PROXY STATEMENT
ABOUT THE MEETING
Why am I receiving this Proxy Statement?
This Proxy Statement contains information related to the solicitation of proxies for use at our 2018 Annual Meeting of Stockholders, to be held
at the Company's offices, located at 4600 S. Syracuse Street, Suite 1450, Denver, Colorado 80237, on May 2, 2018, at 8:00 a.m. Mountain Time, for the purposes stated in the
accompanying Notice of Annual Meeting of Stockholders. This solicitation is made by Farmland Partners Inc. on behalf of our Board of Directors (also referred to as the "Board" in this Proxy
Statement). "We," "our," "us" and the "Company" refer to Farmland Partners Inc.
We
have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending to our stockholders of record as of the close of business on March 9, 2018,
a Notice of Internet Availability of Proxy Materials (the "Notice") relating to our Annual Meeting of Stockholders. All stockholders of record will have the ability to access the proxy materials on
the website referred to in the Notice or to request to receive a printed set of the proxy materials. Instructions on how to request a printed copy by mail or electronically may be found on the Notice
and on the website referred to in the Notice, including an option to request paper copies on an ongoing basis. On or about March 21, 2018, we intend to make this Proxy Statement and
accompanying form of proxy card available on the Internet and to mail the Notice to all stockholders entitled to vote at the Annual Meeting. We intend to mail this Proxy Statement, together with a
proxy card, to those stockholders entitled to vote at the Annual Meeting who have properly requested paper copies of such materials, within three business days of such request.
The
Notice, this Proxy Statement, accompanying form of proxy card and our Annual Report to Stockholders/Form 10-K for the fiscal year ended December 31, 2017 are available
at
http://www.proxyvote.com. You are encouraged to access and review all of the important information contained in the proxy materials before voting.
What am I being asked to vote on?
You are being asked to vote on the following proposals:
-
-
Proposal 1 (Election of
Directors):
The election of the five director nominees named in this Proxy Statement, each for a term expiring at the 2019 annual meeting of
stockholders (the "2019 Annual Meeting");
-
-
Proposal 2 (Ratification of EKS&H
LLLP):
The ratification of EKS&H LLLP ("EKS&H") as our independent registered public accounting firm for our fiscal year ending
December 31, 2018; and
-
-
To transact any other business that may properly come before the Annual Meeting or any adjournment(s) or postponements
of the Annual Meeting.
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What are the Board's voting recommendations?
The Board recommends that you vote as follows:
-
-
Proposal 1 (Election of
Directors):
"FOR" each of the Board nominees for election as directors; and
-
-
Proposal 2 (Ratification of EKS&H
LLLP):
"FOR" the ratification of EKS&H as our independent registered public accounting firm for our fiscal year ending December 31, 2018.
Who is entitled to vote at the Annual Meeting?
Only holders of record of our common stock, par value $0.01 per share (our "Common Stock"), at the close of business on March 9, 2018,
the record date for the Annual Meeting (the "Record Date"), are entitled to receive notice of the Annual Meeting and to vote at the Annual Meeting. Our Common Stock constitutes the only class of
securities entitled to vote at the Annual Meeting.
What are the voting rights of stockholders?
Each share of our Common Stock outstanding on the Record Date entitles its holder to cast one vote on each matter to be voted on.
No
dissenters' rights are provided under the Maryland General Corporation Law, our charter or our bylaws with respect to any of the proposals described in this Proxy Statement.
Who can attend the Annual Meeting?
All holders of our Common Stock at the close of business on the Record Date (March 9, 2018), 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. For directions to the Annual Meeting, contact
our Secretary at (720) 452-3100.
Please
also note that if you are the beneficial owner of 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 the Record Date.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
Many stockholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below,
there are some distinctions between shares held of record and those owned beneficially.
-
-
Stockholder of record.
If your shares are registered directly in your name
with our transfer agent, American Stock Transfer & Trust Company, you are considered the stockholder of record of those shares and the Notice is being sent directly to you by us.
-
-
Beneficial owner of shares held in street name.
If your shares are held in
a stock brokerage account or by a bank or other nominee, you are considered the "beneficial owner" of shares held in "street name," and the Notice is being forwarded to you by your broker or nominee,
which is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker how to vote your shares and are also invited to attend
the Annual Meeting. However, because you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you bring with you a legal proxy from the organization
that holds your shares.
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What will constitute a quorum at the Annual Meeting?
The presence at the meeting, in person or by proxy, of the holders of a majority of our Common Stock outstanding on the Record Date
(March 9, 2018) will constitute a quorum, permitting our stockholders to conduct business at the meeting. 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. As of the Record Date, there were 33,091,611 shares of our Common Stock outstanding.
If
a quorum is not present to transact business at the Annual Meeting or if we do not receive sufficient votes in favor of the proposals by the date of the Annual Meeting, the persons
named as proxies may propose one or more adjournments of the Annual Meeting to permit solicitation of additional proxies. The chairperson of the Annual Meeting shall have the power to adjourn the
Annual Meeting.
What are broker non-votes?
Broker non-votes occur when nominees, such as banks and brokers holding shares 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 shares of
our Common Stock 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 EKS&H) is the only proposal that is considered "routine" under the NYSE rules. If you are a beneficial owner and your shares are held in the name of a broker
or other nominee, the broker or other nominee is permitted to vote your shares on the ratification of the appointment of EKS&H as our independent registered public accounting firm for our fiscal year
ending December 31, 2018, even if the broker or other nominee does not receive voting instructions from you.
Under
NYSE rules, Proposal 1 (Election of Directors) is considered a "non-routine" proposal. Consequently, if you do not give your broker or other nominee voting instructions, your
broker or other nominee will not be able to vote on this proposal, and broker non-votes may exist with respect to the election of directors.
How many votes are needed for the proposals to pass?
The proposals to be voted on at the Annual Meeting have the following voting requirements:
-
-
Proposal 1 (Election of
Directors):
Directors are elected by plurality vote. There is no cumulative voting in the election of directors. Therefore, the five director
nominees receiving the highest number of "FOR" votes will be elected. For purposes of the election of directors, 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 2 (Ratification of
EKS&H):
The affirmative vote of a majority of the votes cast once a quorum has been established is required to ratify the appointment of EKS&H as
our independent registered public accounting firm for our fiscal year ending December 31, 2018. For purposes of the vote on the ratification of EKS&H as our independent registered public
accounting firm, 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.
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Will any other matters be voted on?
As of the date of this Proxy Statement, we are not aware of any matters that will come before the Annual Meeting other than those disclosed in
this Proxy Statement. If any other matters are properly brought before the Annual Meeting, the persons named in the accompanying proxy card will vote the shares represented by the proxies on the other
matters in the manner recommended by the Board, or, if no such recommendation is given, in the discretion of the proxy holders.
How do I vote?
If you are a registered stockholder as of the Record Date, you may submit your proxy by U.S. mail, Internet or telephone by following the
instructions in the Notice. If you requested a paper copy of the proxy materials, you also may submit your completed proxy card by mail by following the instructions included with your proxy card. The
deadline for submitting your vote by Internet or telephone is 11:59 a.m. Eastern Time on the day before the date of the Annual Meeting. The designated proxy holders named in the proxy card will
vote according to your instructions. You may also attend the Annual Meeting and vote in person.
If
you are a street name or beneficial stockholder because your shares are held in a brokerage account or by a bank or other nominee, your broker or nominee firm will provide you with
the Notice. Follow the instructions on the Notice to access our proxy materials and vote by Internet or to request a paper or email copy of our proxy materials. If you receive these materials in paper
form, the materials include a voting instruction card so that you can instruct your broker or nominee how to vote your shares.
If
you sign and submit your proxy card without specifying how you would like your shares voted, your shares will be voted in accordance with the Board's recommendations specified above
under "What are
the Board's voting recommendations?" and in accordance with the discretion of the proxy holders with respect to any other matters that may be voted upon at the Annual Meeting.
If I plan to attend the Annual Meeting, should I still vote by proxy?
Yes. Voting in advance does not affect your right to attend the Annual Meeting. If you send in your proxy card and also attend the Annual
Meeting, you do not need to vote again at the Annual Meeting unless you want to change your vote. Written ballots will be available at the meeting for stockholders of record. Beneficial owners of
shares held in street name who wish to vote in person at the Annual Meeting must request a legal proxy from the organization that holds their shares and bring that legal proxy to the Annual Meeting.
How are proxy card votes counted?
If the proxy card is properly signed and returned to us, and not subsequently revoked, it will be voted as directed by you. Unless contrary
instructions are given, the persons designated as proxy holders on the proxy card will vote: "FOR" the election of all nominees for the Board named in this Proxy Statement; "FOR" the ratification of
the appointment of EKS&H as our independent registered public accounting firm for the fiscal year ending December 31, 2018; and as recommended by the Board with regard to any other matters that
may properly come before the Annual Meeting, or, if no such recommendation is given, in their own discretion.
May I revoke my vote after I return my proxy card?
Yes. You may revoke a previously granted proxy and change your vote at any time before the taking of the vote at the Annual Meeting by
(i) filing with our Secretary a written notice of revocation
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or
a duly executed proxy bearing a later date or (ii) attending the Annual Meeting and voting in person.
Who pays the costs of soliciting proxies?
We will pay the costs of soliciting proxies, including preparation and mailing of the Notice, preparation and assembly of this Proxy Statement,
the proxy card and the Annual Report to Stockholders/Form 10-K for the fiscal year ended December 31, 2017, coordination of the Internet and telephone voting process, and any additional
information furnished to you by the Company. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of our Common Stock
beneficially owned by others to forward to such beneficial owners. We may reimburse persons representing beneficial owners of shares of our Common Stock for their costs of forwarding solicitation
materials to such beneficial owners. Original solicitation of proxies by Internet and mail may be supplemented by telephone, facsimile, or personal solicitation by our directors, officers or other
regular employees.
What are the implications of being an "emerging growth company"?
We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, enacted on April 5, 2012 (the "JOBS Act").
For as long as we are an "emerging growth company," we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging
growth companies," including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding stockholder advisory "say-on-pay" votes on executive
compensation and stockholder advisory votes on golden parachute compensation.
Under
the JOBS Act, we will remain an "emerging growth company" until the earliest of:
-
-
the last day of the fiscal year during which we have total annual gross revenues of $1.07 billion or more;
-
-
the last day of the fiscal year following the fifth anniversary of our initial public offering;
-
-
the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; and
-
-
the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(we will qualify as a large accelerated filer as of the first day of the first fiscal year after we have (i) more than $700 million in outstanding common equity held by our
non-affiliates and (ii) been public for at least 12 months; the value of our outstanding common equity will be measured each year on the last day of our second fiscal quarter).
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.
PROPOSALS TO BE VOTED ON
Proposal 1: Election of Directors
The Board is currently comprised of six directors, all of whom have terms expiring at the Annual Meeting. However, Thomas S.T. Gimbel, an
independent member of the Board, has decided not to
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stand
for reelection when his current term expires at the Annual Meeting. As a result, the Board will reduce the size of the Board from six directors to five directors upon the expiration of
Mr. Gimbel's current term at the Annual Meeting. Mr. Gimbel's decision not to stand for reelection was not the result of any disagreements with the Company. The nominees, all of whom are
currently serving as directors of the Company, have been recommended by the Board for re-election to serve as directors for one-year terms until the 2019 Annual Meeting and until their successors are
duly elected and qualify. Based on its review of the relationships between the director nominees and the Company, the Board has affirmatively determined that the following directors are "independent"
directors under the rules of the NYSE and under applicable rules of the Securities and Exchange Commission (the "SEC"): Messrs. Jay B. Bartels, Chris A. Downey, Joseph W. Glauber and John A.
Good. Mr. Good was appointed to the Board on January 21, 2018.
The
Board knows of no reason why any nominee would be unable to serve as a director. If any nominee is unavailable for election or service, the Board 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. Under these circumstances, the Board may also, as permitted by our bylaws,
decrease the size of the Board.
The following table sets forth the name and age of each nominee for director, indicating all positions and offices with us currently held by the
director.
|
|
|
|
|
|
|
|
|
|
Name
|
|
Age(1)
|
|
Title
|
|
Director
Since
|
|
Jay B. Bartels
|
|
|
53
|
|
Independent Director
|
|
|
2014
|
|
Chris A. Downey
|
|
|
67
|
|
Independent Director
|
|
|
2014
|
|
Joseph W. Glauber
|
|
|
63
|
|
Independent Director
|
|
|
2015
|
|
John A. Good
|
|
|
60
|
|
Independent Director
|
|
|
2018
|
|
Paul A. Pittman
|
|
|
56
|
|
Executive Chairman and Chief Executive Officer
|
|
|
2014
|
|
-
(1)
-
Age
as of March 19, 2018
Set
forth below are descriptions of the backgrounds and principal occupations of each of our directors, and the period during which he has served as a director.
Jay B. Bartels.
Mr. Bartels has served as a director since our initial public offering on April 16, 2014. Since 2010,
Mr. Bartels has served as the Chief Executive Officer and President and a member of the board of directors of Trendmojo, Inc., a technology development company, and as the President and
a member of the board of directors of Bonsai Development Corp, a California-based software company. In addition, since 2005, he has served as a partner and a member of the board of directors of
Germinator, Inc., a California-based seed fund that advises and invests in early-stage technology companies. Mr. Bartels also has served as a member of the board of directors of
ProWebSurfer, Inc., which focuses on new media and online advertising, since 2006. From 2008 to 2012, Mr. Bartels was the Chief Operating Officer of CollabRx, a privately held company
that focuses on healthcare data research. Mr. Bartels holds a B.S. in Mathematics and Statistics from the University of California at Berkeley.
Based
on his extensive experience as an investor, advisor and manager of a variety of businesses and his demonstrated leadership abilities, strong knowledge of our business and financial
expertise, we have determined that Mr. Bartels should serve as a director.
Chris A. Downey.
Mr. Downey has served as a director since our initial public offering on April 16, 2014.
Mr. Downey has over
30 years of experience in land development, financial
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management
and management consulting. Since 1998, Mr. Downey has been a principal at Stirling Development, a real estate development company he co-founded. Mr. Downey previously worked
for a private real estate company and directed several large-scale master planned community development projects from acquisition through zoning, entitlement, financing, infrastructure and build-out.
Mr. Downey is a former CPA and previously was a management consultant with Arthur Young &
Company, where he directed the firm's financial planning and controls practice in Orange County, California. Mr. Downey also worked in the medical device operations of Fiat S.p.A. in
California and Italy in both line and staff positions. Mr. Downey holds a B.A. degree in Chemistry from the University of California at Irvine, and an M.B.A. from the Anderson School of
Management at the University of California at Los Angeles.
Based
on his demonstrated leadership abilities, extensive experience in the real estate industry and his finance and accounting expertise, we have determined that Mr. Downey
should serve as a director.
Joseph W. Glauber.
Dr. Glauber has served as a director since February 2015. Dr. Glauber served as the Chief Economist
of the U.S.
Department of Agriculture (the "USDA") from 2008 to 2014 and as Deputy Chief Economist of the USDA from 1992 to 2007. Dr. Glauber has been active in the agriculture industry since the early
1980s and began working for the USDA in 1984. In addition, Dr. Glauber chaired the Federal Crop Insurance Corporation Board of Directors from 2008 to 2014, served as the chief U.S. agricultural
negotiator in the WTO Doha Round from 2007 to 2009 and served on the President's Council of Economic Advisors from 1991 to 1992. Dr. Glauber is currently a senior research fellow at the
International Food Policy Research Institute and, over the course of his career, has written numerous articles about the agricultural industry that have been published in academic and trade journals.
Dr. Glauber received an A.B. in Anthropology from the University of Chicago and a Ph.D. in Agricultural Economics from the University of Wisconsin.
Based
on his extensive knowledge of agricultural economics and the agricultural industry as a whole, we have determined that Dr. Glauber should serve as a director.
John A. Good.
Mr. Good has served as a director since his appointment to the Board on January 21, 2018. Since June 2015,
Mr. Good has served as a director and the president and chief operating officer of Jernigan Capital, Inc., a NYSE-listed REIT that provides capital to developers of self-storage
facilities. Prior to joining Jernigan Capital, Inc., Mr. Good was a partner and co-head of the REIT practice group of Morrison & Foerster LLP., a global law firm. From 1999
to 2013, Mr. Good was a partner, multi-term executive committee member and head of the REIT practice at the law firm of Bass, Berry & Sims PLC and prior to that was a stockholder
and chair of the securities and M&A practice group at the law firm of Baker, Donelson, Bearman, Caldwell and Berkowitz P.C. Mr. Good has over 28 years' experience working with senior
management teams and boards of directors of public companies in the REIT and financial services industries on corporate finance, corporate governance, merger and acquisition, tax, executive
compensation, joint venture and strategic planning projects. As a nationally recognized corporate and securities lawyer, he was lead counsel on over 200 securities offerings raising in excess of
$25 billion over the past 25 years, with more than 125 of those deals being in the REIT industry. Mr. Good graduated from the University of Memphis with a B.B.A. in accounting,
cum laude, in 1980, attained his CPA designation and practiced with a large regional CPA firm until entering University of Memphis School of Law, where he received his J.D with honors in 1987. He has
been nationally ranked by Chambers USA as a leading lawyer to the REIT industry and has been active in NAREIT since 1994.
Based
on his extensive experience working with public companies in the REIT industry, we have determined that Mr. Good should serve as a director.
Paul A. Pittman.
Mr. Pittman has served as our Executive Chairman and Chief Executive Officer since the formation of our
company. He also
served as our President from the formation of our
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company
until February 2017. From 2008 to 2015, Mr. Pittman served as the President of American Agriculture Corporation and Pittman Hough Farms LLC. Mr. Pittman served as the
Chief Administrative Officer and Executive Vice President of Jazz Technologies, Inc., a semiconductor foundry, from March 2007 to September 2008 and its Chief Financial Officer from February
2007 to September 2008. Mr. Pittman also served as the Principal Accounting Officer of Jazz Technologies, Inc. From December 2004 to March 2006, he served as Partner and Head of
Mergers & Acquisitions at ThinkEquity Partners LLC. From April 2000 to January 2003, he served as the President, Chief Executive Officer and Chief Operating Officer of
HomeSphere, Inc., an enterprise software company, and TheJobsite.com, which merged into HomeSphere. Before TheJobsite.com, he worked in senior investment banking roles for ten years at Merrill
Lynch & Co., and prior to that with Wasserstein Perella Co. From March 1997 to February 2000, he served as Head of Emerging Markets M&A at Merrill Lynch in London, where he was
responsible for origination and execution of all M&A business in the region (Eastern Europe, the Middle East, the Former Soviet Union and Africa). Prior to Merrill Lynch & Co., he served
as Director of M&A at Wasserstein Perella & Co. in New York and London. Mr. Pittman began his career at Sullivan & Cromwell as an Associate in Mergers and Acquisitions. He
has been involved with the residential construction industry for more than 20 years as both a developer and builder and has also served as the general contractor and developer of several
condominium and custom home projects. He served as a Director of HomeSphere, Inc., and TheJobsite.com from April 2000 to January 2003. Mr. Pittman graduated from the University of
Illinois with a B.S. degree in Agriculture, received a Masters in Public Policy from Harvard University, and a J.D. with Honors from the University of Chicago Law School.
Based
on his knowledge of the Company, its business and properties, his past public company experience, his background in finance and his experience in the real estate industry,
including acquiring and managing farmland, we have determined that Mr. Pittman should serve as the Executive Chairman of the Board.
Directors are elected by plurality vote. Therefore, the five individuals with the highest number of affirmative votes will be elected to the
five directorships. 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.
THE BOARD RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES SET FORTH ABOVE.
Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm
The Audit Committee of the Board, which is composed entirely of independent directors, has appointed EKS&H as our independent registered public
accounting firm for the fiscal year ending December 31, 2018. After careful consideration of the matter and in recognition of the importance of this matter to our stockholders, the Board has
determined that it is in the best interests of the Company and our stockholders to seek the ratification by our stockholders of our Audit Committee's selection of our independent registered public
accounting firm. A representative of EKS&H will be present at the Annual Meeting, will have the opportunity to make a statement if they so desire and will be available to respond to appropriate
questions.
As previously reported on the Company's Current Report on Form 8-K dated March 12, 2018, on March 10, 2018, the Company
dismissed PricewaterhouseCoopers LLP ("PwC") as its independent registered public accounting firm. The Audit Committee participated in and approved the
decision to change the Company's independent registered public accounting firm. The Company notified PwC of its decision on March 10, 2018.
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The audit reports of PwC on the Company's financial statements for each of the two fiscal years ended December 31, 2017 and December 31, 2016 did
not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. In addition, during the fiscal years ended
December 31, 2017 and December 31, 2016, as well as during the subsequent interim period preceding March 10, 2018, there were no (i) "disagreements" (as that term is
defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) between the Company and PwC with respect to any matter relating to accounting principles or practices, financial
statement disclosure or auditing scope or procedures which, if not resolved to the satisfaction of PwC, would have caused PwC to make reference to the subject matter of the disagreement in its reports
on the Company's financial statements with respect to such periods; or (ii) "reportable events" (as that term is defined in Item 304(a)(1)(v) of Regulation S-K and the related
instructions).
On
March 10, 2018, the Company engaged EKS&H as its new independent registered public accounting firm upon the approval of the Audit Committee. During the years ended
December 31, 2017 and December 31, 2016, and the subsequent interim period through March 10, 2018, the effective date of the Company's engagement of EKS&H, the Company did not
consult with EKS&H regarding any of the matters or events set forth in Items 304(a)(2)(i) or (ii) of Regulation S-K.
The affirmative vote of the holders of a majority of all the votes cast at the Annual Meeting with respect to the matter is necessary for the
approval of the ratification of the appointment of EKS&H as our independent registered public accounting firm for the year ending December 31, 2018. For purposes of vote on this proposal,
abstentions will not be counted as votes cast and will have no effect on the result of the vote. Even if the appointment of EKS&H as our independent registered public accounting firm is ratified, the
Audit Committee may, in its discretion, change that appointment at any time during the year should it determine such a change would be in our and our stockholders' best interests. In the event that
the appointment of EKS&H is not ratified, the Audit Committee will consider the appointment of another independent registered public accounting firm, but will not be required to appoint a different
firm.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE SELECTION OF EKS&H LLLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2018.
Our consolidated financial statements for the fiscal years ended December 31, 2017 and 2016 have been audited by PwC, which served as our
independent registered public accounting firm for those years.
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The
following table summarizes the fees billed by PwC, our prior independent registered public accounting firm, for services performed for the Company for the fiscal years ended
December 31, 2017 and 2016:
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2017
|
|
Year Ended
December 31, 2016
|
|
Audit Fees(1)
|
|
$
|
1,233,000
|
|
$
|
1,129,941
|
|
Audit-Related Fees(2)
|
|
|
354,000
|
|
|
|
|
Tax Fees(3)
|
|
|
39,081
|
|
|
171,267
|
|
All Other Fees
|
|
|
3,731
|
|
|
3,731
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,629,812
|
|
$
|
1,304,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Audit
Fees for 2017 and 2016 include actual fees for the 2017 and 2016 audits, reviews of our Quarterly Reports on Form 10-Q, additional services associated
with our securities offerings and registration statements and the issuance of comfort letters and consents.
-
(2)
-
Audit-Related
fees for 2017 consist of fees in connection with the audit of American Farmland Company for the year ended December 31, 2016.
-
(3)
-
Tax
fees for 2017 and 2016 consist primarily of tax consultation and planning fees and tax compliance services, including services provided in connection with
certain federal and state tax matters, cost segregation services, transaction support and Internal Revenue Service examination support services.
The Audit Committee's policy is to review and pre-approve, either pursuant to the Company's Audit and Non-Audit Services Pre-Approval Policy
(the "Pre-Approval Policy") or through a separate pre-approval by the Audit Committee, any engagement of the Company's independent auditor to provide any audit-related and non-audit services to the
Company. Pursuant to the Pre-Approval Policy, which the Audit Committee reviews and reassesses periodically, a list of specific services within certain categories of services, including audit,
audit-related and tax services, are specifically pre-approved for the upcoming or current fiscal year, subject to an aggregate maximum annual fee payable by us for each category of pre-approved
services. Any service that is not included in the approved list of services must be separately pre-approved by the Audit Committee. In addition, the Audit Committee may delegate authority to its
chairperson to pre-approve engagements for the performance of audit-related and non-audit services. Additionally, all audit-related and non-audit services in excess of the pre-approved fee level,
whether or not included on the pre-approved list of services, must be separately pre-approved by the Audit Committee. The Audit Committee has delegated authority to its chairperson to pre-approve
engagements for the performance of audit and non-audit services, for which the estimated cost for such services shall not exceed $100,000 in the aggregate for any calendar year. The chairperson must
report all pre-approval decisions to the Audit Committee at its next scheduled meeting and provide a description of the terms of the engagement. During the year ended December 31, 2017, 100% of
the services provided by PwC were pre-approved under the Pre-Approval Policy.
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CORPORATE GOVERNANCE AND BOARD MATTERS
We have structured our corporate governance in a manner we believe closely aligns our interests with those of our stockholders. Notable features
of our corporate governance structure include the following:
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the Board is not classified, with each of our directors subject to re-election annually;
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five of our six directors are "independent" and following the Annual Meeting four of our five directors will be independent;
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all of our standing Board committees are comprised solely of independent directors;
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we have opted out of the business combination and control share acquisition statutes in the Maryland General Corporation Law;
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we do not have a stockholder rights plan;
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we have adopted an anti-hedging policy (as discussed below);
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we have adopted stock ownership guidelines (as discussed below); and
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We have appointed a lead independent director.
Our
directors stay informed about our business by attending meetings of the Board and its committees and through supplemental reports and communications. Our independent directors meet
regularly in executive sessions without the presence of our corporate officers or non-independent directors.
Recent Governance Enhancements
Our Board has recently undertaken a series of actions to strengthen our corporate governance, including the
following:
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we have adopted an anti-hedging policy, which is designed to prevent any director, officer or employee of the Company from entering into a
transaction in Company securities that is designed to hedge the risks of the ownership of Company securities. The policy specifically prohibits the purchase or sale of puts, calls, options or other
derivative securities based on the Company's securities, as well as prohibits hedging or monetization transactions, such as forward sale contracts, by directors, officers or employees of the Company;
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we have adopted stock ownership guidelines, which require the CEO to own Common Stock worth six times his base salary, other senior officers to
own Common Stock worth three times their base salary, and non-employee directors to own Common Stock worth three times the cash portion of their annual retainer;
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we have made certain changes to our corporate governance guidelines, that, among other things, require a Director to tender his or her
resignation from the Board when his or her principal occupation or business association changes substantially during his or her tenure; and
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we have made certain amendments to our Audit Committee charter, Nominating and Corporate Governance Committee charter and Compensation
Committee charter, as well as adopted the Second Amended and Restated Bylaws of the Company, which include certain provisions that have strengthened our corporate governance.
Role of the Board in Risk Oversight
One of the key functions of the Board is informed oversight of our risk management process. The Board administers this oversight function
directly, with support from its three standing committees, the
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Audit
Committee, the Nominating and Corporate Governance Committee and the Compensation Committee, each of which addresses risks specific to their respective areas of oversight. In particular, our
Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines
and policies to govern the process by which risk assessment and management is undertaken. The Audit Committee also monitors compliance with legal and regulatory requirements, in addition to oversight
of the performance of our internal audit function. Our Nominating and Corporate Governance Committee monitors the effectiveness of our corporate governance guidelines, including whether they are
successful in preventing illegal or improper liability-creating conduct. Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to
encourage excessive risk-taking.
Board Committees
Our Board of Directors has established three standing committees: an audit committee, a compensation committee and a nominating and corporate
governance committee. The principal functions of each committee are described below. We comply with the listing requirements and other rules and regulations of the NYSE, as amended or modified from
time to time, and each of these committees is comprised exclusively of independent directors. Additionally, our Board of Directors may from time to time establish certain other committees to
facilitate the management of our company.
The
table below provides membership information for each of the Board committees as of the date of this Proxy Statement:
|
|
|
|
|
|
|
Member
|
|
Audit
Committee
|
|
Compensation
Committee
|
|
Nominating and
Corporate Governance
Committee
|
Jay B. Bartels
|
|
X
|
|
|
|
X (chair)
|
Chris A. Downey*
|
|
X (chair)
|
|
X
|
|
|
Joseph W. Glauber
|
|
X
|
|
X
|
|
X
|
John A. Good
|
|
|
|
X (chair)
|
|
X
|
-
*
-
Audit
committee financial expert.
The Audit Committee is comprised of Messrs. Bartels and Downey and Dr. Glauber. Mr. Downey, the chairman of the Audit
Committee, qualifies as an "audit committee financial expert" as that term is defined by the applicable SEC regulations. The Board has determined that each of the directors serving on our Audit
Committee is "independent" within the meaning of the applicable rules of the SEC and the NYSE listing standards. We have adopted an Audit Committee charter, which details the principal functions of
the Audit Committee, including oversight related to:
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our accounting and financial reporting processes;
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the integrity of our consolidated financial statements and financial reporting process;
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our systems of disclosure controls and procedures and internal control over financial reporting;
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our compliance with financial, legal and regulatory requirements;
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the evaluation of the qualifications, independence and performance of our independent registered public accounting firm;
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the performance of our internal audit function; and
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our overall risk profile.
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The Audit Committee also is responsible for engaging an independent registered public accounting firm, reviewing with the independent registered public accounting
firm the plans and results of the audit engagement, approving professional services provided by the independent registered public accounting firm, including all audit and non-audit services, reviewing
the independence of the independent registered public accounting firm, considering the range of audit and non-audit fees and reviewing the adequacy of our internal accounting controls.
During
the fiscal year ended December 31, 2017, the Audit Committee met five times, including telephonic meetings.
The Compensation Committee is comprised of Mr. Downey, Dr. Glauber and Mr. Good, with Mr. Good serving as chairman.
The Board has determined that each of the directors serving on our Compensation Committee is "independent" within the meaning of the applicable rules of the SEC and the NYSE listing standards. We have
adopted a Compensation Committee charter, which details the principal authority and functions of the Compensation Committee, including:
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reviewing and approving on an annual basis the corporate goals and objectives relevant to our chief executive officer's compensation,
evaluating our chief executive officer's performance in light of such goals and objectives and determining and approving the remuneration of our chief executive officer based on such evaluation;
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reviewing and approving the compensation of all of our other officers;
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reviewing our executive compensation policies and plans;
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implementing and administering our incentive compensation equity-based remuneration plans;
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assisting management in complying with our proxy statement and annual report disclosure requirements;
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to the extent required by applicable SEC rules, producing a report on executive compensation to be included in our annual Proxy Statement; and
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reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
The
Compensation Committee may form and delegate its authority to subcommittees when appropriate.
During
the fiscal year ended December 31, 2017, the Compensation Committee met six times, including telephonic meetings.
The Nominating and Corporate Governance Committee is comprised of Mr. Bartels, Dr. Glauber and Mr. Good, with
Mr. Bartels serving as chairman. The Board has determined that each of the directors serving on our Nominating and Corporate Governance Committee is "independent" within the meaning of the
applicable rules of the SEC and the NYSE listing standards. We have adopted a Nominating and Corporate Governance Committee charter, which details the principal functions of the Nominating and
Corporate Governance Committee, including:
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identifying and recommending to the full Board qualified candidates for election as directors and recommending nominees for election as
directors at the Annual Meeting of stockholders;
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developing and recommending to the Board corporate governance guidelines and implementing and monitoring such guidelines;
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reviewing and making recommendations on matters involving the general operation of the Board, including board size and composition, and
committee composition and structure;
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reviewing and reassessing the adequacy of the Company's charter and bylaws and recommending any revisions to the Board;
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recommending to the Board nominees for each committee of the Board;
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annually facilitating the assessment of the Board's performance as a whole and of the individual directors, as required by applicable law,
regulations and the NYSE corporate governance listing standards; and
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overseeing the Board's evaluation of management.
In
identifying and recommending nominees for directors, the Nominating and Corporate Governance Committee may consider, among other factors, diversity of relevant experience, expertise
and background.
During
the fiscal year ended December 31, 2017, the Nominating and Corporate Governance Committee met four times, including telephonic meetings.
Director Selection Process
The Nominating and Corporate Governance Committee is responsible for, among other things, the selection and recommendation to the Board of
nominees for election as directors. In accordance with the Nominating and Corporate Governance Committee charter and our Corporate Governance Guidelines, the Nominating and Corporate Governance
Committee develops on an annual basis guidelines and criteria for the selection of candidates for directors of the Board. The Nominating and Corporate Governance Committee considers whether a
potential candidate for director has the time available, in light of other business and personal commitments, to perform the responsibilities required for effective service on the Board, along with
their personal and professional integrity, demonstrated ability and judgement, experience, familiarity with the Company, diversity (of both experience and background) as well as certain other relevant
factors. Applying these criteria, the Nominating and Corporate Governance Committee considers candidates for Board membership suggested by its members and the chairman of the Board and chief executive
officer as well as stockholders. After completing the identification and evaluation process described above, the Nominating and Corporate Governance Committee recommends the nominees for directorship
to the Board. Taking the Nominating and Corporate Governance Committee's recommendation into consideration, the Board then approves the nominees for directorship for stockholders to consider and vote
upon at the annual stockholders' meeting.
On
March 2, 2016, we completed the acquisition (the "Forsythe Transaction") of approximately 22,100 acres of farmland in Illinois from unrelated third-party sellers (the "Forsythe
Sellers") for total consideration comprised of (a) $50.0 million in cash, (b) 2,608,695 OP units valued at $11.50 per OP unit and (c) 117,000 Series A preferred
units of limited partnership interest in the Operating Partnership. In connection with the Forsythe Transaction, we and the Forsythe Sellers entered into the Security Holders Agreement to provide the
Forsythe Sellers with certain rights. Pursuant to the Security Holders Agreement, until such time that the Forsythe Sellers maintain ownership of at least 10% of the then-outstanding shares of Common
Stock (on a fully diluted basis taking into account all outstanding OP units), the Company has agreed to allow Gerald R. Forsythe, as representative of the Forsythe Sellers, to nominate one director
to the Board. Mr. Forsythe appointed John C. Conrad as the Forsythe Seller's designated member of the Board on March 27, 2016.
On
August 28, 2017, Mr. Conrad resigned from the Board due to personal reasons. As of March 14, 2018, the Forsythe Sellers collectively owned 23.59% of the combined number
of outstanding
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shares
of Common Stock and OP Units on a fully diluted basis, and pursuant to the terms of the Security Holders Agreement, Mr. Forsythe is entitled to nominate one new director to the Board to
replace Mr. Conrad, which as of the date of this filing he has not done. In connection with Mr. Conrad's resignation, the Board reduced the size of the Board from eight directors to
seven directors.
On
February 2, 2017, in connection with the consummation of the Company's merger with AFCO and pursuant to the terms of the merger agreement, immediately following closing, the
size of the Board was increased from six members to eight members and D. Dixon Boardman and Thomas S.T. Gimbel, the former Chairman of AFCO's board of directors and the former Chief Executive Officer
of AFCO, respectively, were elected to the Board, each to serve until the Annual Meeting.
On
December 5, 2017, Mr. Boardman resigned from the Board citing his desire to devote more time to his other business interests. In connection with Mr. Boardman's
resignation, the Board reduced the size of the Board from seven directors to six directors. Furthermore, Mr. Gimbel has decided not to stand for reelection to the Board at the Annual Meeting.
Following the Annual Meeting, the size of the Board will be reduced from six directors to five.
On
January 18, 2018, Mr. Sarff resigned from the Board citing his desire to devote more time to his other business interests. On January 21, 2018, the Board
appointed Mr. Good to fill the vacancy created by Mr. Sarff's resignation. Since his appointment, Mr. Good has served as chairman of the Compensation Committee and as a member of
the Nominating and Corporate Governance Committee.
Stockholders
wishing to recommend individuals for consideration as directors must follow the procedures described in Article II, Section 11 of the Company's bylaws,
including (among other requirements) the giving of written notice of the nomination to our Secretary no later than 120 days prior to the first anniversary of the date of the proxy statement for
the previous year's annual meeting. The stockholder's notice must set forth as to each nominee all information relating to the person that would be required to be disclosed in a solicitation of
proxies for election of directors pursuant to Regulation 14A under the Exchange Act if the candidate had been nominated by or on behalf of the Board. Recommendations by stockholders that are
made in this manner will be evaluated in the same manner as other candidates. See "Other MattersStockholder Proposals and Nominations for the 2018 Annual Meeting."
Code of Business Conduct and Ethics
The Board has established a code of business conduct and ethics that applies to our officers, directors and employees. Among other matters, our
code of business conduct and ethics is designed to deter wrongdoing and to promote:
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honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional
relationships;
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full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications;
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compliance with applicable laws, rules and regulations;
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prompt internal reporting of violations of the code to appropriate persons identified in the code; and
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accountability for adherence to the code of business conduct and ethics.
Any
waiver of the code of business conduct and ethics for our executive officers or directors must be approved by the Board or a committee of the Board, and any such waiver shall be
promptly disclosed to stockholders as required by law and NYSE regulations.
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Availability of Corporate Governance Materials
Stockholders may view our corporate governance materials, including the charters of the Audit Committee, Compensation Committee and Nominating
and Corporate Governance Committee, our Corporate Governance Guidelines, our Code of Business Conduct and Ethics and our Code of Ethics for Chief Executive Officer and Senior Financial Officers, on
our website at www.farmlandpartners.com under "Corporate InformationGovernance Documents", and these documents are available in print to any stockholder who sends a written request to
such effect to Farmland Partners Inc., 4600 S. Syracuse Street, Suite 1450, Denver, Colorado 80237, Attention: Secretary. Information on or accessible from our website is
not and should not be considered a part of this Proxy Statement.
Independence of Directors
NYSE listing standards require NYSE-listed companies to have a majority of independent board members and a nominating/corporate governance
committee, compensation committee and audit committee, each comprised solely of independent directors. Under the NYSE listing standards, no director of a company qualifies as "independent" unless the
Board of Directors of the company affirmatively determines that the director has no material relationship with the company (either directly or as a partner, stockholder or officer of an organization
that has a relationship with such company).
The
Board currently has six directors, a majority of whom the Board affirmatively has determined, after broadly considering all relevant facts and circumstances, to be "independent"
under the listing
standards of the NYSE and under applicable rules of the SEC. The Board affirmatively has determined that each of the following directors is independent under these standards: Mr. Bartels,
Mr. Downey, Mr. Gimbel, Dr. Glauber, and Mr. Good. Mr. Pittman is not independent as he is an executive officer of the Company. In light of Mr. Gimbel's
decision not to stand for reelection at the Annual Meeting, the Board will be reduced to 5 directors, 4 of which the Board has determined are independent.
Board Leadership Structure
Mr. Pittman serves as the Executive Chairman of the Board and Chief Executive Officer. The Board has reviewed its current leadership
structure and has determined that the use of the lead independent director, as described below, along with the combined Executive Chairman and Chief Executive Officer positions, is currently the most
appropriate and effective leadership structure for the Company. Mr. Pittman has been involved with the agricultural real estate industry for more than 20 years. As the individual
primarily responsible for the day-to-day management of business operations, he is best positioned to chair regular Board meetings as the directors discuss key business and strategic issues. Coupled
with a lead independent director, this leadership structure allows the Board to exercise independent oversight and enables the Board to have direct access to information related to the day-to-day
management of business operations.
The Board believes that its governance structure ensures a strong, independent Board even though the Board does not have an independent
Chairman. To strengthen the role of our independent directors and encourage independent Board leadership, the Board also has established the position of lead independent director, which currently is
held by Mr. Downey. The responsibilities of the lead independent director include, among others:
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-
presiding at all meetings of the Board at which the Chairman of the Board is not present;
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scheduling meetings of the independent directors from time to time, but not less than twice a year;
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developing the agendas for, and presiding at, executive sessions of the independent directors of the Board;
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communicating the sense of the Board to the Chief Executive Officer of the Company;
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-
assisting the Chairman of the Board to review and set the agenda and schedule for each of the Board's meetings, including bringing to the
attention of the Chairman of the Board particular issues for the Board's attention and consideration and assuring there is sufficient time for discussion of all agenda items;
-
-
assisting in improving the effectiveness of Board meeting;
-
-
assisting the Chairman of the Board in the review and approval of information and materials to be sent to the Board, including in particular
providing input as to the quality, quantity and timeliness of the information submitted by the Company's management that is necessary or appropriate for the independent directors to effectively and
responsibly perform their duties; and
-
-
coordinating with committee heads with respect to committee self-evaluations.
Board and Committee Meetings
During the fiscal year ended December 31, 2017, the Board met seven times, including telephonic meetings. Each director then serving
attended at least 75% of the applicable Board meetings and committee meetings during this time. Mr. Good was appointed to the Board on January 21, 2018 and has attended all board
meetings following his appointment.
Annual Meeting Attendance
Pursuant to the policy set forth in our Corporate Governance Guidelines, each director is expected to attend the Annual Meeting. Each director
then serving attended our 2017 annual meeting of stockholders.
Executive Sessions of Non-Management Directors
Pursuant to our Corporate Governance Guidelines and the NYSE listing standards, in order to promote open discussion among non-management
directors, our non-management directors meet in executive sessions without management participation regularly. The lead independent director presides at these sessions.
Communications with the Board
Stockholders and other interested parties may communicate with the Board by sending written correspondence to the "Lead Independent Director"
c/o the Secretary of Farmland Partners Inc., 4600 S. Syracuse Street, Suite 1450, Denver, Colorado 80237, who will then directly forward such correspondence to the lead
independent director. The lead independent director will decide what action should be taken with respect to the communication, including whether such communication should be reported to the full
Board.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related Party Transaction Policy
The Board has adopted a written related person transaction approval policy ("the Related Party Transaction Policies and Procedures" or the
"policy") to further the goal of ensuring that any related person transaction is properly reviewed, approved by the Audit Committee, and fully disclosed in accordance with the rules and regulations of
the SEC and the NYSE. The policy applies to transactions or arrangements between the Company and any related person, including directors, director nominees, executive officers, greater than 5%
stockholders and the immediate family members of each of these groups (the "Related Persons"). They do not, however, apply with respect to general conflicts between the interests of the Company and
our employees, officers and directors, including issues relating to engaging in a competing business and receiving certain benefits from the Company, such as loans or guarantees of obligations, which
are reported and handled in accordance with the Company's Code of Business Conduct and Ethics and other procedures and guidelines implemented by the Company from time to time.
Under
the policy, the Related Person is responsible for identifying and reporting to the Audit Committee any proposed related person transaction. In the event the Chief Executive Officer
determines that it is impractical or undesirable to wait until an Audit Committee meeting can be convened in order to review a transaction with Related Person, the Chairperson of the Audit Committee
may act as an authorized subcommittee on behalf of the Audit Committee to review the such transaction, so long as the Chairperson is a disinterested member with respect to such transaction. After
considering all the facts and circumstances available to the Audit Committee, the Audit Committee will approve, ratify or reject the transaction, in its discretion. All approved transactions with
Related Persons will be disclosed to the full Board.
Related Party Transactions
On July 21, 2015, the Company entered into a lease agreement with American Agriculture Aviation LLC ("American Ag Aviation") for
the use of a private plane. American Ag Aviation is a Colorado limited liability company that is owned 100% by Mr. Pittman. The Company reimburses American Ag Aviation solely for use of the
private plane for business purposes by the Company's executive officers. During the year ended December 31, 2017, the Company reimbursed American Ag Aviation in the amount of $178,186 in
connection with use of the aircraft in accordance with the lease agreement.
For the fiscal year ended December 31, 2017, we paid Eric Sarff, the Company's Director of Management and
AcquisitionsMidwest and the son of Darell Sarff, an independent member of the Board until his resignation on January 18, 2018, direct compensation for service as an employee of the
Company of approximately $130,000. In accordance with the Company's Related Party Transaction Policies and Procedures, the Audit Committee approved Eric Sarff's compensation and determined that such
compensation did not affect Mr. Sarff's independence during his tenure on the Board.
Our charter and bylaws provide for certain indemnification rights for our directors and officers and we entered enter into an indemnification
agreement with each of our executive officers and directors, providing for procedures for indemnification and advancement by us of certain expenses and costs relating to claims, suits or proceedings
arising from their service to us or, at our request, service to
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other
entities, as officers or directors, or in certain other capacities, to the maximum extent permitted by Maryland law.
On February 1, 2017, Thomas S.T. Gimbel, an independent director of the Board since February 2, 2017, entered into a separation
agreement and release with AFCO (the "Separation Agreement"), which entitled him to a separation payment from AFCO following his termination in connection with a change in control. The Company assumed
the Separation Agreement following the closing of the Company's merger with AFCO on February 2, 2018. Mr. Gimbel was terminated by AFCO on February 2, 2017, and received a
separation payment of $2,857,951 from the Company. Pursuant to the terms of the Separation Agreement, Mr. Gimbel received a lump sum cash severance payment from the Company equal to three times
(3x) the sum of his (i) base salary at the time of termination and (ii) the average annual cash incentive compensation received by Mr. Gimbel over the prior three years. In
addition, Mr. Gimbel also received a pro rata portion of his target bonus based on the number of days Mr. Gimbel worked for AFCO during 2017, as well as a cash payment equal to the
monthly employer contribution that AFCO would have been required to make to provide health insurance to Mr. Gimbel for an 18 month period following his termination of employment from
AFCO.
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