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First Potomac Realty Trust – ‘PRE 14A’ for 5/23/17

On:  Wednesday, 3/22/17, at 5:10pm ET   ·   For:  5/23/17   ·   Accession #:  1193125-17-92267   ·   File #:  1-31824

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 3/22/17  First Potomac Realty Trust        PRE 14A     5/23/17    1:1.7M                                   Donnelley … Solutions/FA

Document/Exhibit                   Description                      Pages   Size 

 1: PRE 14A     Preliminary Proxy Solicitation Material             HTML    680K 

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.        )

Filed by the Registrant  ☒                        Filed by a Party other than the Registrant  ☐

Check the appropriate box:

FIRST POTOMAC REALTY TRUST

(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

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•, 2017

Dear Fellow Shareholders:

You are cordially invited to attend the Annual Meeting of Shareholders (the “Annual Meeting”) of First Potomac Realty Trust on Tuesday, May 23, 2017 at 9:00 a.m., Eastern Time, at the Company’s offices at 7600 Wisconsin Avenue, 11th Floor, Bethesda, Maryland 20814.

At the Annual Meeting, you will be asked to:

The accompanying proxy statement provides a detailed description of these proposals and instructions on how to vote your shares.

This year’s proxy statement demonstrates our ongoing commitment to provide a clear and detailed discussion of matters that will be addressed at the Annual Meeting. We have included a proxy summary that includes highlights of some important policy updates and a snapshot of other information that are discussed in more detail elsewhere in the accompanying proxy statement.

Your vote is important. Whether or not you plan to attend the meeting, please vote as soon as possible. Instructions on how to vote are contained in the proxy statement.

On behalf of the Board of Trustees and our employees, we thank you for your continued interest in and support of our company.

Sincerely,

Robert Milkovich

President and Chief Executive Officer

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7600 Wisconsin Avenue, 11th Floor

Bethesda, Maryland 20814

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 23, 2017

To Our Shareholders:

You are cordially invited to attend the 2017 Annual Meeting of Shareholders (the “Annual Meeting”) of First Potomac Realty Trust, which will be held as follows:

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on May 23, 2017. The Proxy Statement, our Annual Letter to Shareholders and our Annual Report on Form 10-K for the year ended December 31, 2016 are available at http://ir.first-potomac.com/CorporateProfile. In addition, our shareholders may access this information, as well as transmit their voting instructions, at www.proxyvote.com by having their proxy card and related instructions in hand.

By order of the Board of Trustees,

Samantha Sacks Gallagher

Executive Vice President,

General Counsel and Secretary

Bethesda, Maryland

•, 2017

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PROXY SUMMARY

This summary highlights information contained elsewhere in the proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

SHAREHOLDER VOTING MATTERS

CORPORATE STRUCTURE AND GOVERNANCE HIGHLIGHTS

We have recently updated our corporate structure and governance practices as follows:

Appointment of New Trustee; Trustee Succession

Led by our Nominating and Governance Committee, our Board of Trustees remains focused on ensuring that the composition of our Board is systematically refreshed so that, taken as a whole, the Board has the desired mix of skills, experience, reputation and diversity relevant to our strategic direction and operating environment, as well as the knowledge, ability and independence to continue to deliver a high standard of governance expected by investors. For more information on this process, see “Corporate Governance and Board Matters – Trustee Selection Process” beginning on page 18 of the proxy statement.

In connection with our focus on Board refreshment and trustee succession, in October 2016, our Board of Trustees increased the size of the Board from seven trustees to eight trustees and appointed Kati M. Penney to fill the vacancy created by the increase in the size of the Board. Ms. Penney has over 20 years of Big Four public accounting experience serving both private and public companies, executing financial statement audits and audits of internal controls over financial reporting; leading technical accounting matters and implementation of new accounting standards; advising on spin-offs, mergers, acquisitions and dispositions; initial public offerings; and securities offerings. Ms. Penney is currently a Managing Director at Cross Country Consulting, a corporate advisory consulting firm, where she provides accounting and financial consulting services to private and public companies. Prior to joining Cross Country, Ms. Penney was an assurance partner at Ernst & Young and was a member of Ernst & Young’s Global Real Estate, Hospitality & Construction sector team. Our Board of Trustees has determined that Ms. Penney qualifies as an “audit committee financial expert”.

In addition, Richard B. Chess is retiring upon expiration of his current term as a trustee, which expires at the Annual Meeting, and, therefore, will not be standing for re-election. Also, in accordance with the terms of our Governance Guidelines, which provide that “[n]o Trustee may be nominated to a new term if he or she would be age 75 or older at the time of the election,” Alan G. Merten exceeds the age limit for trustees and also is retiring upon expiration of his current term as a trustee, which expires at the Annual Meeting. In connection with the foregoing, our Board of Trustees will be reduced from eight trustees to six trustees and, therefore, at the Annual Meeting, only six trustees will be nominated to serve until the 2018 Annual Meeting of Shareholders.

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Amendment to the Charter to Allow Shareholders to Amend the Bylaws by a Majority Vote

In March 2017, our Board of Trustees approved an amendment to our charter that would, if approved by shareholders at the Annual Meeting, allow shareholders to amend the bylaws by a majority vote of the outstanding shares entitled to be cast on the matter. In connection with this approval, the Board of Trustees also approved an amendment to the bylaws to permit our shareholders to amend the bylaws by a majority vote of the outstanding shares. If the shareholders approve the amendment to the charter in Proposal 5, the amendment to the bylaws will become effective immediately upon filing the amendment to the charter.

SNAPSHOT OF BOARD, GOVERNANCE & COMPENSATION INFORMATION

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FIRST POTOMAC REALTY TRUST

7600 Wisconsin Avenue, 11th Floor

Bethesda, Maryland 20814

PROXY STATEMENT

Pursuant to Securities and Exchange Commission (“SEC”) rules, we are furnishing proxy materials to our common shareholders over the Internet. Accordingly, we mailed on or about     •    , 2017, a Notice Regarding the Availability of Proxy Materials (“Notice”) to our common shareholders of record as of March 14, 2017, or copies of the proxy materials and the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, if such shareholder previously requested to receive paper copies of these documents. Beginning on the date of the mailing of the Notice, all common shareholders and beneficial owners had the ability to access all of the proxy materials and the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 on a website referred to in the Notice and to vote by proxy on the Internet.

ABOUT THE MEETING: QUESTIONS & ANSWERS

Why am I receiving this proxy statement?

This proxy statement is furnished in connection with the solicitation of proxies for use at the Annual Meeting of Shareholders (the “Annual Meeting”) to be held at the offices of the Company, 7600 Wisconsin Avenue, 11th Floor, Bethesda, Maryland 20814 on Tuesday, May 23, 2017 at 9:00 a.m. Eastern Time, for the purposes stated in the accompanying Notice of Annual Meeting of Shareholders. This solicitation is made by First Potomac Realty Trust on behalf of our Board of Trustees. “We,” “our,” “us,” and the “Company” refer to First Potomac Realty Trust. This proxy statement, the enclosed proxy card and our Annual Letter to Shareholders and our Annual Report on Form 10-K for the year ended December 31, 2016 are first being mailed to shareholders beginning on or about     •    , 2017.

What am I being asked to vote on, and what are the Board’s voting recommendations?

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Will any other matters be voted on?

The proposals set forth in this proxy statement constitute the only business that the Board of Trustees intends to present at the Annual Meeting. The proxy does, however, confer discretionary authority upon the persons designated as proxy holders on the proxy card, or their substitutes, to vote on any other business that may properly come before the meeting.

Who is entitled to vote at the Annual Meeting?

Only holders of record of our common shares, or their duly appointed proxies, as of the close of business on March 14, 2017, the record date for the Annual Meeting, are entitled to receive notice of and to vote at the Annual Meeting and all adjournments or postponements thereof. Our common shares constitute the only class of securities entitled to vote at the meeting.

What are the voting rights of shareholders?

Each common share outstanding on the record date entitles its holder to cast one vote on each matter to be voted on at the Annual Meeting.

Who can attend the Annual Meeting?

All holders of our common shares at the close of business on March 14, 2017, the record date for the Annual Meeting, or their duly appointed proxies, are authorized to attend the Annual Meeting. Admission to the meeting will be on a first-come, first-served basis. If you attend the meeting, you may be asked to present valid photo identification, such as a driver’s license or passport, before being admitted. Cameras, recording devices and other electronic devices will not be permitted at the meeting.

Please also note that if you are the beneficial owner of common shares held in “street name” (that is, through a bank, broker or other nominee), you will need to bring a copy of the brokerage statement reflecting your share ownership as of March 14, 2017.

What will constitute a quorum at the Annual Meeting?

The representation in person or by proxy of a majority of the issued and outstanding common shares as of March 14, 2017 will constitute a quorum, permitting the shareholders to conduct business at the Annual Meeting. As of the March 14, 2017 record date, there were 58,712,937 common shares outstanding. If you have returned valid proxy instructions or if you hold your common shares in your own name as a holder of record and attend the Annual Meeting in person, your shares will be counted for the purpose of determining whether there is a quorum. We will include abstentions and broker non-votes in the calculation of the number of shares considered to be present at the meeting for purposes of determining the presence of a quorum at the meeting. If a quorum is not present, the Annual Meeting may be adjourned from time to time to a date not more than 120 days after March 14, 2017, by the vote of a majority of the shares represented at the Annual Meeting in person or by proxy until a quorum has been obtained.

How do I vote?

Voting in Person at the Annual Meeting

If you are a shareholder of record and attend the Annual Meeting, you may vote in person at the meeting. If you are the beneficial owner of common shares held in “street name” (that is, through a bank, broker or other nominee), and you wish to vote in person at the Annual Meeting, you will need to bring a copy of the brokerage statement reflecting your share ownership as of March 14, 2017 and obtain a “legal proxy” from the bank, broker or other nominee that holds your common shares of record.

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Voting by Proxy for Shares Registered Directly in the Name of the Shareholder

If you are a shareholder of record, you may instruct the proxy holders named in the proxy card how to vote your common shares in one of the following ways:

Voting by Proxy for Shares Held in Street Name

If you are the beneficial owner of common shares held in “street name” (that is, through a bank, broker or other nominee), then you should follow the instructions provided to you by your broker, bank or other nominee.

How many votes are required for the proposals to be approved?

Proposal 1 (Election of Trustees): Under our bylaws, to be elected in an uncontested election, trustee nominees must receive the affirmative vote of a majority of the votes cast, which means that the number of shares voted for a nominee must exceed the number of shares voted against that nominee. For purposes of the election of trustees, abstentions and broker non-votes (described below) will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum.

If an incumbent trustee fails to be re-elected by a majority of votes cast, that trustee is required under our bylaws to tender his or her resignation to the Board of Trustees. The Nominating and Governance Committee will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board of Trustees is required to act on the Nominating and Governance Committee’s recommendation and publicly disclose its decision and its rationale within 90 days after the election results are certified.

Proposal 2 (Ratification of Appointment of KPMG LLP): The affirmative vote of a majority of the votes cast is required for approval of the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2017, which is considered a routine matter (as discussed below). For purposes of the vote on this proposal, abstentions will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum.

Proposal 3 (Advisory Vote on Executive Compensation): The affirmative vote of a majority of the votes cast is required for approval (on a non-binding advisory basis) of named executive officer compensation, commonly referred to as “say-on-pay.” For purposes of the vote on this proposal, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum.

Proposal 4 (Advisory Vote on Frequency of Holding Advisory Votes on Executive Compensation): The affirmative vote of a majority of the votes cast is required for approval (on a non-binding advisory basis) of the frequency of holding the “say-on-pay” vote in the future. Since shareholders have several voting choices for this proposal, it is possible that no single choice will receive a majority of the votes cast. The option (every year, two years or three years) that receives the highest number of votes cast by shareholders will be the frequency for the advisory vote on executive compensation that has been selected, on a non-binding advisory basis, by the

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shareholders. For purposes of the vote on this proposal, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum.

Proposal 5 (Amendment of Our Charter to Allow Shareholders to Amend Our Bylaws by a Majority Vote): The affirmative vote of the holders of two-thirds of our outstanding shares entitled to be cast on the matter is required to amend our charter to allow our bylaws to be amended by a majority vote of the outstanding shares entitled to be cast on the matter. For purposes of the vote on this proposal, abstentions and broker non-votes will have the same effect as a vote against the proposal, although they will be considered present for the purpose of determining the presence of a quorum.

What are broker non-votes?

Broker non-votes occur when nominees, such as banks and brokers holding shares in “street” name on behalf of beneficial owners, do not receive voting instructions from the beneficial owners at least ten days before the Annual Meeting. If that happens, the nominees may vote those shares only on matters deemed “routine” by the New York Stock Exchange (the “NYSE”), the exchange on which our common shares are listed. On non-routine matters, nominees cannot vote without instructions from the beneficial owner, resulting in a so-called “broker non-vote.”

Proposal 2 (Ratification of Appointment of KPMG LLP) is the only proposal that is considered “routine” under the NYSE rules. Accordingly, no broker non-votes will arise in the context of voting for the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2017, and the broker is permitted to vote your shares on such ratification even if the broker does not receive voting instructions from you.

However, broker non-votes may arise in the context of Proposals 1, 3, 4 and 5 (Election of Trustees, Advisory Vote on Executive Compensation, Advisory Vote on Frequency of Holding Advisory Votes on Executive Compensation and Amendment of Our Charter, respectively) because such proposals are considered non-routine matters under the NYSE rules. Consequently, if you do not give your broker specific voting instructions, your broker will not be able to vote on any of these proposals.

How are proxy card votes counted?

If the accompanying proxy card is properly completed, signed and returned to us, and not subsequently revoked, it will be voted as directed by you. If the proxy card is submitted, but voting instructions are not provided, the proxy will be voted “FOR” each of the trustee nominees, “FOR” the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2017, “FOR” approval, on a non-binding advisory basis, of the named executive officer compensation, “ONE YEAR” for the advisory vote on the frequency of holding shareholder advisory votes on named executive officer compensation, “FOR” the amendment to our charter to allow shareholders to amend our bylaws by a majority vote and as recommended by our Board of Trustees with regard to any other matters that may properly come before the meeting, or, if no such recommendation is given, in the discretion of the proxy holders.

May I change or revoke my vote after I return my proxy card?

Yes. You may revoke a previously granted proxy at any time before it is exercised by any of the following actions:

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If your common shares are held on your behalf by a broker, bank or other nominee, you must contact them to receive instructions as to how you may revoke your proxy instructions.

Who pays the costs of soliciting proxies?

The Company will bear the costs of this solicitation, including the costs of preparing, assembling and mailing proxy materials and the handling and tabulation of proxies received. In addition to soliciting proxies through the Internet or by mail, proxies may be solicited by the trustees, officers and employees of the Company, for no additional compensation, by telephone, personal interviews or otherwise. It is anticipated that banks, brokers, fiduciaries, custodians and nominees will forward proxy soliciting materials to their principals, and that we will reimburse such persons for their out-of-pocket expenses.

You should rely only on the information provided in this proxy statement. We have not authorized anyone to provide you with different or additional information. You should not assume that the information in this proxy statement is accurate as of any date other than the date of this proxy statement or, where information relates to another date set forth in this proxy statement, then as of that date.

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PROPOSAL 1: ELECTION OF TRUSTEES

The Board of Trustees is currently comprised of eight trustees, all of whom have terms expiring at the Annual Meeting. As previously disclosed, Richard B. Chess is retiring upon expiration of his current term as a trustee, which expires at the Annual Meeting. In addition, in accordance with the terms of our Governance Guidelines, which provide that “[n]o Trustee may be nominated to a new term if he or she would be age 75 or older at the time of the election,” Alan G. Merten exceeds the age limit for trustees and also is retiring upon expiration of his current term as a trustee, which expires at the Annual Meeting. In connection with the foregoing, our Board of Trustees will be reduced from eight trustees to six trustees and, therefore, at the Annual Meeting, only six trustees will be nominated to serve until the 2018 Annual Meeting of Shareholders. The nominees, all of whom are currently serving as trustees of the Company, have been recommended by our Board of Trustees for election to serve as trustees for one-year terms until the 2018 Annual Meeting of Shareholders or until such time as their respective successors are elected and qualified. Based on its review of the relationships between the trustee nominees and the Company, the Board of Trustees has affirmatively determined that the following trustees are “independent” trustees under the rules of the NYSE and under applicable rules of the SEC: Robert H. Arnold, James P. Hoffmann, Kati M. Penney, Thomas E. Robinson and Terry L. Stevens.

The Board of Trustees knows of no reason why any nominee would be unable to serve as a trustee. If any nominee is unavailable for election or service, the Board of Trustees may designate a substitute nominee and the persons designated as proxy holders on the proxy card will vote for the substitute nominee recommended by the Board of Trustees. Under these circumstances, the Board of Trustees may also, as permitted by our bylaws, decrease the size of our Board of Trustees.

Nominees for Election as Trustees

The following table sets forth the names, ages and principal occupations of each of the trustees nominated for election at the Annual Meeting, and the period during which each has served as a trustee:

Set forth below are descriptions of the biographical information and specific qualifications and attributes of each of the trustees nominated for election at the Annual Meeting.

Robert H. Arnold has served since 1989 as the Co-Managing Director of R.H. Arnold & Co., Inc., a New York-based financial consulting firm which specializes in providing advisory services to U.S. and international institutions. He has served as a trustee since our initial public offering and was a director of First Potomac Realty Investment Trust, Inc. (our “Predecessor”) from 1997 until our initial public offering in 2003. Mr. Arnold has more than 30 years of financial experience including serving as the Treasurer of Merrill Lynch & Co. and the Chief Financial Officer of Merrill Lynch Capital Markets. Mr. Arnold also serves on the board of the Wilmington Funds. He received his Bachelor of Science, Master of Science and Ph.D. degrees from Northwestern University. Nominee’s Specific Qualifications: Mr. Arnold’s service at Merrill Lynch and as

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Co-Managing Director of R.H. Arnold & Co., Inc. has provided him with extensive experience in investment banking and finance. This experience is particularly valuable in connection with the Company’s consideration of strategic alternatives and its involvement in the debt and equity markets. Mr. Arnold currently serves as chairperson of our Finance and Investment Committee. In addition, although he does not currently serve on the Audit Committee, our Board of Trustees has determined that Mr. Arnold qualifies as an “audit committee financial expert” as defined by the rules and regulations of the SEC.

James P. Hoffmann is a former Partner and Senior Vice President of Wellington Management Company, an investment management company, where he served as the firm’s senior global REIT analyst and portfolio manager, as well as on numerous internal management oversight committees, from 1997 to 2012. Prior to that, he held analyst positions at Everen Securities, LaSalle Street Capital Management and Eastdil Realty, Inc. since 1986, and gained extensive experience covering REITs and other real estate portfolios across all property sectors. He also served as Senior Investment Officer, Real Estate, at the Washington State Investment Board from 1992 to 1994. Mr. Hoffmann has served as a trustee of the Company since 2015. Mr. Hoffmann currently serves on the board of directors of HCP, Inc. (NYSE: HCP). He also served on the Board of Directors of New York REIT, Inc. (NYSE: NYRT) from October 2016 to January 2017. Since March 2015, Mr. Hoffmann has been a member of the Board of Representatives of the International Market Centers, L.P., a private REIT, and also serves on its Audit Committee and Compensation Committee. He received a Bachelor of Science in Economics and Master of Science in Real Estate Appraisal & Investment Analysis from the University of Wisconsin. Nominee’s Specific Qualifications: Mr. Hoffmann’s thirty years of experience in real estate investment analysis and as a current director of another public REIT, as well as his comprehensive understanding of the global real estate investment industry, provide us with valuable insight with respect to our business and institutional shareholder perspectives, the evaluation of investment opportunities and the Company’s overall strategic planning process.

Robert Milkovich has served as President, Chief Executive Officer and a trustee of the Company since November 2015 and has served as Chief Operating Officer since joining the Company in June 2014. Mr. Milkovich has over 25 years of leadership in the greater Washington, D.C. commercial real estate industry, as well as elsewhere in the country. Prior to joining the Company, he served, since 2012, as President and Head of the Investment Committee of Spaulding & Slye Investments, a comprehensive real estate services and investment company that is a wholly owned subsidiary of JLL. He also served as Regional Director of Archon Group, L.P., an investment arm of the Merchant Banking Division of Goldman Sachs, which he joined in 2004, where he spearheaded the asset management of $2 billion for their Merchant Bank, Special Situations Group, and other parts of the firm, in addition to generating investment opportunities. Mr. Milkovich also previously served as Market Managing Director for CarrAmerica Realty Corporation, a then publicly traded office REIT headquartered in Washington, D.C., with primary responsibilities including overseeing asset management, development activities, portfolio investments and acquisition efforts. He currently serves as a Director and Investment Committee member for the University System of Maryland Foundation. Mr. Milkovich is on the Board and Membership Committee of the Economic Club of Washington, D.C. and is a member of the Urban Land Institute’s Office Development Counsel, and was a past president of The Real Estate Group in Washington, D.C. Mr. Milkovich graduated with a B.S. in Business Administration from the University of Maryland. Nominee’s Specific Qualifications: Mr. Milkovich’s 25 years of experience in commercial real estate and relationships in the commercial real estate industry, as well as his experience serving as President and Head of the Investment Committee of Spaulding & Slye Investments, provide us with strategic and decisive leadership.

Kati M. Penney is a Managing Director of Cross Country Consulting, a corporate advisory consulting firm, where she provides accounting and financial consulting services to private and public companies, a position she has held since December 2014. Prior to joining Cross Country Consulting, Ms. Penney served as an Assurance Partner at Ernst & Young and was a member of Ernst & Young’s Global Real Estate, Hospitality & Construction sector team from June 2007 through June 2014, and served as a Senior Manager from May 2002 through June 2007. Prior to joining Ernst & Young, Ms. Penney held various positions with Arthur Anderson from 1993 to 2002. Ms. Penney is on the Foundation Board of Children’s Hospital of Philadelphia and serves as Chair of its Cardiac Board of Visitors. She also currently serves as an advisor and guest lecturer at the Catholic

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University School of Business & Economics. Ms. Penney received her Bachelors of Science and Masters in Accounting from the Catholic University of America and she is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants. Nominee’s Specific Qualifications: Ms. Penney’s 20 years of Big Four public accounting experience assisting public companies with transaction-related accounting matters, internal controls over financial reporting, and the application of technical accounting guidance, as well as her experience advising on spin-offs, mergers, acquisitions and dispositions, and securities offerings, qualify her to help the Board of Trustees fulfill its oversight responsibilities with respect to financial reporting, accounting and risk assessment functions, as well as the Company’s evaluation of strategic transactions. Our Board of Trustees has determined that Ms. Penney qualifies as an “audit committee financial expert” as defined by the rules and regulations of the SEC.

Thomas E. Robinson is Senior Advisor to the real estate investment banking group at Stifel, a full-service brokerage and investment banking firm, where he previously was a managing director and co-head of the real estate investment banking group. Prior to that position he served as President and Chief Financial Officer of Storage USA, Inc., a self-storage REIT, from 1994 to 1997. Mr. Robinson has served as a trustee of the Company since 2013. Mr. Robinson currently serves on the boards of directors of Tanger Factory Outlet Centers, Inc. (NYSE: SKT) and Essex Property Trust (NYSE: ESS). He is a former trustee of Centerpoint Properties Trust and BRE Properties, Inc. (NYSE: BRE), and a former director of Legg Mason Real Estate Investors, Inc. Mr. Robinson is a former member of the Board of Governors of the National Association of Real Estate Investment Trusts (NAREIT) and in 2009 received its Industry Achievement Award for his wisdom, expertise, and service to the REIT industry. He holds a Bachelor’s degree from Washington and Lee University, a Juris Doctor degree from Suffolk University Law School, and a Master of Laws degree in Taxation from the Georgetown University Law Center. Nominee’s Specific Qualifications: Mr. Robinson’s experience as a former chief financial officer of a public REIT and as a current director of two public REITs, and his expertise in real estate finance/investment banking, accounting and the public equity markets qualify him to help ensure that the Board of Trustees fulfills its oversight responsibilities with respect to the Company’s overall strategic planning process, capital structure, financings and evaluation of investment opportunities. Mr. Robinson currently serves as chairperson of the Compensation Committee of the Board of Trustees.

Terry L. Stevens has served as Chairman of our Board of Trustees since July 2015, and as a trustee since our initial public offering in 2003. He was previously Senior Vice President and Chief Financial Officer of Highwoods Properties, Inc. (NYSE: HIW) (“Highwoods”) located in Raleigh, North Carolina until his retirement in September 2014. Mr. Stevens joined Highwoods in December 2003. Highwoods is a publicly traded real estate investment trust that owns office and industrial properties. Prior to joining Highwoods, from 1994 to 2003, Mr. Stevens held various executive positions, including Executive Vice President, Chief Financial Officer and Trustee, at Crown American Realty Trust, a publicly traded retail real estate company that merged with Pennsylvania Real Estate Investment Trust in November 2003. From 1990 to 1994, Mr. Stevens was Director of Financial Systems Development as well as Director of Internal Audit at AlliedSignal, Inc., a large multi-national manufacturer. He also spent 18 years with Price Waterhouse, including seven years as an audit partner. Mr. Stevens received a Bachelor of Science degree in physics from Juniata College and a Masters of Business Administration from The Wharton School. Nominee’s Specific Qualifications: Mr. Stevens’ experience as a former chief financial officer of two public REITs and as a former trustee of a public REIT, and his expertise in REIT accounting, real estate finance and the public equity markets qualify him to help the Board of Trustees fulfill its oversight responsibilities with respect to the Company’s overall strategic planning process, capital structure, financings and evaluation of investment opportunities, and financial reporting, accounting and risk assessment functions. Our Board of Trustees has determined that Mr. Stevens qualifies as an “audit committee financial expert” as defined by the rules and regulations of the SEC.

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PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of our Board of Trustees has appointed KPMG LLP (“KPMG”) as our Company’s independent registered public accounting firm for the year ending December 31, 2017. Although shareholder approval is not required, in recognition of the importance of this matter to our shareholders and as a matter of good corporate governance, our Board of Trustees has determined that it is in the best interest of our shareholders to seek shareholder ratification of our Audit Committee’s selection of KPMG as our independent registered public accounting firm.

If our shareholders do not ratify the selection of KPMG, the Audit Committee will take that fact into consideration, together with such other factors as it deems relevant, and may, but will not be required to, appoint a different independent registered public accounting firm.

For additional information regarding our independent registered public accounting firm, see “Principal Accountant Fees and Services” below.

We expect that a representative of KPMG will be present at our Annual Meeting, where the representative will be afforded an opportunity to make a statement and to respond to appropriate questions.

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CORPORATE GOVERNANCE AND BOARD MATTERS

Corporate Governance Profile

Our corporate governance is structured in a manner that our Board of Trustees believes aligns our interests with those of our shareholders. Notable features of our corporate governance structure include the following:

WHAT WE DO				WHAT WE DON’T DO
		83% Independent Trustees. Five of our six trustees standing for election have been determined by us to be “independent” as defined by the NYSE listing standards.				No Classified Board. Our trustees are elected annually for one-year terms.
		Independent Chairman. Our Chairman of the Board is an independent trustee, which strengthens the role of our independent trustees and encourages independent Board leadership.				No Poison Pill. The Company does not have a “poison pill” or shareholder rights plan.
		Majority Voting for Trustees. We recently adopted majority voting for uncontested trustee elections, which became effective in October 2015 and applies to the Annual Meeting.				Opted Out of Maryland Anti-Takeover Statutes. We have elected not to be subject to the Maryland Business Combination Statute and the Maryland Control Share Acquisition Statute.
		Entirely Independent Committees. All of the members of our Audit, Compensation and Nominating and Governance Committees are independent.				No Significant Related Party Transactions. We do not currently have any significant related party transactions and have robust related party transaction review procedures.
		Audit Committee Financial Expert. Three of our trustees qualify as an “audit committee financial expert” as defined by the SEC.				No Pledging of Our Securities. None of our current executive officers or trustees are permitted to pledge our common shares or OP Units for margin or other loans.
		Share Ownership Guidelines. Our share ownership guidelines require that our CEO and other executive vice presidents (whether or not they are named executive officers) own shares with an aggregate value of 4x and 2x current base salary, respectively. All non-employee trustees must hold common shares equal to at least the aggregate cash value of equity awards for the last four years.				No Hedging of Our Securities. Our anti-hedging policy prohibits our trustees, officers (including our named executive officers) and directors from engaging in the following transactions: (i) hedging or monetization transactions involving our securities; (ii) trading in options, puts, calls or other derivative instruments involving our securities; (iii) short sales of our securities; and (iv) purchasing our securities on margin.
		Limit Overboarding of Trustees. Our Governance Guidelines provide that no trustee may serve on more than four other public company boards. In addition, our CEO does not serve on any public company board other than our Board of Trustees.				Proposal to Limit Undue Restrictions on Shareholder Right to Amend Bylaws. Our Board of Trustees recently approved an amendment to our charter that would, if approved by shareholders at the Annual Meeting, allow shareholders to amend the bylaws by a majority vote of the outstanding shares entitled to be cast on the matter.

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Recent Changes to Corporate Governance Practices

Our Board of Trustees values the input and insights of the Company’s shareholders and believes that effective shareholder engagement strengthens the Board’s role as an informed and engaged fiduciary. The Board of Trustees meaningfully integrates the feedback it receives from shareholders into its review and assessment of the Company’s corporate governance policies. In light of recent developments in corporate governance best practices, and in response to shareholder feedback, the Board of Trustees approved and implemented several corporate governance initiatives since our 2016 annual meeting that the Board of Trustees believes are in our best interests and the best interests of our shareholders, including:

Corporate Governance Guidelines

Our Board of Trustees has adopted Governance Guidelines, which set forth a flexible framework within which the Board of Trustees, assisted by its committees, directs the affairs of the Company. The Governance Guidelines reflect the Board of Trustees’ commitment to monitoring the effectiveness of decision-making at the Board of Trustees and management level and ensuring adherence to good corporate governance principles. The Governance Guidelines address, among other things:

Our Corporate Governance guidelines are subject to periodic review by the Nominating and Governance Committee.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics that applies to our trustees, officers (including the Company’s President and Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer) and other employees. Among other matters, our Code of Business Conduct and Ethics is designed to deter wrongdoing and to promote:

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Any waiver of the Code of Business Conduct and Ethics applicable to our executive officers or trustees may be made only by the approval of a majority of the disinterested members of the Board of Trustees and will be promptly disclosed to shareholders as required by law, stock exchange regulation or the requirements of the SEC. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K relating to amendments to or waivers from any provision of the Code of Business Conduct and Ethics applicable to our President and Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer by posting such information on our website at www.first-potomac.com under the section “Investors — Corporate Governance.” Information on or accessible through our website is not and should not be considered a part of this proxy statement.

Availability of Corporate Governance Materials

Shareholders may view our corporate governance materials, including the charters of our Audit Committee, our Compensation Committee, our Nominating and Governance Committee and our Finance and Investment Committee, our Governance Guidelines and our Code of Business Conduct and Ethics, on our website at www.first-potomac.com under the section “Investors — Corporate Governance,” and these documents are available in print to any shareholder upon request by writing to First Potomac Realty Trust, 7600 Wisconsin Avenue, 11th Floor, Bethesda, Maryland 20814, Attention: Secretary. Information on or accessible through our website is not and should not be considered a part of this proxy statement.

Independence of Trustees

Our bylaws and Governance Guidelines and the listing standards of the NYSE require that a majority of our trustees be independent. Our Board of Trustees has adopted categorical standards to assist the Board of Trustees in evaluating the independence of each of the trustees. The categorical standards describe various types of relationships that could potentially exist between a board member and the Company and sets thresholds at which such relationships would be deemed to be material. Provided that no relationship or transaction exists that would disqualify a trustee under the categorical standards and the Board of Trustees determines, taking into account all facts and circumstances, that no other material relationship between the Company and the trustee exists of a type not specifically mentioned in the categorical standards, the Board of Trustees will deem such person to be independent. A trustee shall not be independent if he or she satisfies any one or more of the following criteria:

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The Board of Trustees, after broadly considering the above criteria and all relevant facts and circumstances regarding the past and current relationship of each trustee with the Company, determined that the following members of the Board of Trustees had no material relationship with the Company and were independent in accordance with the NYSE listing standards and applicable SEC rules: Robert H. Arnold, Richard B. Chess, James P. Hoffmann, Alan G. Merten, Kati M. Penney, Thomas E. Robinson and Terry L. Stevens. We presently have eight trustees, including these seven independent trustees. Robert Milkovich is not independent because he is an executive officer of the Company.

Board Leadership Structure

In 2015, our Board of Trustees separated the roles of the Chairman and Chief Executive Officer. As a result, our President and Chief Executive Officer is Robert Milkovich, while Terry L. Stevens, who is independent under the rules of the NYSE, serves as Chairman of the Board of Trustees. Our Board of Trustees has concluded that, in order to strengthen the role of our independent trustees and encourage independent Board leadership, the Board of Trustees shall maintain a leadership structure in which either the Chairman is an independent trustee under the rules of the NYSE or, if the Chairman is not independent, the independent trustees shall appoint a Lead Independent Trustee. As a result, our Governance Guidelines provide that, if at any time the Chairman is not independent under the rules of the NYSE, the Board of Trustees shall appoint a Lead Independent Trustee elected by the independent trustees. If elected under such circumstances, the Lead Independent Trustee will have the following duties and responsibilities:

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We believe this Board leadership structure is appropriate for our Company at this time as it promotes effective independent leadership and direction regardless of whether, in the future, the Chairman is independent under the rules of the NYSE.

The Board’s Role in Risk Oversight

The Board of Trustees has overall responsibility for the oversight of the Company’s enterprise risk management process. In this regard, the Board of Trustees seeks to identify, understand, analyze and oversee critical business risks. While the full Board of Trustees has primary responsibility for risk oversight, it utilizes its committees, as appropriate, to monitor and address risks that may be within the scope of a particular committee’s expertise or charter. Our Board of Trustees uses its committees to assist in its risk oversight function as follows:

While the Board of Trustees oversees risk management as part of an on-going process, the Company’s management is charged with managing risk. Management periodically reports to the Board of Trustees and its committees, as appropriate, on the material risks to the Company, including in the areas of market condition, investment selection and optimization, access to capital, debt covenant compliance, refinancing of corporate and property level debt, tenant credit and leasing, and the mitigation activities intended to address such risks, and provides a quarterly update regarding the Company’s policies and procedures in place to minimize certain potential legal, regulatory and contractual risks.

Board Committees

Our Board of Trustees has four standing committees to assist it in the discharge of its responsibilities. The principal responsibilities of each committee are described below. Committee members are appointed by the Board of Trustees upon the recommendation of the Nominating and Governance Committee, which annually reviews the composition of each committee. Actions taken by any committee of our Board of Trustees are reported to the Board of Trustees, usually at the meeting following such action. All members of the committees described below are “independent” of the Company as that term is defined in the NYSE listing standards.

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The table below provides membership information for each of the committees as of the date of this proxy statement:

Audit Committee

Our Board of Trustees has established an Audit Committee, which consists of Messrs. Chess (Chair), Hoffmann and Stevens and Ms. Penney. Our Board of Trustees has determined that each of the Audit Committee members is independent, in accordance with the NYSE listing standards and applicable SEC rules, and that each of the members of the Audit Committee is financially literate, as that term is interpreted by our Board of Trustees. In addition, our Board of Trustees has determined that Mr. Stevens and Ms. Penney are each an “audit committee financial expert” as that term is defined in the applicable SEC rules. The Audit Committee operates under a written charter adopted by our Board of Trustees. The principal functions and responsibilities of the Audit Committee are to:

The Audit Committee has authority, to the extent it deems necessary or appropriate, to retain special legal, accounting or other consultants to advise the Audit Committee and has the authority to determine, and to receive

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from the Company, the appropriate compensation to be paid to any special legal, accounting or other consultant retained by the Audit Committee.

For more information, please see “Audit Committee Report” beginning on page 64.

Compensation Committee

Our Board of Trustees has established a Compensation Committee, which currently consists of Messrs. Robinson (Chair) and Arnold and Dr. Merten. Our Board has determined that each of the Compensation Committee members is independent in accordance with the NYSE listing standards and applicable SEC rules.

The Compensation Committee operates under a written charter adopted by our Board of Trustees. The Compensation Committee determines compensation for our executive officers and administers the Company’s 2009 Equity Compensation Plan (as amended, the “2009 Plan”). Although the Company’s 2003 Equity Compensation Plan (as amended, the “2003 Plan”) expired in 2013, awards remain outstanding under the 2003 Plan and, as such, the Compensation Committee administers awards outstanding under the 2003 Plan. The principal functions of the Compensation Committee include:

The Compensation Committee has the sole authority to retain and terminate any compensation consultant used to assist in the evaluation of trustee or executive officer compensation and has the sole authority to approve the consultant’s fees and other retention terms. The Compensation Committee also has authority, to the extent it deems necessary or appropriate, to retain special legal, accounting or other consultants to advise the Compensation Committee and has the authority to determine, and to receive from the Company, the appropriate compensation to be paid to any special legal, accounting or other consultant retained by the Compensation Committee. In selecting any such advisors or consultants, the Compensation Committee considers the independence of such advisor or consultant, as determined by it in its business judgment, in accordance with the standards of the NYSE, any applicable rules and regulations of the SEC and other applicable laws relating to independence of advisors and consultants.

Nominating and Governance Committee

Our Board of Trustees has established a Nominating and Governance Committee, which currently consists of Dr. Merten (Chair) and Messrs. Chess and Stevens. Our Board has determined that each of the Nominating and Governance Committee members is independent in accordance with NYSE listing standards and applicable SEC rules. The Nominating and Governance Committee operates under a written charter adopted by our Board of Trustees. The principal functions and responsibilities of the Nominating and Governance Committee include:

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Finance and Investment Committee

Our Board of Trustees has established a Finance and Investment Committee, which consists of Messrs. Arnold (Chair), Hoffmann and Robinson and Ms. Penney. The Finance and Investment Committee operates under a written charter adopted by our Board of Trustees. The principal functions and responsibilities of the Finance and Investment Committee include:

Other Committees

From time to time, our Board of Trustees may establish other committees as circumstances warrant. Those committees will have the authority and responsibility as delegated to them by our Board of Trustees.

Executive Sessions of Our Non-Management Trustees

Pursuant to our Governance Guidelines and the NYSE listing standards, in order to promote open discussion among non-management trustees, the Board of Trustees regularly holds executive sessions that exclude our non-independent trustee and other members of our management team. There were four executive sessions held during 2016. Our independent Chairman presides over these executive sessions.

Trustee Attendance at Meetings of our Board of Trustees and its Committees and Annual Meeting of Shareholders

The Board of Trustees held 13 meetings in 2016, including telephonic meetings. All trustees attended at least 75% of the aggregate number of meetings of the Board of Trustees and its committees on which they served during 2016. On an aggregate basis, the trustees attended 95% of all meetings of the Board of Trustees and the committees on which each trustee served in 2016.

Our Governance Guidelines provide that, absent unusual or unforeseen circumstances, all trustees of the Company should attend the Company’s annual meetings of shareholders. All of our trustees then on the Board attended the 2016 Annual Meeting.

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Trustee Selection Process

Process and Criteria for Identifying and Evaluating Trustee Candidates. The Nominating and Governance Committee is responsible for reviewing each year the qualifications and performance of each member of the Board of Trustees, the qualifications of potential new Board members, and the composition of the Board of Trustees as a whole.

The Nominating and Governance Committee seeks to identify candidates based on input provided by a number of sources, including (i) other members of the Board, (ii) officers and employees of the Company and (iii) shareholders of the Company. As part of the candidate identification process, the Nominating and Governance Committee evaluates the skills, experience and diversity possessed by the current Board of Trustees, and whether there are additional skills, experience or diversity that should be added to complement the composition of the existing Board of Trustees. The Nominating and Governance Committee also will take into account whether existing trustees have indicated a willingness to continue to serve as trustees if re-nominated. Once trustee candidates have been identified, the Nominating and Governance Committee will then evaluate each candidate in light of his or her qualifications and credentials, and any additional factors that the Nominating and Governance Committee deems necessary or appropriate. Existing trustees who are being considered for re-nomination will be re-evaluated as part of the Nominating and Governance Committee’s process of recommending trustee candidates.

Although the Nominating and Governance Committee does not have a formal policy with respect to diversity, we endeavor to have a diverse Board whose members represent a range of experiences and perspectives in business, finance and policy-making that are relevant to the Company’s business and markets. The Nominating and Governance Committee, therefore, focuses on the following criteria: a trustee’s independence qualifications under NYSE rules, diversity, business experience, ethics, leadership characteristics, financial acumen, industry and market knowledge, and knowledge of the public markets.

After completing the identification and evaluation process described above, the Nominating and Governance Committee will recommend to the Board of Trustees the nomination of a number of candidates equal to the number of trustee vacancies that will exist at the annual meeting of shareholders. The Board of Trustees will then select the Board’s trustee nominees for shareholders to consider and vote upon at the annual meeting of shareholders.

Trustee Candidate Recommendations and Nominations by Shareholders. The Nominating and Governance Committee’s charter provides that the committee will consider trustee candidate recommendations by shareholders. Shareholders should submit any such recommendations for the consideration of our Nominating and Governance Committee through the method described under “Communications with Our Board of Trustees” below. In addition, any shareholder entitled to vote for the election of trustees at the 2018 annual meeting of shareholders may nominate persons for election to the Board of Trustees if that shareholder complies with the notice procedures summarized in “Shareholder Proposals and Nominations for Our 2018 Annual Meeting” below. All candidates submitted by shareholders will be evaluated in the same manner as all other trustee candidates, provided that the shareholders comply with the notice procedures.

Communications with Our Board of Trustees

Shareholders and other interested parties may communicate directly with our Board of Trustees as a whole, the non-management trustees of our Board, any committee of our Board or any specified individual trustee by sending a written communication c/o First Potomac Realty Trust, 7600 Wisconsin Avenue, 11th Floor, Bethesda, Maryland 20814, Attention: Secretary. The Company does not screen mail, and all such letters will be forwarded to our Board, the non-management trustees and any such specified committee or individual trustee, as applicable.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Party Transactions Policy

Our related party transactions policy is set forth in the Company’s bylaws and Code of Business Conduct and Ethics. The policy provides that trustees and officers are prohibited from entering into agreements and transactions with the Company that involve a conflict of interest, unless such conflict is first disclosed to the Board of Trustees and waived by a majority of the disinterested members of the Board of Trustees. For these purposes, a conflict of interest exists when a person’s interests are not aligned or appear not be aligned, or interfere, or appear to interfere, in any way with the interests of the Company.

Certain Relationships

Employment and Related Agreements

We have entered into employment agreements with our named executive officers. The material terms of the employment agreements with our named executive officers are described under “Compensation of Executive Officers — Employment and Related Agreements” and “Compensation of Executive Officers — Potential Payments Upon Termination or a Change in Control.”

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COMPENSATION OF TRUSTEES

The following table presents information relating to total compensation of our trustees for the fiscal year ended December 31, 2016. Robert Milkovich, our President, Chief Executive Officer and Chief Operating Officer, received no compensation for his service on the Board of Trustees.

Additional Information Regarding Compensation of Trustees

Annual Fees and Equity Awards. As compensation for serving on our Board of Trustees each of our non-employee trustees is entitled to receive an annual base cash fee of $35,000. The chairperson of each of the Audit Committee and Compensation Committee is entitled to receive an additional annual cash fee of $20,000 and the chairperson of each of the Nominating and Governance Committee and the Finance and Investment Committee is entitled to receive an additional annual cash fee of $15,000; provided, however, that a trustee may not receive more than one chairperson’s fee. The independent Chairman of the Board of Trustees is entitled to receive an additional annual cash fee of $45,000. Each member of the Audit Committee (other than the chairperson) is entitled to receive an additional annual cash fee of $10,000, each member of the Compensation Committee (other than the chairperson) is entitled to receive an additional annual cash fee of $10,000 and each non-employee trustee who was a member of any other committee of the Board of Trustees (other than the chairperson) is entitled to receive an additional annual cash fee of $5,000 with respect to each committee on which he serves. All of the fees are paid quarterly.

In addition, on May 24, 2016, each of our non-employee trustees (except for Ms. Penney, who joined the board in October and received a pro-rated restricted share award) received a grant of 6,138 restricted common shares (valued on the date of grant at approximately $55,000), all of which will vest on May 23, 2017, assuming continued service by the trustee until that date.

We reimburse all trustees for reasonable out-of-pocket expenses incurred in connection with their service on the Board of Trustees and any and all committees.

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EXECUTIVE OFFICERS

The following table contains information regarding the current executive officers of the Company. These officers are appointed annually by the Board of Trustees and serve at the Board’s discretion.

Robert Milkovich. See Mr. Milkovich’s information on page 7.

Andrew P. Blocher joined the Company in October 2012 as Executive Vice President, Chief Financial Officer and Treasurer. Mr. Blocher has over 20 years of finance and capital markets experience, including 15 years in the public REIT sector. Prior to joining the Company, Mr. Blocher was the Chief Financial Officer at Federal Realty Investment Trust (NYSE: FRT), a publicly traded retail REIT, where he had oversight of the finance, accounting, human resources, investor relations and information technology departments. Mr. Blocher joined Federal Realty Investment Trust in 2000 as Vice President, Investor Relations and was promoted to Senior Vice President in 2007 and to Chief Financial Officer in 2008. Mr. Blocher had served as Director, Structured Finance Marketing and Modeling, at Freddie Mac, as well as Vice President of Capital Markets for CRIIMI MAE Inc., a mortgage REIT. Mr. Blocher is a member of the National Association of Real Estate Investment Trusts (NAREIT). In addition, he currently serves as a member of the Board of Directors of Make-A-Wish^® Mid-Atlantic, Inc., and serves as a member of its Executive Committee, as well as Chairman of its Audit and Finance Committee. Mr. Blocher received his Bachelor of Science degree in Finance from Indiana University in Bloomington and his Masters of Business Administration in Finance from The George Washington University.

Samantha Sacks Gallagher joined the Company in October 2014 as Executive Vice President, General Counsel and Secretary. Ms. Gallagher serves as the Company’s chief legal officer and leads the Company’s corporate legal function. In her role, she has leadership responsibility for corporate governance matters, SEC and NYSE compliance, structuring of corporate-level transactions, overseeing litigation, as well as managing outside counsel. Ms. Gallagher has over 15 years of experience representing REITs and other real estate companies and financial institutions. Prior to joining the Company, Ms. Gallagher served as a Partner at Arnold & Porter LLP in the firm’s Corporate and Securities Practice. She also previously served as a Partner at Hogan Lovells US LLP in the firm’s Corporate, Capital Markets and REIT practice groups (having joined Hogan as a corporate attorney in 2001). While in private practice, Ms. Gallagher focused on capital markets transactions (including public and private equity and debt offerings), joint ventures, mergers and acquisitions and strategic investments, as well as advising companies in a variety of corporate and securities law matters. She currently serves on the Board of Directors for Make-A-Wish^® Mid-Atlantic, Inc., where she is Chair of its Governance Committee and is a member of its Executive Committee. Ms. Gallagher received her Juris Doctor degree from Georgetown University Law Center, cum laude, and her Bachelor of Arts degree from Princeton University, summa cum laude.

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SHARE OWNERSHIP OF TRUSTEES AND EXECUTIVE OFFICERS

The following table sets forth certain information, as of March 14, 2017, regarding the Company’s common shares owned of record or known to the Company to be owned beneficially by each trustee and nominee for trustee, each named executive officer and all trustees and executive officers as a group. At March 14, 2017, there were 58,712,937 common shares outstanding. Except as set forth in the footnotes to the table below, each of the shareholders identified in the table has sole voting and investment power over the common shares beneficially owned by that person. Unless otherwise indicated, the address for each individual listed below is c/o First Potomac Realty Trust, 7600 Wisconsin Avenue, 11th Floor, Bethesda, Maryland 20814.

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SHARE OWNERSHIP BY CERTAIN BENEFICIAL OWNERS

To the Company’s knowledge, based upon information available to the Company, the following table sets forth the beneficial owners of more than 5% of the Company’s common shares as of March 14, 2017. At March 14, 2017, there were 58,712,937 common shares outstanding.

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is comprised of Thomas E. Robinson (Chair), Robert H. Arnold and Alan G. Merten, each of whom is an independent trustee. No member of the Compensation Committee is or was formerly an officer or an employee of the Company. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board of Trustees or the Compensation Committee, nor has such interlocking relationship existed in the past. Accordingly, during 2016 there were no interlocks with other companies within the meaning of the SEC’s rules.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section of this proxy statement with management and, based on that review and discussion, the committee recommended to our Board of Trustees that it be included in this proxy statement.

Respectfully submitted,

COMPENSATION COMMITTEE

Thomas E. Robinson, Chairperson

Robert H. Arnold

Alan G. Merten

The foregoing report does not constitute “soliciting material” and shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such acts.

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COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Committee of our Board of Trustees is responsible for designing and administering the underlying policies and principles of our executive officer compensation program. This Compensation Discussion and Analysis describes our executive compensation program for our named executive officers and describes how and why the Compensation Committee made its 2016 compensation decisions. Our named executive officers for 2016 (the “named executive officers” or “executive officers”) were as follows:

This Compensation Discussion and Analysis is organized as follows:

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Executive Summary

Compensation Philosophy and Objectives

The underlying principles of our executive compensation program are to reward executives for developing and executing strategies that create shareholder value, drive financial and strategic results and enhance our competitive position within the industry and markets in which we compete. The specific objectives of our executive compensation program are to:

2016 Business and Governance Highlights

The following are examples of key achievements and initiatives of the Company in 2016:

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We believe that all of these achievements and initiatives helped drive strong operating and financial results throughout 2016, and position us with positive operating momentum, a strong balance sheet and capital available to support future growth and drive shareholder returns. In particular, we believe that the Company’s strategic plan has been well-received by our shareholders and we have already started realizing the benefits of the strategic and forward-thinking actions that we took in 2016 pursuant to the strategic plan. The following charts demonstrate our absolute and relative total shareholder return since February 22, 2016 (the date of announcement of the strategic plan) through December 31, 2016, as well as showing such information for the full-year 2016 (thereby demonstrating the impact of the strategic plan and the initiatives implemented pursuant to the strategic plan). The charts compare our total shareholder return to the MSCI US REIT Index.

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Impact of the Leadership Transition on 2016 Compensation

On November 8, 2015, the Company undertook a leadership transition, pursuant to which Robert Milkovich was promoted to President and Chief Executive Officer, and was appointed to the Board of Trustees. In connection with this leadership transition, the Compensation Committee of the Board of Trustees undertook a comprehensive review of the Company’s executive compensation arrangements, with a view toward compensating the Company’s current executive officers in a manner that (i) reflects current market practices, (ii) recognizes the increase in responsibilities of the Company’s executive officers in light of the leadership transition, (iii) provides uniformity among the employment arrangements of the Company’s executive officers, and (iv) implements certain governance changes by (a) providing that the severance payments will generally be based on a multiple of the average (not highest) bonus paid to the executives in the three years prior to their termination and (b) eliminating any remaining 280G gross-up provisions from prior employment arrangements.

As a result of that review, in January 2016, the Compensation Committee concluded that the following steps were warranted:

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Compensation Structure Highlights

The following is an overview of the highlights of our compensation structure, and the fundamental compensation policies and practices we do and do not use.

WHAT WE DO

Pay for Performance. We provide alignment between pay and performance by linking a meaningful portion of total compensation to the achievement of multiple operational and strategic goals through our short-term incentive program, as well as rigorous absolute and relative shareholder return goals through our long-term incentive program.

Balanced Compensation. We balance overall compensation by linking some portions of pay to annual performance goals and some portions (particularly long-term incentive compensation) to multi-year performance goals.

Forward-Looking Long-Term Incentive Compensation Structure. We are transitioning to a long-term incentive compensation structure that is based on forward-looking performance over a multi-year performance period. The shift from a historical “looking back” structure to the new forward-looking structure reflects market practice and was established in consultation with the Compensation Committee’s compensation consultant.

Performance-Based Awards Include Additional Time-Based Vesting Component to Enhance Retention. We require that awards earned for performance over a multi-year period are subject to additional time-based vesting after the performance period to enhance retention.

Double-Trigger Severance Payments. Under our executives’ employment agreements, a “change in control” by itself is not sufficient to trigger severance payments — it must also be accompanied by a qualifying termination.

Clawback Policy. We have a clawback policy that provides for the recoupment of performance-based compensation if an officer engaged in fraud or willful misconduct that caused or otherwise contributed to a requirement for any restatement of Company’s financials.

Share Ownership Guidelines. We have share ownership guidelines for our CEO, executive vice presidents and trustees.

Independent Compensation Consultant. The compensation committee retained FPL Associates, a nationally recognized compensation consulting firm, to review and provide recommendations regarding our executive compensation program.

Compensation Risk Assessments. We conduct annual compensation risk assessments to ensure the executive compensation program does not encourage excessively risky behaviors.

WHAT WE DON’T DO

No Guaranteed Annual Salary Increases or Minimum Bonuses. We do not guarantee annual salary increases (salary increases are made only in the discretion of the compensation committee), nor do we pay guaranteed minimum bonuses.

No Dividends Paid on Unearned Performance-Based Restricted Shares. Under our current plans, dividends on performance-based restricted shares will not be paid unless and until the shares are earned.

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Target Compensation Not Above Median of Peer Group. The target compensation level set by our compensation committee for the named executive officers collectively is not set above the median level set for named executive officers by other companies in our peer group.

No Excise Tax Gross-Ups. In connection with our executives’ new employment agreements, which were executed in January 2016, we eliminated any remaining 280G gross-up provisions from prior employment arrangements.

No Excess Perquisites. We provide no perquisites or other personal benefits to the named executive officers that are not available to all employees of the Company.

Limited Retirement and Benefit Plans. We do not maintain any defined benefit or supplemental retirement plans.

No Repricing Underwater Options and Share Appreciation Rights. We do not allow for repricing or buyouts of underwater options or share appreciation rights.

No Pledging of Our Securities. None of our named executive officers or trustees are permitted to pledge our common shares or OP Units for margin or other loans.

No Hedging of Our Securities. Our anti-hedging policy (contained within our Insider Trading Policy) prohibits our trustees, officers (including our named executive officers) and directors from engaging in the following transactions: (i) hedging or monetization transactions involving our securities; (ii) trading in options, puts, calls or other derivative instruments involving our securities; (iii) short sales of our securities; and (iv) purchasing our securities on margin.

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Improvements to the Long-Term Incentive Program Structure

The Company made significant changes to its long-term incentive plan structure in 2016. Specifically, the Compensation Committee decided to transition to a long-term incentive compensation structure that is based on forward-looking performance (which features awards made at the beginning of a performance period, subject to being earned) rather than historical performance. Under the Company’s long-term incentive program adopted in April 2013 (the “2013 LTI Program”), with respect to the performance-based portion of the 2013 LTI Program, awards of restricted common shares are made after the completion of the performance period (if performance met or exceeded the threshold requirement). Pursuant to the new long-term incentive program structure, the Company’s named executive officers received an upfront grant (the “2016-2018 LTI Awards”) of performance-based restricted common shares (“performance shares”) in July 2016. The amount of performance shares earned pursuant to the 2016-2018 LTI Awards will not be known until the end of 2018, as it is based upon the achievement of relative and absolute total shareholder return goals measured over the performance period from February 22, 2016 (the date of announcement of the Company’s strategic plan) through December 31, 2018. The relative shareholder return goal for the 2016-2018 LTI Awards reflects a 50-basis-point increase to each of the threshold, target and stretch performance levels set forth in the 2013 LTI Program. The shift in structure for long-term incentive compensation, phasing out the historical “looking back” structure and implementing the new forward-looking structure, reflects market practice and was established in consultation with the Compensation Committee’s compensation consultant. In order to avoid cancelling or restarting performance periods that had already commenced, the Compensation Committee has decided to maintain the 2013 LTI Program for the three-year periods from January 1, 2014 to December 31, 2016 and from January 1, 2015 to December 31, 2017 (since such performance periods were already substantially underway). However, it is important to note that the transition to the forward-looking structure under the 2016-2018 LTI Awards (and future forward-looking grants) will not have any duplicative economic impact (benefit) on the Company’s named executive officers and their ongoing long-term incentive compensation opportunities (as the 2013 LTI Program and the 2016-2018 LTI Awards cover different three-year performance periods). See “— Principal Components of Named Executive Officer Compensation — Long-Term Incentive Compensation — Long-Term Incentive Compensation Program”. The diagram below depicts the July 2016 grant of the 2016-2018 LTI Awards (though note that in the future such grants will be made in the first quarter of the fiscal year) and the overlap of awards pursuant to two distinct programs that were designed to reward performance for two separate timeframes.

(1) The performance measurement period for the 2016-2018 LTI Awards is from February 22, 2016 (the date of announcement of the Company’s strategic plan) through December 31, 2018.

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Alignment of Pay with Performance

Our compensation program provides significant alignment between pay and performance by linking a meaningful portion of total compensation to the achievement of operational and strategic goals through our short-term incentive program, as well as rigorous absolute and relative shareholder return goals through our long-term incentive program. In 2016, 54.5% of our Chief Executive Officer’s total target compensation and 51.3% of our other named executive officer’s total target compensation was performance-based and not guaranteed and 45.5% and 48.7%, respectively, was fixed (including base salary and time-based restricted share grants under our 2013 LTI Program, the latter of which vest over a three-year period, with the ultimate value subject to our share performance). To build even stronger pay-for-performance alignment with our shareholders, long-term incentive awards are predominantly “at-risk” performance-based equity awards, the ultimate value of which depends entirely on the Company’s future absolute and relative shareholder return. The following charts present the allocation of total pay among different components for our Chief Executive Officer and the weighted-average of each component for our other named executive officers as a group.

The Compensation Committee believes that the long-term incentive compensation awards issued to the named executive officers pursuant to the 2013 LTI Program and the 2016-2018 LTI Awards appropriately align our named executive officers’ focus on achieving the Company’s strategic objectives with the absolute and relative shareholder return expectations of our shareholders. The following charts reflect: the actual amount of the long-term incentive awards earned by the named executive officers as a group pursuant to the performance component of the annual award under the 2013 LTI Program for the 2015 and 2016 plan years (based on actual results measured over the three-year periods from January 1, 2013 to December 31, 2015 and January 1, 2014 to December 31, 2016, respectively); the estimated value to be earned for the named executive officers as a group pursuant to the performance component of the annual award under the 2013 LTI Program for the 2017 plan year (based on tracking data for the performance period from January 1, 2015 to December 31, 2017, measured as of December 31, 2016, which could change over the balance of the performance period); and the estimated value to be earned for the named executive officers as a group for the 2016-2018 LTI Awards (based on tracking data for the performance period from February 22, 2016 to December 31, 2018, measured as of December 31, 2016,

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which could change over the balance of the performance period). The data demonstrate that our named executive officers’ performance-based pay embodies a strong alignment between executive compensation and performance.

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Process for Setting Executive Officer Compensation

Role of the Compensation Committee

The Compensation Committee is responsible for designing and administering our executive officer compensation program. Among other duties, the Compensation Committee is responsible for the following:

The Compensation Committee is supported in its work by an executive compensation consultant, as described below. The Compensation Committee’s charter, which sets out its duties and responsibilities and addresses other matters, can be found on our website at www.first-potomac.com, under the section, “Investors — Corporate Governance.” Information on or accessible through our website is not and should not be considered part of this proxy statement.

Role of the Chief Executive Officer

Within the framework of the compensation programs approved by the Compensation Committee and based on management’s review of market competitive positions, each year our Chief Executive Officer meets with the Compensation Committee to discuss his specific recommendations regarding the base salary, short-term incentive compensation and long-term incentive compensation of each of our named executive officers and provide further insight and details of each executive officer’s performance.

The Compensation Committee believes it is valuable to consider the recommendations of the Chief Executive Officer with respect to these matters because, given his knowledge of our operations, the real estate industry generally and our markets in particular, and the day-to-day responsibilities of such named executive officers, he is in a unique position to provide the Compensation Committee perspective into the most appropriate measures and goals in light of our business at a given point in time. However, the Compensation Committee makes all final determinations on issues within the scope of its authority, including with respect to executive officer compensation.

Role of the Compensation Consultant

The Compensation Committee has retained FPL Associates (“FPL”) to serve as its independent compensation consultant. FPL reports directly to the Compensation Committee for all services related to executive officer compensation. The assigned consultant from FPL generally attends meetings of the Compensation Committee; however, the Compensation Committee makes all decisions regarding the compensation of our named executive officers.

In selecting its compensation consultants, the Compensation Committee considered the independence of such consultants in accordance with the standards of the NYSE, any applicable rules and regulations of the SEC and other applicable laws relating to independence of advisors and consultants. The Compensation Committee has analyzed the work of FPL and has determined that FPL’s work does not raise any conflicts of interest. FPL and its affiliates do not provide any services or products to the Company or management without the approval of the Chairperson of the Compensation Committee. To date, no such services or products have been provided to us by FPL, and there are no business or personal relationships that raise the possibility of a conflict of interest between FPL or its affiliates, on the one hand, and the Compensation Committee or the Company, on the other hand.

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Peer Group Analysis

The Compensation Committee reviews the potential total compensation package for each of the executive officers against a pre-selected peer group consisting of other publicly traded REITs, based on data compiled by FPL. Consistent with the objectives of the Company’s executive compensation program, the Compensation Committee compares executive officer compensation against these peer companies (“benchmarking analysis”) to ensure that the Company attracts and retains highly qualified executive officers by providing a total compensation package that is competitive with those provided by the Company’s peers.

FPL assists the Compensation Committee in selecting the Company’s peer group, based on a methodology utilizing the following primary factors: (i) focus on office operations or a hybrid portfolio that includes office properties; (ii) a presence in the Mid-Atlantic region; and/or (iii) similarity in size in terms of total market capitalization. As our portfolio of properties has changed over time, we implemented several adjustments to the peer group to better reflect our current footprint. Based on all of the foregoing factors, in arriving at fiscal 2016 compensation opportunities, FPL analyzed compensation practices within the following peer group of REITs:

In 2016, the Compensation Committee reviewed compensation data for executives at the peer companies with positions comparable to those held by the named executive officers. This data consisted of base salary, annual cash incentive award and equity award information (the latter two components on an actual and target basis), as well as total remuneration paid by each of the peer companies based on proxy statements and Form 4 filings (which reflect the latest comprehensive data publicly available), as well as FPL’s proprietary database, which also includes data from the NAREIT Compensation Survey (which FPL conducts). FPL’s analysis concluded that the peer companies generally have compensation programs comparable to ours, with annual bonuses typically in the form of cash and long-term compensation typically in the form of performance-based equity awards with additional time-based vesting. The Compensation Committee typically uses the median levels of compensation within the peer group as an initial point of reference for setting pay; however, the Compensation Committee does not specifically target a percentile for benchmarking purposes and actual compensation paid may fluctuate above/below the median of the peer group based on the Company’s performance and achievement of the goals established by the Compensation Committee for the executive officers. The Compensation Committee expects to review the peer group periodically and make changes as warranted and deemed appropriate by the Compensation Committee.

On a target basis, using the award opportunities established under the 2013 LTI Program and the 2016-2018 LTI Awards, total target compensation for the named executive officers ranked near the peer group median, but actual compensation will fluctuate based on the absolute and relative total shareholder return hurdles established under the 2013 LTI Program and the 2016-2018 LTI Awards, as well as performance under the hurdles established under the short-term incentive plan.

Results of 2016 Advisory Vote on Executive Compensation

We provide our shareholders an annual opportunity to indicate whether they support our compensation practices for our named executive officers. As previously reported, there was strong support by shareholders at

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our 2016 Annual Meeting of Shareholders for the compensation program, with 97% of the votes cast on the “say-on-pay” proposal in favor of the advisory vote to approve our named executive officer compensation for 2015. The Compensation Committee appreciates and values the views of our shareholders. In considering the results of this most recent advisory vote on executive compensation, the Compensation Committee concluded that the executive compensation program, which was significantly revised in 2013 to more closely align executive compensation with performance, has strong shareholder support. Accordingly, no significant changes were made to the executive compensation program as a result of the advisory vote. However, despite strong shareholder support for our compensation program, as discussed above under “— Executive Summary — Improvements to the Long-Term Incentive Program Structure”, the Compensation Committee decided to proactively transition to a long-term incentive compensation structure that is based on forward-looking performance rather than historical performance. The Compensation Committee believes that this shift in the structure of long-term incentive compensation, which was established in consultation with the compensation consultant, reflects current market practice.

At the Annual Meeting, we will again hold an annual advisory vote by shareholders (the “say-on-pay” proposal) to approve the compensation of our named executive officers for 2016. The Compensation Committee will continue to consider the results from this year’s and future advisory votes on named executive officer compensation, as well as informal feedback from shareholders.

Principal Components of Named Executive Officer Compensation

For the fiscal year ended December 31, 2016, the principal components of our compensation program for the named executive officers were:

Each component of the compensation program is described in further detail below.

Base Salary

Policy and Process. Base salary, which under our compensation program is market-derived and market-driven, represents the fixed component of our executive officer compensation program paid in cash. The main purpose of base salary compensation is to provide salary levels sufficient to attract and retain executive officers. Base salary is targeted to be approximately 30% or less of total target annual compensation opportunity for each of the executive officers. The actual percentages will vary from year to year based on each executive officer’s performance, as well as the Company’s performance, within that year. Because one of the primary objectives of our executive officer compensation program is to instill an ownership mentality in the executive officers, the base salary component constitutes a smaller percentage of total compensation than incentive-based compensation.

On an annual basis, the Compensation Committee reviews the base salary of each of the executive officers and considers adjustments to place executive officer base salary in a position approximately equal to the median base salary paid to similarly situated executives of the peer group companies. In making this determination, the Compensation Committee consults with the Company’s compensation consultant regarding the base salaries paid to comparable executives in our peer group. In making its final determination of the base salary to be paid to an executive officer, the Compensation Committee also takes into consideration the responsibilities and individual performance of the executive officer, the contribution of the executive officer to the achievement of the

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Company’s goals, the experience of the executive officer and, for all but the Chief Executive Officer, the Chief Executive Officer’s recommendations. The Compensation Committee reviews and establishes base pay during the first quarter of each year, after reviewing the performance of the Company and each executive officer in the prior fiscal year.

2015, 2016 and 2017 Base Salaries. In connection with our leadership change in late 2015, Mr. Milkovich was promoted to the roles of President and Chief Executive Officer on November 8, 2015. In connection with his promotion, the Compensation Committee recommended, and the Board of Trustees approved, an increase in Mr. Milkovich’s base salary from $360,500 to $550,000, effective as of November 8, 2015. In February 2016, the Compensation Committee approved base salary increases of approximately 5% for Mr. Blocher and Ms. Gallagher, each effective February 15, 2016. Mr. Milkovich’s base salary for 2016 remained the same, as it was established in connection with his promotion in November 2015. Mr. Milkovich’s base salary for 2016 represented an 11% decrease from the 2015 salary of the Company’s former Chief Executive Officer. In February 2017, the Compensation Committee approved base salary increases of approximately 2.75% for Messrs. Milkovich and Blocher and Ms. Gallagher.

The following table sets forth the base salaries for our named executive officers for 2015, 2016 and 2017:

The Compensation Committee believes the base salary increases for the named executive officers are within market for their respective peer groups and, with respect to 2016, recognize the increase in responsibilities of the executive officers in light of the leadership transition and the execution of the Company’s strategic plan announced in February 2016.

Short-Term Incentive Compensation

Policy and Process. Short-term incentive awards are designed to encourage our executive officers to pursue annual goals that will inure to the benefit of our Company and shareholders in both the short- and long-term. Short-term incentive awards are intended to reward executive officers whose contributions improve the operational performance of our existing portfolio and the Company, enhance short-term strategic goals and generate new business opportunities and investments, all of which are intended to create shareholder value.

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For 2016, the Compensation Committee set the overall short-term incentive award targets at 100% of Mr. Milkovich’s 2016 base salary and 80% of Mr. Blocher’s and Ms. Gallagher’s 2016 base salary (in each case assuming 100% achievement of departmental and individual goals, as applicable). The short-term incentive award target set for Mr. Milkovich in 2016 represents a 41% decrease from the 2015 short-term incentive award target set for the Company’s former Chief Executive Officer (which was set at 150% of the former Chief Executive Officer’s 2015 base salary). The following table sets forth the 2016 short-term incentive award targets for our named executive officers:

The Compensation Committee determines short-term incentive awards during the first quarter following the fiscal year end to which such awards pertain after a review of our Company’s and the executive’s actual performance. For 2016, short-term incentive compensation was targeted based on results in the following three performance categories: (i) a corporate performance component; (ii) a departmental/functional component; and (iii) an individual performance component. The corporate performance component was divided into six corporate performance goals, and the specific goals and weightings set by the Compensation Committee for each of the named executive officers were as follows:

Within each of the six corporate performance goals (Core FFO, dispositions, new leasing activity, debt + preferred/gross book value, strategic hold same-property NOI, and retention), the Compensation Committee established the following threshold, target, stretch and max performance goals:

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If the performance level is between two of these identified levels of performance (i.e., between threshold and target, between target and stretch or between stretch and maximum), the actual amount of the award that is earned will be “interpolated” using the two identified levels of performance.

Consistent with the Company’s strategic plan, the corporate performance goals established by the Compensation Committee were designed to support lease-up of the core portfolio and the Company’s previously disclosed disposition strategy, while meeting Core FFO and Strategic Hold Same-Property NOI measures. In addition, the goals were established with sufficient rigor to drive operating performance and results.

Actual Payouts for 2016. During the first quarter of 2017, actual results under the measures for the corporate performance component were determined against the 2016 annual corporate performance goals. The following tables show the potential payouts of the corporate performance component of the 2016 annual short-term incentive award targets established by the Compensation Committee for each of Messrs. Milkovich and Blocher and Ms. Gallagher at various levels of each of the six corporate performance goals, and the actual payouts with respect to each specific goal within the corporate performance component based on our 2016 results.

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