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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a‑6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material pursuant to Rule §240.14a‑12
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No fee required.
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Fee paid previously with preliminary materials.
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0‑11.
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“FOR” Proposal 3, to approve, on an advisory (non-binding) basis, the compensation paid to the Company’s Named Executive Officers (“Say on Pay”), and
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“FOR” Proposal 4, to approve an amendment to the Peakstone Realty Trust Second Amended and Restated Employee and Trustee Long-Term Incentive Plan (the “Incentive Plan”).
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If the Incentive Plan is not approved by shareholders, (i) we will not have sufficient shares available under the Incentive Plan to settle all of the 2024 annual equity awards to our named executive officers
(“NEOs”) and all other employees for 2023 performance, which will likely result in the use of cash to settle all or a portion of such awards, (ii) we will not have the ability to continue to provide share-settled equity-based compensation,
and (iii) our ability to attract and retain talent may be impacted which could negatively affect our long-term success.
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We use equity-based incentive awards in order to align the long-term interests of management with the interests of our shareholders, and we do not believe that cash awards provide the same degree of alignment
with our shareholders as share-settled awards.
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Our three-year average burn rate (i.e., the number of shares granted in each fiscal year divided by the weighted average common shares outstanding for that fiscal year) is less than 0.40%, well below industry
benchmark of 1.05%.
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Our estimated aggregate dilution of 3.78%, which includes the newly requested shares being proposed under this plan, will remain significantly less dilutive than the current average share dilution among Russell
3000 Office REITS of 5.2% of shares outstanding.
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Shareholder-friendly plan provisions include: no evergreen provision; no discounted options or share appreciation rights; no repricing or cash buyouts without shareholder approval; no liberal share recycling;
restricted transferability of awards until vested; no automatic grants to any individual; and no tax gross-ups.
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We employ compensation risk-mitigating policies including stock ownership guidelines (5X for the Chief Executive Officer) and anti-hedging/ anti-pledging policies.
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The policy states that “Generally, the Special Cases models will be used in the following two cases: 1) the subject company has less than or equal to 32 months of trading history as of the applicable QDD date;
or 2) the subject company has between 33 and 36 months of trading history as of the applicable QDD and less than three years of burn rate data is available.”
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The Company’s ISS peer group is largely driven by a total revenue figure, and ISS used a revenue amount for the Company that reduced our rental income by a non-cash loss and impairment to our investment in an
office joint venture. Our total revenue for fiscal year 2023 should have been correctly noted as $254 million vs. $78 million as reported by ISS (i.e., our total revenue should not have been reduced by these non-cash adjustments).
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Given the limited trading history of the Company, ISS did not conduct a full, quantitative pay-for-performance assessment on the Company, only focusing on the Multiple of Median and Financial Performance
Assessment test. We believe this led to an inaccurate portrayal of the Company.
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In developing our peer group, our Compensation Committee, in consultation with our independent compensation consultant, aims to balance the Company’s size, geography and portfolio constitution while also taking
into consideration peer group continuity year-over-year. Our 2023 executive compensation peer group was established using REITs that were comparable in terms of (i) size (i.e., REITs up to approximately 2.5 times our total capitalization),
(ii) scope of operations (i.e., REITs that primarily invest in office, industrial or net lease properties), and/or (iii) geography (i.e., REITs headquartered in Southern California).
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Using the Company’s executive compensation peer group, our NEOs’ aggregate compensation is below the median.
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Sincerely, |
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Samuel Tang
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Chairperson of the Compensation Committee of the Board of Trustees
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