wstr20230310_def14a.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

(RULE 14a-101)

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

☐	Preliminary Proxy Statement

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☒	Definitive Proxy Statement

☐	Definitive Additional Materials

☐	Soliciting Material Pursuant to Section 240.14a-12

Whitestone REIT

(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):

☒	No fee required.

☐	Fee paid previously with preliminary materials.

☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

2600 S. GESSNER ROAD, SUITE 500

HOUSTON, TEXAS 77063

March 31, 2023

Dear Shareholder:

You are cordially invited to attend the 2023 Annual Meeting of Shareholders (the “Annual Meeting”) of Whitestone REIT virtually via the internet or by proxy. The Annual Meeting will be held on May 12, 2023, at 9:00 a.m., Central Daylight Time.

In accordance with the “e-proxy” rules promulgated by the Securities and Exchange Commission, we are pleased to take advantage of the practice of furnishing proxy materials to shareholders over the internet. The e-proxy rules afford us the opportunity not only to realize cost savings on the printing and distribution of our proxy materials but also to preserve our environment, and we hope that, if possible and convenient, you will avail yourself of this option. Accordingly, on or about March 31, 2023, we are mailing to our shareholders (other than those shareholders who have previously requested electronic or paper delivery) a Notice of Internet Availability of Proxy Materials. On the mailing date of the Notice of Internet Availability of Proxy Materials, all shareholders of record and beneficial owners will have the ability to access all of our proxy materials referred to in the Notice of Internet Availability of Proxy Materials on the internet website cited therein and in the accompanying Proxy Statement. These proxy materials will be available free of charge. During the Annual Meeting, shareholders will have the opportunity to vote on each item of business described in the enclosed notice of the Annual Meeting and accompanying proxy statement. You will only be able to vote electronically and submit questions during the Annual Meeting by using your control number, which will be included on your notice or proxy card (if you received a printed copy of the proxy materials), to log on to the Annual Meeting.

It is important that your shares be represented at the Annual Meeting. I urge you to authorize a proxy to vote your shares via the internet, or by calling the toll-free telephone number, or by signing, dating and promptly returning your proxy card enclosed with the proxy materials. Your vote is important. If you have any questions about how to vote your shares, please contact our Director of Investor Relations, David Mordy, at 713-435-2219.

Sincerely yours,

David K. Holeman

Chief Executive Officer

2600 S. GESSNER ROAD, SUITE 500

HOUSTON, TEXAS 77063

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To be Held May 12, 2023

To Our Shareholders:

Notice is hereby given that the 2023 Annual Meeting of Shareholders (the “Annual Meeting”) of Whitestone REIT will be held on May 12, 2023, at 9:00 a.m., Central Daylight Time. The Annual Meeting will be held virtually via the internet at www.virtualshareholdermeeting.com/WSR2023 by using the control number included with your notice to log on to the Annual Meeting. The agenda for the Annual Meeting is as follows:

To elect six trustees to serve until our 2024 annual meeting of shareholders and until their successors have been duly elected and qualified (Proposal No. 1);

To approve, in an advisory (non-binding) vote, the compensation of our named executive officers (Proposal No. 2);

To determine, in an advisory (non-binding) vote, whether a shareholder vote to approve the compensation of our named executive officers should occur every one, two or three years (Proposal No. 3)

To ratify the appointment of Pannell Kerr Forster of Texas, P.C. as our independent registered public accounting firm for the fiscal year ending December 31, 2023 (Proposal No. 4); and

To transact such other business that may properly come before the meeting or any adjournment or postponement thereof.

All shareholders of record as of the close of business on February 28, 2023 are entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. We are pleased to take advantage of the Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their shareholders electronically. We believe these rules allow us to provide our shareholders with the information they need, while reducing the environmental impact of the Annual Meeting and lowering the costs of delivery of the materials.

REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE READ THE PROXY STATEMENT AND AUTHORIZE A PROXY TO VOTE YOUR SHARES AS SOON AS POSSIBLE.

By order of the Board of Trustees,

Peter A. Tropoli

General Counsel and Corporate Secretary

March 31, 2023

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON MAY 12, 2023:

This Proxy Statement and Whitestone’s Annual Report to Shareholders for the fiscal year ended December 31, 2022 are available for review by shareholders of record at: www.proxyvote.com

TABLE OF CONTENTS

CEO's Letter
Notice of Annual Meeting of Shareholders	i
Table of Contents	iii
PROXY SUMMARY	1
PROPOSAL NO. 1 - ELECTION OF TRUSTEES	6
Nominees for Trustee	6
Members of the Board of Trustees	7
Qualifications of Trustees	7
CORPORATE GOVERNANCE	10
Governance Highlights	10
Independence	10
Meetings and Committees of the Board of Trustees	11
Nominating and Corporate Governance Committee	11
Shareholder Nominations for Trustee	12
Audit Committee	14
Compensation Committee	14
Code of Business Conduct and Ethics	15
Board Leadership Structure	15
Clawback Policy	15
Insider Trading Compliance Policy	15
Risk Management	16
Corporate Responsibility and Sustainability	16
ESG Steering Committee	16
Communications with our Board of Trustees	17
Share Ownership Guidelines	17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	18
Trustees and Executive Officers	18
Beneficial Owners of More Than 5% of Common Shares	20
EXECUTIVE OFFICERS	21
TRUSTEE COMPENSATION	22
PROPOSAL NO. 2 - ADVISORY VOTE ON EXECUTIVE COMPENSATION	23

iii

COMPENSATION DISCUSSION AND ANALYSIS	24
2022 Named Executive Officers	24
Say-On-Pay Shareholder Engagement	24
Our Performance - 2022	24
2022 Pay for Performance Decisions	25
Summary of our Compensation Practices	25
Compensation Strategy and Philosophy	27
Compensation Objectives	31
Roles and Responsibilities in Compensation Decisions	31
Setting Executive Compensation	32
Compensation Related Risk Management	34
Employment and Change in Control Agreements	34
Perquisites and Other Personal Benefits	34
Chief Executive Officer Compensation and Employee Compensation and Pay Ratio	35
Compensation Committee Interlocks and Insider Participation	35
Compensation Consultant	35
COMPENSATION COMMITTEE REPORT	36
EXECUTIVE COMPENSATION	37
Summary Compensation Table	37
Grants of Plan Based Awards	39
Outstanding Equity Awards at Fiscal Year End 2022	40
Stock Awards Vested in 2022	41
Potential Payments Upon Termination or Change in Control	42
Employment Agreements and Payments Upon Change in Control	44
Pay vs. Performance Comparison	46
PROPOSAL NO. 3 – ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE ON EXECUTIVE COMPENSATION	50
PROPOSAL NO. 4 – RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	51
AUDIT COMMITTEE INFORMATION	52
Report of the Audit Committee of the Board of Trustees	52
Independent Registered Public Accounting Firm Fees and Services	53
Pre-Approval Policies and Procedures	53
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	54
Policies and Procedures for Transactions with Related Persons	54
OTHER MATTERS	55
Documents Incorporated by Reference	55
Other Business	55
SOLICITATION AND VOTING	56
How may I attend the virtual Annual Meeting?	56
What proposals will be voted upon at the Annual Meeting?	56
Who is entitled to vote at the Annual Meeting?	56
Why did I not automatically receive a paper copy of the Proxy Statement, Proxy Card and Annual Report?	57
Can I find additional information on the Company website?	57
How do I vote?	57
Can I change or revoke my vote after I return my proxy card?	58
How many shares must be present to constitute a quorum for the Annual Meeting?	58
What are the recommendations of the Board?	58
How are votes counted?	59
How many votes are needed to approve each proposal?	59
May I ask questions at the Annual Meeting?	60
Who is paying for this proxy solicitation?	60
How many copies should I receive if I share an address with another shareholder?	60
How can I obtain Whitestone's Annual Report?	61
How can I find out the results of the voting at the Annual Meeting?	61
How and when may I submit a shareholder proposal for the Annual Meeting?	61
Whom should I contact if I have any questions?	61
APPENDIX A - RECONCILIATION OF NON-GAAP MEASURES	62

PROXY SUMMARY

Here we present an overview of information that you will find throughout this Proxy Statement. As this is only a summary, we encourage you to read the entire Proxy Statement for more information about these topics prior to voting.

Annual Meeting of Shareholders		Shareholder Voting Matters
Time and Date:	May 12, 2023 at 9:00 a.m. Central Daylight Time	Proposals	Board's Voting Recommendation	Page
Place:	Virtual Meeting at www.virtualshareholdermeeting.com/WSR2023	1. Election of Trustees	FOR	[6]
Record Date:	February 28, 2023	2. Advisory Vote on Executive Compensation	FOR	[23]
This Proxy Statement and the accompanying form of proxy are first being sent or made available to our shareholders on or about March 31, 2023 in connection with the solicitation by our Board of Trustees of proxies to be used at our 2023 annual meeting of shareholders.		3. Advisory vote on whether a shareholder vote to approve the compensation of our named executive officers should occur every one, two or three years	ONE YEAR	[50]
		4. Ratification of the appointment of Pannell Kerr Forster of Texas, P.C. as our independent registered public accounting firm for the fiscal year ending December 31, 2023.	FOR	[51]

Our Trustees Nominees

You are being asked to vote on the election of six trustee nominees listed below. Detailed information about each trustee nominee’s background, skills and expertise can be found in the Proposal No. 1 - Election of Trustees section of this Proxy Statement. The Board has determined that five of the six trustee nominees are independent. If the trustee nominees are elected at the Annual Meeting, the trustees plan to hold committee memberships as follows:

			Committee Memberships
Name and Primary Occupation	Age	Trustee Since	Audit	Compensation	Nominating and Corporate Governance Committee
*Nominees:*
Nandita V. Berry, former 109th Texas Secretary of State	54	2017	X		Chair
Julia B. Buthman, Managing Director, Prudential Private Capital	63	2023 ⁽¹⁾			X ⁽¹⁾
Amy S. Feng, Head of Investor Relations of Shopify Inc.	57	2022	X	X
David K. Holeman, Chief Executive Officer of Whitestone REIT	59	2022
Jeffrey A. Jones, Managing Director of Stephens Inc.	67	2020	Chair	X
David F. Taylor, Chair of Locke Lord LLP and Chairman of Whitestone REIT	59	2017		Chair	X

⁽¹⁾

Subject to election to the Board by shareholders on May 12, 2023.

Our Commitment to Excellence in Stakeholder Engagement

Through owning, operating, developing and redeveloping successful neighborhood community shopping centers, we engage with a wide variety of stakeholders, including shareholders, noteholders, lenders, employees, co-investment partnerships, tenants, and the local communities where our properties are located. We believe that considering the needs and feedback of these stakeholders is crucial to the value-creation process as they are in a position to significantly influence our long-term success.

STAKEHOLDER GROUP	ENGAGEMENT APPROACH		TOPICS OF DISCUSSION
Shareholders, Noteholders and Lenders	● One-on-one meetings with individuals and institutions	● Interactions facilitated via industry associations and sell-side analyst conferences	● Our goals and strategic objectives, performance and expectations, transparent disclosure, corporate governance and other ESG initiatives
	● Direct dialogue through Whitestone-hosted market visits and quarterly conference calls	● Information sharing via company filings
Tenants	● Tenant site visits on a regular basis performed by property managers and regional managers	● One-on-one contact with tenants and representatives at retailer industry conferences	● Tenant performance, tenant satisfaction, property maintenance, property health and safety, property efficiencies and sustainable building practices
	● Tenant satisfaction surveys
Communities	● One-on-one dialogue with local and regional planning agencies, municipal boards, permitting authorities and community groups	● Direct dialogue through open houses and town halls	● Property specific information, community interests and needs
	● Monitoring through social media	● Employing a diverse group of associates that understands the needs of multicultural communities and tenants.
Vendors	● Compliance with our Vendor Code of Conduct Policy		● Vendors are to comply with established Code of Conduct Policy which includes, but not limited to, labor rights, health & safety, unfair business practices and environmental and sustainability concerns
Employees	● One-on-one engagements and annual goal setting	● Special project and training workshops	● Employee satisfaction, benefits and compensation, health and safety, career development and training, diversity and equal opportunity
	● Employee review meetings and Q&A sessions with the executive team members	● Open door policy that encourages employees to offer opinions or raise concerns informally
	● Formal reporting mechanism to raise issues such as fraud, harassment, etc.	● Whistleblower Policy
	● Employee satisfaction surveys	● Employee ESG training

Our approach to stakeholder engagement is described in detail in our annual Environmental, Social, and Governance Report posted on our website at www.whitestonereit.com

Commitment to Excellence in Corporate Responsibility

We own, operate, develop and redevelop retail community-centered properties in vibrant markets and create value by leasing, managing, developing, and redeveloping properties to be a place of connection and convenience, crafted for the local needs of the community.

We are more than landlords - we build unity and synergy between our tenants, designing a tenant mix for cross-referral business, which is the glue that creates the community atmosphere within our properties. In doing so, we create value for the community and other stakeholders.

We understand that managing our environmental, social and governance ("ESG") responsibilities is critical to creating and sustaining long-term value. Our priorities in those efforts are providing sustainable, high quality rental spaces with credit-worthy tenants; prioritizing human capital management by investing in our people to ensure we can attract and retain the talent we need to remain successful; and operating to the highest possible standards of ethics and transparency.

To that end, we have established an ESG Committee, under the oversight of the Board, which is comprised of key members of management and other employees.

Social Responsibility

Our Employees:

•

A values-based culture that promotes employee engagement

•

A culture of inclusivity, with annual diversity and sensitivity training for management and associates

•

Employee wellness, health and safety, offering comprehensive benefits

•

Employee training and continuing education opportunities for professional development

•

24 languages spoken at Whitestone REIT as of March 11, 2023

•

Internship Program

Social Responsibility

Our Tenants and Communities:

•

Lease to tenants that provide beneficial services to the surrounding communities

•

Perform due diligence to ensure upholding of our standards through informal surveys, tenant meetings and formalized lease renewal processes

•

Participation of associates in volunteering and philanthropy

•

Employ and develop a diverse group of associates who understand the needs of our multicultural communities and tenants

Ethics and Governance

•

Separate Chairman and CEO positions

•

Unwavering ethical standards and business practices fostered by 100% employee participation in Code of Business Conduct and Ethics Training

•

Annual shareholder elections for Trustees

•

Ongoing board refreshment - 60% of Independent Trustees have served fewer than 4 years

•

Commitment to continual enhancement of our corporate governance practices, evidenced by, among other things, our recent termination of our Shareholder Rights Plan, amendment of our Bylaws to provide separate Chairman and CEO roles, and our recent amendment to our Charter to enable shareholders to amend our Bylaws.

Environmental Stewardship

Redeveloping and Revitalizing

•

We acquire and reposition properties and seek to add value through renovating and re-tenanting our properties to create Whitestone-branded Community Centered Properties™.

•

Adding leasable square footage to existing structures, upgrading and renovating existing structures and developing and building on unused land are all ways that we revitalize existing space to better serve the local community.

•

When redeveloping our properties, we seek opportunities to improve their environmental footprint. Examples include providing parking spaces for low emission and fuel efficient vehicles; installing low voltage lighting; and installing enclosed trash collectors. Furthermore, we undertake extensive due diligence related to any possible contamination at all the properties we purchase, investing in any necessary clean up to ensure we and new tenants comply with all environmental regulations.

•

We usually provide triple net (NNN) leases that charge the utility expenses directly to tenants. Tenants are incented to economize on utilities such as electricity and water usage, and improve their profitability by reducing expenses they pay.

•

We use an ESG data management software solution to enable tracking of our water, electricity, gas and trash usage. In November 2022, we released our 2022 ESG Report (in alignment with the Sustainability Accounting Standards Board industry standards and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations) highlighting our ESG strategic priorities and initiatives.

•

Looking forward, we plan to evaluate the possibility of Energy Star and LEED certifications for select properties. In 2022, we submitted our first GRESB real estate assessment.

Our approach to corporate responsibility and key environmental, social, and governance initiatives are described in detail in our various ESG policies and reports, including our Environmental, Social, and Governance Report, Environmental Policies, Environmental Management System Policy, Charter of the Environmental, Social, and Governance Steering Committee, Occupational Safety and Health Policy and Procedures Manual, Human Rights Policy, Vendor Code of Conduct Diversity, Equity, and Inclusion Policy, and Sustainability Statement, each of which is available on our website http://ir.whitestonereit.com/ under the Corporate Responsibility section.

Our Commitment to Excellence in Corporate Governance

Board Refreshment and Characteristics of Board Member Nominees

We believe that, while we can benefit from experienced trustees, periodic refreshment of the Board is important. We understand that the quality, dedication and chemistry of the Board have been integral to our success. We have refreshed our Board, reflecting a balanced set of experienced Board members and less tenured trustees who bring fresh perspectives and differing backgrounds. To that end, our average Board term is 3.4 years, with two of our five current trustees elected in 2022, and one new trustee nominated for election at the Annual Meeting. When considering whether our trustees and trustee nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable our Board to satisfy its oversight responsibilities effectively in light of our operational and organizational structure, the Nominating and Corporate Governance Committee and the Board focused primarily on the categories set forth in the matrix below. There are no family relationships among any of our trustee nominees or executive officers.

	Berry	Buthman	Feng	Holeman	Jones	Taylor	Total
Knowledge / Skills / Experience
Strategic planning and leadership	*	*	*	*	*	*	6
REIT / real estate		*	*	*			3
Financial expertise / literacy	*	*	*	*	*	*	6

SEC Form DEF 14A filed by Whitestone REIT