John F. Donahue
About John F. Donahue
Executive Vice President and President of FSP Property Management LLC at Franklin Street Properties (FSP); identified as a Named Executive Officer (NEO) in recent proxies . FSP’s pay program for executives comprises base salary, discretionary cash bonus, 401(k) match, and potential payments under a change‑in‑control (CIC) program; the company does not grant options, RSUs, PSUs, deferred comp, or perquisites, and has not made executive stock awards since 2005 . Company performance indicators that informed recent bonus decisions include net debt reduction, property dispositions, debt repayment, leasing volume, TSR and FFO, with the Compensation Committee using a subjective assessment rather than formulaic weightings . FSP’s PVP disclosure shows weak TSR in 2024 vs peers (FSP $28.18 vs peer $76.95 per $100 base), negative net income, and materially reduced net debt ($208mm), aligning with management’s 2024 emphasis on asset sales and deleveraging .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $247,056 | $256,882 | $264,723 |
| 401(k) Match ($) | $6,000 | $6,000 | $6,000 |
Notes:
- FSP states its executive base salaries are generally lower than industry standards; CEO has a stock ownership requirement, but no such policy for other executives .
Performance Compensation
Annual Cash Bonus (discretionary)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Cash Bonus Paid ($) | $402,797 | $397,800 | $318,240 |
- Structure: Discretionary, based on subjective assessment of corporate and individual performance (e.g., net debt, debt repaid, property dispositions, leasing, FFO, TSR, estimated NAV); no disclosed weightings or numeric targets .
- 2024 Committee decision: reduced executive cash bonuses by approximately 20% vs. 2023 to reflect stock price pressure, dispositions, net debt and leasing context, and to lower G&A .
- No equity awards (options/RSUs/PSUs) were granted to executives in 2022–2024; none since 2005 .
Performance Framework (company-level indicators referenced)
| Performance Measure (examples) | Disclosed usage |
|---|---|
| Net debt, debt repaid, gross proceeds from property dispositions; amount/terms of space leased; FFO; TSR; estimated NAV | Considered collectively with judgment; no fixed weights |
| 2024 “most important” performance measure for PVP | Net debt |
| 2023 “most important” performance measure for PVP | Net debt |
| 2022 “most important” performance measure for PVP | Debt repaid |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 1,000 FSP shares (as of March 4, 2025) |
| Ownership as % of shares outstanding | <1% |
| Options outstanding (exercisable/unexercisable) | None; FSP has no outstanding options or other securities convertible into common stock |
| Executive stock awards (RSUs/PSUs) | No executive stock awards since 2005 |
| Hedging policy | Prohibits short sales and buying/selling puts or calls on FSP stock |
| Pledging | No pledging disclosure for Donahue in beneficial ownership notes; a margin/line-of-credit account is disclosed for Director D.J. McGillicuddy (not for Donahue) |
Implication: Donahue’s equity stake is de minimis, and with no ongoing equity awards, direct stock-based alignment is limited relative to cash components .
Employment Terms
| Term | Detail |
|---|---|
| Employment agreement | None for NEOs (no executive employment contracts) |
| Severance (outside CIC) | None; no obligation to pay severance absent CIC |
| Change‑in‑Control (CIC) program | Single‑trigger retention payment at closing equal to 3× base salary + 3× “bonus opportunity” (defined as base salary); Board may also create a discretionary pool up to 1% of market cap (offset by total retention payments) |
| CIC payout amounts (Donahue) | $1,484,209 (as of 12/31/2022) ; $1,541,292 (as of 12/31/2023) ; $1,588,338 (as of 12/31/2024) |
| Clawback | Clawback policy compliant with NYSE American listing standards |
| Anti-hedging | Hedging/short sales prohibited |
Performance & Track Record (company-level context)
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| FSP TSR – Value of $100 | $54.63 | $84.25 | $40.20 | $38.59 | $28.18 |
| Peer TSR – Value of $100 (FTSE NAREIT Equity Office) | $81.56 | $99.51 | $62.07 | $63.34 | $76.95 |
| Net Income ($) | $32,615,000 | $92,717,000 | $1,094,000 | ($48,110,000) | ($52,723,000) |
| Net Debt ($) | $919,350,000 | $434,249,000 | $406,368,000 | $277,120,000 | $207,649,000 |
Additional company actions referenced by the Compensation Committee:
- 2024: ~$100mm property dispositions and ~$155mm debt repaid; leasing ~616,000 sq ft (vs. ~706,000 sq ft in 2023) .
- 2023: ~$154mm property dispositions; $102mm debt repaid on Feb 21, 2024; leasing ~706,000 sq ft (vs. ~435,000 sq ft in 2022) .
Say‑on‑Pay & Governance Touchpoints
- Say‑on‑pay support: recent approvals “over 93%” of votes cast; prior years “over 95%” .
- Compensation Committee independence and remit reaffirmed; no perquisites, no deferred comp, no equity awards to executives since 2005 .
Investment Implications
- Alignment: Donahue’s equity ownership is minimal (1,000 shares; <1%), and FSP has not granted executive equity since 2005—reducing direct stock‑based alignment and limiting vest‑driven selling pressure; hedging is prohibited, and no Donahue pledging is disclosed .
- Incentives mix: Pay is primarily cash (base + discretionary bonus) without formulaic performance metrics; while the Committee cited deleveraging, dispositions, leasing, and TSR as considerations, the lack of explicit targets/weights can weaken pay‑for‑performance line‑of‑sight for investors .
- Retention/CIC economics: Single‑trigger CIC payments (~$1.59mm as of 12/31/2024) provide material certainty at closing; this can support retention through a sale but may be viewed as shareholder‑unfriendly vs. double‑trigger constructs .
- Execution risk vs. outcomes: 2024 TSR lagged peer office REITs and net income was negative, but net debt declined sharply and bonuses were reduced ~20%—consistent with the Committee’s deleveraging focus but still reflective of discretionary calibration amid a challenged office backdrop .
Overall, Donahue’s incentive exposure is dominated by discretionary cash bonuses and a sizable single‑trigger CIC benefit, with limited ongoing equity linkage. Investors focused on stronger alignment may look for explicit performance frameworks and renewed equity‑based pay tied to deleveraging, leasing, and TSR recovery .