proactive asset management and improved operating results, while being patient and disciplined in our evaluation of a broad range of investment opportunities.

Since we took over responsibility for EQC in 2014 with a new Board of Trustees and internalized management team, we have become a fundamentally different company with a small portfolio of high-quality assets, a strong balance sheet with significant capacity and a track record of consistent execution. Through year-end 2020, we reduced our portfolio to four office buildings in three cities, exiting 116 cities, 28 states and Australia:

*	EQC Starting Portfolio includes properties classified as discontinued operations as of March 31, 2014 and excludes two land parcels previously classified as properties.

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Through December 31, 2020, we have also accomplished the following:

•	Completed $7.6 billion of dispositions, including the sale of 164 properties totaling 44 million square feet and three land parcels;

•	Repaid debt and preferred equity balances of $3.3 billion;

•	Paid $1.2 billion, or $9.50 per common share, of distributions to our common shareholders;

•	Repurchased $266 million of our common shares at a cumulative average share price of $18.72 per share, net of distributions; and

•	Increased our cash balance to $3 billion, or over $24.00 per share.

With our share price increasing from $26.30 to $27.28, and our $1.2 billion of distributions to common shareholders, we have created $1.4 billion of total shareholder value.

With the progress we have made executing dispositions, and the strength and liquidity of our balance sheet, we have increasingly shifted our focus to capital allocation. We are evaluating opportunities to invest capital in high-quality assets or businesses in favorable markets that offer a compelling risk-reward profile. The set of opportunities that we are pursuing include acquisitions and/or investments in a range of property types in order to create a foundation for long-term growth. Alternatively, we may determine to sell, liquidate or otherwise exit our business if we believe doing so will maximize shareholder value.

2020 Performance Highlights

The Company’s significant accomplishments in 2020 included:

•	Disposed of three properties consisting of 961,000 square feet for an aggregate sales price of $757 million;

•	Adapted business operations in response to the COVID-19 pandemic with an emphasis on tenant and employee safety and productivity while maintaining our focus on rent collections, including:

○	successfully transitioning our employees to work from home, and

○	adapting our properties and corporate office to allow for continued occupancy;

•	Completed 142,000 square feet of leasing in the 4 properties we held on December 31, 2020, including new leasing of 66,000 square feet and lease renewals covering approximately 76,000 square feet;

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•	Increased optionality and liquidity through dispositions;

•	Evaluated numerous external growth investment opportunities in a range of property types;

•	Repaid at par our last remaining debt obligation of $25 million of mortgage debt at 206 East 9th Street in Austin, Texas;

•	Paid $427 million in distributions to our common shareholders and repurchased $21 million of our common stock, while increasing our balance of cash to $3 billion;

•	Participated in the 2020 Real Estate Assessment for Global Real Estate Sustainability Benchmark (“GRESB”), the environmental, social and governance benchmark for real assets; and

•	Fostered an entrepreneurial culture with an emphasis on transparency and open communication, where working passionately and collaboratively is fundamental.

Executive Compensation Highlights

Our executive compensation program is designed to accomplish four key objectives:

1.	reward effective executive officers who create long-term value for the Company’s shareholders;

2.	align the long-term interests of our executive officers with the interests of the Company and the Company’s shareholders;

3.	reward financial and operating performance and leadership excellence; and

4.	retain and motivate executives to remain at the Company for the long-term.

As part of these objectives, our executive compensation program is centered on pay-for-performance principles that are aligned with the interests of our shareholders, including the following key components:

•	Pay-for-Performance Alignment – We maintain strong pay-for-performance alignment with 64% of 2020 target compensation for our CEO and 59% for our other named executive officers being at-risk compensation that is contingent upon Company performance.

•

Performance-Based Annual Cash Incentives – For 2020, 67% of our named executive officers’ annual cash bonuses are based on the achievement of corporate performance goals established at the beginning of the year, with the remaining 33% based on individual performance goals. Our cash bonus program may result in significant fluctuations in payouts depending on our financial and operating success each year. In 2020, our named executive officers experienced an average decrease of 40% in cash bonus payouts versus the previous year.

•

Focus on Long-Term Performance and Alignment with Our Shareholders – 60% of target compensation for our CEO and an average of 53% for our other named executive officers is paid in long-term equity awards that further enhance our named executive officers’ alignment with shareholders. 67% of our long-term equity awards consist of performance awards subject to forfeiture based upon the achievement of three-year relative total shareholder return (“TSR”). If our TSR performance is negative over the performance period, the awards earned are reduced by 25%. The remaining 33% of our long-term equity awards are time-based and subject to vesting over a four-year period with half vesting in the fourth year.

•	Commitment to Strong Compensation Governance – Our executive compensation program is designed to achieve an appropriate balance between risk and reward by employing both good compensation governance and appropriate risk mitigation features, including:

✔	Compensation clawback policy that covers all incentive-based compensation (cash and equity) for all our named executive officers

✔	Equity ownership requirements (including 6x base salary for our CEO), with executives required to hold all equity awards until the guidelines are met

✔	Anti-hedging and anti-pledging policies applicable to all of our named executive officers

✔	Long-term vesting requirements on equity awards

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✔	Caps on short-term annual incentive program and long-term incentive compensation payouts

✔	Multiple performance factors that provide for a range of payouts (not all or nothing)

✔	Double-trigger change in control provisions and no excise tax gross-ups

Corporate Governance Highlights

We are committed to a corporate governance approach that promotes transparency as well as alignment with and accountability to our shareholders. We consistently look to improve our corporate governance policies and practices, including:

	✔			Majority voting in uncontested trustee elections
	✔			Annual trustee elections, with shareholder approval required to stagger the Board
	✔			Independent lead trustee with robust duties
	✔			Separate chairman and chief executive officer
	✔			9 of 11 current trustees are independent
	✔			Regular executive sessions of independent trustees
	✔			All members of Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are independent
	✔			All members of Audit Committee are financial experts under SEC rules
	✔			Annual board and committee review and self-evaluations
	✔			Code of Business Conduct and Ethics that covers trustees and employees as well as the Company’s relationships with its vendors
	✔			Meaningful share ownership guidelines for our trustees (4x annual cash retainer), chief executive officer (6x salary) and other named executive officers (3x salary)
	✔			Opted out of Maryland business combination and control share acquisition statutes
	✔			No shareholder rights plan (commonly known as a “poison pill”)
	✔			Active shareholder engagement
	✔			Shareholders have ability to amend the Company’s bylaws by majority vote

Our Board of Trustees reviews our corporate governance practices regularly, and we strive to operate the Company on a foundation of strong corporate governance principles. For additional information, see pages 19-26 below regarding our corporate governance policies.

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Proposal/Voting Overview

Proposal	Board Vote Recommendation	Page # for Additional Information
Election of 8 Trustees	FOR each nominee	10
Advisory vote on executive compensation	FOR	15
Ratification of the appointment of independent registered public accounting firm	FOR	16

Annual Meeting Information

	Date & Time:			June 23, 2021, at 9:00 a.m. Central Time
	Place:			Virtual meeting at www.virtualshareholdermeeting.com/EQC2021
	Record Date:			April 15, 2021

How to Vote

	Online:			Vote at www.proxyvote.com using the shareholder identification number provided in the Proxy Notice
	Telephone:			If you received printed materials, follow the “Vote by Phone” instructions on the proxy card
	Mail:			If you received printed materials, mark, sign and date the proxy card and return it in the pre-paid envelope

Trustee Nominees

Name	Age as of Annual Meeting	Trustee Since	Independent
Sam Zell	79	2014
Ellen-Blair Chube	40	2020	X
Martin L. Edelman	80	2014	X
David A. Helfand	56	2014
Peter Linneman	70	2014	Lead
Mary Jane Robertson	67	2014	X
Gerald A. Spector	74	2014	X
James A. Star	60	2014	X

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

Why am I receiving this Proxy Statement?

This Proxy Statement is furnished by the Board of Equity Commonwealth, a Maryland real estate investment trust, in connection with the Board’s solicitation of proxies for the Annual Meeting, and any adjournments or postponements thereof, to be held in a virtual-only format on June 23, 2021, at 9:00 a.m., Central Time. This Proxy Statement is first being made available to shareholders on or about April 27, 2021. Unless the context requires otherwise, references in this Proxy Statement to “Equity Commonwealth,” “we,” “our,” “us” and the “Company” refer to Equity Commonwealth, together with its consolidated subsidiaries.

Why didn’t I automatically receive a paper copy of the Proxy Statement, proxy card and Annual Report?

Pursuant to rules adopted by the U.S. Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials via the Internet. Accordingly, rather than paper copies of our proxy materials, we are sending a Notice of Internet Availability of Proxy Materials (the “Proxy Notice”) to our shareholders.

How can I receive electronic access to the proxy materials?

The Proxy Notice includes instructions on how to access our proxy materials over the Internet at www.proxyvote.com and how to request a printed set of the proxy materials by mail or an electronic set of materials by e-mail.

In addition, shareholders may request to receive future proxy materials in printed form by mail or electronically by e-mail on an ongoing basis. Choosing to receive future proxy materials by e-mail will save us the cost of printing and mailing documents to you and will reduce the environmental impact of our annual meetings. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and the proxy voting site. Your election to receive future proxy materials by e-mail will remain in effect until you terminate it.

What am I being asked to vote on?

You are being asked to vote on the following proposals:

•	Proposal 1 (Election of Trustees): the election of the 8 trustees named in this Proxy Statement to our Board;

•	Proposal 2 (Advisory Vote on Executive Compensation): the approval, on a non-binding advisory basis, of the compensation of our named executive officers; and

•	Proposal 3 (Ratification of the Appointment of Ernst & Young LLP): the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2021.

Our Board knows of no other matters to be brought before the Annual Meeting.

What are the Board’s voting recommendations?

The Board recommends that you vote as follows:

•	Proposal 1 (Election of Trustees): “FOR” each of the Board’s nominees for election as trustee;

•	Proposal 2 (Advisory Vote on Executive Compensation): “FOR” approval, on a non-binding advisory basis, of the compensation of our named executive officers; and

•	Proposal 3 (Ratification of the Appointment of Ernst & Young LLP): “FOR” ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2021.

Who is entitled to vote at the Annual Meeting?

The close of business on April 15, 2021 has been fixed as the record date (the “Record Date”) for the Annual Meeting. Only shareholders of record of our common shares of beneficial interest, $0.01 par value per share (“Common Shares”), at the close of business on the Record Date are entitled to notice of, to attend, and to vote at the Annual Meeting. On April 15, 2021, we had approximately 121,921,850 Common Shares outstanding.

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What are the voting rights of shareholders?

Each Common Share is entitled to one vote on each matter to be voted on.

How do I vote?

If your shares are registered directly in your name with our transfer agent, Equiniti Trust Company, you are considered the shareholder of record with respect to those shares and the Proxy Notice was sent directly to you by us. In that case, you may instruct the proxy holders named in the proxy card (the “Proxy Agents”) how to vote your Common Shares in one of the following ways:

•	Vote online. You can access proxy materials and vote at www.proxyvote.com. To vote online, you must have the shareholder identification number provided in the Proxy Notice.

•	Vote by telephone. If you received printed materials, you also have the option to vote by telephone by following the “Vote by Phone” instructions on the proxy card.

•	Vote by regular mail. If you received printed materials and would like to vote by mail, please mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided.

Proxies submitted over the Internet, by telephone or by mail must be received by 11:59 p.m., Eastern Time, on June 22, 2021.

If your shares are held in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are the beneficial owner of shares held in “street name,” and the Proxy Notice was forwarded to you by that organization. As a beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account. You should instruct your broker or nominee how to vote your shares by following the voting instructions provided by your broker or nominee.

How are proxy card votes counted?

Proxies submitted properly via one of the methods discussed above will be voted in accordance with the instructions contained therein. If the proxy is submitted but voting instructions are not made, the proxy will be voted “FOR” each of the 8 trustee nominees, “FOR” approval, on a non-binding advisory basis, of the compensation of our named executive officers and “FOR” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021, and in such manner as the Proxy Agents, in their discretion, determine upon such other business as may properly come before the Annual Meeting. If the proxy is submitted and voting instructions are made for some, but not all, of the proposals, as to matters in which instructions are given, the proxy will be voted in accordance with those instructions, and for all other proposals, the proxy will be voted as described in the prior sentence.

If your Common Shares are held in an account at a brokerage firm, bank, broker-dealer or other similar organization, under applicable rules of the New York Stock Exchange (the “NYSE”) (the exchange on which our Common Shares are traded), the brokers will vote your shares according to the specific instructions they receive from you. If brokers that hold Common Shares for a beneficial owner do not receive voting instructions from that owner at least 10 days prior to the Annual Meeting, the broker may vote only on the proposal if it is considered a “routine” matter under the NYSE’s rules. On non-routine matters, nominees do not have discretionary voting power and cannot vote without instructions from the beneficial owners, resulting in a so-called “broker non-vote.” Pursuant to the rules of the NYSE, the election of trustees and the approval of the compensation of our named executive officers are each a “non-routine” matter and brokerage firms may not vote without instructions from their client on these matters, resulting in a broker non-vote. In contrast, ratification of the appointment of an independent registered public accounting firm is considered a “routine” matter under NYSE’s rules, which means that brokers have discretionary voting authority to the extent they have not received voting instructions from their client on the matter.

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How many votes are needed for each of the proposals to pass?

The proposals to be voted on at the Annual Meeting have the following voting requirements:

•

Proposal 1 (Election of Trustees): You may vote “FOR” all nominees, “WITHHOLD” your vote as to all nominees or vote “FOR” all nominees except those specific nominees from whom you “WITHHOLD” your vote. Pursuant to our Articles of Amendment and Restatement of Declaration of Trust (our “Charter”), in an uncontested elect

SEC Form DEF 14A filed by Equity Commonwealth