John G. Demeritt
Executive Vice President, Chief Financial Officer and Treasurer at FRANKLIN STREET PROPERTIES CORP /MA/
Executive
About John G. Demeritt
Executive Vice President, Chief Financial Officer and Treasurer of Franklin Street Properties (FSP). Age 64 as of February 7, 2025; CFO since March 2005; Certified Public Accountant with a B.S. from Babson College . FSP’s compensation linkages highlight balance sheet deleveraging: net debt was the most important financial performance measure in 2024 and 2023 used to determine compensation actually paid; other qualitative metrics include debt repaid, property disposition proceeds, leasing, FFO, TSR, and estimated NAV .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Franklin Street Properties | EVP, CFO & Treasurer | Mar-2005–Present | Senior finance leader overseeing reporting, disclosure controls, financial strategy |
| Caturano & Company (later merged with McGladrey) | Manager | 2004 | Led Sarbanes-Oxley compliance work for clients |
| Self-employed consulting | Consultant | 2002–2004 | SEC filings, business process evaluation, acquisition integration for public/private companies |
| Cabot Industrial Trust (REIT) | VP, Financial Planning & Analysis | 2001–2002 | FP&A leadership through CalWest acquisition |
| The Meditrust Companies (REIT; formerly The La Quinta Companies) | Controller & Officer | 1995–2000 | Involved in merger and financing transactions |
| Various public companies | Finance & accounting roles | 1986–1995 | Progressive finance responsibilities |
| Laventhol & Horwath | Associate | 1983–1986 | Public accounting foundation |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| FSP 303 East Wacker Drive Corp. (Sponsored REIT) | Director | Noted in filings | Governance role at sponsored public reporting REIT |
Fixed Compensation
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Base Salary ($) | $271,773 | $283,876 | $292,442 | $304,074 | $313,355 |
| All Other Compensation ($) | $6,000 (401(k) match) | $6,000 (401(k) match) | $6,000 (401(k) match) | $6,000 (401(k) match) | $6,000 (401(k) match) |
| Employment Agreements | None disclosed (employees have no employment agreements) | ||||
| Equity Awards (RSU/Options) | None; no grants since 2005 |
Notes:
- 401(k) match generally up to 3% of compensation (subject to plan caps) .
Performance Compensation
| Year | Bonus ($) | Metric Framework | Most Important Metric | Other Considered Metrics | Payout Design | Vesting |
|---|---|---|---|---|---|---|
| 2024 | $323,520 | Discretionary, subjective corporate/individual performance | Net debt | Debt repaid; property disposition proceeds; leasing; FFO; TSR; estimated NAV | Cash bonus only; no equity | Not applicable (no equity awards) |
| 2023 | $404,400 | Discretionary, subjective corporate/individual performance | Net debt for 2023 | Debt repaid; property disposition proceeds; leasing; FFO; TSR; estimated NAV | Cash bonus only; ~1.2% lower vs 2022 | Not applicable (no equity awards) |
| 2022 | $409,427 | Discretionary, subjective corporate/individual performance | Committee uses qualitative measures; no formula | Price of Common Stock, dispositions, debt repaid, leasing (downward adjustment vs 2021) | Cash bonus only | Not applicable (no equity awards) |
Design features:
- No target bonus %, weightings, or formula; committee benchmarks NAREIT market data and applies judgment; peer review via FPL Associates (2019) .
- No non-equity incentive plan compensation elements; no RSUs/options; no perquisites .
Multi-Year Compensation (Total)
| Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|---|---|
| 2015 | $240,436 | $455,000 | N/A | N/A | N/A | $6,000 | $701,436 |
| 2016 | $247,677 | $470,000 | N/A | N/A | N/A | $6,000 | $723,677 |
| 2017 | $254,014 | $460,000 | N/A | N/A | N/A | $6,000 | $720,014 |
| 2018 | $261,781 | $385,000 | N/A | N/A | N/A | $6,000 | $652,781 |
| 2019 | $269,665 | $471,800 | N/A | N/A | N/A | $6,000 | $747,465 |
| 2020 | $271,773 | $472,000 | N/A | N/A | N/A | $6,000 | $749,773 |
| 2021 | $283,876 | $494,000 | N/A | N/A | N/A | $6,000 | $783,876 |
| 2022 | $292,442 | $409,427 | N/A | N/A | N/A | $6,000 | $707,869 |
| 2023 | $304,074 | $404,400 | N/A | N/A | N/A | $6,000 | $714,474 |
| 2024 | $313,355 | $323,520 | N/A | N/A | N/A | $6,000 | $642,875 |
Equity Ownership & Alignment
| As of | Shares Beneficially Owned | % of Shares Outstanding | Shares Outstanding Reference |
|---|---|---|---|
| Mar 4, 2025 | 42,000 | Less than 1% | 103,566,715 |
| Mar 5, 2024 | 42,000 | Less than 1% | 103,430,353 |
| Feb 28, 2023 | 42,000 | Less than 1% | 103,235,914 |
| Feb 28, 2022 | 42,000 | Less than 1% | 103,286,981 |
| Mar 1, 2021 | 42,000 | Less than 1% | 107,328,199 |
Alignment observations:
- No executive stock options outstanding company-wide; executives have not received stock awards since initial listing; CFO ownership stable at ~42,000 shares; no pledging or hedging by executives is permitted under the company’s anti-hedging policy; no pledge disclosure for Demeritt in ownership tables .
Stock ownership guidelines:
- FSP has stock ownership requirements for CEO (6x salary) and non-employee directors; no ownership requirements for other executives, including CFO .
Employment Terms
- No employment agreements or guaranteed severance outside change-in-control program .
- Change-in-control program (adopted 2006): lump-sum payment equals three years of base salary plus a bonus opportunity payment equal to three years of base salary (total 6x base salary); CEO elected not to participate .
Change-in-Control Retention Payment Illustrations (assuming closing date at year-end):
| Date | Amount (CFO) |
|---|---|
| Dec 31, 2019 | $1,617,990 |
| Dec 31, 2020 | $1,630,638 |
| Dec 29, 2017 | $1,524,084 |
| Dec 31, 2013 | $1,352,610 |
Other governance and policies impacting incentives:
- Clawback policy compliant with NYSE American adopted Oct 2023 .
- Anti-hedging policy prohibits short sales and transactions in puts/calls on FSP securities .
Pay Versus Performance Context (Company Level)
| Year | PEO SCT Total ($) | Average NEO SCT Total ($) | FSP TSR (Initial $100) | Peer TSR (FTSE NAREIT Office) | Net Income ($) | Net Debt ($) |
|---|---|---|---|---|---|---|
| 2024 | $306,000 | $617,846 | $28.18 | $76.95 | ($52,723,000) | $207,649,000 |
| 2023 | $306,000 | $689,403 | $38.59 | $63.34 | ($48,110,000) | $277,120,000 |
| 2022 | $306,000 | $683,601 | $40.20 | $62.07 | $1,094,000 | $406,368,000 |
| 2021 | $806,000 | $759,488 | $84.25 | $99.51 | $92,717,000 | $434,249,000 |
| 2020 | $306,000 | $730,884 | $54.63 | $81.56 | $32,615,000 | $919,350,000 |
Say-on-pay support:
- Say-on-pay proposals approved by over 93% of votes cast in 2021–2023 .
Compensation Structure Analysis
- Cash-heavy structure: salary plus discretionary cash bonus; no equity grants since 2005; no options; no perquisites; no formal bonus targets or metric weightings .
- Metric emphasis shifted toward deleveraging outcomes (net debt, debt repaid) and asset recycling (dispositions), consistent with sector headwinds; bonuses adjusted downward when stock price, dispositions, debt repayment and leasing underperformed prior year context .
- Governance protections strengthened via 2023 clawback policy; anti-hedging limits misalignment behaviors; CEO and directors have ownership guidelines, but CFO is not subject to guidelines .
Risk Indicators & Red Flags
- Minimal equity alignment for CFO (42,000 shares; <1%); no executive equity grants since 2005, reducing direct TSR alignment .
- Large single-trigger change-in-control cash payout potential (≈6x base salary via program design), which can incentivize transaction acceptance irrespective of TSR, though program intent is retention through potential corporate change .
- Anti-hedging policy mitigates hedging misalignment; no disclosure of pledged shares for Demeritt in ownership tables .
Equity Ownership & Alignment Details
- Stock ownership guidelines: CEO must own 6x salary; non-employee directors must own 5x cash retainer; no requirement for CFO .
- No options outstanding or RSU/PSU awards to executives; therefore no vesting schedule exposure; insider selling pressure from vesting is not a factor .
Investment Implications
- Alignment: CFO’s compensation is tied to deleveraging and operational execution but lacks equity-based at-risk components; stable, modest personal shareholding and no ownership requirement reduce skin-in-the-game. This may temper long-term TSR alignment but supports focus on balance sheet repair and cash generation .
- Event risk: The single-trigger change-in-control structure with a defined cash payout could influence transaction dynamics; investors should monitor strategic review outcomes and any M&A chatter given the program economics .
- Trading signals: Absence of equity grants and insider vesting means limited forced-seller dynamics; watch for any Form 4 activity and updates to bonus outcomes relative to net debt trajectory and property dispositions for read-through on execution confidence .