UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.     )

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STORE Capital Corporation

 

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				2021 Notice of Annual Meeting of Stockholders and Proxy Statement

 

 

Christopher H. Volk Executive Chair		To Our Stockholders:   On March 19, 2020, in response to the COVID-19 pandemic, California became the first state to issue “shelter in place” orders. Over the next few weeks, forty-one other states followed, effecting nearly three quarters of U.S. counties. By the end of March, business closures had impacted 23% of the properties held by STORE. A month later the percentage of STORE properties subject to closure would rise to 35%. There is no such thing as a corporate business model designed for no business. Across the country, impacted companies of every size sought relief from creditors, including landlords.   As it turned out, April would be our most impacted month in terms of property closures. The result was a cash collection shortfall of more than 30% for the month of May. For the full second quarter, STORE collected 74% of the rents due us. As the economy reopened, our collections would rise to 87% for the third quarter and 90% for the fourth quarter. Impressively, we were able to raise our dividend in the third quarter. Also impressively, we were able to document deferral agreements with nearly all our impacted tenants to repay rent payment shortfalls. Our ability to realize such achievements was owed in part to our approach to our asset class. We had created senior net-lease contracts collectively having credit characteristics that exceeded those of our impacted tenants. Our ability to document lease deferral agreements was also positively impacted by our direct approach to investment originations. At STORE, we have always taken pride in maintaining close ties with our tenants, who we view as customers. Virtually all the lease agreements we have were negotiated by us, which made a clear difference and enabled us to be a continued leader in our sector for portfolio investment yields. We concluded 2020 with documented deferral agreements or verbal understandings with virtually all our impacted customers, avoiding the need for litigation. We take enormous pride in this outcome and in our many customers and STORE team members who made this happen.
No discussion of 2020 would be complete without a mention of our remote working effectiveness, which is bound to positively impact the future work protocols of our team members, not to mention much of corporate America. In 2019, we invested in cloud-based solutions across all our major systems platforms and also implemented Microsoft Teams to help improve work collaboration. During 2020, we began to harness this technology, implementing an extensive data warehouse, which will reap business intelligence benefits as we move forward. These extensive efforts proved invaluable in their ability to improve our ability to efficiently work remotely in 2020. When the pandemic hit, we were able to transform seamlessly from having all of us under one roof to having nearly all of us working remotely. Our office went from having approximately 100 of us daily to typically having fewer than ten. We are especially proud of the ability of our many leaders and team members to rise to the challenge of addressing this seminal moment.   During 2020, when we weren’t focused directly on helping our customers with their business needs, we addressed STORE’s corporate responsibility on many fronts, starting with the publication of our inaugural Corporate Responsibility Report. This impressive publication was accomplished by our internal ESG Working Group, which will produce our second report in the second quarter of 2021. Our corporate responsibility initiatives have been extensive. Given that STORE has always excelled at corporate governance, our emphasis in 2020 was on areas of social and environmental impact. During the year, we increased the percentage of women comprising our Board of Directors to 33% and our senior management team to 56%. During the year, we also elevated our tenant sustainability engagement through educational outreach and continued surveys. Importantly, STORE’s initiatives over the past two years included investments in continuing employee education, development and recognition programs. The results of these efforts are reflected throughout our organization.   An important part of our jobs as business leaders is to plan for our succession. STORE’s investments in employee development reflect this emphasis. Concurrent with this proxy statement, we completed a leadership transition that has been several years in the making: I have moved into the role of Executive Chair; Catherine D. Rice, a director since 2017, has taken on the position of Lead Independent Director; Mort Fleischer, our founding Chairman, will remain as a director with the honorary title of Chair Emeritus; and the company is in great hands with Mary Fedewa as President and Chief Executive Officer. As we go forward, we are confident that our growing impressive leadership team will enable STORE to continue its impressive performance, delivered through a potent corporate business model, an amazing staff of talented professionals and the dynamic leading middle market and larger companies that we address.   Sincerely,         Christopher H. Volk Executive Chair

 

April 15, 2021

Dear Fellow Stockholder:

You are invited to attend the 2021 Annual Meeting of Stockholders of STORE Capital Corporation. The meeting will be held on Thursday, May 27, 2021, at 9:00 a.m., Arizona time. The Annual Meeting will be a completely “virtual” meeting of stockholders. You will be able to attend the Annual Meeting as well as vote and submit your questions during the live webcast of the meeting by visiting www.virtualshareholdermeeting.com/STOR2021 and entering the 16-digit control number included in your Notice of Internet Availability of Proxy Materials, on your proxy card or in the instructions that accompanied your proxy materials.

The attached proxy statement, with the accompanying notice of the meeting, describes the matters expected to be acted upon at the meeting. We urge you to review these materials carefully and to take part in the business of our company by voting on the matters described in the accompanying proxy statement. We hope that you will be able to attend the meeting during which our directors and senior leadership team will be available to answer questions.

Your vote is important. Whether you plan to attend the meeting or not, please return a completed proxy card as promptly as possible or authorize your proxy on the Internet or by calling the toll-free telephone number included in the proxy materials provided to you. The attached proxy statement contains instructions regarding all three methods of authorizing your proxy. If you attend the meeting virtually through the Internet, you may continue to have your shares of common stock voted as instructed in a previously delivered proxy or you may electronically revoke your proxy and vote your shares of common stock online during the meeting. We look forward to your participation.

Sincerely,

 

 

 

Christopher H. Volk

Executive Chair

 

This proxy statement is dated April 15, 2021, and is first being made available to stockholders on or about

April 15, 2021.

 

		8377 East Hartford Drive, Suite 100 Scottsdale, Arizona 85255 (480) 256-1100

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held on May 27, 2021

 

TABLE OF CONTENTS

 

 

			2021 Proxy Statement				i

PROXY SUMMARY

The Board of Directors (the “Board”) of STORE Capital Corporation is soliciting proxies for the annual meeting of stockholders (the “Annual Meeting”), and at any adjournments or postponements thereof, for the purposes set forth in this Proxy Statement and the accompanying notice. This Proxy Statement and the accompanying form of proxy card, and our Annual Report on Form 10-K for the year ended December 31, 2020, which constitutes our annual report to stockholders (the “Annual Report”), were first made available to stockholders on or about April 15, 2021. Throughout this Proxy Statement, we refer to STORE Capital Corporation as “we,” “us,” “our,” “STORE” or the “Company.”

The summary below highlights information contained elsewhere in the Proxy Statement. The summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement before voting. For more complete information regarding STORE’s 2020 performance, please review our Annual Report.

 

 

			2021 Proxy Statement				S-1

 

S-2		2021 Proxy Statement

 

			2021 Proxy Statement				S-3

2020 BUSINESS PERFORMANCE

2020 Financial Milestones

 

 

1, 3 and 5-Year Total Shareholder Return as of December 31, 2020

 

 

Comparison of the Company’s absolute Total Shareholder Return (“TSR”) for the one-year, three-year and five-year periods ending on the last trading day of 2020 relative to the absolute TSR for the MSCI US REIT Index and S&P 400 REIT Index

 

*	5-Year absolute TSR comparisons to the S&P 400 REIT Index as of December 31, 2020 are not currently available as the S&P 400 REIT Index was launched in 2016

 

S-4		2021 Proxy Statement

CORPORATE RESPONSIBILITY

STORE defines its success by its ability to make a positive difference for its many stakeholders. Our beginning was inspired by a belief that we could make a positive difference for real estate intensive businesses across America by delivering innovative and superior real estate capital solutions. In that process, we have sought to add an important tool to middle market company capital formation while improving the liquidity of leading middle market and larger businesses.

For its many customers, STORE’s real estate lease solutions have contributed to their prospects for wealth creation and to their ability to grow, create jobs and contribute to many communities across the country. In turn, meeting the needs of our customers provides an extraordinary investment opportunity that we believe holds the promise of sustainable long-term wealth creation for our many stockholders. In fulfilling this mission, we have grown our staff to more than 100 employees, expanded our diverse and experienced management team, and strengthened our commitment to employee development, employee engagement and personal growth central to the creation of a quality business.

Customers, stockholders and employees: These are our three most integral stakeholders. Through them, we make a positive difference to our many other important stakeholders, including our creditors, suppliers and the many communities we serve.

 

Environmental Stewardship

STORE is a net-lease real estate investment trust (“REIT”). We acquire single-tenant operational real estate (or profit center properties) from business owners, and then lease the properties back to the business owners under long-term net-leases, substantially all of which are triple-net. Under a triple-net lease, the tenant is solely responsible for operating the business conducted in the building subject to the lease, keeping the building in good order and repair, remodeling and updating the building as it deems appropriate to maximize business value, and paying the insurance, property taxes and other property-related expenses. Under the triple-net lease model, therefore, it is our customer, and not STORE, that controls energy, water usage and waste and recycling practices, and decides when and how to implement environmentally sustainable practices at a given property.

While we do not control the business operations at our properties, as the property owner, we nevertheless recognize that the operation of commercial real estate assets can have a meaningful impact on the environment—particularly with respect to resource consumption and waste generation—and on the health of building occupants. At STORE, we believe that being conscious of, and seeking to address, environmental impacts within our control, and supporting our tenant customers to do the same in their businesses, plays a role in building and sustaining successful enterprises and is material to the success of our own business.

 

			2021 Proxy Statement				S-5

 

 

S-6		2021 Proxy Statement

Social Responsibility and Human Capital Development

STORE believes that true success means delivering strong financial results while also contributing in a positive way to all our many stakeholders. We seek to provide a work environment that attracts, develops and retains top talent by affording our employees an engaging work experience that fosters career development and opportunities for meaningful civic involvement. Our employees further our commitment to social responsibility through their personal efforts to build connections with one another and their involvement in outside organizations that promote education, environmentally sustainable practices and social well-being. We engage with our customers to help them build and sustain successful businesses that have a positive impact on their own communities.

 

 

			2021 Proxy Statement				S-7

Corporate Governance and Ethical Business Practices

At STORE, we believe that one of our most valuable corporate assets is our reputation for honesty, fairness and candor in all our business activities. It is the responsibility of everyone at STORE to protect and enhance our corporate integrity. Accordingly, we are committed to principles of good corporate governance and have implemented internal policies and procedures to ensure that our governance practices are best in class, and that our directors, officers and employees conduct business with integrity and in accordance with the highest ethical standards. Our Nominating and Corporate Governance Committee plays an active role in managing corporate governance and reputational risk and in developing and adopting corporate policies, processes and procedures that ensure full compliance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”), promote ethical business practices and benefit our stockholders. The following highlights certain key aspects of our corporate governance framework:

 

 

S-8		2021 Proxy Statement

Execution of Coordinated Leadership Transition

On April 15, 2021, we announced that Mary B. Fedewa, STORE’s President and Chief Operating Officer, had been appointed as President and Chief Executive Officer, Christopher H. Volk, STORE’s Chief Executive Officer, had been appointed as Executive Chair, and that Catherine D. Rice, a director of STORE since 2017, had been appointed as Lead Independent Director, in each case effective April 15, 2021. In connection with the foregoing, Morton H. Fleischer, STORE’s non-executive Chairman of the Board since our founding in May 2011, was granted the honorary title of Chair Emeritus and will continue to serve as a director. This transition reflects the execution of a coordinated Chief Executive Officer succession plan that began with the appointment of Ms. Fedewa to the position of Chief Operating Officer in 2017 and that was overseen by the Board with support from its committees, including a Succession Planning Committee established in December 2020 to oversee the final stages of the transition. The Board determined that Ms. Fedewa – a co-founder of STORE who had successfully advanced through the positions of Executive Vice President – Acquisitions, Chief Operating Officer, and President – was the logical and correct choice to succeed Mr. Volk as STORE’s next Chief Executive Officer. Mr. Volk’s extensive experience and established relationships with STORE’s directors and stakeholders enable him to lead the Board in overseeing the company through the transition of a new Chief Executive Officer. Ms. Rice, as Lead Independent Director, leverages her extensive business experience and leadership to ensure continued robust, independent oversight of management by the independent directors.

Questions and Answers

Please see the section titled “Questions and Answers About the Proxy Materials and Voting Information” for important information about the proxy materials, voting, the Annual Meeting, STORE’s corporate governance documents, communications and the deadlines to submit stockholder proposals and director nominees for the 2022 annual meeting of stockholders. Additional questions may be directed to Chad A. Freed, STORE’s Executive Vice President – General Counsel, Chief Compliance Officer and Secretary, at 8377 East Hartford Drive, Suite 100, Scottsdale, Arizona 85255.

Learn More About STORE

You can learn more about STORE, view our corporate governance materials, read our 2020 Corporate Responsibility Report, and much more by visiting our website at www.storecapital.com.

Please also visit STORE’s 2021 Annual Meeting website, www.virtualshareholdermeeting.com/STOR2021, to easily access our interactive proxy materials, vote through the Internet, submit questions in advance of the 2021 Annual Meeting of Stockholders, and listen to a live webcast of the meeting.

 

			2021 Proxy Statement				S-9

GOVERNANCE

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

 

2021 Director Nominees

The number of directors that serve on our Board is currently set at nine and may be fixed from time to time by our Board in the manner provided in our charter and bylaws. Upon the unanimous recommendation of our Nominating and Corporate Governance Committee, our Board has unanimously nominated the following candidates for election as directors at the Annual Meeting:

 

If any of the foregoing nominees should be unable or unwilling to stand for election at the time of the Annual Meeting, proxies will be voted for a replacement nominee designated by our Board or, in the event no such designation is made, proxies will be voted for a lesser number of nominees. At this time, our Board knows of no reason why the nominees listed above may not be able to serve as a director if elected.

Each of the nine director nominees currently serves as a director of the Company and was elected at the 2020 annual meeting of stockholders. If elected, each director will hold office until the 2022 annual meeting of stockholders and until his or her successor is elected and qualified or until his or her earlier resignation or removal.

Our Board and our Nominating and Corporate Governance Committee believe that the combination of the various qualifications, attributes, skills and experiences of the director nominees has contributed and will continue to contribute to an effective and well-functioning Board and that, individually and as a whole, the director nominees possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to STORE’s management.

 

			2021 Proxy Statement				1

Set forth below is biographical information for each director nominee named above. The following information also describes the specific experience, qualifications, attributes and skills that qualify each person to serve on STORE’s Board.

 

Joseph M. Donovan    Age: 66
Director Since:    2014		Mr. Donovan has served as a director since 2014. Mr. Donovan is currently the non-executive Chairman of the Board and Chairman of the Audit Committee of Fly Leasing Limited, a Dublin, Ireland based commercial aircraft leasing company (NYSE:FLY), which he joined in 2007 prior to its initial public offering. Prior to his retirement in January 2007, Mr. Donovan was chairman of Credit Suisse’s Asset-Backed Securities and Debt Financing Group, which he led for nearly seven years. Prior to that time, Mr. Donovan was a managing director and head of Asset Finance at Prudential Securities (1998-2000) and Smith Barney (1995-1997). Mr. Donovan began his investment banking career at The First Boston Corporation in 1983, ultimately becoming a managing director at CS First Boston, where he served as Chief Operating Officer of the Investment Banking Department from 1992 to 1995. Mr. Donovan was formerly a licensed certified public accountant. Mr. Donovan holds a B.B.A. degree in Accountancy from the University of Notre Dame and an M.B.A. with a concentration in Finance from the Wharton School, University of Pennsylvania.   Specific Qualifications, Attributes, Skills and Experience:   •   Service as a member of public company boards of directors •   Extensive investment banking and capital markets experience •   Expertise in accounting and finance   Other Public Company Boards:   •   Fly Leasing Limited (NYSE:FLY)
Independent:    Yes
Committees:
•   Audit •   Investment

 

Mary B. Fedewa    Age: 55
Director Since:    2016		Ms. Fedewa was one of our founders in May 2011. Ms. Fedewa has served as our Chief Executive Officer since April 15, 2021 and our President since September 2020, having previously served as our Chief Operating Officer since October 2017. She was appointed to serve as a director in August 2016. From our inception until October 2017 she served as our Executive Vice President – Acquisitions, Assistant Secretary and Assistant Treasurer. Ms. Fedewa has over 20 years of experience in a broad range of financial services. Prior to co-founding STORE, Ms. Fedewa spent several years investing as principal in single-tenant commercial real estate for private real estate companies. From 2004 to 2007, Ms. Fedewa was a Managing Director of Acquisitions at Spirit Finance Corporation (now Spirit Realty Capital, Inc. (NYSE: SRC)) (“Spirit”), a REIT, originating net-lease transactions in a variety of industries across the United States. Prior to Spirit, Ms. Fedewa held numerous positions within GE Capital, concluding as a Senior Vice President of GE Franchise Finance, which was the successor company to Franchise Finance Corporation of America (“FFCA”), a Scottsdale, Arizona-based REIT acquired by GE Capital in 2001. Throughout her GE Capital tenure, Ms. Fedewa held leadership positions within Mortgage Insurance, Private Label Financing and Commercial Finance. While at GE, Ms. Fedewa was awarded a Six Sigma Black Belt and also served as a GE Quality Leader. Ms. Fedewa attended North Carolina State University, where she graduated summa cum laude with a B.A. degree in Business Management with a concentration in Finance.   Specific Qualifications, Attributes, Skills and Experience:   •   Familiarity with the Company’s history and operations •   Extensive experience acquiring and selling net-lease real estate •   Management service at three public companies   Other Public Company Boards:   •   None
Independent:    No
Committees:
•   None

 

2		2021 Proxy Statement

Morton H. Fleischer    Age: 84
Director Since:    2011		Mr. Fleischer has served as a director since STORE’s organization in May 2011, including serving as the non-executive Chairman of the Board from May 2011 until April 15, 2021. Prior to his role with STORE, Mr. Fleischer co-founded Spirit and served as Chairman from its inception in 2003 to February 2010, including the three years that Spirit was publicly traded on the NYSE, 2004 to 2007. Prior to Spirit, Mr. Fleischer founded numerous real estate limited partnerships in the 1980s that were predecessors to FFCA, a REIT that he formed and took public on the NYSE in 1994. Mr. Fleischer served as FFCA’s Chairman of the board of directors and Chief Executive Officer until FFCA was acquired by GE Capital in 2001. FFCA was the nation’s largest publicly traded net-lease REIT and owned or financed over 5,000 single-tenant properties at the time of its sale to GE Capital in 2001. As a result of over 35 years of experience in the real estate and net-lease industries and the invaluable guidance, support and wisdom Mr. Fleischer provided to the Company in the early years of its formation, our executive team considers him an honorary founder of STORE and our Board has granted Mr. Fleischer the honorary title of Chair Emeritus.   Specific Qualifications, Attributes, Skills and Experience:   •   Familiarity with the Company’s history and operations •   Extensive real estate and capital markets experience •   Service as a chief executive officer of two public companies   Other Public Company Boards:   •   None
Independent:    Yes
Committees:
•  Compensation •  Nominating and Corporate Governance •  Executive •  Investment

 

William F. Hipp    Age: 66
Director Since:    2016		Mr. Hipp has served as a director since 2016. Mr. Hipp spent over 35 years in commercial banking, where he developed extensive experience with REITs, real estate capital markets and corporate finance. From 2004 until his retirement in 2015, Mr. Hipp was employed by KeyBank in various senior level roles, most recently as head of the Institutional Capital Group (ICG) for KeyBank’s real estate business, which he founded upon joining the bank and ran until his retirement. ICG’s mission is to identify real estate related borrowers, particularly public and private REITs and real estate opportunity funds with effective debt ratings ranging from high yield to mid investment grade, that have a significant need for bank debt and M&A advisory services, and for access to the syndicated loan market, the public equity markets, and the commercial mortgage backed securities and agency debt markets (Fannie Mae/Freddie Mac). Through the ICG platform, KeyBank provided debt and equity capital and advisory services to real estate related borrowers; and Mr. Hipp, in his capacity as head of ICG, was responsible for formulating and implementing strategy and for client selection and initial credit and risk decisions. Prior to his employment with KeyBank, Mr. Hipp spent 20 years with BankBoston, as head of its real estate group, and FleetBoston (following the merger of BankBoston and Fleet Financial Group) as co-head of real estate. Mr. Hipp holds a B.A. degree in Economics from Emory University and an M.B.A. with a concentration in Finance and Accounting from Tulane University.   Specific Qualifications, Attributes, Skills and Experience:   •   Experience identifying, underwriting and evaluating real estate investments •   Familiarity with the Company’s history and operations •   Expertise in accounting and finance   Other Public Company Boards:   •   None
Independent:    Yes
Committees:
•   Audit •   Investment

 

			2021 Proxy Statement				3

Tawn Kelley    Age: 57
Director Since:    2020		Ms. Kelley has served as a director since February 2020. As Executive Vice President of Taylor Morrison and President of its Financial Services unit, Ms. Kelley contributes to the executive leadership of Taylor Morrison and leads Taylor Morrison Home Funding, Inspired Title Services and Mortgage Funding Direct Ventures. She is responsible for the management, financial performance and long-term growth strategies of these companies. Prior to joining Taylor Morrison, in 2001, Ms. Kelley founded and served as CEO and President of Mortgage Funding Direct Ventures (“MFDV”), a management company that partnered with production homebuilders to create in-house mortgage subsidiaries. Among the various partnerships under the Mortgage Funding Direct family, Taylor Morrison Home Funding was also established in 2001. The successful partnership expanded nationally and evolved from a mortgage brokerage to a lender, ultimately paving the way for Taylor Morrison to acquire the MFDV management company in 2009. As an executive member of Taylor Morrison Corporation (NYSE:TMHC), Ms. Kelley has held several senior-executive level positions that have impacted and contributed to the growth and expansion of Taylor Morrison.   Specific Qualifications, Attributes, Skills and Experience:   •   Experience in the real estate industry •   Experience as a senior operating executive of a public company •   Expertise in lending and finance   Other Public Company Boards:   •   None
Independent:    Yes
Committees:
•  Nominating and Corporate Governance

 

Catherine D. Rice    Age: 61
Director Since:    2017		Ms. Rice has served as a director since October 2017 and as Lead Independent Director since April 15, 2021. Ms. Rice has over 30 years of experience in the real estate capital and investment markets and in the management and operation of public and private real estate companies. She currently serves as the lead independent director and a member of each of the Audit, Compensation, and Nominating and Corporate Governance Committees of the board of directors of Colony Credit Real Estate, Inc. (NYSE: CLNC), one of the largest commercial real estate credit REITs. Ms. Rice also currently serves on the boards of directors of RMG Acquisition Corp II (NASDAQ:RMGBU) and RMG Acquisition Corp III (NASDAQ:RMGCU), both newly formed special purpose acquisition companies. From 2013 to 2016, Ms. Rice was Chief Financial Officer and then Senior Managing Director of W.P. Carey (NYSE: WPC), one of the largest global net lease REITs, where she completed a comprehensive reorganization of the finance, accounting and IT functions and the build-out of the investor relations and capital markets areas. She was responsible for financial strategy, all public capital-raising initiatives, and a company-wide strategic evaluation. She was a member of the operating and investment committees. From 2010 to 2013, Ms. Rice was a partner at Parmenter Realty Partners, a private real estate investment firm focused on distressed and value-add properties in the Southern regions of the U.S. Her responsibilities included both capital raising and investing for the firm’s fourth fund. From 2002 to 2009, Ms. Rice was the Chief Financial Officer of iStar Financial (NYSE: STAR), a publicly traded finance company focused on the commercial real estate industry, where she was responsible for financial strategy and capital-raising initiatives, financial reporting and investor relations. Ms. Rice spent the first 16 years of her career as a professional in the real estate investment banking groups of Merrill Lynch, Lehman Brothers and Banc of America Securities. During her career as an investment banker, she was involved in numerous capital-raising and strategic advisory transactions, including REIT IPOs, public and private debt and equity offerings, mergers and acquisitions, leveraged buyouts, and asset and corporate acquisitions and dispositions. Ms. Rice received a B.A. degree from the University of Colorado and an M.B.A. from Columbia University.   Specific Qualifications, Attributes, Skills and Experience:   •   Extensive real estate and capital markets experience •   Service as a chief financial officer of a public company •   Experience investing in and managing commercial real estate projects   Other Public Company Boards:   •   Colony Credit Real Estate (NYSE:CLNC) •   RMG Acquisition Corp II (NASDAQ:RMGBU) •   RMG Acquisition Corp III (NASDAQ:RMGCU)
Independent:    Yes
Committees:
•   Audit •   Investment

 

4		2021 Proxy Statement

Einar A. Seadler    Age: 64
Director Since:    2016		Mr. Seadler has served as a director since 2016. Mr. Seadler is the founder and President of EAS Advisors LLC, a management consulting firm specializing in advisory services to senior executives who seek to develop and execute enduring growth, operational improvement and human capital strategies. Prior to starting EAS Advisors in 2016, Mr. Seadler was a managing director of Accenture Strategy, an operating unit of Accenture PLC (NYSE: ACN), which he joined in 2008. His responsibilities included advising senior executives of Fortune 500 companies on increasing stockholder value, primarily in the consumer goods and services, retail, fast food dining, industrial, infrastructure and government sectors. Prior to Accenture, Mr. Seadler served as a leader in McKinsey & Company’s Operations Strategy Practice. He has also served in senior executive roles in retail and business services companies, with responsibilities that spanned sales, marketing, operations, real estate, supply chain, technology and finance. Mr. Seadler began his career as a United States Army infantry officer serving in various command and staff assignments, including as an associate professor at the United States Military Academy at West Point. Mr. Seadler is a graduate of the United States Military Academy at West Point and received a Master of Science degree from Cornell University.   Specific Qualifications, Attributes, Skills and Experience:   •   Experience in business and operational strategy across multiple industry sectors •   Advisor to senior executives on increasing stockholder value across industry sectors relevant to the Company •   Top leadership and operational experience as a senior executive   Other Public Company Boards:   •   None
Independent:    Yes
Committees:
•   Compensation

 

Quentin P. Smith, Jr.    Age: 69
Director Since:    2014		Mr. Smith has served as a director since 2014. Mr. Smith is the founder and President of Cadre Business Advisors LLC, a management consulting firm that specializes in strategic planning, business performance improvement, capital formation and turnaround management. Prior to starting Cadre, Mr. Smith was Partner in Charge of Arthur Andersen’s Desert Southwest business consulting practice with responsibility for business development and client engagement management for Arizona and New Mexico. Mr. Smith has business development, growth and operational profit and loss experience across a wide variety of industries. Mr. Smith also has over eight years of diversified corporate management experience. He currently serves on the board, and chairs the compensation committee, of Banner Health and previously served as its Chairman. From January 2015 through March 2017, Mr. Smith served as a member of the board of directors of Patriot National, Inc. (NYSE:PN), a provider of comprehensive full-service outsourcing solutions within the workers’ compensation insurance marketplace, chaired its compensation committee and served on its audit committee. He has served on the boards of the Arizona Public Service Company and Arizona MultiBank, as well as on the boards of Employee Solutions, Inc., Rodel, Inc. and iCrossing, Inc. until those companies were sold or acquired. Mr. Smith holds a B.S. degree in Industrial Management and Computer Science from Purdue University and an M.B.A. degree from Pepperdine University.   Specific Qualifications, Attributes, Skills and Experience:   •   Prior service as a member of public company boards of directors •   Management consulting, corporate management and operational experience •   Experience on public company compensation and audit committees   Other Public Company Boards:   •   None
Independent:    Yes
Committees:
•  Compensation •  Nominating and Corporate Governance •  Executive

 

			2021 Proxy Statement				5

Christopher H. Volk    Age: 64
Director Since:    2011		Mr. Volk was one of our founders in May 2011. Mr. Volk has served as Executive Chair since April 15, 2021, having previously served as our Chief Executive Officer and as a director since our inception, and also having served as our President since inception until September 2020. With more than 30 years of experience in structuring, managing and financing commercial real estate companies, Mr. Volk led the largest ever real estate limited partnership roll-up transaction of its time in 1994 in the formation of FFCA; oversaw the issuance of FFCA’s unsecured debt rating in 1995, which was the first unsecured debt rating ever issued to a net-lease REIT; and, in 2005 while CEO of Spirit, led the creation of the first commercial real estate master trust debt conduit in the United States designed to finance net-lease assets. Prior to forming the Company, Mr. Volk co-founded Spirit and served as its President and Chief Executive Officer and as a member of its board from August 2003 to February 2010. Prior to co-founding Spirit in 2003, Mr. Volk served for over 16 years in numerous capacities with FFCA, including President and Chief Operating Officer and a member of FFCA’s board of directors. Mr. Volk continued as Chief Operating Officer of GE Capital Franchise Finance, the new name given to the business following the FFCA acquisition, until December 2002. In addition to his service on the Board and as our Chief Executive Officer, Mr. Volk currently serves on the board of directors of Banner Health where he is chairman of its nominating and corporate governance committee and a member of its investment committee. He has also currently serves as a visiting professor at Cornell University. He received a B.A. degree from Washington and Lee University and an M.B.A. degree from Georgia State University.   Specific Qualifications, Attributes, Skills and Experience:   •   Familiarity with the Company’s history and operations •   Extensive real estate and capital markets experience •   Senior executive at three public companies   Other Public Company Boards:   •   None
Independent:    Yes
Committees:
•   Executive

Board Recommendation

Our Board recommends that you vote “FOR” the election of each of the

director nominees named above.

 

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OUR BOARD OF DIRECTORS

Role of our Board

Our stockholders elect the members of our Board to oversee their interests in the long-term health and overall success of STORE’s business. Our Board serves as the ultimate decision-making body of STORE, except for those matters reserved to or shared with our stockholders. Our Board plays a critical role in the strategic planning process and regularly discusses strategy throughout the year. Our Board selects and oversees the members of our senior management team, who are charged by our Board with conducting the day-to-day business of STORE.

Board Composition and Refreshment

Our Board and its Nominating and Corporate Governance Committee seek nominees to serve on our Board who have diverse skills, professional experience and backgrounds, and effectively represent the long-term interests of our many stakeholders. Our Board and its Nominating and Corporate Governance Committee also understand the importance of Board refreshment; because term limits may cause the loss of experience and expertise important to the optimal operation of our Board, we currently do not impose limits on the number of terms a director may serve, but we do strive to maintain an appropriate balance of tenure, turnover, diversity and skills on our Board. Our Board believes that new perspectives and ideas are critical to a forward-looking and strategic Board, as is the ability to benefit from the valuable experience and familiarity that longer-serving directors offer. Of our nine director nominees, five have joined the Board since the beginning of 2016.

Board Evaluation Process

Our Board believes that a robust and constructive evaluation process is an essential component of good corporate governance and Board effectiveness. Our Board, acting through its Nominating and Corporate Governance Committee, conducts a self-evaluation at least annually to determine whether it and its committees are functioning effectively, and whether the combination and mixture of skills, experience and judgment that directors bring to our Board provide our Board with the necessary tools to perform its oversight function effectively. Each of our Audit, Compensation, and Nominating and Corporate Governance Committees also conducts a self-evaluation at least annually and reports the results to our Board, acting through our Nominating and Corporate Governance Committee. The results of this evaluation process are discussed by the full Board and each applicable committee and changes in practices or procedures may be considered and implemented as appropriate. Our Nominating and Corporate Governance Committee may periodically review the format of the evaluation process to ensure that the matters being evaluated remain relevant and that useful feedback on the operation of our Board and its committees is received.

Director Nominee Selection Process and Considerations

Management-Recommended Director Candidates. Our Nominating and Corporate Governance Committee is responsible for recommending to our Board a slate of nominees for election at each annual meeting. Nominees may be suggested by directors, members of management or stockholders (as discussed below). In evaluating candidates to serve on our Board, our Nominating and Corporate Governance Committee’s objective is to select individuals with holistically diverse skills and experience that can assist STORE and our Board in achieving their business, governance and social responsibility objectives. The Committee considers individual qualifications, including relevant career experience, strength of character, maturity of judgment, and experience in, and familiarity with, STORE’s industry and business. It also considers other factors it considers appropriate, which may include:

 

Though neither our Board nor its Nominating and Corporate Governance Committee has a formal policy concerning diversity, our Board values diversity on the Board, believes diversity should be considered in the director identification and

 

			2021 Proxy Statement				7

nominating process, and seeks to compose a Board that is holistically diverse, with a wide range of views, backgrounds, leadership and business experience, and that includes women and underrepresented minorities. The Committee also considers the extent to which a candidate would fill a present need on our Board. In selecting director nominees, our Board seeks to monitor the mix of specific experiences, qualifications and skills of its members in order to assure that STORE’s Board, as a whole, has the necessary tools to perform its oversight function effectively in light of STORE’s business and structure. Presently, our nine-person board includes four diverse members, including three women and one underrepresented minority.

Once a prospective nominee has been identified, our Nominating and Corporate Governance Committee will make an initial determination as to whether to conduct a full evaluation of the candidate. This initial determination will be based on the information provided to the Committee with the recommendation of the prospective candidate, as well as the Committee’s own knowledge of the prospective candidate, which may be supplemented by inquiries to the person making the recommendation or others.

Stockholder-Recommended Director Candidates. A stockholder who desires to recommend a prospective nominee for the Board should notify Chad A. Freed, STORE’s Executive Vice President – General Counsel, Chief Compliance Officer and Secretary, at 8377 East Hartford Drive, Suite 100, Scottsdale, Arizona 85255. As set forth in the Company’s bylaws, to be timely, a stockholder’s notice must be delivered not earlier than the 150th day nor later than 5:00 p.m., Arizona time, on the 120th day prior to the first anniversary of the date STORE’s proxy statement was released to stockholders in connection with the previous year’s annual meeting. Recommendations by stockholders that are made in accordance with these procedures will receive the same consideration by our Nominating and Corporate Governance Committee as other suggested nominees.

Stockholder-Nominated Director Candidates. Pursuant to our bylaws, stockholders are permitted to nominate directors in accordance with the advance notice provision contained in Article II, Section 11 of our bylaws. Article II, Section 11(a) provides that nominations of individuals for election to our Board may be made at an annual meeting of stockholders by any of our stockholders who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in Section 11(a) and at the time of the annual meeting and who is entitled to vote at the meeting in the election of each individual so nominated. For any nomination to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to our Secretary and satisfied the other requirements set forth in Article II, Section 11 of our bylaws. To be timely, a stockholder’s notice must be delivered to our principal executive offices (8377 East Hartford Drive, Suite 100, Scottsdale, AZ 85255) not less than 120 days nor more than 150 days prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting of stockholders; provided, however, if an annual meeting of stockholders is called for a date that is not within 30 days before or after the anniversary date of the preceding year’s annual meeting, then, in order to be timely, a stockholder’s notice must be received by us no earlier than the 150th day prior to the date of such annual meeting and no later than the later of (a) the 120th day prior to the date of such annual meeting, as originally convened, or (b) the tenth day following the day on which public announcement of the date of such meeting is first made. The stockholder notice must comply with the information requirements set forth in our bylaws.

Proxy Access Rights

In 2019, we amended our bylaws to adopt a proxy access provision to permit a stockholder, or group of no more than 20 stockholders, meeting specified eligibility requirements, to include director nominees in STORE’s proxy materials for annual meetings of stockholders. In order to be eligible to utilize these proxy access provisions, a stockholder, or group of stockholders, must, among other requirements:

 

•

have owned shares of common stock equal to at least 3% of the outstanding shares of STORE’s common stock continuously for at least the prior three years;

 

•

represent that such shares were acquired in the ordinary course of business and not with the intent to change or influence control of STORE and that such stockholder or group does not presently have such intent; and

 

•

provide a notice requesting the inclusion of director nominees in our proxy materials and provide other required information to us not earlier than 150 days nor later than 120 days prior to the first anniversary of the date of mailing of the notice for the prior year’s annual meeting of stockholders (with adjustments if the date for the upcoming annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the prior year’s annual meeting).

Additionally, all director nominees submitted through these provisions must be independent and meet specified additional criteria, and stockholders will not be entitled to utilize this proxy access right at an annual meeting if we receive notice through the advanced notice bylaw provisions that a stockholder intends to nominate a director at such meeting. The

 

8		2021 Proxy Statement

maximum number of director nominees that may be submitted pursuant to these provisions may not exceed the greater of two directors or 20% of the number of directors then serving on our Board (rounding down to the closest whole number). The foregoing proxy access right is subject to additional eligibility, procedural and disclosure requirements set forth in our bylaws.

Annual Elections of Directors

We do not have a staggered board; our directors are elected each year at the annual meeting of stockholders to hold office until the next annual meeting and until their successors are elected and qualified. Our Nominating and Corporate Governance Committee evaluates the qualifications and performance of each incumbent director before recommending the nomination of that director for an additional term.

Policy on Directors Who Fail to Achieve a Majority Vote

Our Corporate Governance Guidelines provide that, in an election of directors where the number of nominees does not exceed the number of directors to be elected, each director must receive the majority of the votes cast with respect to that director (without regard to withhold votes or broker non-votes). If a director does not receive a majority vote, the director will promptly, and in any event within ten (10) days from the date of the certification of the election results, tender his or her resignation to our Board. Our Nominating and Corporate Governance Committee will make a recommendation to our Board on whether to accept or reject the resignation, or whether other action should be taken. Our Board will act on the resignation taking into account the recommendation of its Nominating and Corporate Governance Committee. Our Nominating and Corporate Governance Committee, in making its recommendation, and our Board, in making its decision, may each consider any factors or other information that it considers appropriate and relevant, including, but not limited to:

 

•

the stated reasons, if any, why stockholders withheld their votes;

 

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possible alternatives for curing the underlying cause of the withheld votes;

 

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the director’s tenure, qualifications, and past and expected future contributions to STORE; and

 

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the overall composition of our Board, and whether accepting the tendered resignation would cause STORE to fail to meet any applicable rule or regulation, including under NYSE listing requirements and federal securities laws.

When deciding the action to take, our Board may accept or reject the resignation offer or, upon the recommendation of its Nominating and Corporate Governance Committee, decide to pursue alternative actions such as (i) allowing the director to remain on our Board but not be re-nominated to our Board at the end of the current term, (ii) deferring acceptance of the resignation until a replacement director with certain necessary qualifications held by the subject director (for example, audit committee financial expertise) can be identified and elected to our Board, or (iii) deferring acceptance of the resignation if the director can cure the underlying cause of the withheld votes within a specified period of time (for example, if the withheld votes were due to another board directorship, by resigning from that other board). If our Board accepts a director’s resignation offer, then our Board, in its sole discretion, may fill any resulting vacancy or may decrease the size of our Board, in each case pursuant to the applicable provisions of our bylaws as then in effect. If our Board rejects a director’s resignation offer, then such director will continue to serve through the remainder of his or her term and until his or her successor is duly elected, or his or her earlier resignation or removal.

The director who tenders his or her resignation will not participate in the recommendation of our Nominating and Corporate Governance Committee or the decision of our Board with respect to his or her resignation; provided, however, that (a) if a majority of the members of our Nominating and Corporate Governance Committee did not receive the vote of at least “the majority of the votes cast,” then the independent directors of our Board (including any who received the vote of at least “the majority of the votes cast” in such election) shall appoint a committee amongst themselves to consider the resignation offers and recommend to our Board whether to accept them, and (b) if three or fewer independent directors received at least “the majority of the votes cast” in the same election, then all independent directors may participate in any discussions or actions with respect to accepting or declining the resignation offers (except that no such director will vote to accept or decline his or her own resignation offer).

Our Board must take action on the resignation within 90 days of the certification of the election results and will publicly disclose its decision and its rationale promptly thereafter.

In addition, pursuant to our Corporate Governance Guidelines, a director who experiences a significant change in his or her principal current employer or principal employment, including any director who is currently an officer or employee of STORE, or other similarly significant change in professional occupation or association, is asked to consider whether his or her resignation is appropriate. Our Board will then determine the action, if any, to be taken with respect to any offer to resign.

 

			2021 Proxy Statement				9

BOARD AND COMMITTEE GOVERNANCE

We believe that effective corporate governance is critical to our ability to create long-term value for our stockholders. Accordingly, we have structured our corporate governance to align our interests with those of our stockholders, including but not limited to the following:

 

Director Attendance at Annual Meetings

Although we do not have a formal policy regarding attendance by members of our Board at annual meetings of stockholders, we expect that our directors will participate in our annual meetings, absent a valid reason for not doing so. Each of our nine directors attended the 2020 annual meeting of stockholders.

Board Leadership Structure

STORE’s Corporate Governance Guidelines provide our Board with flexibility to select the appropriate leadership structure for our company. In making leadership structure determinations, our Board considers many factors, including the specific needs of the business, corporate governance best practices, succession planning, and the best interests of STORE’s stockholders. Our Board believes it is in the best interests of STORE and our stockholders to retain this flexibility in determining the appropriate leadership structure, recognizing that different structures may be appropriate in different circumstances.

Board Executive Sessions

The non-management members of our Board meet in executive session without management present at the conclusion of each regular Board meeting. During his time as Chairman of the Board, Mr. Fleischer acted as the presiding director over each of these executive sessions. Following the leadership transition described below, Catherine D. Rice, our Lead Independent Director, will now preside over executive sessions.

Board Role in Succession Planning

A key responsibility of our Board is to ensure that STORE has the necessary senior management talent to operate our business and be successful into the future. Our Nominating and Corporate Governance Committee is charged with periodically reviewing with our Board and our Chief Executive Officer the succession plans relating to positions held by executive officers, and making recommendations to our Board with respect to the selection of individuals to occupy those positions. Consistent with its responsibilities, our Nominating and Corporate Governance Committee regularly discusses succession planning with our Chief Executive Officer and reports to our Board regarding those plans.

 

 

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Our consistent focus on succession planning resulted in several transitions during 2020, including the promotion of Mary B. Fedewa to the position of President and Chief Operating Officer, and Craig A. Barnett and Tyler S. Maertz, both long-time members of the STORE team, to the positions of Executive Vice President – Underwriting and Portfolio Management and Executive Vice President – Acquisitions, respectively. In addition, in early 2021, we promoted one Vice President to the position of Senior Vice President and three Director-level employees to the position of Vice President, and we announced the anticipated retirement of Catherine Long, our Executive Vice President – Chief Financial Officer, pending the appointment of her replacement.

Leadership Transition in 2021

In the fourth quarter of 2020, in anticipation of the significant transitions involving our founding management team, we formed an ad hoc committee of independent directors, consisting of Messrs. Seadler (Chair), Donovan, Hipp and Smith, and Mses. Kelley and Rice, to oversee senior management succession planning and to make recommendations to the full Board or the appropriate standing Board committees as warranted. Upon the recommendation of our Succession Planning Committee, effective April 15, 2021, our Board created a new leadership structure for STORE. Mr. Volk became our newly appointed Executive Chair upon stepping down as STORE’s Chief Executive Officer; Ms. Fedewa succeeded Mr. Volk as our new Chief Executive Officer; Catherine D. Rice, who has served as a director since 2017, took on our newly created Lead Independent Director role; and Mr. Fleischer, who had served as our non-executive Chairman of the Board since 2011, remained as a director and was granted the honorary title of Chair Emeritus. While this new leadership structure had been discussed and planned for some time, and the Board believes that this new leadership structure is in the best interests of STORE and its stockholders, following the announcement of Ms. Long’s retirement, our Board believed that this leadership structure should be put in place prior to the recruitment of a new chief financial officer. With Mr. Volk in the Executive Chair role, STORE continues to leverage his significant net-lease industry and capital markets expertise and effective working relationship with the Board. Ms. Fedewa is a co-founder of STORE with over 20 years’ experience in the net-lease industry. Ms. Fedewa became President and Chief Operating Officer in September 2020 having served as Chief Operating Officer since October 2017. In her new role as Chief Executive Officer, Ms. Fedewa will also benefit from and build upon her long-standing relationship with our Board while focusing on developing and implementing STORE’s business initiatives. In a Lead Independent Director role with clearly defined responsibilities, Ms. Rice continues to ensure robust independent oversight of the company by our Board. Our Board is confident that STORE has the right team to lead STORE through the next phase of its growth as a multi-generational company.

Lead Independent Director Role

In her role as Lead Independent Director, Ms. Rice has clearly defined duties as set forth in our Corporate Governance Guidelines, including:

 

•

calling, setting the agenda for and chairing periodic executive sessions of the independent directors;

 

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consulting on, in consultation with the Executive Chair and the Chief Executive Officer, the agendas for meetings of the Board; and

 

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serving as a non-exclusive liaison between the management directors and the independent directors.

Our Board believes that its leadership structure is well-aligned with the current needs of STORE and its stockholders. Mr. Volk’s extensive experience and established relationships with STORE’s directors and other stakeholders will enable him to lead our Board in overseeing the company through the transition to a new Chief Executive Officer. Ms. Rice will leverage her extensive business experience and leadership to ensure continued independent oversight of management by the independent directors

Board Role in Risk Oversight

Our Board oversees the proper safeguarding of our corporate assets, the maintenance of appropriate financial and other internal controls and STORE’s compliance with applicable laws and regulations and proper governance. Inherent in these responsibilities is our Board’s understanding and oversight of a company-wide approach to risk management that is carried out by our senior leadership team. Our Board determines the appropriate risk for us generally, assesses the specific risks faced by us and reviews the steps taken by our senior leadership team to manage those risks. Our Board’s committees assist in discharging our Board’s risk oversight role by overseeing the subject matter responsibilities outlined below. Our Board retains full oversight responsibility for all subject matters not assigned to a committee. In fulfilling its risk management responsibilities, our Board recognizes that it is neither possible nor prudent to eliminate all risk and that purposeful and appropriate risk taking is essential for STORE to be competitive in its industry and to achieve our long-term strategic objectives. In performing its oversight responsibilities, our Board and its committees review policies and guidelines that senior management uses to manage STORE’s exposure to material categories of risk. As these issues sometimes overlap, committees address certain issues at the full Board level.

 

			2021 Proxy Statement				11

In addition, our Board oversees STORE’s cyber risk management program. In order to respond to the threat of security breaches and cyber-attacks, we have developed a program, under the leadership of our Senior Vice President of Information Technology, that is designed to protect and preserve the confidentiality, integrity and continued availability of all information owned by, or in the care of, STORE. This program also includes a cyber-incident response plan. Our Audit Committee, which is tasked with oversight of certain risk issues, receives periodic reports, and regularly briefs the full Board, on these matters, and the full Board also receives periodic briefings on cybersecurity threats in order to enhance our directors’ literacy on and awareness of cybersecurity issues.

 

In establishing our Board’s current leadership structure, risk oversight was one factor among many considered by our Board, and our Board believes that the current leadership structure is conducive to and appropriate for its risk oversight function. Our Board regularly reviews its leadership structure and evaluates whether it, and our Board as a whole, is functioning effectively. If, in the future, our Board believes that a change in its leadership structure is required to, or potentially could, improve our Board’s risk oversight function, it may make any change it deems appropriate.

 

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Committees and Meetings of the Board

During the year ended December 31, 2020, our full Board met nine times. Eight of our nine directors attended 100% of our Board meetings (with one director missing a single, special meeting) and each director attended at least 93% of the aggregate total number of Board meetings and the total number of meetings held by all standing committees on which he or she served that were held during the year ended December 31, 2020 and that were held while such person was a director of STORE or a member of such committee. Our Board has five standing committees: our Audit Committee, our Compensation Committee, our Nominating and Corporate Governance Committee, our Investment Committee and our Executive Committee. The charters of our Audit Committee, our Compensation Committee and our Nominating and Corporate Governance Committee are available on our investor relations website at http://ir.storecapital.com. Our Board may establish other committees as it deems necessary or appropriate from time to time.

 

 

 

			2021 Proxy Statement				13

 

 

As noted above, in the fourth quarter of 2020 we formed an ad hoc committee of directors, consisting of Messrs. Seadler (Chair), Donovan, Hipp, and Smith, and Mses. Kelley and Rice, to oversee senior management succession planning and to make recommendations to the full Board or the appropriate Board standing committees as warranted. This committee meets on an as-needed basis.

Changes in Committee Composition

In connection with the appointment of Tawn Kelley to our Board, effective February 13, 2020, our Nominating and Corporate Governance Committee recommended, and our Board approved, the appointment of Ms. Kelley to serve on our Nominating and Corporate Governance Committee and the appointment of Ms. Rice to serve on our Investment Committee.

 

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Communication with the Board

Stockholders and other interested parties who desire to contact our Board, a particular Board committee, a particular group of directors (e.g., our independent directors), or individual members of our Board, including our Executive Chair or Lead Independent Director, may do so electronically by email at CorporateSecretary@storecapital.com, or by mail addressed to the named individual, the committee, the group, or our Board as a whole c/o Chad A. Freed, Executive Vice President – General Counsel, Chief Compliance Officer and Secretary, at STORE Capital Corporation, 8377 East Hartford Drive, Suite 100, Scottsdale, AZ 85255. In general, any communication delivered to us for forwarding to our Board, a Board committee, a particular group of directors or specified Board members will be forwarded in accordance with the stockholder’s instruction, except that we reserve the right not to forward any abusive, threatening or otherwise inappropriate materials.

ADDITIONAL CORPORATE GOVERNANCE FEATURES

Stockholder Authority to Amend Bylaws

At our 2019 annual meeting of stockholders, a supermajority of our stockholders, representing approximately 72% of the votes cast on the proposal, approved an amendment to our bylaws that allows stockholders to amend STORE’s bylaws by a majority vote of the outstanding shares entitled to be cast on the matter, pursuant to a binding proposal submitted for approval at a duly called annual meeting or special meeting of stockholders. Under this amendment as approved by our stockholders, such a binding proposal must (a) be submitted by a stockholder, or group of up to 20 stockholders, (i) owning at least 3% of STORE’s outstanding common stock continuously for at least the prior three years, and (ii) satisfying certain eligibility, procedural and disclosure requirements set forth in Sections 3 and 11 of Article II of our bylaws, and (b) not seek to alter or repeal (i) Article XII of the bylaws, which provides for indemnification and advancement of expenses for STORE’s directors and officers, (ii) Article XIV of the bylaws, which provides an exclusive forum for certain litigation, or (iii) Article XV, which addresses procedures for amendment of the bylaws, without the approval of our Board.

Stockholder Engagement

Over the years, we have developed our stockholder engagement program as a means to provide continuous and meaningful interaction with our stockholders. We engage with our stockholders through a multi-pronged program pursuant to which we seek input, address questions and concerns, and provide perspective on STORE’s policies and practices to our stockholders throughout the entire year. In developing our approach to stockholder engagement, our principal goal is to develop strong relationships with our key stockholders that will allow us to understand those issues that are most meaningful to them, thereby giving us insight into stockholder support of any initiatives and strategies that we propose to implement in furtherance of our long-term growth, improved governance or other matters. We recognize that stockholders are the owners of STORE and we use every component of the engagement effort to provide stockholders with detailed disclosures about our business and our thoughts on relevant issues, including the rationale for our corporate strategy.

The five components of our stockholder engagement program are:

 

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Direct Engagement. Each year we seek to engage with our significant stockholders on matters related to our business, corporate governance or other matters that they may wish to discuss. These engagements consist of focused, one-on-one meetings (in person or via teleconference or videoconference) between stockholders and our management that are designed to give our institutional stockholders an opportunity to better understand our company so that they may speak directly with management regarding any concerns they have, as well as fulfill their own fiduciary duties to their own investors. To make these meetings most productive for our investors’ governance teams, we will seek to set meeting times well in advance and provide advance materials covering the primary topics of discussion, thus ensuring that stockholder participants will have the opportunity and information to prepare and engage in meaningful dialogue.

 

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Biennial Investor Day. We periodically host Investor Day events. At these events, our senior executives and acquisition team members provide market commentary, as well as investment and portfolio management case-studies and other informative insights. We design our Investor Days to provide stockholders a view of our long-term outlook and strategy. These events draw institutional equity and fixed income investors, as well as analysts who generally publish their observations. As necessary, highlights of the presentations are also filed with the SEC in a Form 8-K and made available to all stockholders.

 

			2021 Proxy Statement				15

•

Virtual Stockholder Meeting. We conduct each annual meeting as a “virtual meeting,” allowing our stockholders to join remotely from anywhere with an Internet connection. Our virtual meeting platform empowers stockholders to submit questions to our Board and management team, who are then able to thoughtfully review and respond to those questions in an organized manner. We remain very sensitive to concerns regarding virtual meetings generally from investor advisory groups and other stockholder rights advocates, who have suggested that virtual meetings may diminish stockholder voice or reduce accountability. Accordingly, we have designed this virtual format to enhance, rather than constrain, stockholder access, participation and communication. For example, the online format allows stockholders to communicate with us in advance of, and during, the meeting so they can ask questions of our Board or management. During the live question-and-answer session of the meeting, we answer questions as they come in and address those asked in advance, as time permits. We have committed to publishing and answering each question received following the meeting. Although the live webcast is available only to stockholders at the time of the meeting, a replay of the meeting is made publicly available on our investor relations site. We have continued to receive positive support from larger stockholders who have indicated the virtual format is beneficial and appropriate in the context of our broader direct outreach program, our geographic location, which is far removed from the offices of our principal investors, and the limitations on physical meetings resulting from the COVID-19 pandemic.

Virtual stockholder meetings also offer other benefits. We avoid the time, effort and elevated expenses of organizing physical meetings which historically have been attended by only a few stockholders; our stockholders who wish to attend our annual meeting do not need to incur travel and other costs to do so; and we reduce the environmental impact our annual meetings have by cutting transport and related carbon emissions, paper materials and other negative impacts necessarily a part of a physical meeting. Our virtual meeting platform also allows us to better track attendance and more easily verify the identity of our stockholders. We believe these factors allow us to conduct our annual meetings in a manner that is more meaningful to us and our stockholders.

 

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Annual Letter to Stockholders. On an annual basis, our Chief Executive Officer publishes a letter to our stockholders. In this letter, Mr. Volk provides insights into our financial performance, the foundational elements of our business, the long-term strategies that we follow and the value that we provide to our customers. The annual letter is announced via press release in concert with the filing of STORE’s Annual Report on Form 10-K with the SEC and is available on our investor relations website.

 

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Quarterly Investor Presentation. Each quarter, together with the filing of our earnings release, we prepare and file a comprehensive investor presentation that provides detailed information regarding our corporate strategy, financial results, investment portfolio statistics and other key metrics regarding our business. We update this presentation each quarter, file it with the SEC and make it available on our investor relations website.

We supplement these efforts throughout the year through post-earnings communications, participation at industry and investor conferences and general availability to respond to investor inquiries. We believe this multi-pronged approach to stockholder engagement allows us to maintain meaningful interaction with a broad audience including large institutional investors, smaller to mid-size institutions, pension funds, advisory firms and individual investors. We expect the widespread adoption and use of virtual technology in place of in-person meetings resulting from the COVID-19 pandemic to continue into the future, and thus expect the number of interactions with our investors to increase over time.

Anti-Hedging, Anti-Short Sale and Anti-Pledging Policies

Our Board considers it inappropriate for any director, officer or employee to enter into speculative transactions in STORE securities, as well as transactions that, while allowing the holder to own STORE securities without the full risks and rewards of ownership, potentially separate the holder’s interests from those of other stockholders. Our Corporate Governance Guidelines accordingly prohibit the purchase or sale of puts, calls, options or other derivative securities based on STORE securities by directors, officers or employees. These guidelines also prohibit hedging or monetization transactions, such as forward sale contracts, in which the holder continues to own the underlying security without all the risks or rewards of ownership. Under the terms of our insider trading policy, our directors and executive officers are additionally prohibited from engaging in short sales of our common stock, from purchasing securities on margin or, except with the prior written consent of our Chief Compliance Officer, pledging securities as collateral for a loan or other arrangement.

 

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Stock Ownership Guidelines Applicable to Executive Officers and Outside Directors

We believe that stock ownership by our executive officers and outside directors helps to align their interests with the interests of our stockholders. As such, we maintain a stock ownership policy applicable to our executive officers and outside directors under which they are expected to maintain beneficial ownership of shares of our common stock with a value equal to the following:

 

Position		Minimum Equity Ownership Requirement
Chief Executive Officer		6x annual base salary
Chief Operating Officer / Executive Vice President		3x annual base salary
Outside Director		5x annual cash fees

Calculation of required ownership levels. These required stock ownership levels are based on the annual base salary or annual cash fees payable to an executive officer or outside director, as applicable, as of the date such person becomes subject to the stock ownership guidelines and the average closing sale price of STORE’s common stock for the 60 trading days following such date. The requirement is determined on an individual basis, first in dollars as a multiple of the person’s annual base salary or annual cash fees, as applicable, and then by converting such amount to a fixed number of shares. Once established, a person’s requirement will not change due to changes in his or her base salary or annual cash director fees or fluctuations in STORE’s stock price and will only change in connection with an appointment to a different executive position.

Eligible equity. Each person may count toward his or her ownership requirement shares owned directly, including restricted stock and shares deliverable upon settlement of restricted stock units the performance period for which has been completed (but not restricted stock units still subject to the achievement of performance goals), and shares owned indirectly, provided the person has an economic interest in the shares. Stock options and outstanding performance-based awards do not count toward the requirement.

Satisfying the requirement. Each person subject to the policy has five years to satisfy his or her applicable ownership requirement after becoming subject to the policy or following a change in the person’s ownership requirement. If a person does not satisfy the specified ownership levels when the applicable transition period ends, our stock ownership policy does not require the person to purchase shares in the open market but does require that person to retain 100% of any shares then held and any shares subsequently acquired pursuant to any equity grants (after the payment of any applicable exercise costs and taxes) until the minimum ownership requirement is satisfied. As of December 31 2020, all of our directors and executive officers were in compliance with our stock ownership policy.

Corporate Governance Guidelines and Code of Business Conduct and Ethics

Our Board has adopted Corporate Governance Guidelines and a Code of Business Conduct and Ethics that apply to all of our directors, officers and employees. Current versions of these corporate governance documents are available free of charge on STORE’s investor relations website at http://ir.storecapital.com and in print to any stockholder who requests copies by contacting Chad A. Freed, STORE’s Executive Vice President – General Counsel, Chief Compliance Officer and Secretary, at 8377 East Hartford Drive, Suite 100, Scottsdale, Arizona 85255. We will promptly disclose to our stockholders, if required by applicable law or NYSE rules and regulations, any amendments to, or waivers from, provisions of our Code of Business Conduct and Ethics that apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on our website, www.storecapital.com, rather than by filing a Form 8-K.

Management of Our Human Capital

Our Board, through the oversight of our Nominating and Corporate Governance Committee, and our senior management believe that to continue to deliver strong financial results, we must execute on a human capital strategy that prioritizes, among other things: (i) establishing a work environment that attracts, develops and retains top talent; (ii) affording our employees an engaging work experience that allows for career development and opportunities for meaningful civic involvement; (iii) providing compensation and benefits that reward outstanding performance; (iv) engaging with, and obtaining feedback from, our employees on their workplace experiences; (v) enabling every employee at every level to be treated with dignity and respect, to be free from discrimination and harassment, and to devote their full attention and best efforts to performing their job to the best of their respective abilities; and (vi) communicating with our Board on key topics, including executive succession planning.

 

			2021 Proxy Statement				17

As part of our efforts to achieve these priorities:

 

•

We seek to foster a diverse and vibrant workplace of individuals who possess a broad range of experiences, backgrounds and skills. At the management level, 33% of our Board members, 33% of our executive officers (including Mary B. Fedewa, our President and Chief Operating Officer, and Catherine Long, our Executive Vice President – Chief Financial Officer), and 56% of our officers at the level of Senior Vice President and above are women.

 

•

We empower our employees through employee-run engagement committees that develop and influence new employee onboarding, personal growth and professional development programs, STORE social and team-building events, and health and wellness programs. During the pendency of the COVID-19 pandemic, the health and safety of our employees has taken on particular importance; among other things, we immediately implemented a company-wide work from home policy, which remains in effect, and ensured each employee had access to the necessary tools to work remotely and remain in communication with all other employees.

 

•

We actively support charitable organizations that promote education, environmentally sustainable practices and social well-being and we encourage our employees to personally volunteer with organizations that are meaningful to them. For example, we proudly sponsor local charities such as the Juvenile Diabetes Research Foundation and our employees volunteer in local charitable organizations such as Arizona Helping Hands and the Society of St. Vincent de Paul.

 

•

We seek to identify future leaders and equip them with the tools for management roles within our company. Our Board periodically reviews with our President and Chief Executive Officer the identity, skills and characteristics of those persons who could succeed to senior and executive management team positions.

As a result of our succession planning efforts and focus, we believe that we have a deep bench of men and women who are collectively fully capable of professionally operating our business and fulfilling the STORE vision.

Management of Our Environmental Impact

STORE is a net-lease REIT. We acquire single-tenant operational real estate (or profit center properties) from business owners, and then lease the properties back to the business owners under long-term net-leases, substantially all of which are triple-net. Under a triple-net lease, the tenant is solely responsible for operating the business conducted in the building subject to the lease, keeping the building in good order and repair, remodeling and updating the building as it deems appropriate to maximize business value, and paying the insurance, property taxes and other property-related expenses. Under the triple-net lease model, therefore, it is the customer, and not STORE, that controls energy, water usage and waste and recycling practices and decides when and how to implement environmentally sustainable practices at a given property.

While we do not control the business operations at our properties, as the property owner, we nevertheless recognize that the operation of commercial real estate assets can have a meaningful impact on the environment—particularly with respect to resource consumption and waste generation—and on the health of building occupants. We also understand that, even though STORE’s business is not directly carbon-intensive, as virtually all the properties we own are operated by our tenants under triple-net (Scope 3) leases, our tenants do present climate risk through the operation of their businesses. We are therefore committed to environmental sustainability and the mitigation of the environmental risks presented by our tenants’ businesses as we continue to grow our property portfolio. This commitment reflects the fact that the properties we acquire are subject to both state and federal environmental regulations, but, more importantly, it aligns with our belief that being conscious of, and seeking to address and manage environmental risks within our control, and supporting our customers to do the same in their businesses, plays a central role in building and sustaining successful enterprises and is material to the success of our own business.

 

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DIRECTOR COMPENSATION

2020 Director Compensation

The following tables sets forth the elements of our director compensation program in effect in 2020:

 

Under our director compensation program, in 2020, Mr. Fleischer, as STORE’s non-executive Chairman of the Board, received cash fees of $200,000 and a grant of restricted stock having a value of $200,000 at grant that vests over four years. In 2020, our other non-employee directors each received cash fees of $65,000 (with the exception of Ms. Kelley, who received a prorated amount of her $65,000 annual cash retainer calculated based on the date she joined the Board in February 2020) and a grant of restricted stock in May 2020 having a value of $100,000 at grant that vests at the end of their one-year term (with the exception of Ms. Kelley, who also received a prorated grant at the date she joined the Board in February 2020).

In 2020, Messrs. Donovan and Smith also received additional cash fees of $20,000 and $15,000 for their service as the chairs of our Audit Committee and Compensation Committee, respectively. Mr. Fleischer does not receive additional fees for his service as the chair of the Nominating and Corporate Governance Committee. If, in the future, a non-employee director other than Mr. Fleischer serves as chair of our Nominating and Corporate Governance Committee, that person would receive additional cash fees pursuant to the director compensation program as then in effect. All cash fees are paid in quarterly installments in arrears over the calendar year.

The annual cash retainers are payable in four equal installments on the first business day of each quarter in arrears of service for the preceding quarter. The annual equity grant is made for prospective service, at the time of STORE’s annual meeting of stockholders, for the upcoming one-year term, except for the grant to Mr. Fleischer, which has historically been made in February of each year.

The following table shows the compensation paid to the non-employee directors who served on our Board during 2020:

 

Name		Fees Earned or Paid in Cash ($)				Stock Awards ($)(1)(2)				Total ($)
Morton H. Fleischer			200,000				199,998				399,998
Joseph M. Donovan			85,000				100,006				185,006
William F. Hipp			65,000				100,006				165,006
Tawn Kelley			57,417				128,970				186,387
Catherine D. Rice			65,000				100,006				165,006
Einar A. Seadler(3)			67,094				100,006				167,100
Quentin P. Smith, Jr.			80,000				100,006				180,006

 

(1)

All stock award amounts in this column reflect the aggregate grant date fair value of restricted stock calculated in accordance with FASB ASC Topic 718. For each director other than Mr. Fleischer, the number of shares of restricted stock granted in May 2020 was determined by dividing the grant date value of the award, $100,000, by $20.13 (the closing price of our common stock on May 28, 2020, the date of the grant), rounded down to the nearest whole share. Ms. Kelley’s total includes an additional $28,964 reflecting the prorated grant she received at the date she joined our Board in February 2020.

 

			2021 Proxy Statement				19

For Mr. Fleischer, the number of shares of restricted stock granted was determined by dividing the grant date value of the award, $200,000, by $39.30 (the closing price of our common stock on February 13, 2020, the date of the grant), rounded down to the nearest whole share.

 

(2)	As of December 31, 2020, our independent directors had the following aggregate numbers of unvested stock awards outstanding:

 

Name		Unvested Stock    Awards
Morton H. Fleischer				16,111
Joseph M. Donovan				4,968
William F. Hipp				4,968
Tawn Kelley				4,968
Catherine D. Rice				4,968
Einar A. Seadler				4,968
Quentin P. Smith, Jr.				4,968

 

(3)

Mr. Seadler was appointed Chair of the ad hoc committee of directors that was established to oversee senior management succession planning and will receive cash fees of $12,500 annually for serving in that role. His total includes $2,094, which reflects the prorated fees earned for the portion of 2020 following the establishment of the committee in the fourth quarter of 2020.

Changes to Director Compensation for 2021

Our Compensation Committee periodically reviews the compensation of our non-employee directors and recommends changes to our Board when it deems appropriate. In 2020, our Compensation Committee engaged Korn Ferry Hay Group, Inc. (“Korn Ferry”) to review our existing director compensation program, as the program had last been evaluated in 2018. Korn Ferry provided our Compensation Committee with market data and made recommendations with respect to compensation mix and levels. Our Board, based on the recommendation of its Compensation Committee following consultation with Korn Ferry, modified our non-employee director compensation program, effective January 1, 2021, as follows:

 

Compensation Element		2020 Pay Levels					2021 Pay  Levels
All Board Members:
Annual Cash Retainer				$65,000					$85,000
Annual Equity Award				$100,000					$130,000
Committee Chair Retainers:
Audit				$20,000					$20,000
Compensation				$15,000					$15,000
Nominating and Corporate Governance				$12,500					$12,500
Non-Executive Chairman of the Board:
Additional Cash Retainer				$135,000					$115,000
Additional Equity Retainer				$100,000					$70,000
Lead Independent Director:
Additional Cash Retainer				N/A					$32,500

Following the leadership transition in 2021 described above, the fees payable to Mr. Fleischer for his previous service as non-executive Chairman of the Board will be appropriately adjusted. To date, Mr. Fleischer has not received a retainer for his service as Chair of our Nominating and Corporate Governance Committee.

DIRECTOR INDEPENDENCE AND RELATED PARTY TRANSACTIONS

Independence Determinations

Under the corporate governance listing standards of the NYSE and our Corporate Governance Guidelines, our Board must consist of a majority of independent directors. In making independence determinations, our Board observes NYSE and SEC criteria and considers all relevant facts and circumstances. Under NYSE corporate governance listing standards, to be considered independent:

 

•

the director must not have a disqualifying relationship, as defined in the NYSE standards; and

 

•

our Board must affirmatively determine that the director otherwise has no material relationship with STORE directly, or as an officer, stockholder or partner of an organization that has a relationship with STORE.

 

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Our Board, through its Nominating and Corporate Governance Committee, annually reviews all relevant business relationships any director and director nominee may have with STORE. As a result of its annual review, our Board has determined that none of the following director nominees has a material relationship with STORE and, as a result, such director nominees are independent: Joseph M. Donovan, Morton H. Fleischer, William F. Hipp, Tawn Kelley, Catherine D. Rice, Einar A. Seadler and Quentin P. Smith, Jr.

Christopher H. Volk, who serves as STORE’s Executive Chair, and Mary B. Fedewa, who serves as STORE’s President and Chief Executive Officer, are executive officers of STORE and are therefore not independent directors.

All of the directors who serve as members of our Audit Committee, our Compensation Committee and our Nominating and Corporate Governance Committee are independent as required by the NYSE corporate governance rules. Under these rules, our Audit Committee members also satisfy a separate SEC independence requirement and our Compensation Committee members also satisfy an additional NYSE independence requirement.

Certain Relationships and Related Party Transactions

Our Board has adopted a written statement of policy regarding transactions with related parties (our “Related Person Policy”). Our Related Person Policy requires that a “related person” (as defined in paragraph (a) of Item 404 of Regulation S-K under the Securities Act of 1933, as amended) must promptly disclose to our Chief Compliance Officer any transaction in which the amount involved exceeds $1,000 and in which any related person had or will have a direct or indirect material interest and all material facts with respect thereto. Following a determination of whether the proposed transaction is material to STORE (with any transaction in which the amount involved exceeds $50,000 being deemed material for purposes of our Related Person Policy), our Chief Compliance Officer will report the transaction to our Audit Committee for its approval. No related party transaction will be executed without the approval or ratification of our Audit Committee. It is our policy that directors interested in a related party transaction will recuse themselves from any vote on a related party transaction in which they have an interest. Our Audit Committee will consider all relevant facts and circumstances when deliberating on such transactions, including whether such transactions are in, or not inconsistent with, the best interests of STORE and its stockholders.

The following is a summary of related party transactions since January 1, 2020. The related party transactions listed below were all approved by our Audit Committee and/or our Board.

 

•

We are a party to indemnification agreements with our directors and certain members of management. These agreements require us to indemnify these individuals to the fullest extent permitted under Maryland law and our charter against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. Insofar as indemnification for liabilities arising under securities laws may be permitted to directors or executive officers, we have been informed that in the opinion of the SEC, such indemnification is against public policy and is therefore unenforceable. There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

 

•

Following a competitive bidding process conducted in the fall of 2018, we selected Berkshire Hathaway Specialty Insurance Company (“BHSIC”) to provide our primary layer of directors and officers liability insurance. For the policy period of December 31, 2020 through December 31, 2021, we paid a premium of $198,165 for such policy. In addition, we selected BHSIC to provide our employment practices liability insurance for the period of December 31, 2020 through December 31, 2021, and paid an additional premium of $12,000 for such policy. As of December 31, 2020, Berkshire Hathaway Inc., the parent company of BHSIC, beneficially owned approximately 9.2% of our outstanding common stock.

 

			2021 Proxy Statement				21

EXECUTIVE COMPENSATION

PROPOSAL NO. 2 – ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

 

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and Rule 14a-21 under the Exchange Act, we request that our stockholders cast an annual non-binding, advisory vote to approve the compensation of STORE’s named executive officers (our “Named Executive Officers” or “NEOs”) identified in the “Compensation Discussion and Analysis” section of this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on the compensation of our NEOs. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that the Company’s stockholders hereby approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosures.”

Details concerning how we implement our compensation philosophy and structure our plans to meet the objectives of our compensation program are provided in the section titled “Compensation Discussion and Analysis” set forth below in this Proxy Statement. In particular, we discuss how we design performance-based compensation programs and set compensation targets and other objectives to maintain a close correlation between executive pay and STORE’s performance.

This say-on-pay vote is merely advisory and will not be binding upon STORE, our Board or our Compensation Committee, nor will it create or imply any change in the duties of STORE, our Board or our Compensation Committee with respect to our executive compensation plans, programs or practices. Our Compensation Committee will, however, take into account the outcome of this vote when considering future executive compensation decisions. Our Board values constructive dialogue on executive compensation and other significant governance topics with STORE’s stockholders and encourages all stockholders to vote their shares on this important matter.

Board Recommendation

Our Board recommends that you vote “FOR” the resolution to approve, on an advisory

basis, the compensation of STORE’s named executive officers as disclosed

in this Proxy Statement.

 

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EXECUTIVE OFFICERS

Set forth below is biographical information with respect to each of our executive officers as of the date of this Proxy Statement, except Mr. Volk, STORE’s Executive Chair, and Ms. Fedewa, STORE’s President and Chief Executive Officer. Mr. Volk and Ms. Fedewa also serve as directors on our Board and their respective biographical information is set forth above in the section titled “Governance—Proposal No. 1—Election of Directors—2021 Director Nominees.”

 

Craig A. Barnett    Age: 44
Officer Since:    2020 Years at STORE: 10		Mr. Barnett has served as our Executive Vice President – Underwriting and Portfolio Management since September 2020. Prior to his appointment, Mr. Barnett served in various leadership roles at STORE for nearly 10 years, most recently as Senior Vice President of Portfolio Management. Since joining STORE as a senior underwriter in 2011, Mr. Barnett has played an integral role in growing STORE’s transaction volume to over $9.0 billion. Mr. Barnett has nearly 20 years of broad-based commercial real estate and REIT experience, including portfolio and investment management, capital transactions, investment analysis, underwriting and valuation. Prior to joining STORE, he was a Vice President of Franchise Capital Advisors and held leadership positions at GE Capital and Franchise Finance Corporation of America. Mr. Barnett received a B.S. in Finance from Arizona State University’s W.P. Carey School of Business.

 

Chad A. Freed    Age: 47
Officer Since:    2019 Years at STORE: 1+		Mr. Freed joined STORE in August 2019 and has served as our Executive Vice President – General Counsel, Chief Compliance Officer and Secretary since that time. Prior to joining STORE, Mr. Freed served as the General Counsel, Executive Vice President of Corporate Development of Universal Technical Institute, Inc. (NYSE:UTI), an education company, from June 2015 to August 2019. Mr. Freed previously served as UTI’s General Counsel, Senior Vice President of Business Development from March 2009 to June 2015, as Senior Vice President, General Counsel from February 2005 to March 2009 and as inside legal counsel and Corporate Secretary since March 2004. Prior to joining UTI, Mr. Freed was a Senior Associate in the Corporate Finance and Securities department at Bryan Cave LLP. Mr. Freed received his Juris Doctor from Tulane University and a B.S. in International Business and French from Pennsylvania State University.

 

Catherine Long    Age: 64
Officer Since:    2011 Years at STORE: 10		Ms. Long was one of STORE’s founders in May 2011 and has served as our Executive Vice President – Chief Financial Officer, Treasurer and Assistant Secretary since STORE’s inception. Ms. Long has over 30 years of accounting, operating and financial management expertise. Prior to co-founding STORE, Ms. Long was CFO, Senior Vice President and Treasurer of Spirit from its inception in August 2003 to February 2010. Prior to Spirit, Ms. Long served in various capacities with FFCA and its successor, GE Capital Franchise Finance. Ms. Long was also FFCA’s Principal Accounting Officer and actively participated in FFCA’s real estate limited partnership rollup, as well as numerous securitization transactions and business combinations. Prior to her employment with FFCA, Ms. Long was a senior manager specializing in the real estate industry with the international public accounting firm of Arthur Andersen in Phoenix, Arizona. She was named CFO of the Year in 2008 by the Arizona chapter of Financial Executives International. Ms. Long also serves on the board of directors and audit committee of Oaktree Real Estate Income Trust, Inc., a non-traded, externally-managed REIT, formed to invest in income-producing commercial real estate assets and debt, primarily in the office, multifamily and industrial sectors. She received a B.S. degree in accounting with high honors from Southern Illinois University and has been a certified public accountant since 1980.   Ms. Long has announced that she intends to retire from her positions with STORE in 2021 following our appointment of a successor, and we have engaged an executive search firm to aid our search for a new chief financial officer.

 

Tyler S. Maertz    Age: 42
Officer Since:    2020 Years at STORE: 10		Mr. Maertz has served as our Executive Vice President – Acquisitions since September 2020. Prior to his appointment, Mr. Maertz served in various capacities at STORE, having joined STORE shortly after inception as the initial member of our direct acquisitions team, most recently as Senior Managing Director—Western Territory. Mr. Maertz served in various positions with GE Capital for 11 years prior to joining STORE, including as a member of the sales team at GE Franchise Finance, actively managing the customer relationships for a portfolio of assets approaching $1 billion, and leading the Financial Planning & Analysis group at GE Franchise Finance. Mr. Maertz graduated with honors from GE’s Financial Management Program, a renowned leadership training program. Mr. Maertz received a Bachelor of Business Administration degree in Finance & Accounting from the University of Notre Dame and an M.B.A. from Arizona State University’s W.P. Carey School of Business, and is a CFA charterholder.

 

			2021 Proxy Statement				23

COMPENSATION DISCUSSION AND ANALYSIS

 

In this section, we describe the material components of our executive compensation program for our Named Executive Officers, whose compensation is set forth in the Summary Compensation Table and other compensation tables contained in this Proxy Statement. We also provide an overview of our executive compensation philosophy and our executive compensation program. In addition, we explain how and why our Compensation Committee arrived at the specific compensation decisions involving our NEOs for the 2020 fiscal year.

For 2020, our NEOs were:

 

Named Executive Officer		Title as of December 31, 2020
Christopher H. Volk		Chief Executive Officer(1)
Mary B. Fedewa		President and Chief Operating Officer(2)
Catherine Long		Executive Vice President – Chief Financial Officer and Treasurer
Chad A. Freed		Executive Vice President – General Counsel, Chief Compliance Officer and Secretary
Tyler S. Maertz		Executive Vice President – Acquisitions(3)
Andrew L. Rosivach		Former Executive Vice President – Chief Credit Officer(4)

 

(1)	Mr. Volk became Executive Chair, effective April 15, 2021.

 

(2)	Ms. Fedewa was promoted to President and Chief Executive Officer, effective April 15, 2021.

 

(3)	Mr. Maertz was promoted to Executive Vice President – Acquisitions, effective October 1, 2020.

 

(4)	Mr. Rosivach’s employment with STORE terminated, effective October 10, 2020.

The discussion that follows will focus on the compensation of our continuing NEOs.

Executive Summary

Business Highlights

Our Business. We are an internally managed net-lease REIT, and a leader in the acquisition, investment and management of Single Tenant Operational Real Estate, which is our target market and the inspiration for our name. We are one of the largest and fastest-growing net-lease REITs and own a well-diversified portfolio that consists of investments in 2,634 profit center property locations operated by 519 customers across the United States. Our customers operate across a wide variety of industries within the service, retail and manufacturing sectors of the U.S. economy, with restaurants, early childhood education, health clubs, metal fabrication and automotive repair and maintenance representing the top industries in our portfolio.

 

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2020 Performance and the Impact of the COVID-19 Pandemic. We began our 2020 fiscal year projecting a continuation of the strong operating performance that we experienced over the previous five years. The COVID-19 pandemic impacted our business through government mandated limits (i.e., required closings or limits on operations, social distancing requirements and restrictions on travel) imposed on our customers’ businesses and continuing public perceptions regarding safety, which impacted our customers’ ability to pay their rent to us. Our executive management team reacted swiftly to this fluid environment, slowing our acquisition activities and drawing on our credit facility to ensure liquidity; focusing our efforts on collecting rent from our tenants; and working directly with our tenants in highly impacted industries to help them meet their rent payment obligations to us, all while instituting an immediate and seamless transition of our workforce to a fully-remote working environment.

In a normal economic environment, we typically collect substantially all our contractual base rent and interest from our customers each month. When the COVID-19 pandemic forced widescale business closures in March 2020, our cash rent recollections began to drop, from nearly 100% in March 2020 to 64% in May 2020. We quickly developed, and engaged directly with a substantial number of our tenants in highly impacted industries on, short-term rent deferral arrangements, including a structured rent relief program under which we allowed tenants to defer a portion of their rent, with repayment primarily structured through short-term, interest-bearing notes. These efforts allowed our customers to avoid lease defaults while giving their businesses time to recover and providing us the ability to continue to receive our contractual base rent and interest. After the substantial drop in our cash rent collections through May 2020, our contractual rent receipts began to slowly rebound, ultimately reaching 90% for the fourth quarter of 2020, by which time nearly all our portfolio properties were open for business. We also began to collect amounts due on the deferral notes (which had the effect, for example, of increasing our May cash rent collections to 70% by year end). While unpredictable factors remain that may impact our business going forward – and our executive management team continues to closely monitor these factors, including the duration and scope of the pandemic; governmental, business and individuals’ actions in response to the pandemic; and the pandemic’s overall impact on economic activity and consumer spending – we expect our cash rent collections percentage to continue to improve in 2021, and we also expect to collect a substantial portion of the rent that our highly impacted customers deferred in 2020.

Despite the challenges presented by the COVID-19 pandemic, our NEOs and other senior management delivered strong, focused leadership throughout this difficult year, succeeding throughout 2020 in proving out the STORE business model:

 

•

Our focus on the large market for profit center real estate allowed us to be selective in our acquisitions and to direct our efforts at vital industries that can withstand severe business shocks;

 

•

Our customer-centric approach, which involves direct engagement with tenants and requires, as part of every lease, the collection and analysis of our customers’ financial statements, enabled us to understand the needs of our customers and to develop relationship-driven solutions to guide them through the pandemic while ensuring that their rental obligations to us could be satisfied;

 

•

Our pervasive use of master lease contracts, which provide for strong rent coverages, annual lease escalations and tenant alignments of interest (such as parent company recourse, guarantees and cross-defaults), continued to give us the flexibility to work with tenants in need while putting us in a position to successfully enforce our right to receive contractual rent payments; and

 

•

Our discipline in continuing to pay less than replacement cost for the properties we acquire, and in obtaining initial cap rates in excess of those that might be demanded in the brokered marketplace, ensured that we maintained our margins of safety.

 

 

			2021 Proxy Statement				25

The decisions made by our Compensation Committee and our Board on the compensation of our NEOs reflect our Board’s view of our executive management team’s superior performance in managing the business through the continuing COVID-19 pandemic. Despite the challenges of the pandemic:

 

 

 

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In 2020, we continued to adhere to the following compensation and corporate governance practices:

 

 

 

			2021 Proxy Statement				27

How We Determine Compensation

Role of our Compensation Committee. Our Compensation Committee, operating pursuant to authority delegated to it by our Board, oversees the design, development and implementation of our executive compensation program. Our Compensation Committee also administers our compensation plans and awards for our directors and Named Executive Officers and is primarily responsible for reviewing and approving our compensation policies and the compensation paid to our Named Executive Officers. Our Compensation Committee’s responsibilities are set forth in its written charter and are more fully described in this Proxy Statement under the heading “Governance—Board and Committee Governance—Committees and Meetings of the Board.”

Role of Management. Certain of our Named Executive Officers, principally our President and Chief Executive Officer and our Chief Financial Officer, work closely with our Compensation Committee and its consultant to analyze relevant peer data and to provide input into the compensation program design. Management assists our Compensation Committee’s consultant in its survey of our executive compensation practices by providing historical compensation information. Management makes recommendations of the program design for the Named Executive Officers for consideration by our Compensation Committee.

Role of Compensation Consultant. In 2020, our Compensation Committee again engaged Korn Ferry as its independent compensation consultant to assist the Committee with structuring our executive compensation program. Korn Ferry provided our Compensation Committee with market data and made recommendations regarding the compensation mix and levels with respect to the 2020 executive compensation program described herein, including the modifications adopted in 2020 to reflect the changes in our business focus resulting from the COVID-19 pandemic. Our Compensation Committee conducts independence assessments of its consultants and has determined that no conflict of interest exists that would require disclosure under SEC rules. Korn Ferry does not provide services to STORE in any other capacity.

 

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Competitive Market Analysis. In 2018, we established an updated peer group (the “Compensation Peer Group”) for purposes of developing our 2019 executive compensation program. In developing the Compensation Peer Group, our Compensation Committee, with the assistance of Korn Ferry and management, focused primarily on the compensation practices, salary levels and target incentive levels of peer companies according to asset size (seeking a peer group with respect to which STORE’s asset size is close to median), revenue, growth in assets and funds from operations (“FFO”) per share (as a proxy for adjusted funds from operations (“AFFO”) per share growth) and number of employees (with an emphasis on including REITs that have less than 250 employees). Consistent with previous peer groups, the Compensation Peer Group includes both net-lease REITs and other REITs that have experienced significant asset growth and/or growth in per share FFO in recent years, many of which also have relatively small employee populations. Giving effect to recent acquisition activity in the REIT sector, the Compensation Peer Group consisted of the following companies:

 

Acadia Realty Trust		National Health Investors*
Agree Realty Corporation*		National Retail Properties, Inc.*
American Homes 4 Rent		Omega Healthcare Investors, Inc.*
CyrusOne, Inc.		Physicians Realty Trust
Douglas Emmett, Inc.		QTS Realty Trust, Inc.
EPR Properties*		Spirit Realty Capital*
Gaming and Leisure Properties, Inc.*		STAG Industrial, Inc.*
Liberty Property Trust		VEREIT*
Medical Properties Trust, Inc.		W.P. Carey Inc.*

 

*	Denotes a net-lease oriented company.

Our Compensation Committee reviews each compensation element and aggregate total direct compensation (the sum of base salary, short-term cash incentives and long-term equity incentives) for each of our Named Executive Officers compared to similarly situated employees of companies in the Compensation Peer Group, but does not target compensation to a specific percentile of the market data. In determining actual pay levels, our Compensation Committee considers peer group data as well as other factors that, in its collective judgment, it believes to be relevant, including the executive’s experience and performance, internal pay equity among STORE’s senior management team based on the executive’s respective scope of responsibilities and specific skills, the executive’s ability to impact business results and other business events or conditions.

In the discussion below, we reference FFO and AFFO, which are metrics that are not included within the Financial Accounting Standards Board’s (“FASB”) generally accepted accounting principles (“GAAP”). FFO is used generally by management teams, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains and losses on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. Management believes that AFFO provides more useful information to investors and analysts because it modifies FFO to exclude certain additional non-cash revenues and expenses that may cause short-term fluctuations in net income but have no impact on long-term operating performance, such as: straight-line rents, including construction period rent deferrals; amortization of equity-based compensation, deferred financing costs, and lease-related intangibles; lease termination fees; capitalized interest; and executive severance costs. We believe that these costs are not an ongoing cost of the portfolio in place at the end of each reporting period and, for these reasons, the portion expensed is added back when computing AFFO. As a result, we believe AFFO to be a more meaningful measurement of ongoing performance that allows for greater performance comparability. Therefore, we disclose both FFO and AFFO and reconcile them to the most appropriate GAAP performance metric, which is net income, and we use AFFO as a component of both our short-term and long-term incentive programs. Our FFO and AFFO may not be comparable to similarly-titled measures employed by other companies. For a discussion of the manner in which we compute AFFO and for a table setting forth a reconciliation of our FFO and AFFO to our net income (as determined in accordance with GAAP), please see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures,” on page 77 of our Annual Report on Form 10-K filed with the SEC on February 26, 2021.

 

 

			2021 Proxy Statement				29

Elements of 2020 Compensation

The components of our Named Executive Officers’ 2020 compensation were set forth in an annual written compensation plan approved by the Compensation Committee. For 2020, the compensation of our Named Executive Officers consisted of three principal components:

 

Compensation Element		Purpose of Compensation Element		Key Features of Compensation Element
Base Salary		•  A stable means of cash compensation designed to provide competitive compensation that reflects the contributions and skill levels of each executive.		•   Paid in cash   •   Our Compensation Committee, with assistance from its compensation consultant, generally reviews base salaries each year.
Short-Term Incentive Compensation		•   An annual cash bonus program designed to motivate our executive officers to achieve performance goals established by our Compensation Committee that reinforce our annual business plan, to assist STORE in attracting and retaining qualified executives and to promote the alignment of our Named Executive Officers’ interests with those of our stockholders.		•   The threshold, target and maximum dollar amounts for short-term incentive compensation are established by our Compensation Committee.   •  Paid in cash following our Compensation Committee’s certification of achievement of goals.
Long-Term Incentive Compensation		•   An equity-based compensation program involving awards of restricted stock and restricted stock units that are designed to align the long-term interests of our Named Executive Officers with those of our stockholders and to maintain the competitiveness of our total compensation package.		•   Restricted stock grants are subject to time-based vesting while restricted stock units vest over a three-year performance period.   •  Generally granted in February of each year.

Reflecting our Compensation Committee’s philosophy that our NEOs’ compensation should be weighted towards variable at-risk pay elements, the following chart presents the overall target mix of compensation elements for our Chief Executive Officer and all other NEOs as a group for 2020 as set forth in the approved compensation plan:

 

Name(1)		Base Salary %					Target Bonus %					Target      LTI %
Christopher H. Volk				13.3	%				20.0	%				66.7	%
Mary B. Fedewa				17.2	%				22.4	%				60.3	%
Catherine Long				20.0	%				20.0	%				60.0	%
Chad A. Freed				30.8	%				23.1	%				46.2	%

 

(1)	Mr. Maertz was elevated to the position of Executive Vice President – Acquisitions in September 2020 and was not included in the initial 2020 executive compensation program.

Set forth below is a discussion of each of the principal components of 2020 compensation for our NEOs.

 

 

30		2021 Proxy Statement