36
| | (1) | Messrs. Harper, Fitzmaurice and Collier joined the Trust in 2018. Their target and earned annual 2018 bonuses are shown prorated for the portion of 2018 during which they were employed by the Trust. The amounts above do not include cash starting bonuses for Messrs. Harper and Fitzmaurice of $500,000 and $170,000, respectively. For 2018, such executives were entitled to receive guaranteed bonuses equal to their prorated target bonus amount, negotiated in connection with their hiring. For Messrs. Fitzmaurice and Collier, the Compensation Committee paid discretionary amounts above such guaranteed bonuses for 2018. |
TABLE OF CONTENTS | ○ | Hiring best in class personnel. | (2) | The amounts above do not include a one-time special cash bonus for Mr. Merk of $50,000. |
| ○ | Growth through acquisitions; | (3) | Mr. Gershenson was no longer employed by the Trust effective July 1, 2018 and, pursuant to his employment agreement, he is entitled to receive his target 2018 STIP award for the term of the agreement (but in no event longer than 36 months) in accordance with the Trust’s normal payroll |
| ○ | Balance sheet management; |
| ○ | Elevation of digital data advancement; and |
| ○ | Promotion of innovative business practices. |
| | (4) | Mr. Bedrosian resigned from the Trust effective April 20, 2018 and was not eligible to receive a bonus payment for 2018. |
| | (5) | Mr. Hendrickson was no longer employed by the Trust effective April 12, 2018 and, pursuant to his employment agreement, received a pro rata portion of his bonus through April 30, 2018 calculated based on his average annual bonus payments for the two most recently completed full fiscal years of the Trust. |
| | (6) | Mr. Eickhoff was no longer employed by the Trust effective July 30, 2018 and received this amount as severance under his severance agreement. |
The principal achievements of the Trust that the Compensation Committee considered in relation to the executive performance goals are discussed above in “—Executive Summary—Key Highlights.” The Compensation Committee established target bonus amounts as a percentage of annual base salary for each of our named executive officers under the 2021 STIP, with no changes from the percentages of annual base salary that were used in 2020, except for Mr. Merk whose target bonus percentage increased from 40% of his base salary to 50% of his base salary. Target bonus amounts for Messrs. Harper and Collier equaled the minimum amounts provided for in the employment agreements and offer letters with these executives, while target bonus amounts for Messrs. Fitzmaurice and Merk and Ms. Ohlberg were 5% higher, 10% higher and 15% higher, respectively, than the amounts provided for in each executive’s respective employment agreement or offer letter. Under the 2021 STIP, the Compensation Committee had also established bonus payout levels for each named executive officer at threshold (50% of target incentive), target (100% of target incentive) or maximum (200% of target incentive) for certain objective and subjective goals, with a linear increase between such levels for the objective goals, but not the subjective goals. The 2021 STIP goals, the relative weight given to each goal, the specific hurdles and the target and actual bonus amounts are set forth above under “—2021 Results and Earned Compensation.”
Mr. Harper, Mr. Fitzmaurice, Mr. Collier, Ms. Clark and Mr. Merk earned 100%, 141%, 128%, 137% and 150%, respectively, of their respective target annual or prorated bonuses in 2018. The discretionary bonus approvals reflected the Trust's completion of several key foundational objectives, which included the streamlining of the organizational platform, resetting the company culture, conducting a strategic asset review that resulted in the decision to sell approximately $200 million of non-core assets, cultivating a redevelopment pipeline and changing the name of the Trust to RPT Realty. Mr. Merk also received a one-time, special cash bonus of $50,000 reflecting his contributions to the Trust as acting principal financial officer from April 20, 2018 to June 18, 2018.
Long-Term Incentive Compensation Annual Grants.In February 2018,2021, the Compensation Committee approved the Trust’s long-term incentive compensation program, setting long-term incentive targets of 45%awards to 125% of base salary for the named executive officers serving asin the amounts set forth below: | | Brian L. Harper | | | 3,000,000 | | | 143,541 | | | 143,541 | | | | Michael P. Fitzmaurice | | | 712,500 | | | 34,091 | | | 34,091 | | | | Timothy Collier | | | 576,800 | | | 27,598 | | | 27,598 | | | | Heather R. Ohlberg | | | 400,000 | | | 19,139 | | | 19,139 | | | | Raymond J. Merk | | | 206,250 | | | 9,868 | | | 9,868 | |
For 2021, the Compensation Committee increased the target amount of the long-term incentive compensation awards made to Mr. Harper to the contractual minimum amount set forth in the employment agreement he entered into with the Trust in 2020. The target amount of the long-term incentive compensation awards made to Mr. Collier and Ms. Ohlberg also increased by approximately 24.4% and 38.0%, respectively, based on a review of competitive market data and a desire to increase the alignment of each such named executive officers in February 2018, other than Mr. Gershenson. officer with the long-term success of the Trust. The long-term incentive program consistsawards consisted one-half of grants of service-based restricted shares and one-half of performance-based restricted share units. units based on the amounts that could be earned based on target performance. The service-based restricted shares vest in fivethree equal installments on the anniversaries of the date of grant, subject to continued employment. For these and future grants under the Amended and Restated 2019 Omnibus Long-Term Incentive Plan, the Trust will retain all dividends that otherwise would have been paid on unvested restricted shares and those amounts will only be paid if and when the shares vest. The performance-based restricted share units may be earned based on the percentile rank of our relative total shareholder return over the three-year period from January 1, 2021 to December 31, 2023 compared to 17 peer companies, as set forth in the following table, with a linear increase in payout between the performance levels up to a maximum of 200%. TABLE OF CONTENTS | | Threshold | | | 33rd | | | 50% | | | | Target | | | 50th | | | 100% | | | | Maximum | | | 90th | | | 200% | |
None of the restricted share units will be earned if our TSR is below the 33rd percentile. The seventeen peer companies utilized for purposes of these performance-based restricted share units are earned based on the achievement of specific performance measures over a period of three calendar years (with such measures established by the Committee at the beginning of the three-year period). Upon satisfaction of the specified performance measures, any performance-based restricted share units earned will be vested and settled in the form of unrestricted shares in March of the following year. The sole performance measure for the performance-based restricted share units is relative total shareholder return over a three-year period. The fifteen peer companies are publicly traded shopping center REITs, which were selected based on the Compensation Committee’s view that such REITs were the Trust’s primary competitors for shareholder investment: Acadia Realty Trust, Agree Realty Corporation, Brixmor Property Group Inc., Cedar Realty Trust, Inc., Federal Realty Investment Trust, Kimco Realty Corporation, Kite Realty Group Trust, Regency Centers Corporation, Retail Opportunity Investments Corp., Retail Properties of America, Inc., Saul Centers, Inc., Seritage Growth Properties, SITE Centers Corp., Saul Centers, Inc., Urban Edge Properties, Urstadt Biddle Properties Inc., Washington Prime Group, Inc., and Weingarten Realty Investments.
The achievement of 33rd percentile, 50th percentile, 90th percentile and above correspondsperformance-based restricted share units are also subject to payouts of 50%, 100% and 200%, respectively,service-based vesting, based on continued employment through February 11, 2024. Upon satisfaction of the target incentive. There is a linear increasespecified performance measures and service-based vesting, any performance-based restricted share units earned will be settled in payout between the performance levels, up to a maximumform of 200%. The LTIP grants forunrestricted shares. On the 2018 compensation program for executive officers serving in February 2018 were as follows:
| | | | | | | | | | | | Name | | LTIP Award ($) | | Target Restricted Share Units (Performance-Based) (#) | | Restricted Shares (Service-Based) (#) | | Catherine Clark | | 251,252 |
| | 10,566 |
| | 10,566 |
| | Raymond Merk | | 112,500 |
| | 4,731 |
| | 4,731 |
| | Geoffrey Bedrosian | | 579,376 |
| | 24,364 |
| | 24,364 |
| | John Hendrickson | | 579,376 |
| | 24,364 |
| | 24,364 |
| | Edward A. Eickhoff | | 228,598 |
| | 9,613 |
| | 9,613 |
|
In June 2018, Ms. Clark also received a discretionary grant of 1,250 service-based restricted Shares that vest in three equal installments on March 1, 2019, 2020 and 2021.
Pursuant to his employment agreement, Mr. Gershenson was not eligible to receive an annual grant under the Trust’s LTIP in 2018 but received a grant of 100,000 restricted Shares on January 2, 2018, which vested in full on July 1, 2018, when Mr. Gershenson ceased to be employed by the Trust.
In connection with their hiring, Messrs. Harper, Fitzmaurice and Collier were granted long-term incentive awards upon commencement of their employment withsettlement date, the Trust under the Trust's Inducement Incentive Plan. Messrs. Harper, Fitzmaurice and Collier were granted (i) restricted shareswill pay, in cash, an amount equal to $2,250,000, $325,000 and $225,000, respectively, divided by the closing price ofaggregate dividends that would have been paid with respect to the Shares onearned shares if such shares had been outstanding for the day prior to such executive's grant date, which will vest in equal installments on the first three anniversaries of the grant date and (ii) performance shares equal to $4,750,000, $325,000 and $225,000, respectively, divided by the closing price of the Shares on the day prior to such executive's grant date. The performance shares granted to Messrs. Harper, Fitzmaurice and Collier have the same terms as the Trust’s 2018 grant of performance shares to other executives, but will be based on the Trust’s total shareholder return relative to a defined peer group over a period from the grant date through December 31, 2020.of the performance-based restricted share units to the settlement date.
EXECUTIVE COMPENSATION AND RELATED POLICIES AND CONSIDERATIONS
Long-term incentive awards under the Inducement Incentive Plan forThe Trust has employment agreements with Messrs. Harper and Fitzmaurice and offer letters with Messrs. Collier were as follows:and Merk and Ms. Ohlberg that provide for specified severance benefits, including termination upon a change in control. The Trust also has a Change in Control Policy applicable to executive officers of the Trust, which applies to Messrs. Collier and Merk and Ms. Ohlberg. In addition, our performance-based restricted share units provide for acceleration of vesting and/or earning in connection with a change in control or termination of employment in certain circumstances. See “—Employment Agreements and Severance and Change in Control Arrangements” below for a summary of these arrangements.
We believe that providing predetermined severance benefits for all of our executives in the event they are terminated without cause or terminate their employment for good reason following a change in control helps to further align the interests of our executives and our shareholders in the event of a potentially attractive proposed change in control transaction following which one or more of our executives may be expected to be terminated. We also believe that providing predetermined severance benefits for our executives in the event they are terminated without cause encourages these executives to engage in appropriate risk-taking activities and, because the severance level is determined up front, makes it easier for us to terminate these executives without the need for protracted negotiations over severance. Additionally, many of our competitors have severance and change in control arrangements with named executive officers and having such arrangements are critical for the attraction and retention of talented, well qualified executives. | | | | | | | | | | | | Name | | Long-Term Incentive Award ($) | | Target Restricted Share Units (Performance-Based) (#) | | Restricted Stock (Service-Based) (#) | | Brian L. Harper | | 7,000,000 |
| | 371,966 |
| | 176,195 |
| | Michael Fitzmaurice | | 650,000 |
| | 25,571 |
| | 25,571 |
| | Timothy Collier | | 450,000 |
| | 17,189 |
| | 17,189 |
|
Equity Compensation—Other Policies
StockShare Ownership Guidelines.
The Trust's stockTrust’s share ownership guidelines for executive officers require our executive officers to hold directly a number of Sharesshares (including unvested restricted Shares)shares) having a market value equal to a multiple of their then current base salary; the Chief Executive Officer's multiple is six and all other executive officers’ multiple is three.five. The Committee reviews the minimum equity holding level and other market trends and practices on a periodic basis. The Committee has confirmed that all executive officers currently satisfy the guidelines or are within the time period to become compliant. Timing and Pricing of Share-Based Grants. The Trust does not coordinate the timing of share-based grants with the release of material non-public information. Annual equity grants for executive officers and other employees are generally made at the first Committee meeting each year with a grant date as of such approval or shortly thereafter. Further, awards that are subject to performance measures are generally granted at the first Committee meeting of the year following satisfaction of such performance measures. The Committee generally establishes dates for regularly scheduled meetings at least a year in advance.
In accordance with the Trust’s compensation plans, the exercise price of each option, if any, is the closing price of the shares (as reported by the NYSE) on the grant date (which date is not earlier than the date the Committee approved such grant). The Committee is prohibited from repricing options, both directly (by lowering the exercise price) and indirectly (by canceling an outstanding option and granting a replacement option with a lower exercise price), without shareholder approval, except in limited circumstances such as a stock split, stock dividend, special dividend or distribution or similar transactions.
Trading Limitations. In addition to the restrictions set forth in SEC regulations, the Trust has an insider trading policy, which among other things, prohibits Trustees, executive officers and other employees from engaging in short sales, trading in options or participating in any other speculative investments relating to the Trust’s stock.
Perquisites and Other Personal Benefits
The Trust historically provides named executive officers with perquisites and other personal benefits that the Committee believes are reasonable and consistent with its overall compensation program to enable the Trust to attract and retain employees for key positions. See “Named Executive Officer Tables—Summary Compensation Table” and the footnotes thereto for a description of certain perquisites provided to the named executive officers in 2018.
Deferred Stock
The Committee believes nonqualified deferred compensation arrangements are a useful tool to assist in tax planning and ensure retirement income for its named executive officers. Existing deferred compensation arrangements do not provide for above-market or preferential earnings as defined under SEC regulations.
Under the Trust's Deferred Compensation Plan for Officers, an officer can elect to defer restricted shares which may be granted during a subsequent calendar year. No executive officers elected to defer his or her restricted share grants in 2018.
Contingent Compensation
Clawback Policy
The Trust has a Changeclawback policy that allows the Trust to recoup cash and equity incentive compensation paid to, earned by or granted to our executive officers during the three-year period preceding either a restatement of Control Policy applicable to any executive vice presidentthe Trust’s financial statements or the determination by the Compensation Committee that a material miscalculation of a performance metric occurred that resulted from fraud or any senior vice president, which includes all namedother intentional misconduct by any of our executive officers. The policy provides for payments of 2.0 times the sum of the person's base compensation plus his or her target bonus for the year in which the termination occurs ifIn such person’s employment withcircumstances, the Trust may recoup the amount of cash and equity incentive compensation that was paid, earned or any subsidiary is terminated in specified circumstances followinggranted as a changeresult of control. The policy does not provide for any tax gross-up payments.either the incorrectly reported
TABLE OF CONTENTS The Trust believes this policy would be instrumental in the successfinancial results of the Trust in the event of any future hostile takeover bid and would ensure the continued dedication of employees, notwithstanding the possibility, threat or occurrence of a change of control. Further, it is imperative to diminish the inevitable distraction of such employees by virtue of the personal uncertainties and risks created by a pending or threatened change of control, and to provide such employees with compensation and benefits upon a change of control that ensure that such employees’ compensation and benefits expectations are satisfied. Finally, many competitors have change of control arrangements with named executive officers and such policy ensures the Trust will be competitive in its compensation program. See “Named Executive Officer Compensation Tables—Potential Payments Upon Termination or Change-in-Control” for further information. The Trust has employment agreements with Messrs. Harper and Fitzmaurice and an offer letter with Mr. Collier that provide for specified severance benefits, including termination upon a change of control. See “—Executive Officer Employment Agreements” below for a description of the material terms of such employment agreements and the offer letter.
Also, in April 2018 the Trust entered into an agreement regarding severance with Ms. Clark and Mr. Eickhoff , which provides for severance benefits if such executive incurs a separation from service by reason of an involuntary termination, and an offer letter with Mr. Collier, which provides for specified severance benefits in certain circumstances, including in connection with a change of control. See “—Executive Officer Employment Agreements” below for a description of the material terms of such agreements and “Named Executive Officer Compensation Tables—Potential Payments Upon Termination or Change-in-Control” for further information regarding potential payments (and actual payments to Mr. Eickhoff) under these agreements.
Policy Regarding Retroactive Adjustment
The Trust does not have a formal policy regarding whether the Committee will make retroactive adjustments to, or attempt to recover, cash or share-based incentive compensation granted or paid to senior management in which the payment was predicated upon the achievement of certain financial results that are subsequentlywere the subject of the restatement or the material miscalculation that would not have been paid, earned or granted, as applicable, if determined based on correctly reported financial results or the correct calculation of the performance metric. Our clawback policy applies to all cash and equity performance-based incentive compensation with a restatement. The Committee intends to adopt an appropriate recoupment policy following the approval of applicable regulations required by the Dodd-Frank Act.performance period beginning on or after January 1, 2020.
Prohibition on Hedging and Pledging The Trust has adopted an anti-hedging and pledging policy that prohibits its trustees officers and employees from (i) trading in Trust securities on a short-term basis, (ii) short sales and (iii) buying or selling puts and calls and an anti-pledging policy that (1) prohibits trustees andexecutive officers from (1) purchasing any financial instrument or entering into any transaction that is designed to hedge or offset any decrease in the market value of the shares or other equity securities, and (2) pledging, Trusthypothecating or otherwise encumbering shares or other equity securities as collateral to secure debt or engaging in transactions where the Trust’s securities are heldfor indebtedness, including holding such shares in a margin accountaccount. The Trust does not have any practices or policies regarding the ability of any other employees to purchase financial instruments or otherwise engage in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Trust’s equity securities. Timing and (2) strongly encourages allPricing of Share-Based Grants The Trust does not coordinate the timing of share-based grants with the release of material non-public information. Annual equity grants for executive officers and other employees are generally made at the first Committee meeting each year with a grant date as of such approval or shortly thereafter. Further, awards that are subject to performance measures are generally granted at the first Committee meeting of the year following satisfaction of such performance measures. The Committee generally establishes dates for regularly scheduled meetings at least a year in advance. Trading Limitations In addition to the restrictions set forth in SEC regulations, the Trust has an insider trading policy, which among other things, prohibits Trustees, executive officers and other employees from engaging in short sales, trading in options or participating in any other speculative investments relating to the Trust’s shares. Change in Control Payments Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) disallows a company’s tax deduction for “excess parachute payments,” generally defined as payments to specified persons that are contingent upon a change in control in an amount equal to or greater than three times the person’s base amount (the five-year average of Form W-2 compensation). Additionally, Section 4999 of the Code imposes a 20% excise tax on any person who receives such excess parachute payments. The Trust’s share-based plans entitle participants to payments in connection with a change in control that may result in excess parachute payments. Further, the employment agreements of Messrs. Harper and Fitzmaurice, the offer letters of Messrs. Collier and Merk, as well as the Change in Control Policy for the benefit of executive officers, entitle our named executive officers to payments upon termination of employment following a change in control that may constitute excess parachute payments. In the event that any payment or benefit constitutes an excess parachute payment under Section 280G of the Code subject to an excise tax, the executive will not be entitled to a tax gross-up payment; however, the executive’s payments and benefits would be reduced to the extent necessary to avoid such transactions.excise taxes, but only if such a reduction of pay or benefits would result in a greater after-tax benefit to the executive. TABLE OF CONTENTS COMPENSATION PHILOSOPHY AND BENCHMARKING The Trust’s compensation program for named executive officers is designed to: establish and reinforce the Trust’s pay-for-performance philosophy; motivate and reward the achievement of specific annual and long-term financial and strategic goals of the Trust; link actual compensation earned to the relative performance of the Trust’s total shareholder return as compared against the peer companies; attract, retain and motivate key executives critical to the Trust’s operations and strategies; and be competitive relative to peer companies. The Compensation Committee recognizes that a compensation program must be flexible to address all of its objectives. The Compensation Committee engaged Meridian Compensation Partners LLC (“Meridian”), a nationally recognized third-party compensation consulting firm, to assist the Compensation Committee in determining our executive compensation for 2021. Among other things, Meridian provided the Compensation Committee with competitive market data from a peer group developed by the Compensation Committee with the assistance of our Chief Executive Officer and Meridian. Our peer group, along with other market data, used for benchmarking our executive compensation program for fiscal year 2021 was the same as our peer group for 2020. Our 2021 peer group, which represented companies with similar businesses and annual revenues and market capitalization comparable to ours, included the following companies: | | | | | | Acadia Realty Trust | | | Saul Centers, Inc. | | | | Agree Realty Corporation | | | Seritage Growth Properties | | | | Cedar Realty Trust, Inc. | | | Urban Edge Properties | | | | Kite Realty Group Trust(1) | | | Urstadt Biddle Properties, Inc. | | | | Retail Opportunity Investments Corp. | | | Washington Prime Group Inc. | | | | Retail Properties of America, Inc.(1) | | | Weingarten Realty Investors(2) | | | | | |
(1)
| Kite Realty Group Trust and Retail Properties of America, Inc. merged in October 2021, with Kite Realty Group Trust continuing as the surviving public company. |
(2)
| Kimco Realty Corporation and Weingarten Realty Investors merged in August 2021, with Kimco Realty Corporation continuing as the surviving public company. |
The 2021 peer group data presented to the Compensation Committee included information regarding base salary, annual cash bonus, total annual compensation and long-term incentive compensation. For each of these categories, Meridian presented information comparing our compensation to the compensation paid by these companies at the 25th, 50th and 75th percentiles for comparable positions. For purposes of 2021 compensation, the Compensation Committee used this peer group data to gain a greater understanding of market practices in connection with establishing base salaries, target annual cash bonus amounts and target values for annual long-term incentive compensation, all of which were established in early 2021. The Compensation Committee did not target a single percentile or range of percentiles to be used consistently for all of our executives, but rather used this information in connection with a number of factors, including, among others, the individual experience and skills of, and expected contributions from, our executives, the difficulty that we would have in replacing each of our executives and current economic conditions. TABLE OF CONTENTS COMPENSATION COMMITTEE REPORT The Compensation Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis (CD&A) in this proxy statement with management. Based on such review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in the Trust’s annual report on Form 10-K for the year ended December 31, 2021 and the proxy statement for the 2022 annual meeting of shareholders. The Compensation Committee
Arthur Goldberg (Chair)
Richard L. Federico
Laurie M. Shahon
Andrea M. Weiss TABLE OF CONTENTS We reviewed our compensation policies and practices for employees to determine whether they encourage unnecessary or excessive risk-taking. Due to the greater emphasis placed on incentive compensation at higher levels of our organization, and the fact that these individuals are more likely to make decisions that impact corporate performance and could have a material adverse effect on us, the review focused primarily on our executive compensation policies and practices. Based on this review, we concluded that risks arising from our policies and practices for compensating employees are not reasonably likely to have a material adverse effect on us. Our conclusion was based primarily on the following findings: vesting schedules for restricted shares and restricted share units cause management to have a significant amount of unvested awards at any given time; our executive compensation program has a significant focus on long-term equity compensation; the goals for our long-term incentive compensation program are based on overlapping three-year periods and relative TSR performance, reducing the impact of short-term volatility and aligning management with our long-term success; incentive compensation opportunities are capped and therefore do not incentivize employees to maximize short-term performance at the expense of long-term performance; we have a clawback policy that will allow us to recoup incentive compensation in the event of a restatement or material miscalculation that resulted from fraud or any other intentional misconduct by one of our executive officers; our compensation levels and opportunities are in keeping with appropriate competitive practice; and our executives and trustees are expected to maintain an ownership interest in our Trust, which aligns their interests with those of shareholders. TABLE OF CONTENTS EXECUTIVE AND TRUSTEE COMPENSATION PROCESS The Compensation Committee typically meets several times each year in connection with the consideration and determination of executive compensation. As the timing of many compensation decisions follows a predictable annual schedule, regular meetings and general agenda topics are scheduled well in advance by the Compensation Committee. Special meetings are scheduled as needed by the Compensation Committee, and specific meeting agendas are prepared at the direction of the chair of the Compensation Committee and our Chief Executive Officer. In certain circumstances, the Compensation Committee may also take actions by written consent to address compensation matters that have been previously discussed and/or are summarized by our Chief Executive Officer, a consultant engaged by the Compensation Committee or other advisor to the Trust or the Compensation Committee. The Compensation Committee of our Board has the authority to determine all compensation payable to our executive officers. In 2018, the Compensation Committee engaged Meridian to conduct a competitive review of our executive compensation program, including a written report providing competitive analysis of compensation levels for our executives and Meridian’s recommendations with respect to the mix of our executive compensation and the structure of our cash and equity incentive programs, which the Compensation Committee utilized in connection with negotiating employment arrangements with Messrs. Harper, Fitzmaurice and Collier during 2018. This report was subsequently used as the basis for structuring 2021 compensation, which was substantially consistent with 2020 compensation as initially structured, prior to adjustments made during the course of 2020 in response to the COVID-19 pandemic. The Compensation Committee and the chair of the Compensation Committee consulted with Meridian during early 2021 in connection with the finalization of 2021 compensation decisions regarding base salaries and the target amounts for, and the structure of, our cash and equity incentive programs for 2021. For 2021, each executive’s target annual cash bonus was linked in a formulaic manner to the achievement of specific, objectively measurable goals and certain subjective short-term and long-term goals that were communicated to each executive in February 2021. For 2021, the Compensation Committee considered the recommendations of the Chief Executive Officer regarding the design and implementation of the executive compensation program because he has significant involvement in, and knowledge of, the Trust’s business goals, strategies and performance, the overall effectiveness of the executive officers and each person’s individual contribution to the Trust’s performance. For each named executive officer, the Compensation Committee was provided a compensation recommendation as well as information regarding historical earned compensation, the individual’s experience, current performance, potential for advancement and other subjective factors. The Compensation Committee ultimately made all determinations regarding compensation payable to our executive officers. For 2021, based on a comprehensive review of trustee compensation in 2019, the Compensation Committee declined to make any changes to base trustee compensation and approved no one-time payments in connection with service to the board or any committee. In October 2021, the Compensation Committee engaged Meridian to revisit the overall structure of the Trust’s non-employee trustee compensation and to conduct an extensive review. Following this review, in consultation with Meridian, the Compensation Committee approved changes that will be effective in 2022 to better align our trustee compensation with market practice and to ensure the attraction and retention of qualified trustees. In compliance with the SEC and the NYSE requirements regarding independent of compensation consultants, Meridian provided the Compensation Committee with a letter addressing each of the six independence factors. Their responses affirm the independence of Meridian and the partners, consultants and employees who service the Compensation Committee on executive compensation matters. TABLE OF CONTENTS NAMED EXECUTIVE OFFICER COMPENSATION TABLES SUMMARY COMPENSATION TABLE The table below sets forth information regarding the total compensation paid to or earned by the named executive officers in 2021, 2020 and 2019. | | Brian L. Harper | | | 2021 | | | 789,904 | | | — | | | 3,531,108 | | | 1,937,500 | | | 3,200 | | | 6,261,712 | | | | President and CEO | | | 2020 | | | 678,029 | | | 823,438 | | | 6,544,214 | | | — | | | 3,200 | | | 8,048,881 | | | | | | | 2019 | | | 750,000 | | | 350,000 | | | 1,772,631 | | | 1,618,125 | | | 3,000 | | | 4,493,756 | | | | Michael P. Fitzmaurice | | | 2021 | | | 484,135 | | | — | | | 838,639 | | | 760,000 | | | 3,200 | | | 2,085,974 | | | | Executive VP and CFO | | | 2020 | | | 445,265 | | | 323,000 | | | 1,501,894 | | | — | | | 3,200 | | | 2,273,359 | | | | | | | 2019 | | | 450,000 | | | — | | | 443,149 | | | 582,525 | | | 3,000 | | | 1,478,674 | | | | Timothy Collier | | | 2021 | | | 419,923 | | | — | | | 678,911 | | | 618,000 | | | 3,200 | | | 1,720,034 | | | | Executive VP-Leasing | | | 2020 | | | 386,227 | | | 227,630 | | | 646,711 | | | — | | | 3,200 | | | 1,263,768 | | | | | | | 2019 | | | 400,000 | | | — | | | 332,362 | | | 448,760 | | | 3,000 | | | 1,184,122 | | | | Heather R. Ohlberg | | | 2021 | | | 407,692 | | | 100,000 | | | 470,820 | | | 520,000 | | | 3,200 | | | 1,501,712 | | | | Executive VP, General Counsel and Secretary | | | 2020 | | | 374,750 | | | 221,000 | | | 327,530 | | | — | | | 3,200 | | | 926,480 | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | Raymond J. Merk | | | 2021 | | | 280,288 | | | — | | | 242,753 | | | 275,000 | | | 7,434 | | | 805,475 | | | | Senior VP and Chief Accounting Officer | | | 2020 | | | 257,548 | | | 93,500 | | | 267,386 | | | — | | | 50,579 | | | 669,013 | | | | | | | 2019 | | | 257,500 | | | — | | | 142,631 | | | 177,778 | | | 35,416 | | | 613,325 | |
(1)
| For 2020, the amounts reported reflect the base salaries approved for our named executive officers in February 2020, less amounts voluntarily forgone for no value but including amounts forgone in exchange for restricted shares pursuant to our salary reduction and exchange program, and, as a result, do not reflect the amounts actually paid to Messrs. Harper, Fitzmaurice and Collier and Ms. Ohlberg. The actual amounts of base salary paid to these named executives in cash during 2020 were as follows: Mr. Harper—$581,058; Mr. Fitzmaurice—$415,529; Mr. Collier—$360,454; and Ms. Ohlberg—$349,500. For 2021, the amounts reported reflect the base salaries approved for our named executive officers in February 2021, plus the cash value of excess accrued vacation time paid to each named executive officer during 2021 as follows: Mr. Harper—$14,904; Mr. Fitzmaurice—$9,135; Mr. Collier—$7,923; Ms. Ohlberg—$7,692; and Mr. Merk—$5,288. |
(2)
| The amounts reported reflect the grant date fair value (excluding the effect of estimated forfeitures). The awards in the Stock Awards column for 2021, 2020 and 2019 relate to service-based restricted shares and performance-based restricted share units granted in 2021, 2020 and 2019, respectively, but do not include the restricted shares our named executive officers received in exchange for base salary in 2020 pursuant to our salary reduction and exchange program, which are included in the Salary column. The amounts reported reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. The grant date fair value of each share of service-based restricted shares granted is calculated as the closing price of the shares as of the grant date. The grant date fair value of the performance-based restricted share units are based on the probable outcome of the performance conditions on the grant date for financial statement reporting purposes under FASB ASC Topic 718 and consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated or actual forfeitures. |
| The valuations of the annual performance-based restricted share units granted in 2021 based on relative TSR assume a risk free interest rate of 0.2% and Share price volatility level of 57.1%. Assuming that maximum performance is achieved under these performance-based restricted share units granted in 2021, the value at the grant date of these relative performance-based restricted share units would have been as follows: Mr. Harper—$3,000,007; Mr. Fitzmaurice—$712,502; Mr. Collier—$576,798; Ms. Ohlberg—$400,005; and Mr. Merk—$206,241. The grant date fair value of awards granted to our named executive officers in 2021 is reflected in the “Grants of Plan-Based Awards in 2021” table. |
(3)
| For 2021, the following named executive officers received payments and/or benefits included under “All Other Compensation”: |
a.
| Mr. Harper—$3,000 in 401(k) plan company match and $200 gift card; |
b.
| Mr. Fitzmaurice—$3,000 in 401(k) plan company match and $200 gift card; |
c.
| Mr. Collier—$3,000 in 401(k) plan company match and $200 gift card; |
d.
| Ms. Ohlberg—$3,000 in 401(k) plan company match and $200 gift card; and |
e.
| Mr. Merk—$4,234 for rental storage space, which amount includes $1,285 for the tax gross up paid in connection with this reimbursement pursuant to Mr. Merk's offer letter, $3,000 in 401(k) plan company match and $200 gift card. |
TABLE OF CONTENTS GRANTS OF PLAN-BASED AWARDS IN 2021 The following table provides information about plan-based awards granted to the named executive officers in 2021. | | Brian L. Harper | | | 02/11/21 | | | — | | | — | | | — | | | 71,771 | | | 143,541 | | | 287,082 | | | — | | | 2,031,105 | | | | 02/11/21 | | | — | | | — | | | — | | | — | | | — | | | — | | | 143,541 | | | 1,500,003 | | | | — | | | 484,375 | | | 968,750 | | | 1,937,500 | | | — | | | — | | | — | | | — | | | — | | | | Michael P. Fitzmaurice | | | 02/11/21 | | | — | | | — | | | — | | | 17,046 | | | 34,091 | | | 68,182 | | | — | | | 482,388 | | | | 02/11/21 | | | — | | | — | | | — | | | — | | | — | | | — | | | 34,091 | | | 356,251 | | | | — | | | 190,000 | | | 380,000 | | | 760,000 | | | — | | | — | | | — | | | — | | | — | | | | Timothy Collier | | | 02/11/21 | | | — | | | — | | | — | | | 13,799 | | | 27,598 | | | 55,196 | | | — | | | 390,512 | | | | 02/11/21 | | | — | | | — | | | — | | | — | | | — | | | — | | | 27,598 | | | 288,399 | | | | — | | | 154,500 | | | 309,000 | | | 618,000 | | | — | | | — | | | — | | | — | | | — | | | | Heather R. Ohlberg | | | 02/11/21 | | | — | | | — | | | — | | | 9,570 | | | 19,139 | | | 38,278 | | | — | | | 270,817 | | | | 02/11/21 | | | — | | | — | | | ��� | | | — | | | — | | | — | | | 19,139 | | | 200,003 | | | | — | | | 130,000 | | | 260,000 | | | 520,000 | | | — | | | — | | | — | | | — | | | — | | | | Raymond J. Merk | | | 02/11/21 | | | — | | | — | | | — | | | 4,934 | | | 9,868 | | | 19,736 | | | — | | | 139,632 | | | | 02/11/21 | | | — | | | — | | | — | | | — | | | — | | | — | | | 9,868 | | | 103,121 | | | | — | | | 68,750 | | | 137,500 | | | 275,000 | | | — | | | — | | | — | | | — | | | | |
(1)
| Represents cash payouts that were possible pursuant to the 2021 STIP. See “Compensation Discussion and Analysis—2021 Compensation Determinations-Discussion—Annual Cash Bonus—2021 STIP” for a description of these awards. |
(2)
| All awards in this column relate to shares of performance-based restricted shares under our Amended and Restated 2019 Omnibus Long-Term Incentive Plan (the “2019 Plan”). See “Compensation Discussion and Analysis—2021 Compensation Determinations-Discussion—Long-Term Incentive Compensation” for a description of these amendments and awards. |
(3)
| All awards in this column relate to shares of service-based restricted shares under the 2019 Plan. |
(4)
| The amounts reported reflect the fair value computed in accordance with FASB ASC Topic 718 for the service-based restricted shares and performance-based restricted share units awarded in 2021 under the 2019 Plan. |
Narrative Discussion of Summary Compensation and Grants of Plan-Based Awards Tables Our executive compensation policies and practices, pursuant to which the compensation set forth in the Summary Compensation Table and the 2021 Grants of Plan-Based Awards Table was paid or awarded, are described above under “— Compensation Discussion and Analysis.” In 2021, we granted restricted share awards and performance-based restricted share units to each of our named executive officers under the 2019 Plan, as described in the Grants of Plan-Based Awards in 2021 table. The vesting of each award is subject to acceleration in connection with certain termination triggering events as described below under “—Employment Agreements and Severance and Change in Control Arrangements—Long-Term Incentive Plan Awards.” For service-based awards made in 2021 under the 2019 Plan, we will retain all dividends that otherwise would have been paid on unvested restricted shares and those amounts will only be paid if and when the shares vest. With respect to the annual performance-based restricted share units, holders are entitled to the accumulated value of dividends during the performance period. Once the performance-period for such annual performance-based restricted share units ends, earned performance-based restricted share units will be settled in an equal number of shares. On the settlement date, the Trust will pay, in cash, an amount equal to the aggregate dividends that would have been paid with respect to the earned shares if such shares had been outstanding for the period from the grant date of the performance-based restricted share units to the settlement date. The terms of the employment agreements, offer letters and other agreements that we have entered into with our named executive officers are described below under “—Employment Agreements and Severance and Change in Control Arrangements.” TABLE OF CONTENTS OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2021 The following table provides information on the holdings of equity awards by the named executive officers as of December 31, 2021. | | Brian L. Harper | | | 1,005,603 | | | 13,454,968 | | | 1,128,554 | | | 15,100,053 | | | | Michael P. Fitzmaurice | | | 212,266 | | | 2,840,119 | | | 145,380 | | | 1,945,184 | | | | Timothy Collier | | | 95,623 | | | 1,279,436 | | | 107,762 | | | 1,441,856 | | | | Heather R. Ohlberg | | | 43,203 | | | 578,056 | | | 46,337 | | | 619,989 | | | | Raymond J. Merk | | | 38,492 | | | 515,023 | | | 32,413 | | | 433,686 | |
(1)
| Includes the following: |
| | Brian L. Harper | | | 215,208(a) | | | 143,541 | | | 63,662 | | | 33,192 | | | — | | | — | | | 550,000 | | | | Michael P. Fitzmaurice | | | 71,736(b) | | | 34,091 | | | 18,142 | | | 8,297 | | | — | | | — | | | 80,000 | | | | Timothy Collier | | | — | | | 27,598 | | | 11,802 | | | 6,223 | | | — | | | — | | | 50,000 | | | | Heather R. Ohlberg | | | — | | | 19,139 | | | 7,384 | | | 1,680 | | | — | | | — | | | 15,000 | | | | Raymond J. Merk | | | — | | | 9,868 | | | 5,252 | | | 2,670 | | | 1,892 | | | 810 | | | 18,000 | |
(a)
| Represents restricted shares granted as an extension award in connection with Mr. Harper’s employment agreement, which will vest on June 30, 2025, subject to continued employment through such date. |
(b)
| Represents restricted shares granted as an extension award in connection with Mr. Fitzmaurice’s employment agreement, which will vest on June 30, 2024, subject to continued employment through such date. |
(c)
| Represents unvested restricted share awards granted for 2021, with one-third scheduled to vest on each of February 11, 2022, 2023 and 2024, subject to continued employment through such dates. |
(d)
| Represents unvested restricted share awards granted for 2020, with one-third having vested on March 1, 2021 and one-third scheduled to vest on each of March 1, 2022 and 2023, subject to continued employment through such dates. |
(e)
| Represents unvested restricted share awards granted for 2019, with one-third having vested on each of March 1, 2020 and 2021 and one-third scheduled to vest on March 1, 2022, subject to continued employment through such date. |
(f)
| Represents unvested restricted share unit awards granted for 2018, with one-fifth having vested on each of March 1, 2019, 2020 and 2021 and one-fifth scheduled to vest on each of March 1, 2022 and 2023, subject to continued employment through such dates. |
(g)
| Represents unvested restricted share unit awards granted for 2017, with one-fifth having vested on each of March 20, 2018, 2019, 2020 and 2021 and one-fifth scheduled to vest on March 20, 2022, subject to continued employment through such date. |
(h)
| Represents unvested performance-based restricted share units granted in 2020. Based on increases in the Trust’s absolute share price during the performance period, subject only to the Compensation Committee’s final determination of the Trust’s performance following the conclusion of the performance period, the restricted share units cannot be earned at less than the maximum performance level. Earned restricted share units will be settled in restricted shares that will vest on December 31, 2024, subject to continued employment through such date. |
(2)
| Based upon the $13.38 closing price of the Trust’s shares on the NYSE on December 31, 2021, the last business day of the fiscal year. |
(3)
| Reflects performance-based restricted share units that were outstanding and for which the performance period had not ended as of December 31, 2021. The number of these performance-based units that were outstanding as of December 31, 2021, which equals the target amount that could be earned, is set forth in the table below. In accordance with SEC rules, the number of units set forth in the table above includes the threshold, target or maximum amount, as applicable, of the performance-based restricted share units that may be earned based on the Trust’s performance during the applicable performance period as of December 31, 2021. |
TABLE OF CONTENTS | | Brian L. Harper | | | 143,541 | | | 95,493 | | | 99,586 | | | 371,966(d) | | | — | | | | Michael P. Fitzmaurice | | | 34,091 | | | 27,215 | | | 24,896 | | | 25,571(e) | | | — | | | | Timothy Collier | | | 27,598 | | | 17,704 | | | 18,672 | | | 17,189(f) | | | — | | | | Heather R. Ohlberg | | | 19,139 | | | 11,077 | | | 5,041 | | | — | | | — | | | | Raymond J. Merk | | | 9,868 | | | 7,878 | | | 8,013 | | | — | | | 4,731 | |
(a)
| Represents performance-based restricted share units granted in 2021. Each award provides the opportunity to earn and receive shares equal to between 50% and 200% of the number of restricted share units subject to the award after the end of the three-year performance period from January 1, 2021 through December 31, 2023, based on total shareholder return compared to a group of peer companies. Earned restricted share units will be settled in restricted shares that will vest on February 11, 2024, subject to continued employment. Assuming our relative performance for the three-year performance period continues to be the same as we experienced from the beginning of the performance period through December 31, 2021, the restricted share units would have been earned at a level between target and maximum performance. |
(b)
| Represents performance-based restricted share units granted in 2020. Each award provides the opportunity to earn and receive shares equal to between 50% and 200% of the number of restricted share units subject to the award after the end of the three-year performance period from January 1, 2020 through December 31, 2022, based on total shareholder return compared to a group of peer companies. Earned restricted share units will be settled in restricted shares that will vest on March 1, 2023, subject to continued employment. Assuming our relative performance for the three-year performance period continues to be the same as we experienced from the beginning of the performance period through December 31, 2021, none of the restricted share units would have been earned. |
(c)
| Represents performance-based restricted share units granted in 2019. Each award provided the opportunity to earn and receive shares equal to between 50% and 200% of the number of restricted share units subject to the award after the end of the three-year performance period from January 1, 2019 through December 31, 2021, based on total shareholder return compared to a group of peer companies. Based on our relative performance for the three-year performance period through December 31, 2021, the number of restricted share units that would have been earned at threshold performance is shown in the table above, though none of the restricted share units were ultimately earned. All of the restricted share units were forfeited upon the Compensation Committee’s determination of the Trust’s performance in February 2022. |
(d)
| Represents performance-based restricted share units granted in 2018. The award provides the opportunity to earn and receive shares equal to between 50% and 200% of the number of restricted share units subject to the award after the end of the performance period from June 15, 2018 through December 31, 2024, based on total shareholder return compared to a group of peer companies. Earned restricted share units will be settled in restricted shares that will vest on December 31, 2024, subject to continued employment. Assuming our relative performance for the multi-year performance period continues to be the same as we experienced from the beginning of the performance period through December 31, 2021, the restricted share units would have been earned at a level between target and maximum performance. |
(e)
| Represents performance-based restricted share units granted in 2018. The award provides the opportunity to earn and receive shares equal to between 50% and 200% of the number of restricted share units subject to the award after the end of the performance period from June 18, 2018 through December 31, 2024, based on total shareholder return compared to a group of peer companies. Earned restricted share units will be settled in restricted shares that will vest on December 31, 2024, subject to continued employment. Assuming our relative performance for the multi-year performance period continues to be the same as we experienced from the beginning of the performance period through December 31, 2021, the restricted share units would have been earned at a level between target and maximum performance. |
(f)
| Represents performance-based restricted share units granted in 2018. The award provides the opportunity to earn and receive shares equal to between 50% and 200% of the number of restricted share units subject to the award after the end of the performance period from August 6, 2018 through December 31, 2024, based on total shareholder return compared to a group of peer companies. Earned restricted share units will be settled in restricted shares that will vest on December 31, 2024, subject to continued employment. Assuming our relative performance for the multi-year performance period continues to be the same as we experienced from the beginning of the performance period through December 31, 2021, the restricted share units would have been earned at a level between target and maximum performance. |
(g)
| Represents performance-based restricted share units granted in 2018. The award provides the opportunity to earn and receive shares equal to between 50% and 200% of the number of restricted share units subject to the award after the end of the three-year performance period from January 1, 2018 through December 31, 2024, based on total shareholder return compared to a group of peer companies. Earned restricted share units will be settled in restricted shares that will vest on December 31, 2024, subject to continued employment. Assuming our relative performance for the multi-year performance period continues to be the same as we experienced from the beginning of the performance period through December 31, 2021, the restricted share units would have been earned at a level between threshold and target performance. |
TABLE OF CONTENTS OPTION EXERCISES AND STOCK VESTED IN 2021 The following table provides information on restricted share awards held by each named executive officer that vested in 2021. No options were exercised by named executive officers in 2021. | | Brian L. Harper | | | 141,221 | | | 1,675,562 | | | | Michael P. Fitzmaurice | | | 31,253 | | | 351,636 | | | | Timothy Collier | | | 22,498 | | | 247,631 | | | | Heather R. Ohlberg | | | 9,964 | | | 99,282 | | | | Raymond J. Merk | | | 7,052 | | | 78,617 | |
(1)
| Amounts reflect the market value of the Trust’s shares on the vesting date. |
EMPLOYMENT AGREEMENTS AND SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS The following section describes the employment agreements and offer letters that we have with the named executive officers as well as other severance or change in control agreements, arrangements or policies, including applicable terms of the equity awards, pursuant to which we have agreed to make payments or provide benefits to our named executive officers in connection with a termination of employment or change in control. The Trust, in its discretion, may also decide to provide payments or benefits that are not specifically required pursuant to these agreements, arrangements or policies in connection with any particular termination or change in control. Brian L. Harper’s Employment Agreement Effective April 4, 2018, theThe Trust entered into an employment agreement with Mr. Harper. TheHarper on June 11, 2020, which superseded the employment agreement provides thatthe Trust entered into with Mr. Harper in April 2018. The term of Mr. Harper's employment under the employment agreement is through June 30, 2025, and will automatically renew for successive one-year periods unless either party provides written notice of non-renewal. Under the employment agreement, Mr. Harper is entitled to (1) receive (1) a $750,000an annual base salary of no less than $775,000, which will be reviewed annually, (2) participationparticipate in the Trust’s short-term incentive program (i.e., annual Executive Incentive Plan ("STIP")cash bonus program), with a target award no less thaneach year equal to 125% of annual base salary (with a guaranteed bonus of at least his target bonus for 2018 prorated for the portion of the year during which he was employed by the Trust),and (3) participationparticipate in the LTIP beginning in 2019,Trust’s long-term incentive program, with a target award nothat is not less than $2,000,000 and (4) inducement awards under the Inducement Plan (as defined below), which include (i)$3,000,000.
The employment agreement also entitled Mr. Harper to receive an extension equity award consisting of restricted Shares equal to $2,250,000 divided byshares valued at $1,500,000 based on the closing price of the SharesTrust’s common shares on the day prior to June 15, 2018, the effective date of11, 2020, which equity award will vest in full on June 30, 2025. Mr. Harper's employment with the Trust (the "Start Date"), which will vest in equal installments on the first three anniversaries of the grant date and (ii) performance shares equal to $4,750,000 divided by the closing price of the Shares on the day prior to the Start Date, which will vest on the third anniversary of the grant date. The performance shares will have the same terms as the Trust’s 2018 grant of performance shares toagreement provides for other executives, but will be based on the Trust’s total shareholder return compared to the total shareholder return for the members of the Trust’s peer group for the period from the Start Date through December 31, 2020. Threshold performance (50%) will be at the 33rd percentile for the peer group; target performance (100% payout) will be at the 50th percentile of the peer group; and maximum performance (200% payout) will be at the 90th percentile of the peer group. Mr. Harper will receive other perquisites,benefits, such as paid vacation, and health and insurance benefits, that are generally consistent with thoseboth Mr. Harper’s prior employment agreement and with the benefits provided to the Trust's other Trust executive officers. If Mr. Harper's employment is terminated by the Trust during the term without cause or by Mr. Harper also received a cash starting bonus of $500,000 onfor good reason, subject to the Start Date. The term of the employment agreement is through June 30, 2021. However, in the eventexecution and non-revocation of a termination without Cause or for Good Reason prior to the end of the term (and not within 24 months following a Change in Control), each as defined in the employment agreement,general release and waiver, Mr. Harper will be entitled to receive (1)the following:
an amount equal to 1.5 times (or, if the termination occurs within two years after a change in control, 2.0 times) the sum of Mr. Harper’s annual base salary and annual STIPshort-term incentive program award (calculated based on the average award for Mr. Harper's previous two most recently completed bonus years for which bonus determinations have already been communicated or, if the termination occurs within two years after a change in control, the target award amount), each for the calendar year in which the termination occurs and payable in equal monthly installments for a period of up to 18 months; (2) any earned but not yet paid incentivemonths (or, if the termination occurs within two years after a change in control, 24 months) following the date of termination;
awards for already completed years or award cycles; (3) a prorated portion of the STIP award for the year of termination calculated based on actual performance and (4) continued health benefits for 18 months. In the event of a termination of Mr. Harper without Cause or for Good Reason within 24 months following a Change in Control (as defined in the employment agreement), the employment agreement provides that Mr. Harper will receive (1) 2 times the sum of Mr. Harper’s annual base salary and annual STIP award, payable in equal monthly installments for a period of up to 24 months; (2) any earned but not yet paid incentive awards for already completed years or award cycles; (3)cycles, payable pursuant to and in accordance with the terms and conditions of such plans and award agreements; provided, that any short-term incentive program payment for a proratedcalendar year completed prior to the date of termination will be paid irrespective of whether Mr. Harper is employed by the Trust on the payment date;
the pro rata portion of the STIPshort-term incentive program award for the year of termination, and (4) based on actual performance; continued health benefits for a period of up to 18 months.months; and TABLE OF CONTENTS with respect to equity awards held by Mr. Harper, the following treatment: (1) immediate vesting of the extension award granted in connection with Mr. Harper’s rightnew employment agreement and (2) with respect to receiveall other outstanding equity awards, treatment in accordance with the foregoingterms set forth in the award agreements evidencing such equity awards. In the event that a change in control occurs and any payment or benefit constitutes an excess “parachute payment” under Section 280G of the IRC, subject to an excise tax, Mr. Harper will not be entitled to a tax gross-up payment; however, his payments and benefits would be reduced to the extent necessary to avoid such excise taxes, but only if such a reduction of pay or benefits would result in a greater after-tax benefit to Mr. Harper. Additionally, in the event that a change in control occurs within 24 months prior to the scheduled expiration of the term, Mr. Harper may extend the term until the date that is conditioned upon24 months after the change in control to ensure that the severance protections provided by the Harper Agreement apply for the full negotiated period following a change in control. If Mr. Harper’s employment is terminated during the term because of his death or disability, subject to the execution and non-revocation of a general release of claims, which becomes irrevocable, forand waiver, Mr. Harper, or his estate, will be entitled to the benefit of the Trust. In the event ofsame payments and benefits as he would have received upon a termination of Mr. Harper’s employment for Causeby the Trust without cause or by Mr. Harper without Good Reasonfor good reason, except that (1) the performance-based restricted share units granted as an inducement equity award pursuant to Mr. Harper’s prior toagreement will remain outstanding and vest based on actual performance through the first anniversaryend of the Start Date,performance period and (2) a pro rata portion of the $500,000 bonus paid onextension award granted in connection with Mr. Harper’s Start Date must be repaid by Mr. Harper.current employment agreement will vest based on the portion of the period from July 1, 2020 through June 30, 2025 that has elapsed. During employment and thereafter, Mr. Harper is subject to confidentiality and non-disparagement requirements. During employment and for 12 months after the termination of employment, Mr. Harper is subject to non-competition requirements. During employment and for 24 months after the termination of employment, Mr. Harper is subject to non-solicitation requirements. Michael P. Fitzmaurice’s Employment Agreement InThe Trust entered into an employment agreement with Mr. Fitzmaurice on June 2018,11, 2020, which superseded the employment agreement the Trust andentered into with Mr. Fitzmaurice entered into a written agreement concerningin June 2018. The term of Mr. Fitzmaurice’sFitzmaurice's employment withunder the Trust. The employment agreement is through June 30, 2024, and will automatically renew for successive one-year periods unless either party provides thatwritten notice of non-renewal. Under the employment agreement, Mr. Fitzmaurice willis entitled to (1) receive (1) a $450,000an annual base salary;salary of no less than $475,000, which will be reviewed annually, (2) participationparticipate in the Trust’s STIPshort-term incentive program (i.e., annual cash bonus program), with a target award no less than 75%each year equal to 80% of annual base salary (with a guaranteed bonus equal to his target bonus for 2018 prorated for the portion of the year during which he was employed by the Trust);and (3) participationparticipate in the Trust’s LTIP beginning in 2019,long-term incentive program, with a target award nothat is not less than $600,000 and (4) inducement awards under the Inducement Incentive Plan, which include (i) 25,571$712,500.
The employment agreement also entitled Mr. Fitzmaurice to receive an extension equity award consisting of restricted common shares of beneficial interest thatin the Trust valued at $500,000 based on the closing price of the Trust’s common shares on June 11, 2020, which equity award will vest in equal installmentsfull on the first three anniversaries of the grant date and (ii) 25,571 performance shares (at target) that will vest on March 1, 2021. The performance shares will have the same terms as the Trust’s 2018 grant of performance shares toJune 30, 2024 (the “Fitzmaurice Extension Award”). Mr. Fitzmaurice's employment agreement provides for other executives, but will be based on the Trust’s total shareholder return compared to the total shareholder return for the members of the Trust’s peer group for the period from the grant date through December 31, 2020. Threshold performance (50%) will be at the 33rd percentile of the peer group; target performance (100% payout) will be at the 50th percentile of the peer group; and maximum performance (200% payout) will be at the 90th percentile of the peer group. Mr. Fitzmaurice will receive other perquisites,benefits, such as paid vacation, and health and insurance benefits, that are generally consistent with thoseboth Mr. Fitzmaurice’s prior employment agreement and the benefits provided to the Trust's other Trust executive officers. Mr. Fitzmaurice received a cash starting bonus of $170,000 on June 18, 2018, the effective date of If Mr. Fitzmaurice's employment withis terminated by the Trust. TheTrust during the term ofwithout cause or by Mr. Fitzmaurice for good reason, subject to the employment agreement is through June 30, 2021. However, in the eventexecution and non-revocation of a termination without Cause, for Good Reason or due to death or disability prior to the end of the term (and not within 24 months following a Change in Control), each as defined in the employment agreement,general release and waiver, Mr. Fitzmaurice will be entitled to receive the following,following:
an amount equal to 1.0 times (or, if the termination occurs within two years after a change in addition to any accrued salary, incentive payments or benefits: (1) 1 timescontrol, 2.0 times) the sum of Mr. Fitzmaurice’s annual base salary and target annual STIPshort-term incentive program award, each for the calendar year in which the termination occurs and payable in equal monthly installments for a period of 12 months; (2)months (or, if the termination occurs within two years after a proratedchange in control, 24 months) following the date of termination; any earned but not yet paid incentive awards for already completed years or award cycles, payable pursuant to and in accordance with the terms and conditions of such plans and award agreements; provided, that any short-term incentive program payment for a calendar year completed prior to the date of termination will be paid irrespective of whether Mr. Fitzmaurice is employed by the Trust on the payment date; the pro rata portion of the STIPshort-term incentive program award for the year of termination, calculated based on actual performance; (3) performance (or, if the termination occurs within two years after a change in control, at target); continued health benefits for up to 12 months; (4) immediate vesting of the inducement awards (with the performance share portion vesting at target if the performance period has not yet ended); and (5) the immediate vesting of any restricted shares, stock options, or other equity-based awards or benefits granted in 2018 that are unvested. In the event of a termination of Mr. Fitzmaurice without Cause or for Good Reason within 24 months following a Change in Control (as defined in the employment agreement), the employment agreement provides that Mr. Fitzmaurice will be entitled to receive the following, in addition to any accrued salary, incentive payments or benefits: (1) 1.5 times the sum of Mr. Fitzmaurice's annual base salary and annual STIP award, payable in equal monthly installments for a period of up to 12 months (or, if the termination occurs within two years after a change in control, 18 months; (2) a prorated portion ofmonths); and TABLE OF CONTENTS with respect to equity awards held by Mr. Fitzmaurice, the STIP award for the year of termination; (3) continued health benefits for 18 months; (4)following treatment: (1) immediate vesting of the inducement awards (with the performance share portion vesting at target if the performance period has not yet ended);extension award granted in connection with Mr. Fitzmaurice’s new employment agreement and (5) the immediate vesting of any restricted shares, stock options, or other equity-based awards or benefits that are unvested (except that performance awards(2) with respect to performance periodsall other outstanding equity awards, treatment in accordance with the terms set forth in the award agreements evidencing such equity awards. In the event that havea change in control occurs and any payment or benefit constitutes an excess “parachute payment” under Section 280G of the IRC, subject to an excise tax, Mr. Fitzmaurice will not ended will be forfeited).entitled to a tax gross-up payment; however, his payments and benefits would be reduced to the extent necessary to avoid such excise taxes, but only if such a reduction of pay or benefits would result in a greater after-tax benefit to Mr. Fitzmaurice. In addition, in the event that a change in control occurs within 24 months prior to the scheduled expiration of the term, Mr. Fitzmaurice may extend the term until the date that is 24 months after the change in control to ensure that the severance protections provided by the Fitzmaurice Agreement apply for the full negotiated period following a change in control. If Mr. Fitzmaurice’s rightemployment is terminated during the term because of his death or disability, subject to receive the foregoing is conditioned upon his execution and non-revocation of a general release of claims, which becomes irrevocable,and waiver, Mr. Fitzmaurice, or his estate, will be entitled to the same payments and benefits as he would have received upon a termination by the Trust without cause or by Mr. Fitzmaurice for the benefitgood reason, except that a pro rata portion of the Trust. In the event of a termination ofextension award granted in connection with Mr. Fitzmaurice’s new employment for Cause or by Fitzmaurice without Good Reason prior toagreement will vest based on the first anniversaryportion of his start date, the $170,000 bonus paid on Mr. Fitzmaurice's start date must be repaid by Mr. Fitzmaurice.period from July 1, 2020 through June 30, 2024 that has elapsed.. During employment and thereafter, Mr. Fitzmaurice is subject to confidentiality and non-disparagement obligations.requirements. During employment and for 12 months after the termination of employment, Mr. Fitzmaurice is subject to non-competition obligations.requirements. During employment and for 24 months after the termination of employment, Mr. Fitzmaurice is subject to non-solicitation obligations.
requirements.
Timothy Collier’s Offer Letter Mr. Collier’sThe Trust entered into an offer letter dated as of June 22, 2018, provides thatwith Mr. Collier will receiveon June 25, 2018. Under the offer letter, Mr. Collier is entitled to (1) a $400,000an annual base salary of $400,000, (2) an annual bonus with a target equal to 65% of his annual base salary, (withwith a guaranteed bonusmaximum equal to his150% of target bonus for 2018 prorated for the portion of the year during which he was employed by the Trust),and (3) participationparticipate in the LTIP beginning in 2019,Trust’s long-term incentive program, with a target award of $450,000; and (4) inducement awards under the Inducement Plan, which include (i) restricted Shares equal to $450,000.
The offer letter also entitled Mr. Collier to receive inducement equity awards consisting of (1) restricted shares valued at $225,000 divided bybased on the closing price of the Shares on the grantday prior to Mr. Collier’s start date, which will vest in equal installmentsvesting ratably on each of the first three anniversaries of the grant date and (ii) performance shares(2) performance-based restricted share units, with a number of units at target equal to $225,000 divided bybased on the closing price on the day prior to Mr. Collier’s start date, entitling Mr. Collier to earn up to 200% of the Shares on the grant date, which have the same terms as the Trust’s 2018 grant of performance shares to other executives, but will betarget amount based on the Trust’s total shareholder return relative toTSR during a defined peer group over aperformance period from the grant date throughto December 31, 2020.2020 as compared to peer companies, which performance period has been extended to now conclude on December 31, 2024. Mr. Collier is also entitled to variousCollier's employment agreement provides for other benefits, such as paid vacation, and perquisiteshealth and insurance benefits, generally consistent with those provided to the other TrustTrust's executive officers. Pursuant to the offer letter, if Mr. Collier’s employment is terminated without cause, subject to the execution and non-revocation of a general release and waiver, he will be entitled to receive the following: (1) 1 an amount equal to one times (1.5 times(or, if the termination occurs followingin connection with a change of control)in control, 1.5 times) the sum of Mr. Collier’s annual base salary and for 2018,his target bonus, and after 2018, a proratedbonus; the pro rata portion of thehis annual bonus for the year of termination, calculated based on actual performance target bonus; (2)performance; a lump sum reimbursement for health benefits for 1 year;one year of coverage; and (3) immediate accelerated vesting of inducement awards (with the performance share portion vestingin full and payout at target, if the performance period hashad not yet ended).already ended, of Mr. Collier’s right to receive the foregoing is conditioned upon his execution of a general release of claims, which becomes irrevocable, for the benefit of the Trust.inducement equity awards. Agreements Regarding Severance with Ms. Clark and Mr. EickhoffHeather R. Ohlberg’s Offer Letter
In April 2018, theThe Trust entered into an agreement regarding severanceoffer letter with each of Ms. Clark and Mr. Eickhoff, which provides for the following severance benefits if such executive incurs a separation from service by reason of an involuntary termination: (1) payment of any accrued but unpaid base salary through the termination date, (2) payment of any accrued but unused paid time off or vacation time, (3) a cash lump sum payment equal to such executive's annual base salary plus such executive's annual bonus prorated for the portion of the fiscal year during which he or she was employed by the Trust basedOhlberg on the average annual bonus payment to such executive for the two most recently completed fiscal years, (4) reimbursement for COBRA payments for a period of up to eighteen months and (5) immediate vesting of any restricted shares or stock options, if any, remaining unvested on the termination date. Such executive's right to receive the foregoing is conditioned upon his or her execution of a general release of claims, which becomes irrevocable, for the benefit of the Trust.
Dennis Gershenson’s Employment Agreement
In connection with the Board’s efforts to promote an orderly transition of leadership of the Trust, the Compensation Committee notified Mr. Gershenson in March 2017 that the Trust elected not to renew his employment agreement dated August 1, 2007 for an additional one year term and, in April 2017, the Trust and Mr. Gershenson entered into a new employment agreement.
The employment agreement provided for a term beginning as of April 1, 2017 and expiring December 31, 2020.October 5, 2018. Under the employment agreement, Mr. Gershenson served as the Trust’s chief executive officer and chairman. Mr. Gershenson was paid his annual base salary of $731,300, was entitled to receive an annual award under the Trust’s short-term incentive plan with a target value equal to 125% of his base salary and received one-time grants of 5,000 restricted shares of common stock of the Trust on the date of the employment agreement and 100,000 restricted shares of common stock of the Trust on January 2, 2018, which vested in full on July 1, 2018, when Mr. Gershenson ceased to be employed by the Trust. Mr. Gershenson is not eligible to receive performance awards under the Trust’s long term incentive plan following the awards granted to him in 2015 (for the 2015-2017 years), 2016 (for the 2016-2018 years) and 2017 (for the 2017-2019 years). In the event of the termination of Mr. Gershenson’s employment for Good Reason or by the Trust not for Cause, whether or not following a change in control, Mr. Gershenson was entitled to receive his base salary and target short term incentive award for the shorter of 36 months or the period through December 31, 2020. The agreement also provides for a two year noncompetition covenant following the termination of Mr. Gershenson’s employment.
As used in Mr. Gershenson’s employment agreement, “Cause” meant termination of Mr. Gershenson’s employment upon (i) Mr. Gershenson’s conviction of a felony or misdemeanor involving moral turpitude, (ii) embezzlement, misappropriation of Trust property or other acts of dishonesty or fraud, (iii) material willful breach of duties of good faith or loyalty to the Trust, (iv) willful neglect of significant job responsibilities or misconduct, (v) material willful breach of the employment agreement or (vi) repeated willful failure or refusal, after written notice, to follow any lawful directions from the Board and, in the case of items (iii) through (v), that is not cured within 30 days of notice.
As used in Mr. Gershenson’s employment agreement, “Good Reason” meant the occurrence of any of the following, without Mr. Gershenson’s consent: (i) the failure of the Board to appoint Mr. Gershenson to an executive position, (ii) any reduction in Mr. Gershenson’s base salary or his target 125%-of-base salary short term incentive plan award opportunity, (iii) a material change in the geographic location at which Mr. Gershenson must perform the services related to his position, or (iv) any other action or inaction that constitutes a material breach by the Trust of the employment agreement or any other material agreement to which
Mr. Gershenson and the Trust are party, provided, in each case, Mr. Gershenson provides the Trust with written notice of the condition giving rise to Good Reason within 90 days of its occurrence, the Trust fails to correct such condition within 30 days of its receipt of notice and Mr. Hendrickson actually terminates his employment within 6 months following the occurrence of such condition.
The employment agreement also provides for confidentiality and non-compete and non-solicitation provisions, the latter for two years after termination of employment.
Mr. Gershenson's employment with the Trust ended effective July 1, 2018, and Mr. Gershensonoffer letter, Ms. Ohlberg is entitled to the benefits under his employment agreement described above in connection with a termination by the Trust not for Cause. In June 2018, Mr. Gershenson's performance based cash and restricted share unit awards under the Trust's LTIP for the 2016-2018 and 2017-2019 performance periods were amended so that Mr. Gershenson is entitled to receive the cash payment or Shares, to the extent earned, even if Mr. Gershenson is not employed by the Trust on the date such awards are earned.
Geoffrey Bedrosian's Employment Agreement
Effective December 17, 2015, the Trust entered into an employment agreement with Mr. Bedrosian, the Trust’s Chief Financial Officer, Executive Vice President and Secretary. The employment agreement provided for(1) an annual base salary of at least $450,000 (with adjustments$270,000, (2) an annual bonus target equal to be considered annually by the Committee, and no decrease from the prior50% of annual base salary or initial base salary unless applicable toand (3) participate in the Trust’s executive officers generally), participation in the annual bonus plan, participation in long-term incentive plan,program, with a granttarget award equal to 45% of 37,621 restricted shares (which vests over three years), various relocation costs and other fringe benefits and perquisites as are generally made available to the Trust’s executives.base compensation.
Pursuant to the offer letter, if Ms. Ohlberg’s employment agreement, if Mr. Bedrosian's employment terminated due to death or permanent disability, Mr. Bedrosian (or his legal representative or beneficiary) would have received the accrued and unpaid portion of base salary, any earned but not yet paid incentive awards for already completed years or award cycles, plus one year’s base salary. In addition, any unvested equity awards will immediately vest. Further, any COBRA health benefits will be reimbursed for up to eighteen months. Pursuant to the employment agreement, if Mr. Bedrosian's employment terminated for cause, Mr. Bedrosian would receive the accrued and unpaid portion of his base salary.
If Mr. Bedrosian's employmentis terminated without cause, or if he terminates such employment for good reason (assumingsubject to the changeexecution and non-revocation of control provisions below do not apply), Mr. Bedrosian woulda general release and waiver, she will be entitled to receive the accrued and unpaid portion of base salary, any earned but not yet paid incentive awards for already completed years or award cycles, a pro rata portion of the annual bonus (to the extent earned, and calculated based on the average award for the prior two years), plusfollowing:
an amount equal to one and one-half times his annual base salary and annual bonus (calculated based on the average award for the prior two years for which bonus determinations have already been communicated, or if such termination occurs prior to two award cycles having occurred, based on the target award of seventy-five percent of annual base salary). In addition, any unvested equity awards would immediate vest. Further, any COBRA health benefits would be reimbursed for up to eighteen months. If Mr. Bedrosian’s employment terminated without cause (other than due to death or permanent disability) or he terminated such employment for good reason, in each case within 12 months after a change of control, Mr. Bedrosian would receive the accrued and unpaid portion of base salary, any earned but not yet paid incentive awards for already completed years or award cycles, a pro rata portion of the annual bonus (to the extent earned, and calculated based on the average award for the prior two years), and two times the sum of (i) hisMs. Ohlberg’s annual base salary, and (ii)plus a prorated annual target bonus (eachbased on actual performance for the calendar year in whichof termination following the terminate occurs). In addition, any unvested equity awards would immediately vest. Further, any COBRAdate of termination; and
TABLE OF CONTENTS a lump sum reimbursement for health benefits will be reimbursed for up to eighteen months. If Mr. Bedrosian's employment terminated at the end of the initial term or extension term because the Trust elected not to renew his employment agreement, Mr. Bedrosian would receive the accrued and unpaid portion of base salary, any earned but not yet paid incentive awards for already completed years or award cycles, plus 12 months base salary. In addition, any unvested equity awards will immediate vest.
As used in Mr. Bedrosian's employment agreement, “Cause” meant termination of Mr. Bedrosian's employment upon (i) his conviction of a felony or crime involving moral turpitude, (ii) embezzlement, (iii) misappropriation of Trust property, (iv) his neglect of significant job responsibilities, (v) a material breach of his employment agreement or (vi) his repeated failure to follow
specific directions from the Trust’s Chief Executive Officer or Board and, in the case of items (i) through (v), which is not cured within 30 days of notice.
As used in Mr. Bedrosian’s employment agreement, “Good Reason” meant the occurrence of any of the following, without Mr. Bedrosian’s prior written consent: (i) any material diminution of his duties, responsibilities or authority, or those of the Chief Executive Officer , (ii) a material diminution in the budget over which he retains authority, (iii) a material change in his base salary or target incentive awards, (iv) a material diminution in the budget over which he maintains authority, (v) any material breach by the Trust of its make-whole and other initial award obligations under his employment agreement, (vi) any other action or inaction that constitutes a material breach by the Trust under any agreement under which he provides services to the Trust or (vii) any material change in the geographic location at which he must perform the services related to his position, provided, in each case, Mr. Bedrosian provided the Trust with written notice of the condition giving rise to Good Reason within 90 days of its occurrence, the Trust fails to correct such condition within 30 days of its receipt of notice and Mr. Bedrosian actually terminates his employment within 12 months following the occurrence of such condition.
The employment agreement also provides for confidentiality and nonsolicitation provisions, the latter for one year after termination of employment.coverage.
Raymond J. Merk’s Offer Letter The Trust entered into an offer letter with Mr. Bedrosian resigned fromMerk on July 9, 2019. Under the Trust effective April 20, 2018. In connection with his departure, his unvested or unearned service-based restricted shares and performance-based restricted share units were forfeited, and he was notoffer letter, Mr. Merk is entitled to receive any severance benefits. John Hendrickson's Employment Agreement
Mr. Hendrickson’s employment agreement, as amended in January 2018, provided for(1) an annual base salary of at least $463,500, Mr. Hendrickson’s current$250,000, (2) an annual bonus target equal to 40% of annual base salary, and for participation in the Trust’s annual bonus plan and(3) participate in the Trust’s long-term incentive plan inprogram, with a manner consistenttarget award equal to $187,500 and (4) monthly housing reimbursement equal to $2,000, with the way in which Mr. Hendrickson has previously participated in such plans.annual increases commensurate with annual rent increases and a tax gross up.
Pursuant to the employment agreement,offer letter, if Mr. Hendrickson'sMerk’s employment terminated due to death or permanent disability, Mr. Hendrickson (or his legal representative or beneficiary) would have received the accrued and unpaid portion of base salary plus one year’s base salary. In addition, any unvested equity awards will immediately vest. Further, any COBRA health benefits would be reimbursed for up to eighteen months. If Mr. Hendrickson's employment terminated for cause, Mr. Hendrickson would have received the accrued and unpaid portion of his base salary. If Mr. Hendrickson's employmentis terminated without cause, if Mr. Hendrickson terminated his employment for good reason (assumingsubject to the changeexecution and non-revocation of control provisions below do not apply), or if Mr. Hendrickson did not remain employed by the Trust following the expiration of the term of the agreement in July 2018 with an employment agreement containing similar termination benefits, Mr. Hendrickson wasa general release and waiver, he will be entitled to receive the accrued and unpaid portionfollowing: an amount equal to one times the sum of Mr. Merk’s annual base salary, plus a pro rata portion of theprorated annual bonus (to the extent earned, and calculated based on the average awardactual performance for the prior two years), plus 12 months base salary. In addition, any unvested equity awards would immediately vest. Further, any COBRAyear of termination following the date of termination; a lump sum reimbursement for health benefits would be reimbursed for up to eighteen months.one year of coverage; and reimbursement for any remaining term of Mr. Merk’s apartment lease. Long-Term Incentive Plan Awards Pursuant to the employment agreement, if Mr. Hendrickson’s employment terminated without cause (other than due to death or permanent disability) or he terminated such employment for good reason, in each case within 12 months after a change of control, Mr. Hendrickson was entitled to receive the accrued and unpaid portion of base salary and two times the sum of (i) his annual base compensation and (ii) his target annual bonus (each for the calendar year in which the termination occurs), provided that in no event shall such amount plus all other applicable compensation amounts exceed the product of 2.99 times the “base amount”, as defined by Section 280G of the IRC. In addition, any unvested equity awards will immediately vest. Further, any COBRA health benefits will be reimbursed for up to eighteen months. As used in the employment agreement, “Cause” meant termination of Mr. Hendrickson's employment upon (i) his conviction of a felony or crime involving moral turpitude, (ii) embezzlement, (iii) misappropriation of Trust property, (iv) his neglect of significant job responsibilities, (v) a material breach of his employment agreement or (vi) his repeated failure to follow specific directions from the Trust’s Chief Executive Officer or Board and, in the case of items (i) through (v), which is not cured within 30 days of notice.
As used in the employment agreement, “Good Reason” meant the occurrence of any of the following, without Mr. Hendrickson’s consent: (i) any material diminution of his duties, responsibilities or authority, (ii) the passage of 30 days following either (x) Mr. Hendrickson’s withdrawal in writing from consideration to become Chief Executive Officer; or (y) the public announcement of the employment of a new Chief Executive Officer (other than Mr. Hendrickson), (iii) a material diminution in the budget over which he retains authority, (iii) any other action or inaction that constitutes a material breach by the Trust under the employment agreement or any other material agreement to which he and the Trust are party or (iv) a material change in the geographic location at which he must perform the services related to his position, provided, in each case, Mr. Hendrickson’s provides the Trust with written notice of the condition giving rise to Good Reason within 90 days of its occurrence, the Trust fails
to correct such condition (other than the condition described in (ii), above) within 30 days of its receipt of notice and Mr. Hendrickson actually terminates his employment within 12 months following the occurrence of such condition.
The employment agreement also provides for confidentiality and non-solicitation provisions, the latter for one year after termination of employment.
Mr. Hendrickson resigned from the Trust effective April 12, 2018 and received the benefits under his employment agreement described above that he was entitled to receive if Mr. Hendrickson did not remain employed by the Trust following the expiration of the term of the agreement in July 2018 with an employment agreement containing similar termination benefits.
Severance Agreement with Mr. Eickhoff
In connection with his separation from the Trust, in August 2018, the Trust entered into a severance agreement, waiver and release with Mr. Eickhoff. Mr. Eickhoff received the following: a one-time, lump sum severance payment of $462,200, a one-time, lump sum payment of $14,630 for accrued paid time off, a lump-sum payment of $33,750 for continued health insurance coverage, a lump sum cash payment of $18,523 for the balance of the LTIP cash award for the 2015-2017 performance period and accelerated vesting of 22,708 restricted shares. Mr. Eickhoff was required to deliver a release of claims to receive such severance and his entitlement to payment was subject to his continued compliance with nondisclosure of confidential information and nondisparagement provisions.
Tax and Accounting Considerations
Deductibility of Executive Compensation
The Committee has reviewed the Trust’s compensation policies in light of Section 162(m) of the IRC, which generally limits deductions by a publicly-held corporation for compensation paid to certain executive officers to $1,000,000 per annum. That deduction limitation was subject to a specified exception for certain performance-based compensation, but that exception was generally repealed effective for taxable years after December 31, 2017. As long as the Trust continues to qualify as a real estate investment trust under the IRC, the payment of any non-deductible compensation should not have a material adverse impact on the Trust due to the way in which the income of real estate investment trusts is taxed. The Committee is currently considering the impact of the Tax Cuts and Jobs Act, particularly the elimination of the performance-based exemption, on its compensation programs and policies and intends to continue to review the application of Section 162(m) with respect to any future compensation arrangements considered by the Trust.
Nonqualified Deferred Compensation
Section 409A of the IRC provides that, unless certain conditions are satisfied, amounts deferred under nonqualified deferred compensation arrangements will be included in an employee’s income when vested, and employees will be subject to additional income tax, penalties and a further additional income tax calculated as interest on income taxes deferred under the arrangement. In December 2008, the Trust revised certain of its compensation agreements to ensure that the Trust’s employment, severance and deferred compensation arrangements either comply with, or are exempt from, the requirements of Section 409A to allow for deferral without accelerated taxation, penalties or interest.
Change of Control Payments
Section 280G of the IRC disallows a company’s tax deduction for “excess parachute payments,” generally defined as payments to specified persons that are contingent upon a change of control in an amount equal to or greater than three times the person’s base amount (the five-year average of Form W-2 compensation). Additionally, IRC Section 4999 imposes a 20% excise tax on any person who receives such excess parachute payments.
The Trust’s share-based plans entitle participants to payments in connection with a change of control that may result in excess parachute payments. Further, the employment agreements of Messrs. Harper and Fitzmaurice, the offer letter of Mr. Collier and the Change of Control Policy for the benefit of executive officers, entitle such persons to payments upon termination of his or her employment following a change of control that may constitute excess parachute payments.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis (CD&A) in this proxy statement with management, including the Chief Executive Officer. Based on such review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in the Trust’s annual report on Form 10-K for the year ended December 31, 2018 and the proxy statement for the 2019 annual meeting of shareholders.
| | | | | | | | | | | | | The Compensation Committee | | | | | | | | Arthur Goldberg (Chairman) | | | | | Stephen R. Blank | | | | | Joel M. Pashcow | | | | | Laurie M. Shahon | | | | | Andrea M. Weiss | | | | | | | | | | | | | | | | | |
NAMED EXECUTIVE OFFICER COMPENSATION TABLES
Summary Compensation Table
The table below summarizes the total compensation paid to or earned by the named executive officers in 2018, 2017 and 2016.
| | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary ($) | | Bonus ($) | | Stock Awards ($)(1) | | Non-Equity Incentive Plan Compensation ($)(2)(3) | | All Other Compensation ($)(4) | | Total ($) | Brian L. Harper(5) | | 2018 | | 377,885 | | 1,011,000 | | 6,517,047 | | — | | 141,819 | | 8,047,751 | | President and CEO | | | | | | | | | | | | | |
| Michael Fitzmaurice(6) | | 2018 | | 225,000 | | 426,000 | | 614,215 | | — | | 137,061 | | 1,402,276 | | Executive VP and CFO | | | | | | | | | | | | | |
| Timothy Collier(7) | | 2018 | | 146,154 | | 136,850 | | 439,351 | | — | | 2,123 | | 724,478 | | Executive VP—Leasing | | | | | | | | | | | | | |
| | Catherine Clark | | 2018 | | 335,002 | | 184,000 | | 233,734 | | — | | 3,000 | | 755,736 | | Executive VP—Transactions | | 2017 | | 331,191 | | 165,000 | | 202,517 | | — | | 3,000 | | 701,708 | | | 2016 | | 312,852 | | 165,000 | | 225,798 | | — | | 3,000 | | 706,650 | Raymond Merk(8) | | 2018 | | 250,000 | | 200,000 | | 97,790 | | — | | 20,491 | | 568,281 | | Senior VP and Chief Accounting Officer | | | | | | | | | | | |
| |
| Dennis Gershenson(9) | | 2018 | | 393,777 | | — | | 1,479,000 | | 276,900 | | 4,212,572 | | 6,362,249 | | Former President and CEO | | 2017 | | 727,204 | | — | | 1,602,342 | | 995,972 | | 9,730 | | 3,335,248 | | | 2016 | | 703,269 | | — | | 1,763,406 | | 979,800 | | 9,730 | | 3,456,205 | Geoffrey Bedrosian(10) | | 2018 | | 160,442 | | — | | 503,604 | | — | | 42,688 | | 706,734 | | Former Executive VP, CFO and Secretary | | 2017 | | 460,904 | | — | | 466,995 | | 298,262 | | 56,093 | | 1,282,254 | | | 2016 | | 450,000 | | — | | 537,330 | | 372,600 | | 60,477 | | 1,420,407 | John Hendrickson(11) | | 2018 | | 149,746 | | — | | 503,604 | | — | | 591,915 | | 1,245,265 | | Former Executive VP and COO | | 2017 | | 460,904 | | — | | 466,995 | | 298,262 | | 3,000 | | 1,229,161 | | | 2016 | | 440,385 | | — | | 537,330 | | 372,600 | | 3,000 | | 1,353,315 | Edward A. Eickhoff(12) | | 2018 | | 188,739 | | — | | 198,701 | | — | | 529,103 | | 916,543 | | Former Senior VP— | | 2017 | | 303,089 | | 117,000 | | 184,252 | | — | | 3,000 | | 607,341 | | Development | | 2016 | | 294,261 | | 120,000 | | 212,003 | | — | | 3,000 | | 629,264 |
| | (1) | The amounts reported reflect the grant date fair value (excluding the effect of estimated forfeitures). |
The awards in the Stock Awards column for 2018, 2017 and 2016 relate to service-based restricted shares and performance-based restricted share units granted in 2018, 2017 and 2016, respectively, under the 2012 Omnibus Long-Term Incentive Plan or, for Messrs. Harper, Fitzmaurice and Collier, the Inducement Incentive Plan. For Ms. Clark, also includes a one-time grant of 1,250 restricted shares.
The 2018 amount reported for Mr. Gershenson includes the grant date fair value of the 100,000 restricted Shares issued to Mr. Gershenson on January 2, 2018 under the amended and restated employment agreement between the Trust and Mr. Gershenson entered into in April 2017, which vested in full on July 1, 2018, when Mr. Gershenson ceased to be employed by the Trust.
The amounts reported reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. The grant date fair value of each share of service-based restricted shares granted is calculated as the closing price of the Shares as of the grant date. The grant date fair value of the performance-based restricted share units are based on the probable outcome of the performance conditions on the grant date for financial statement reporting purposes under FASB ASC Topic 718 and consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated or actual forfeitures. The assumptions used in determining the listed valuations include the period of time in the performance cycle, risk free rate, beginning TSR share price and volatility.
| | (2) | Unless otherwise noted, the amounts consist of payments earned under the annual incentive plan for such year. |
| | (3) | For Mr. Gershenson for 2017, consists of (i) a payment of $784,319 under the 2017 Executive Incentive Plan and (ii) a payment of $211,653 in connection with the 2015-2017 performance-based cash award for Mr. Gershenson under the long-term incentive program (representing 87.1% of target), which was approved by the Compensation Committee on February 27, 2018 and paid to Mr. Gershenson on March 5, 2018. For Mr. Gershenson for 2018, consists of a payment of $276,900 in connection with the 2016-2018 performance-based cash award under the long-term incentive program (representing 100% of target), which was approved by the Compensation Committee in February 2019 and paid to Mr. Gershenson on March 1, 2019. |
| | (4) | For 2018, the following named executive officers received payments and/or benefits included under "All Other Compensation" (other than severance payments to certain named executive officers, which are described in footnotes (9), (11) and (12) below): |
| | a. | Mr. Harper - Housing, travel costs and legal expenses of $138,819 and $3,000 in 401(k) plan company match; |
| | b. | Mr. Fitzmaurice - Housing and travel costs of $134,061 and $3,000 in 401(k) plan company match; |
| | c. | Mr. Bedrosian - Housing and travel costs of $18,962 and accrued paid time off of $23,726; |
| | d. | Mr. Collier - $2,123 in 401(k) plan company match; |
| | e. | Ms. Clark - $3,000 in 401(k) plan company match; and |
| | f. | Mr. Merk - Housing reimbursement and $3,000 in 401(k) plan company match. |
| | (5) | Amounts reported reflect that Mr. Harper's employment with the Trust commenced June 15, 2018. "Bonus" for 2018 includes Mr. Harper's prorated target STIP award for 2018 and a cash starting bonus of $500,000. See "Narrative Discussion of Summary Compensation Table - Chief Executive Officer Compensation." |
| | (6) | Amounts reported reflect that Mr. Fitzmaurice's employment with the Trust commenced June 18, 2018. "Bonus" for 2018 includes Mr. Fitzmaurice's prorated target STIP award for 2018, discretionary increase and a cash starting bonus of $170,000. |
| | (7) | Amounts reported reflect that Mr. Collier's employment with the Trust commenced August 6, 2018. |
| | (8) | "Bonus" for 2018 includes Mr. Merk's annual discretionary bonus and a $50,000 one-time, special bonus. |
| | (9) | Amounts reported reflect that Mr. Gershenson ceased to be employed by the Trust effective July 1, 2018. "All Other Compensation" for 2018 also includes the following amounts paid or accrued to Mr. Gershenson in connection with his separation from the Trust: (i) $4,113,563 reflecting continuation of base salary and target STIP award for 30 months, (ii) $39,924 for continued health insurance coverage, and (iii) a one-time, lump sum payment of $59,085 for accrued paid time off. |
| | (10) | Amounts reported reflect that Mr. Bedrosian resigned from the Trust effective April 20, 2018. |
| | (11) | Amounts reported reflect that Mr. Hendrickson ceased to be employed by the Trust effective April 12, 2018. "All Other Compensation" for 2018 also includes the following amounts paid or accrued to Mr. Hendrickson in connection with his separation from the Trust: (i) $553,835 reflecting continuation of base salary and prorated STIP award through April 30, 2018 (based on Mr. Hendrickson's average STIP payment for the two most recently completed fiscal years), (ii) a one-time, lump sum payment of $18,378 for accrued paid time off and (iii) $19,702 for continued health insurance coverage. |
| | (12) | Amounts reported reflect that Mr. Eickhoff ceased to be employed by the Trust effective July 30, 2018. "All Other Compensation" for 2018 also includes the following amounts paid or accrued to Mr. Eickhoff in connection with his separation from the Trust: (i) a severance payment of $462,200, (ii) a one-time, lump sum payment of $14,630 for accrued paid time off, (iii) $33,750 for continued health insurance coverage and (iv) a lump sum cash payment of $18,523 for the balance of his LTIP cash award for the 2015-2017 performance period. |
Narrative Discussion of Summary Compensation Table
Employment Agreements. See “Compensation Discussion and Analysis—Executive Officer Employment Agreements” for a description of the material terms of the Trust's2012 Plan and the 2019 Plan, and the applicable employment agreements with Messrs. Harper, Gershenson, Fitzmaurice, Bedrosian and Hendrickson, offer letter with Mr. Collier andaward agreements regarding severance with Ms. Clark and Mr. Eickhoff and a severance agreement entered into with Mr. Eickhoff in connection with his departure from the Trust.
Chief Executive Officer Compensation. As discussed above, Mr. Harper's compensation for 2018 was dictated by his employment agreement, entered into in April 2018 in connection with his hiring. Mr. Harper's employment agreement provides for one-time inducement equity awards during 2018 in addition to annual long-term equity awards beginning in 2019. The value of Mr. Harper's inducement equity awards for 2018 is significantly greater than the expected value of Mr. Harper's annual LTIP grants going forward. Furthermore, 67% of Mr. Harper's equity award and over half of his total compensation for 2018 was in the form of a performance based equity award based on the Trust’s total shareholder return relative to a defined peer group over a period from the grant date through December 31, 2020.
Bonus. Amounts reported for 2018 reflect (i) cash starting bonuses of $500,000 and $170,000 for Messrs. Harper and Fitzmaurice, respectively, (ii) guaranteed bonuses equal to their prorated target bonus amount negotiated in connection with their hiring for Messrs. Harper, Fitzmaurice and Collier, (iv) annual discretionary bonuses for Ms. Clark and Mr. Merk, (v) a one-time special cash bonus of $50,000 to Mr. Merk and (vi) discretionary bonus amounts above guaranteed or target amounts for allour named executive officers, except Mr. Harper.
Stock Awards. In 2018, the Committee approved long-term incentive targets of 45% to 125% of base salary for the named executive officers serving as executive officers in February 2018, other than Mr. Gershenson, who was not eligible to receive annual grants under the Trust’s LTIP in 2018 but received a grant of 100,000 restricted shares of common stock of the Trust in 2018, which vested in full on July 1, 2018, when Mr. Gershenson ceased to be employed by the Trust. In 2018, Messrs. Harper, Fitzmaurice and Collier were granted initial inducement long-term incentive awards upon commencement of their employment with the Trust under the Trust's Inducement Incentive Plan. In addition to the annual grant under the LTIP, in 2018, Ms. Clark also received an additional 1,250 service-based restricted Shares that vest in three equal installments on March 1, 2019, 2020 and 2021. See "Compensation Discussion and Analysis—2018 Compensation Determinations—Long Term Incentive Compensation" for a description of the Trust's long-term incentive compensation program.
In June 2018, Mr. Gershenson's performance based cash and restricted share unit awards under the Trust's LTIP for the 2016-2018 and 2017-2019 performance periods were amended so that Mr. Gershenson is entitled to receive the cash payment or Shares, as applicable, to the extent earned, even if Mr. Gershenson is not employed by the Trust on the date such awards are earned.
Non-Equity Incentive Plan. All the named executive officers participating in the 2018 STIP separated from the Trust during 2018 and their entitlement to bonus amounts, if any, was determined pursuant to the severance terms of their employment agreements (and included under "All Other Compensation" in the Summary Compensation Table above). The employment agreements of the Trust's current Chief Executive Officer and Chief Financial Officer, Messrs. Harper and Fitzmaurice, provide that they will participate in the Trust's annual executive incentive plans going forward; however, as noted above, for 2018, such officers were entitled to receive guaranteed bonuses equal to their prorated target bonus amount, negotiated in connection with their hiring. Accordingly, none of the named executive officers were paid bonuses for 2018 based on the Trust’s performance in accordance with the 2018 STIP.
Grants of Plan-Based Awards in 2018
The following table provides information about plan-based awards granted to the named executive officers in 2018.
| | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | | All Other Option Awards: Number of Securities Underlying Options (#) | | Exercise of Base Price of Option Awards ($/Sh) | | Grant Date Fair Value of Stock and Option Awards ($)(4) | | Name | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | | Brian L. Harper | 06/15/18 | | — | | — | | — | | 185,983 | | 371,966 | | 743,932 | | 176,195 | | — | | — | | 6,517,047 | | Michael Fitzmaurice | 06/18/18 | | — | | — | | — | | 12,786 | | 25,571 | | 51,142 | | 25,571 | | — | | — | | 614,215 | | Timothy Collier | 08/06/18 | | — | | — | | — | | 8,595 | | 17,189 | | 34,378 | | 17,189 | | — | | — | | 439,351 | | Catherine Clark | 03/01/18 | | — | | — | | — | | 5,283 | | 10,566 | | 21,132 | | 10,566 | | — | | — | | 218,447 | | | 06/04/18 | | — | | — | | — | | — | | — | | — | | 1,250 | | — | | — | | 15,288 | | Raymond Merk | 03/01/18 | | — | | — | | — | | 2,366 | | 4,731 | | 9,462 | | 4,731 | | — | | — | | 97,790 | | Dennis Gershenson | 01/02/18 | | — | | — | | — | | — | | — | | — | | 100,000 | | — | | — | | 1,479,000 | | | — | | 457,063 | | 914,125 | | 1,828,250 | | — | | — | | — | | — | | — | | — | | — | | Geoffrey Bedrosian | — | | 173,813 | | 347,625 | | 695,250 | | — | | — | | — | | — | | — | | — | | — | | | 03/01/18 | | — | | — | | — | | 12,182 | | 24,364 | | 48,728 | | 24,364 | | — | | — | | 503,604 | | John Hendrickson | — | | 173,813 | | 347,625 | | 695,250 | | — | | — | | — | | — | | — | | — | | — | | | 03/01/18 | | — | | — | | — | | 12,182 | | 24,364 | | 48,728 | | 24,364 | | — | | — | | 503,604 | | Edward Eickhoff | 03/01/18 | | — | | — | | — | | 4,807 | | 9,613 | | 19,226 | | 9,613 | | — | | — | | 198,701 |
| | (1) | Amounts in these columns relate to the 2018 Executive Incentive Plan assuming all financial metrics are met at the respective level with no impact on payouts from the ratio of net debt to annualized pro forma adjusted EBITDA. |
| | (2) | All awards in this column relate to shares of performance-based restricted shares under the Inducement Incentive Plan for Messrs. Harper, Fitzmaurice and Collier and under the 2012 Omnibus Long-Term Incentive Plan for all other named executive officers. |
| | (3) | All awards in this column relate to shares of service-based restricted shares under the Inducement Incentive Plan for Messrs. Harper, Fitzmaurice and Collier and under the 2012 Omnibus Long-Term Incentive Plan for all other named executive officers. |
| | (4) | The amounts reported reflect the fair value computed in accordance with FASB ASC Topic 718 for the service-based restricted shares and performance-based restricted share units awarded in 2018 under the 2012 Omnibus Long-Term Incentive Plan or the Inducement Incentive Plan. |
Narrative Discussion of Grants of Plan-Based Awards in 2018 Table
Non-Equity Incentive Plan. The 2018 STIP was based on the achievement of specific corporate objectives. The target annual bonus for Mr. Gershenson was 125% of base salary and for each of Messrs. Bedrosian and Hendrickson was 75% of base salary. All the named executive officers participating in the 2018 STIP separated from the Trust during 2018 and their entitlement to bonus amounts, if any, was determined pursuant to the severance terms of their employment agreements. The employment agreements of the Trust's current Chief Executive Officer and Chief Financial Officer, Messrs. Harper and Fitzmaurice, provide that they will participate in the Trust's annual executive incentive plans going forward; however, as noted above, for 2018, such officers were entitled to receive guaranteed bonuses equal to their prorated target bonus amount, negotiated in connection with their hiring. Accordingly, none of the named executive officers were paid bonuses for 2018 based on the Trust’s performance in accordance with the 2018 STIP. See "Compensation Discussion and Analysis—2018 Compensation Determinations—Annual Bonus—2018 Short Term Incentive Plan" for a description of the 2018 STIP.
Long-Term Incentive Plan. In 2018, the Committee approved long-term incentive targets of 45% to 125% of base salary for the named executive officers serving as executive officers in February 2018, other than Mr. Gershenson, who was not eligible to receive annual awards under the Trust’s LTIP in 2018 but received a grant of 100,000 restricted Shares in 2018, which vested in full on July 1, 2018, when Mr. Gershenson ceased to be employed by the Trust. In 2018, Messrs. Harper, Fitzmaurice and Collier were granted initial inducement long-term incentive awards upon commencement of their employment with the Trust under the Trust's
Inducement Incentive Plan. In addition to the annual grant under the LTIP, in 2018, Ms. Clark also received an additional grant of 1,250 service-based restricted shares that vest in three equal installments on March 1, 2019, 2020 and 2021. See "2018 Compensation Determinations—Long Term Incentive Compensation" for a description of the Trust's long-term incentive compensation program, including the material terms of the 2018 awards under the LTIP.
Outstanding Equity Awards at December 31, 2018
The following table provides information on the holdings of stock awards by the named executive officers as of December 31, 2018.
| | | | | | | | | | | | | | | | | | | | | | | | | | Stock Awards | | Name | | Grant Date/
Performance
Period | | | | Number of Shares or Units of Stock That Have
Not Vested
(#) | | Market Value of Shares or
Units of Stock That Have Not Vested
($)(1) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($)(1) | | Brian L. Harper | | 6/15/18 |
| | (2) | | 176,195 |
| | 2,105,530 |
| | — |
| | — |
| | | | 6/15/18-12/31/20 |
| | (3) | | — |
| | — |
| | 371,966 |
| | 4,444,994 |
| | Michael Fitzmaurice | | 6/18/18 |
| | (2) | | 25,571 |
| | 305,573 |
| | — |
| | — |
| | | | 6/18/18-12/31/20 |
| | (3) | | — |
| | — |
| | 25,571 |
| | 305,573 |
| | Timothy Collier | | 8/6/18 |
| | (2) | | 17,189 |
| | 205,409 |
| | — |
| | — |
| | | | 8/6/18-12/31/20 |
| | (3) | | — |
| | — |
| | 17,189 |
| | 205,409 |
| | Catherine Clark | | 6/4/18 |
| | (7) | | 1,250 |
| | 14,938 |
| | — |
| | — |
| | | | 3/1/18 |
| | (8) | | 10,566 |
| | 126,264 |
| | — |
| | — |
| | | | 12/31/17-12/31/20 |
| | (3) | | — |
| | — |
| | 10,566 |
| | 126,264 |
| | | | 3/6/17 |
| | (8) | | 6,824 |
| | 81,547 |
| | — |
| | — |
| | | | 12/31/16-12/31/19 |
| | (3) | | — |
| | — |
| | 8,534 |
| | 101,981 |
| | | | 3/1/16 |
| | (8) | | 4,146 |
| | 49,545 |
| | — |
| | — |
| | | | 12/31/15-12/31/18 |
| | (5) | | 11,230 |
| | 134,199 |
| | — |
| | — |
| | | | 3/1/15 |
| | (8) | | 2,428 |
| | 29,015 |
| | — |
| | — |
| | | | 12/31/14-12/31/17 |
| | (6) | | 2,291 |
| | 27,377 |
| | — |
| | — |
| | | | 3/1/14 |
| | (8) | | 1,319 |
| | 15,762 |
| | — |
| | — |
| | Raymond Merk | | 3/1/18 |
| | (8) | | 4,731 |
| | 56,535 |
| | — |
| | — |
| | | | 12/31/17-12/31/20 |
| | (3) | | — |
| | — |
| | 4,731 |
| | 56,535 |
| | | | 3/20/17 |
| | (8) | | 3,240 |
| | 38,718 |
| | — |
| | — |
| | | | 3/20/17-12/31/19 |
| | (3) | | — |
| | — |
| | 4,052 |
| | 48,421 |
| | Dennis Gershenson | | 12/31/16-12/31/19 |
| | (4) | | — |
| | — |
| | 64,584 |
| | 771,779 |
| | | | 12/31/15-12/31/18 |
| | (5) | | 87,711 |
| | 1,048,146 |
| | — |
| | — |
| | | | 12/31/14-12/31/17 |
| | (6) | | 16,332 |
| | 195,167 |
| | — |
| | — |
| Geoff Bedrosian(9) | | — |
| | | | — |
| | — |
| | — |
| | — |
| John Hendrickson(10) | | — |
| | | | — |
| | — |
| | — |
| | — |
| Edward A. Eickhoff(11) | | — |
| | | | — |
| | — |
| | — |
| | — |
|
| | (1) | Based upon the $11.95 closing price of the Shares on the NYSE on December 31, 2018, the last business day of the fiscal year. |
| | (2) | Restricted Shares vesting one-third per year, beginning on the first anniversary of the grant date. |
| | (3) | Performance-based restricted share units are listed at Target. Performance-based restricted share units will vest in common stock at the end of the performance period. |
| | (4) | Performance-based restricted share units are listed at Target. 48,438 units will be paid in cash and 16,146 units will vest in common stock at the end of the performance period. In June 2018, Mr. Gershenson's performance based cash and restricted share unit awards under the Trust's LTIP for the 2016-2018 and 2017-2019 performance periods were amended so that Mr. Gershenson is entitled to receive the cash payment or Shares, to the extent earned, even if Mr. Gershenson is not employed by the Trust on the date such awards are earned. |
| | (5) | The 2016-2018 performance period was achieved and the actual payout was 162.5% of target (the payout was calculated by our consultant, Meridian). 50% of the award will vest and settle in cash on March 1, 2019. The other 50% will vest and be settled in cash on March 1, 2020. In June 2018, Mr. Gershenson's performance based cash and restricted share unit awards under the Trust's LTIP for the 2016-2018 and 2017-2019 performance periods were amended so that Mr. Gershenson is entitled to receive the cash payment or Shares, as applicable, to the extent earned, even if Mr. Gershenson is not employed by the Trust on the date such awards are earned. |
| | (6) | The 2015-2017 performance period was achieved and the actual payout was 75.49% of target (the payout was calculated by our consultant, Meridian). 50% of the award vested and settled in cash on March 1, 2018. The other 50% will vest and be settled in cash on March 1, 2019. |
| | (7) | Restricted shares vesting in 3 equal installments on March 1, 2019, March 1, 2020 and March 1, 2021. |
| | (8) | Restricted shares vesting one-fifth per year, beginning on the first anniversary of the grant date. |
| | (9) | Mr. Bedrosian resigned from the Trust effective April 20, 2018 and his unvested or unearned service-based restricted shares and performance-based restricted share units were forfeited. |
| | (10) | Mr. Hendrickson ceased to be employed by the Trust effective April 12, 2018 and, pursuant to his employment agreement, his unvested restricted shares immediately vested. |
| | (11) | Mr. Eickhoff ceased to be employed by the Trust effective July 30, 2018 and, pursuant to his severance agreement, his unvested restricted shares immediately vested. |
Option Exercises and Stock Vested in 2018
The following table provides information on restricted share awards that vested in 2018. No options were exercised in 2018.
| | | | | | | | | | Stock Awards | | Name | | Number of Shares Acquired on Vesting (#)(1) | | Value Realized on Vesting ($)(2) | | Brian L. Harper | | — |
| | — |
| | Michael Fitzmaurice | | — |
| | — |
| | Timothy Collier | | — |
| | — |
| | Catherine Clark | | 6,965 |
| | 83,190 |
| | Raymond Merk | | 812 |
| | 9,647 |
| | Dennis Gershenson | | 234,530 |
| | 2,953,248 |
| | Geoffrey Bedrosian | | 19,109 |
| | 244,749 |
| | John Hendrickson | | 71,579 |
| | 878,123 |
| | Edward A. Eickhoff | | 28,364 |
| | 381,644 |
|
| | (1) | The Shares vested in the following amounts on the following dates in 2018: |
| | | | | | | | | | | | | | | | | | January 31 | March 1 | March 6 | March 20 | April 12 | June 15 | August 27 | | Brian L. Harper | — |
| — |
| — |
| — |
| — |
| — |
| — |
| | Michael Fitzmaurice | — |
| — |
| — |
| — |
| — |
| — |
| — |
| | Timothy Collier | — |
| — |
| — |
| — |
| — |
| — |
| — |
| | Catherine Clark | — |
| 5,255 |
| 1,710 |
| — |
| — |
| — |
| — |
| | Raymond Merk | — |
| — |
| — |
| 812 |
| — |
| — |
| — |
| | Dennis Gershenson | — |
| 24,239 |
| 12,920 |
| — |
| — |
| 197,371 |
| — |
| | Geoffrey Bedrosian | 12,539 |
| 2,631 |
| 3,939 |
| — |
| — |
| — |
| — |
| | John Hendrickson | — |
| 5,302 |
| 3,939 |
| — |
| 62,338 |
| — |
| — |
| | Edward A. Eickhoff | — |
| 4,100 |
| 1,556 |
| — |
| — |
| — |
| 22,708 |
|
| | (2) | The value realized is based upon the number of Shares received on the vesting date multiplied by the closing price of the Shares on the NYSE on the vesting date. The closing price of the Shares on the NYSE on each vesting date is as follows: |
| | | Vesting Date | Closing Price | 1/31/2018 | $13.22 | 3/1/2018 | $11.89 | 3/6/2018 | $12.11 | 3/20/2018 | $11.88 | 4/12/2018 | $12.31 | 6/15/2018 | $12.71 | 8/27/2018 | $13.83 |
Nonqualified Deferred Compensation in 2018
Deferred Compensation Plan
Under the Trust's Deferred Compensation Plan for Officers (the “Officer Deferred Compensation Plan”), an officer can elect to defer restricted shares which may be granted during a subsequent calendar year (“Deferral Year”) by completing and filing a proper deferred compensation agreement with the Secretary of the Trust no later than December 31 of the year prior to the Deferral Year. Restricted shares deferred will be credited to a stock account in the name of the applicable officer. Shares in the stock account will receive distributions, which at the officer’s election will either be paid in cash or will be reinvested in shares. An officer can modify or revoke his or her existing deferral election only on a prospective basis, and only for restricted shares to be granted in a subsequent calendar year, and only if the officer executes a new deferred compensation agreement or revokes his or her existing deferred compensation agreement in writing by December 31 of the year preceding the calendar year for which such modification or revocation is to be effective. The officer must elect the end of the deferral period at the time of such election and, except for a few circumstances, no officer shall have any right to make any early withdrawals from the officer’s deferred compensation accounts. None of the named executive officers elected to defer their restricted share grants in 2018 or have entered into any deferral arrangements with the Trust.
Potential Payments Upon Termination or Change-in-Control
The following section describes potential payments and benefits to the named executive officers under the Trust’s compensation and benefit plans and arrangements upon termination of employment or a change of control of the Trust and the actual payments and benefits that our former executive officers became entitled to receive thereunder in connection with their separation from the Trust in 2018.
Messrs. Gershenson, Hendrickson, and Bedrosian had and Messrs. Harper and Fitzmaurice have employment agreements with the Trust and Mr. Collier has an offer letter with the Trust. In 2018, the Trust entered into agreements regarding severance with Ms. Clark and Mr. Eickhoff and entered into a severance agreement, waiver and release with Mr. Eickhoff in connection with his separation from the Trust. See “Compensation Discussion and Analysis—Executive Officer Employment Agreements” for a description of such agreements including the potential payments and benefits thereunder to such named executive officers upon termination of employment or a change of control of the Trust and the actual payments and benefits that our former executive officers became entitled to receive thereunder in connection with their separation from the Trust in 2018. The Trust also has a Change of Control Policy in effect for the other executive officers, and certain of the Trust’s benefit plans and arrangements contain provisions regarding acceleration of vesting and payment upon specified termination events. See “—Trust Share-Based Plans” and “—Change of Control Policy” below. In addition, the Trust may authorize discretionary severance payments to its named executive officers upon termination.
Trust Share-Based Plans
2012 Omnibus Long-Term Incentive Plan and Inducement Incentive Plan. The Committee generally has the authority to accelerate the vesting of any awards at any time.
Upon a termination for cause, the options will be forfeited. Unless the Compensation Committee provides otherwise, upon a termination other than due to death, disability, or a change in control, all unvested options will be forfeited and all vested options will terminate the earlier of three months after the termination date or the option expiration date, except that upon retirement all vested options will expire upon their normal expiration date. Unless the Compensation Committee provides otherwise, upon a termination due to death or disability or within one year following a changeof an executive, the executive’s outstanding unvested service-based restricted shares will generally fully vest. Outstanding unvested performance-based restricted share units granted as annual performance-based awards in control upon a termination without cause or a termination with good reason,2020 and 2021 under the options2019 Plan will fully vestnot be forfeited and expire upon their normal expiration date with respect to terminations due to death or disability.
Unless the Compensation Committee provides otherwise, upon a termination other than due to death, disability, or a change in control, all unvested restricted Shares (whether performance-based or service-based) will be forfeited. Unless the Compensation Committee provides otherwise, upon a termination due to death, disability, retirement or within one year following a changeearned, in control upon a termination without cause or a termination with good reason, the restricted Shares or share units (whether performance-based or service-based) will fully vest, except that for unearnedfull, based on actual performance shares that vest upon death or disability, such shares will be settled atthrough the end of the applicable performance period based on achievement of performance goals. Generally, the Trust’s award agreements provide that allperiod. The performance-based restricted Shares or share units granted as annual performance-based awards in 2019 under the 2012 Plan do not provide for this treatment and, as a result, unless the Compensation Committee decides otherwise, they will be forfeited upon anyin the event of such a termination exceptprior to vesting. Performance-based awards granted in 2018, including those granted under the Committee may waiveTrust’s Inducement Incentive Plan and under the 2012 Plan, as well as the one-time absolute share price awards granted in 2020 under the 2019 Plan, will be earned based on performance achieved as of the date of termination and the full amount of restricted share units earned will vest as of such forfeiture (unless not permitted by the plan), in its sole discretion.date.
In the event of a change in control, as defined in the applicable equity plan, any outstanding awards granted under the 2012 Omnibus Long-TermPlan and 2019 Plan that are not honored, assumed or substituted by the successor of the Trust (or one of its affiliates) or the Trust, if it is the surviving entity, will vest, with performance-based awards generally vesting at target levels for the annual performance-based awards granted in 2019 under the 2012 Plan and in 2020 and 2021 under the 2019 Plan. To the extent outstanding awards are honored, assumed or substituted, no accelerated vesting will occur, but performance-based awards will be converted into service-based awards at target levels for the annual performance-based awards granted in 2019 under the 2012 Plan and at the greater of actual performance or target levels for the annual performance-based awards granted in 2020 and 2021 under the 2019 Plan. In addition, in such event, Performance-based awards granted in 2018, including those granted under the Trust’s Inducement Incentive Plan and under the 2012 Plan, as well as the one-time absolute share price awards granted in 2020 under the 2019 Plan, will convert into service-based awards based on actual performance. In the event of a termination of an executive’s service by the surviving entity without cause or by the executive for good reason within a specified period following such change in control, all of such honored, assumed or substituted outstanding unvested awards will vest. The 2012 Plan and the 2019 Plan also provide that awards may only be treated as honored, assumed or substituted if they are based on shares which are traded on an established securities market and otherwise have substantially equivalent or better economic value and other rights and entitlements, including vesting and payment terms. In connection with any other termination of an executive, except as set forth in an employment agreement (as summarized above) with respect to certain awards, the awards granted under the 2012 Plan and 2019 Plan to our named executive officers generally provide that all unvested restricted shares or restricted share units (whether service-based or performance-based) will be forfeited unless the Compensation Committee decides otherwise. In addition, the performance-based awards granted in 2018, including those granted under our Inducement Incentive Plan, as well as the one-time absolute share price awards granted in 2020 under the 2019 Plan, will vest upon a termination of the executive without cause or by the executive for good reason, subject to proration in the case of such performance-based awards based on actual performance and the portion of the performance period that had elapsed. In 2018, in connection with the hiring of Messrs. Harper, Fitzmaurice and Collier, we granted each of these executives equity awards under our Inducement Incentive Plan. The treatment of the performance-based restricted share units granted as inducement awards for each of these executives is generally set forth above. TABLE OF CONTENTS The 2012 Plan, the 2019 Plan and the Inducement Incentive Plan both also include terms providing that vesting, payments or other benefits for an executive that would constitute excess “parachute payments” under Section 280G of the IRC, subject to an excise tax will not be received if such a reduction would result in the event outstanding awards are not assumed or substituted by the successor/acquirer company, such outstanding awards will vest with performance awards vesting at target levels. In the event outstanding awards are assumed or substituted by the successor/acquirer company, in the event ofexecutive receiving a termination without cause or termination with good reason within one year following such change in control, such outstanding awards will vest.greater after-tax amount. Change ofin Control Policy The Trust maintains a Change ofin Control Policy for the benefit of the executive officers of the Trust except the executive officers with employment agreements which agreements govern. The policy provides for payments of specified amountsthat supersede the Change in Control Policy. Under the Change in Control Policy, if such person’san executive’s employment with the Trust or any subsidiary is terminated in specified circumstances following a change of control. The policy contains a double trigger. First, the person’s employment must be terminated (a) by the Trust other than forwithout cause or upon such person’s death or permanent disability or (b) by the personexecutive for good reason. Secondly, such termination must occurreason within one year following a change of control; provided, however, if a person’s employment or status asin control, the executive is entitled to an officer withamount equal to two times (or 2.99 times for the Trust or any subsidiary is terminated within six months priorChief Executive Officer, to the date on which a change of control occurs and such termination was not for cause or voluntary by such person, then the change of control date will be the date immediately prior to the date of such termination. If the double trigger is satisfied, the person will receive 2.0 timesextent applicable) the sum of the person'sexecutive’s annual base compensationsalary and target annual bonus, each for the calendar year in which the termination occurs no lateroccurs; provided that, other than for the 30th day followingChief Executive Officer, such payment, plus all other compensation amounts considered to be contingent on the termination date.
change in control for purposes Section 280G of the Code shall not exceed 2.99 times the executive’s base amount for purposes of Section 280G.
The policyChange in Control Policy does not contain a tax gross-up benefit. Further,limit the amount received underprovisions of any employment agreements with executives, but the policypayment due will be reduced toby the extent a person receives otheramount of any severance or other separation payments from the Trust (excluding the(other than accelerated vesting of equity awards) provided for in any options, sharesemployment agreements or rights under any incentive planother arrangements. During the term of the Trust).employment agreements with Messrs. Harper and Fitzmaurice, the Change in Control Policy is superseded for those executives by the terms of their employment agreements. The Change of Control/Severance Payment Table as of Decemberin Control Policy may be terminated by the Trust; provided that it will remain in effect with respect to any change in control that occurs prior to or within one year following such termination. CHANGE IN CONTROL/SEVERANCE PAYMENT TABLE AS OF DECEMBER 31, 20182021 The following table estimates the potential payments and benefits to the named executive officers (except Messrs. Gershenson, Bedrosian, Hendrickson and Eickhoff) upon termination of employment or a change ofin control, assuming such event occurs on December 31, 2018.2021, based on the terms of agreements, arrangements and policies in effect on such date and assuming that no additional discretionary payments or benefits are made. These estimates do not reflect the actual amounts that would be paid to such persons, which would only be known at the time that they become eligible for payment and would only be payable if the specified event occurs. Moreover, such named executive officers may receive additional payments or benefits resulting from a change in control that are not included in the following table. For Messrs. Gershenson, Bedrosian, Hendrickson, and Eickhoff, the table sets forth the actual payments and benefits received in connection with such officer's departure. TABLE OF CONTENTS CHANGE IN CONTROL AND SEVERANCE PAYMENTS AS OF DECEMBER 31, 2021 | | Brian L. Harper | | | | | | | | | | | | | | | | | | | | | | | | | Cash severance | | | 2,993,672 | | | (4) | | | — | | | 2,993,672 | | | (4) | | | 3,487,500 | | | (5) | | | | 2021 pro rata bonus | | | 1,937,500 | | | | | | — | | | 1,937,500 | | | | | | 1,937,500 | | | | | | | Acceleration of service-based awards (1) | | | 4,081,119 | | | | | | — | | | 2,879,483 | | | | | | 6,095,968 | | | | | | | Acceleration of performance-based awards (1) | | | 13,381,055 | | | (10) | | | — | | | 3,582,612 | | | | | | 18,948,903 | | | | | | | Benefits continuation (2) | | | 45,712 | | | | | | — | | | 45,712 | | | | | | 45,712 | | | | | | | Total | | | 22,439,058 | | | | | | — | | | 11,438,979 | | | | | | 30,515,583 | | | | | | | Michael P. Fitzmaurice | | | | | | | | | | | | | | | | | | | | | | | | | Cash severance | | | 855,000 | | | (6) | | | — | | | 855,000 | | | (6) | | | 1,710,000 | | | (4) | | | | 2021 pro rata bonus | | | 760,000 | | | | | | — | | | 760,000 | | | | | | 760,000 | | | | | | | Acceleration of service-based awards (1) | | | 1,170,155 | | | | | | — | | | 959,828 | | | | | | 1,769,719 | | | | | | | Acceleration of performance-based awards (1) | | | 1,484,389 | | | | | | — | | | 405,621 | | | | | | 2,884,086 | | | | | | | Benefits continuation (2) | | | 25,803 | | ��� | | | | — | | | 25,803 | | | | | | 51,606 | | | | | | | Total | | | 4,295,348 | | | | | | — | | | 3,006,251 | | | | | | 7,175,412 | | | | | | | Timothy Collier | | | | | | | | | | | | | | | | | | | | | | | | | Cash severance | | | — | | | | | | — | | | 746,803 | | | (7) | | | 1,107,303 | | | (8) | | | | 2021 pro rata bonus | | | — | | | | | | — | | | 618,000 | | | | | | 618,000 | | | | | | | Acceleration of service-based awards (1) | | | 610,436 | | | | | | — | | | — | | | | | | 610,436 | | | | | | | Acceleration of performance-based awards (1) | | | 947,286 | | | (10) | | | — | | | 258,399 | | | | | | 2,002,660 | | | | | | | Benefits continuation (2) | | | — | | | | | | — | | | — | | | | | | — | | | | | | | Total | | | 1,557,722 | | | | | | — | | | 1,623,2023 | | | | | | 4,338,398 | | | | | | | Heather R. Ohlberg | | | | | | | | | | | | | | | | | | | | | | | | | Cash severance | | | — | | | | | | — | | | 424,029 | | | (7) | | | 1,320,000 | | | (9) | | | | 2021 pro rata bonus | | | — | | | | | | — | | | 520,000 | | | | | | — | | | | | | | Acceleration of service-based awards (1) | | | 377,356 | | | | | | — | | | — | | | | | | 377,356 | | | | | | | Acceleration of performance-based awards (1) | | | 200,700 | | | (10) | | | — | | | 56,648 | | | | | | 810,722 | | | | | | | Benefits continuation (2) | | | — | | | | | | — | | | — | | | | | | — | | | | | | | Total | | | 578,056 | | | | | | — | | | 1,000,677 | | | | | | 2,508,078 | | | | | | | Raymond J. Merk | | | | | | | | | | | | | | | | | | | | | | | | | Cash severance | | | — | | | | | | — | | | 295,292 | | | (7) | | | 825,000 | | | (9) | | | | 2021 pro rata bonus | | | — | | | | | | — | | | 275,000 | | | | | | — | | | | | | | Acceleration of service-based awards (1) | | | 274,183 | | | | | | — | | | — | | | | | | 274,183 | | | | | | | Acceleration of performance-based awards (1) | | | 288,949 | | | (10) | | | — | | | 80,005 | | | | | | 704,902 | | | | | | | Benefits continuation (2) | | | — | | | | | | — | | | — | | | | | | — | | | | | | | Total | | | 563,132 | | | | | | — | | | 650,297 | | | | | | 1,804,085 | | | | |
(1)
| Represents the number of service-based and performance-based restricted shares and restricted share units, as applicable, that would have vested upon the occurrence of the applicable event multiplied by $13.38, which is the closing price of one share on the NYSE on December 31, 2021. |
(2)
| Benefits continuation amounts are based on the actual expense for financial reporting purposes for covering an employee under the medical plan elected by such named executive officer as of December 31, 2021 for the duration of their severance period. |
(3)
| Does not include equity awards that by their terms only vest to the extent outstanding awards are not honored, assumed or substituted in the manner permitted pursuant to the 2012 Plan and the 2019 Plan in connection with the change in control or performance-based awards granted under the Inducement Incentive Plan and the 2019 Plan that convert, pursuant to their terms, into service-based awards upon a change in control. As of December 31, 2021, additional service-based and performance-based equity awards having the following aggregate values would have vested upon a change in control of the Trust if such awards were not honored, assumed or substituted in the manner permitted pursuant to the 2012 Plan and the 2019 Plan in connection with the change in control based on a share value of $13.38, the closing price of one share on the NYSE on December 31, 2021, for each unvested restricted share or restricted share unit: Mr. Harper —$11,663,816; Mr. Fitzmaurice—$3,169,416; Mr. Collier—$1,665,809; Ms. Ohlberg—$987,378; and Mr. Merk—$690,137. In addition, under the 2019 Plan and the Inducement Incentive Plan, the following numbers of unvested performance-based restricted share units would have been converted into an equal number of service-based awards in connection with a change in control on December 31, 2021: Mr. Harper—1,000,079; Mr. Fitzmaurice—110,941; Mr. Collier—70,799; Ms. Ohlberg—15,000; and Mr. Merk—21,596. |
(4)
| Represents eighteen months of base salary and one and one-half times the average of the annual cash bonus for the two most recently completed years for which annual cash bonus was determined as of December 31, 2021. |
(5)
| Represents two years of base salary and target annual cash bonus as of December 31, 2021. |
(6)
| Represents twelve months of base salary and target annual cash bonus as of December 31, 2021. |
TABLE OF CONTENTS (7)
| Represents a lump sum payment equal to twelve months of base salary, including an estimated amount to provide for continuing benefits for a period of twelve months. For Mr. Collier, includes target annual cash bonus as of December 31, 2021. |
(8)
| Represents a lump sum payment equal to eighteen months of base salary and one and one-half times target annual cash bonus as of December 31, 2021, including an estimated amount to provide for continuing benefits for a period of twelve months. |
(9)
| Represents two years of base salary and target annual cash bonus as of December 31, 2021. |
(10)
| Does not include certain performance-based restricted share units that vest upon death or disability, but the payout, if any, will occur at the end of the performance period based on actual results pursuant to the terms of the award. Information regarding the value of unvested performance-based restricted share units that were outstanding as of December 31, 2021 is set forth above in “Named Executive Officer Compensation Tables—Outstanding Equity Awards at December 31, 2021.” |
(11)
| For Messrs. Collier and Merk, payments and benefits are only provided in connection with a termination by the Trust without cause. |
Items Not Reflected in Table. Items not reflected in the table set forth below include but are not limited to: Accrued salary bonus and vacation. CostsLife insurance proceeds in the event of COBRA or any other mandated governmental assistance program to former employees.death.
Disability insurance payouts in the event of disability. Welfare benefits provided to all salaried employees having substantially the same value. Amounts outstanding under the Trust’s 401(k) plan. Change of Control Payments — IRC Section 280G valuation. IRC Section 280G imposes tax sanctions for payments made by the Trust that are contingent upon a change of control and equal to or greater than three times an executive’s most recent five-year average annual taxable compensation (referred to as the “base amount”). If tax sanctions apply, payments that are treated as contingent upon a change in control, to the extent they exceed an allocable portion of the base amount, become subject to a 20% excise tax (payable by the executive) and are ineligible for a tax deduction by the Trust. Key assumptions in this analysis include:
A change of control, termination of employment and all related payments occur on December 31, 2018.
Federal and state income tax rates of 37% and 3.9%, respectively, and a social security/Medicare rate of 2.35%.
Performance-based restricted share units for performance periods that have not closed prior to the date of the change in control: the 2017-2019 performance period is reflected as paid out at the 100% amount.EQUITY COMPENSATION PLAN INFORMATIONThe value of unvested, non-qualified options equals their value as determined pursuant to the safe harbor method provided for in Revenue Procedure 2003-68. The value of Shares on December 31, 2018 is $11.95, the closing price on such date, as published by the NYSE.
The individuals listed in thefollowing table below will not receive any payments or benefits considered to be contingent upon the change in control, other than the payments and benefits setsets forth in the table below.
Other Notes Applicable to Table.
The “Acceleration of Share-Based Awards” column in the table assumes the Compensation Committee’s acceleration of long-term incentiveinformation regarding our equity compensation including share-based awards, for terminations specifically referenced in the table. The amounts set forth therein represent the intrinsic value of such acceleration, which is $11.95, which represents the closing price on the NYSE on December 31, 2018, for each unvested restricted Share.
Life insurance amounts only reflect policies paid for by the Trust (including an additional $1,000,000 of term life insurance paid by the Trust for Mr. Gershenson).
Change of Control and Severance Paymentsplans as of December 31, 20182021.
| | | | | | | | | | | | | | | | | | | | Cash Severance ($) | | Acceleration of Share- Based Awards ($) | | Life Insurance Proceeds ($) | | Annual Disability Benefits ($)(1) | | Total ($) | Brian L. Harper | | | | | | | | | | | | Retirement | | — |
| | — |
| | — |
| | — |
| | — |
| | Death | | 2,567,718 |
| (6) | 6,550,524 |
| (11) | 250,000 |
| | 27,000 |
| | 9,395,225 |
| | Disability | | 2,567,718 |
| (6) | 6,550,524 |
| (11) | — |
| | 45,000 |
| | 9,163,225 |
| Termination without cause or for good reason | | 2,567,718 |
| (6) | 4,678,935 |
| (12) | — |
| | — |
| | 7,246,635 |
| Termination without cause or for good reason (w/i 2 years following change of control) | | 3,411,468 |
| (7) | 4,678,935 |
| (12) | — |
| | — |
| | 8,090,384 |
| | Michael Fitzmaurice | | | | | | | | | | | | Retirement | | — |
| | — |
| | — |
| | — |
| | — |
| | Death | | 811,812 |
| (8) | 611,146 |
| (11) | 250,000 |
| | 27,000 |
| | 1,699,939 |
| | Disability | | 811,812 |
| (8) | 611,146 |
| (11) | — |
| | 45,000 |
| | 1,467,939 |
| Termination without cause or for good reason | | 811,812 |
| (8) | 611,146 |
| | — |
| | — |
| | 1,422,950 |
| Termination without cause or for good reason (w/i 2 years following change of control) | | 1,217,718 |
| (6) | 611,146 |
| | — |
| | — |
| | 1,828,858 |
| | Timothy Collier | | | | | | | | | | | | Retirement | | — |
| | — |
| | — |
| | — |
| | — |
| | Death | | — |
| | 410,817 |
| (11) | 250,000 |
| | 27,000 |
| | 687,817 |
| | Disability | | — |
| | 410,817 |
| (11) | — |
| | 27,000 |
| | 437,817 |
| Termination without cause or for good reason | | 684,312 |
| (8) | 410,817 |
| | — |
| | — |
| | 1,095,129 |
| Termination without cause or for good reason following change of control | | 1,014,312 |
| (6) | 410,817 |
| | — |
| | — |
| | 1,425,129 |
| Catherine Clark | | | | | | | | | | | | Retirement | | — |
| | — |
| | — |
| | — |
| | — |
| | Death | | — |
| | 706,890 |
| (11) | 250,000 |
| | 27,000 |
| | 983,890 |
| | Disability | | — |
| | 706,890 |
| (11) | — |
| | 108,000 |
| | 814,890 |
| Termination without cause or for good reason | | 371,470 |
| (9) | 317,069 |
| | | | | | | Termination without cause or for good reason (w/i 1 year following change of control) | | 938,006 |
| (10) | 706,890 |
| | — |
| | — |
| | 1,644,896 |
| Raymond Merk | | | | | | | | | | | | Retirement | | — |
| | — |
| | — |
| | — |
| | — |
| | Death | | — |
| | 200,209 |
| (11) | 250,000 |
| | 27,000 |
| | 477,209 |
| | Disability | | — |
| | 200,209 |
| (11) | — |
| | 108,000 |
| | 308,209 |
| Termination without cause or for good reason (w/i 1 year following change of control) | | 700,000 |
| (10) | 200,209 |
| | — |
| | — |
| | 900,209 |
| Dennis Gershenson (2) | | | | | | | | | | | Termination without cause or for good reason | | 4,212,572 |
| | 2,611,595 |
| | — |
| | — |
| | 6,824,167 |
| Geoffrey Bedrosian (3) | | | | | | | | | | | | Resignation | | — |
| | — |
| | — |
| | — |
| | — |
| John Hendrickson (4) | | | | | | | | | |
| Termination without cause or for good reason | | 591,915 |
| | 425,774 |
| | — |
| | — |
| | 1,017,689 |
| Edward A. Eickhoff (5) | | | | | | | | | | | Termination without cause or for good reason | | 529,103 |
| | 168,671 |
| | — |
| | — |
| | 697,774 |
|
| | Equity compensation plans approved by security holders | | | | | | | | | | | | | 2019 Plan | | | 1,761,871(1) | | | $—(2) | | | 2,366,483(3) | | | | 2012 Plan | | | 215,534(4) | | | —(5) | | | — | | | | Subtotal | | | 1,977,405 | | | — | | | 2,387,042 | | | | Equity compensation plans not approved by security holders(6) | | | 829,452 | | | — | | | — | | | | Total | | | 2,806,857 | | | $— | | | 2,387,042 | |
(1)
| | (1) | $27,000 represents the amount paid to a survivor if the employee had been disabled for 180 consecutive days and the employee was eligible to receive the long-term disability payments. $108,000 represents the aggregate of 12 monthly payments of $9,000 payable as a long-term disability benefit (such payments would continue for the length of the disability); if the disability was of a short-term nature, such person may be eligible for wage replacement for 13 weeks with a maximum weekly benefit of $4,154. |
| | (2) | Mr. Gershenson ceased to be employed by the Trust effective on July 1, 2018. Mr. Gershenson received the payments and other benefits disclosedIncludes (i) 1,739,892 shares issuable pursuant to the terms of his employment agreement. Following his departure, he was no longer eligible to receive payments in the event of termination after a change in control or death, disability, or retirement. |
| | (3) | Mr. Bedrosian voluntarily resigned from the Trust effective April 20, 2018. |
| | (4) | Mr. Hendrickson ceased to be employed by the Trust effective April 12, 2018. Mr. Hendrickson received the payments and other benefits disclosed pursuant to the terms of his employment agreement. Following his departure, he was no longer eligible to receive payments in the event of termination after a change in control or death, disability, or retirement. |
| | (5) | Mr. Eickhoff ceased to be employed by the Trust effective July 30, 2018. Mr. Eickhoff received the payments and other benefits disclosed pursuant to the terms of his severance agreement. Following his departure, he was no longer eligible to receive payments in the event of termination after a change in control or death, disability, or retirement. |
| | (6) | Represents eighteen months of base salary, target annual bonus, and COBRA health care coverage as of December 31, 2018 for such named executive officer. |
| | (7) | Represents two years of base salary, target annual bonus, and COBRA health care coverage as of December 31, 2018 for such named executive officer. |
| | (8) | Represents one year of base salary, target annual bonus, and COBRA health care coverage as of December 31, 2018 for such named executive officer |
| | (9) | Represents one year of base salary and COBRA health care coverage as of December 31, 2018 for such named executive officer. |
| | (10) | Assumes payment equal to 2.0 times each such named officer's base salary and target bonus for 2018. |
| | (11) | Performance-based restricted share units for the 2017-2019 and the 2018-2020 performance periods will vest upon death or disability, but the payout will occur at the end of the performance period based on actual results. The amounts set forth in the table attributable to performance-based restricted share units for such performance periods assumes payout at 100%outstanding as of the target level using a share value of $11.95 the closing price on December 31, 2018 as published by2021 at the NYSE.maximum level of performance and (ii) 21,979 deferred shares. |
(2)
| Because there is no exercise price associated with the performance-based restricted share units or the deferred shares, such units and shares are not included in the weighted average exercise price. |
(12)(3)
| Represents shares remaining available for issuance under the sum of2019 Plan. We adopted the 2019 Plan on April 29, 2019 and will not make future grants or awards under the 2012 Plan. |
(4)
| Includes (i) the portion of the June 15, 2018 service-based10,654 shares issuable under restricted share award equalunits subject to $1,250,000 divided by the closing priceservice-based vesting, (ii) 168,212 shares issuable pursuant to performance-based restricted share units outstanding as of such shares on the day prior to grant multiplied by a share value of $11.95, the closing price on December 31, 20182021 at the maximum level of performance and (iii) 36,668 deferred shares. |
(5)
| Because there is no exercise price associated with the performance-based restricted share units or the deferred shares, such units and shares are not included in the weighted average exercise price. |
(6)
| Includes shares issuable pursuant to performance-based restricted share units outstanding as published by the NYSE, and (ii) the portion of the June 15, 2018 performance-based grant equal to $3,750,000 divided by the closing price of such shares on the day prior to grant multiplied by a share value of $11.95, the closing price on December 31, 2018 as published by2021 at the NYSE.maximum level of performance. Because there is no exercise price associated with the performance-based restricted share units, such units are not included in the weighted average exercise price. |
Inducement Incentive Plan
For a description of the Inducement Incentive Plan refer to Note 15 of the notes to the Trust's consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 18, 2022.
TABLE OF CONTENTS
CHIEF EXECUTIVE OFFICER PAY RATIO
The Trust’s chief executive officer to median employee pay ratio was calculated in accordance with SEC requirements. However, due to the flexibility afforded by Item 402(u) of Regulation S-K in calculating the pay ratio, the ratio presented herein is a reasonable estimate and may not be comparable to the pay ratio presented by other companies.
The Trust identified the median employee by examining 20182021 compensation for all employees of the Trust excluding the President and Chief Executive Officer. As permitted by SEC rules, employee compensation for full fiscal 20182021 as reported in the Trust’s internal 401(k) reports was used as the compensation measure to identify the Trust’s median employee. The Trust believes that the use of this compensation measure is reasonable since it includes all cash components of the Trust’s employee compensation: annual base salary, overtime pay, target short-term cash incentive compensation and employer benefit costs.
The employee population used to identify the Trust’s median employee included all employees of the Trust, whether employed on a full-time, part-time, or seasonal basis, as of December 16, 2018.26, 2021. The compensation measure described above was consistently applied to this entire employee population. The Trust did not make any assumptions, adjustments, or estimates with respect to the employee population or the compensation measure and did not annualize the compensation for any employees that were not employed by the Trust for all of 2018.2021. After identifying the median employee based on the compensation measure described above, the Trust calculated annual total compensation for the median employee using the same methodology used for our named executive officers as set forth in the "Summary“Summary Compensation Table"Table” herein.
During 2018, Mr. Gershenson served as our Chief Executive Officer until June 2018, at which time Mr. Harper became our Chief Executive Officer and served in such capacity for the remainder of 2018. As permitted by SEC rules, we chose to use the annualized total compensation of Mr. Harper, who served as Chief Executive Officer on the date that we used to select our median employee, to calculate our pay ratio. For the year ended December 31, 2018, Mr. Harper's total compensation, as reported in the Summary Compensation Table, was $8,047,751. To arrive at a value of $8,846,365 as Mr. Harper's annualized total compensation to calculate our pay ratio, we used his base salary and target bonus on an annualized basis ($750,000 and $937,500, respectively) and added such amounts to all other components of his compensation disclosed in the Summary Compensation Table (including stock awards with a grant-date fair value of $6,517,047, a cash starting bonus of $500,000, housing, travel costs and legal expenses of $138,819 and 401(k) plan company matching of $3,000). We did not make any adjustments to the grant-date fair value of his stock awards in 2018 to annualize his compensation since Mr. Harper's target annual LTIP grant starting in 2019 is expected to be less than the initial inducement grants that he received in his first year of employment.
As illustrated in the table below, in 2018,2021, the Trust’s President and Chief Executive Officer’s annual total compensation was 10872 times that of the Trust’s median employee. | | | | | | | | | | President & Chief Executive Officer | | Median Employee | | | 2018 Annual Total Compensation | | $8,846,365 | | $81,934 | | | Total Annual Compensation Pay Ratio | | 108 | | 1 | |
We believe that our pay ratio for 2018 was impacted by our hiring Mr. Harper during the year. Mr. Harper's compensation in 2018 reflects a cash signing bonus and inducement stock awards greater than the expected value of Mr. Harper's annual LTIP grants going forward, which we expect significantly increased Mr. Harper's annualized total compensation for 2018, and, consequently, our pay ratio.
| | 2021 Annual Total Compensation | | | $6,261,712 | | | $87,321 | | | | Total Annual Compensation Pay Ratio | | | 72 | | | 1 | |
RELATED PERSON TRANSACTIONS Policies and Procedures The Trust doeshas a Related Person Transaction Approval Policy for the review, approval or ratification of any related person transaction. This written policy provides that all related person transactions must be reviewed and approved by the Audit Committee or a majority of the disinterested trustees on the Board reasonably in advance of the Trust or any of its subsidiaries entering into the transaction. Disinterested trustees are trustees that do not have a formal related personpersonal financial interest in the transaction policy in writing, although it has the following customary policies and practices regarding such transactions. Trustees and executive officers are required to complete an annual questionnaire in connection with the Trust’s proxy statement for its annual meeting of shareholders, which includes questions regarding related person transactions. Trustees and executive officers are also required to provide written noticethat is adverse to the Trust’s outside general counsel of any updates to such information. If a related person transaction is proposed, the Audit Committee and/or non-interested Trustees of the Board review such business transaction to ensure that the Trust’s involvement in such transactions is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party and is in the best interestsfinancial interest of the Trust andor its shareholders. When necessary or appropriate,The term “related person transaction” refers to a transaction required to be disclosed by the Trust will engage third party consultants and special counsel, and the Board may create a special committee,pursuant to review such transactions. Interested Trustees will recuse themselves from the approval processItem 404 of Regulation S-K (or any successor provision) promulgated by the Board or Audit Committee.
Related Person TransactionsSEC. This policy is in 2018
William Gershenson, Vice Presidentaddition to, and Managing Directornot in substitution of, Western Portfolio of RPT Realty, Inc., is the son of Dennis Gershenson, Trustee and former President and Chief Executive Officerany other policy of the Trust. In 2018, William Gershenson was paid $157,721 in base salary and bonus. In addition, upon his termination from the Trust during 2018, he was also paid an additional $187,388, which included (i) severance wages and pro-rata bonusrelating to approval of $156,081 (ii) a one-time, lump sum paymentconflict of $8,758 for accrued paid time off and (iii) $22,549 for continued health insurance coverage.interest transactions.
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AUDIT COMMITTEE DISCLOSURE The Audit Committee is responsible for monitoring the integrity of the Trust’s consolidated financial statements, the Trust’s system of internal controls, the Trust’s risk management system, the qualifications, performance and independence of the Trust’s independent registered public accounting firm, the performance of the Trust’s internal audit function and the Trust’s compliance with legal and regulatory requirements. The Audit Committee also has the sole authority and responsibility to appoint, determine the compensation of, evaluate and, when appropriate, replace the Trust’s independent registered public accounting firm. Management is responsible for the financial reporting process, including the system of internal controls, for the preparation of consolidated financial statements in accordance with generally accepted accounting principles and for the report on the Trust’s internal control over financial reporting. The Trust’s independent registered public accounting firm is responsible for performing an independent audit of the Trust’s annual consolidated financial statements and expressing an opinion as to their conformity with generally accepted accounting principles and for attesting to management’s report on the Trust’s internal control over financial reporting. The Audit Committee’s responsibility is to oversee and review the financial reporting process and to review and discuss management’s report on the Trust’s internal control over financial reporting. The Audit Committee is not, however, professionally engaged in the practice of accounting or auditing and does not provide any expert or other special assurance as to such financial statements concerning compliance with laws, regulations or generally accepted accounting principles or as to auditor independence. The Audit Committee relies, without independent verification, on the information provided to it and on the representations made by the Trust’s management and the independent registered public accounting firm. Pre-Approval Policies and Procedures for Audit and Non-Audit Services Pursuant to itsThe Audit Committee reviews and approves in advance the terms of and compensation for both audit and non-audit services. As stated in our Audit Committee charter, the Audit Committee must pre-approvepre-approves all auditing services and the performance of auditterms thereof (which may include providing comfort letters in connection with securities underwritings) and non-audit services. In pre-approving permittedservices (other than non-audit services prohibited under Section 10A(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or the applicable rules of the SEC or the Public Company Accounting Oversight Board (“PCAOB”) to be provided to the Trust by its independent auditors). The pre-approval requirement may be waived with respect to the provision of non-audit services for the Trust if the “de minimus” provisions of Section 10A(i)(1)(B) of the Exchange Act are satisfied. This authority to pre-approve all non-auditing services may be delegated to one or more members of the Audit Committee, considers whetherprovided all decisions to pre-approve an activity are required to be presented to the provisionfull Audit Committee at its first meeting following such decision.
The Audit Committee pre-approved 100% of the permitted non-audit services is consistent with applicable lawfees described below and NYSE policies and with maintaining the independencenone of the Trust’s independent registered public accounting firm.services described above were approved pursuant to Rule 2-01(c)(7)(i)(c) of Regulation S-X, which relates to circumstances where the Audit Committee pre-approval requirement is waived. Fees of Independent Registered Public Accounting Firm in 20182021 and 20172020 The following information sets forth the fees for 20182021 and 20172020 for audit and other services provided by Grant Thornton, our independent registered public accounting firm during such periods. The Audit Committee, based on its review and discussions with management and Grant Thornton, determined that the provision of these services was compatible with maintaining Grant Thornton’s independence. All of such services were approved in conformity with the pre-approval policies and procedures described above. | | Audit Fees | | | $891,221 | | | $711,289 | | | | Audit-Related Fees | | | — | | | — | | | | Tax Fees | | | — | | | — | | | | All Other Fees | | | — | | | — | | | | Total Fees | | | $891,221 | | | $711,289 | |
| | | | | | | | | | | 2018 | | 2017 | Audit Fees (1) | | $639,206 | | $741,529 | | Audit-Related Fees | | — |
| | — |
| | Tax Fees | | — |
| | — |
| | All Other Fees | | — |
| | — |
| | Total Fees | | $639,206 | | $741,529 | | | | | | | (1) 2017 fees have been revised to reflect actual billings. | | | | |
Audit Fees. Audit services consist of professional services rendered by Grant Thornton for the audits of the Trust’s annual financial statements and the effectiveness of the Trust’s internal control over financial reporting, review of the financial statements included in the Trust’s quarterly reports on Form 10-Q and annual report on Form 10-K, services associated with SEC registration statements and other documents issued in connection with the Trust’s equity offerings and services that are normally provided by the accountant in connection with these filings and other filings. These amounts include reimbursable expenses of $66,306$51,221 and $37,028$29,414 in 20182021 and 2017,2020, respectively.
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REPORT OF THE AUDIT COMMITTEE In connection with the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018,2021, and the financial statements to be included therein, the Audit Committee has: reviewed and discussed the audited financial statements with management; discussed with Grant Thornton, the Trust’s independent registered public accounting firm, the matters required to be discussed by the statement on Auditing Standards No. 1301, as amended;applicable requirements of the PCAOB and the SEC; and received the written disclosures and the letter from Grant Thornton required by the applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding Grant Thornton’s communications with the Audit Committee concerning independence, and has discussed with Grant Thornton its independence with respect to the Trust. Based upon these reviews and discussions, the Audit Committee recommended to the Board that the Trust’s audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 20182021 filed with the SEC. Members of the Audit Committee
Joanna T. Lau (Chair)
Richard L. Federico
Arthur H. Goldberg
David J. Nettina
Laurie M. Shahon | | | | | | Members of the Audit Committee | | | | David J. Nettina (Chair) | | Stephen R. Blank | | Richard L. Federico | | Arthur H. Goldberg | | Laurie M. Shahon | | 57
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RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM The Audit Committee has appointed Grant Thornton LLP, or Grant Thornton, as our independent registered public accounting firm for the calendar year 2022. The Board recommends that the shareholders ratify the Trust’s selection of Grant Thornton as our independent registered public accounting firm. Although shareholder ratification of the appointment is not required by law or by our Bylaws and is not binding on the Trust, the Board believes that the submission of its selection to shareholders is a matter of good corporate governance. Even if the selection is ratified, the Audit Committee will take the appointment of Grant Thornton under advisement if such appointment is not ratified. Grant Thornton has served as the Trust’sin its discretion, may select a different independent registered public accounting firm since 2005. The appointmentat any time if the Audit Committee believes that such a change would be in the best interests of Grant Thornton has beenthe Trust and its shareholders. If the selection is not ratified, by the Trust’s shareholders at annual meetings since 2006.Audit Committee will take that act into consideration, together with such other factors it deems relevant, in determining its next selection of independent auditors. See “Audit Committee Disclosure” for a description of fees and other matters related to Grant Thornton’s provision of services to the Trust. The Trust expects that one or more representatives of Grant Thornton will be present at the annual meetingAnnual Meeting and will be available to respond to appropriate questions. Such representatives will also have an opportunity to make a statement.statement if they so desire. The Board recommends that the shareholders vote FOR the ratification of Grant Thornton as the Trust’s independent registered public accounting firm for the year ending December 31, 2019.2022. Vote Required The affirmative vote of a majority of the votes cast at the annual meetingAnnual Meeting will be necessary to ratify the Audit Committee’s appointment of Grant Thornton as the Trust’s independent registered public accounting firm for the year ending December 31, 2019.2022. Abstentions will have no effect on the outcome of the vote. TABLE OF CONTENTS ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION Our Board of Trustees proposes that shareholders provide advisory (non-binding) approval of the compensation of our named executive officers, as disclosed in this proxy statement in accordance with the SEC’s rules (commonly known as a “say-on-pay” proposal). We recognize the interest our shareholders have in the compensation of our executives and we are providing this advisory proposal in recognition of that interest and as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Exchange Act. In a non-binding, advisory vote on the frequency of the say-on-pay proposal held at our 2017 annual meeting of shareholders, shareholders voted in favor of holding say-on-pay votes annually. In light of this result and other factors considered by the Board, the Board determined that the Trust will hold advisory say-on-pay votes on an annual basis until the next required advisory vote on such frequency. Therefore, the next advisory say-on-pay vote will occur at our 20202023 annual meeting of shareholders. As described in detail under the heading “Compensation Discussion and Analysis,” our named executive officer compensation program is designed to attract, motivate and retain our named executive officers, who are critical to our success, and ensure alignment of such persons with shareholders. Under this program, our named executive officers are rewarded for their service to the Trust, the achievement of specific performance goals and the realization of increased shareholder value. We believe our executive officer compensation programs also are structured appropriately to support our Trust and business objectives, as well as to support our culture. The Compensation Committee regularly reviews the compensation programs for our named executive officers to ensure the fulfillment of our compensation philosophy and goals. Please read the “Compensation Discussion and Analysis,” beginning on page 19,31, and the “Named Executive Officer Compensation Tables”, beginning on page 37,44, for additional details about our named executive officer compensation program, including information about the target and earned compensation of our named executive officers in 2018.2021.We are asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we will ask our shareholders to vote “FOR” the following resolution at the Annual Meeting: “RESOLVED, that the Trust’s shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Trust’s Proxy Statement for the 20192022 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.” The say-on-pay vote is advisory, and therefore not binding on the Trust, the Compensation Committee or our Board. We value the opinions of our shareholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider our shareholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
The Board recommends that the shareholders vote FOR the approval, on an advisory basis, of the compensation of our named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC. Vote Required The affirmative vote of a majority of the votes cast at the annual meetingAnnual Meeting will be necessary to approve, on an advisory basis, the compensation of our named executive officers. Abstentions and broker non-votes will have no effect on the outcome of the vote. TABLE OF CONTENTS PROPOSAL 4 — APPROVAL OF 2019 OMNIBUS LONG-TERM INCENTIVE PLANThe Trust currently maintainsBYLAW AMENDMENT PROPOSAL
Our shareholders are being asked to approve an amendment to our Bylaws to allow shareholders to amend our Bylaws by a vote of the 2012 Omnibus Long-Term Incentive Plan (referredmajority of votes cast at a meeting of stockholders duly called and at which a quorum is present. We refer to in this Proposal 4the amendment as the “2012 Plan”), which originally became effective on June 6, 2012 and is scheduled to expire on June 6, 2022, and the Inducement Incentive Plan (the “Inducement Plan”), which originally became effective on April 3, 2018. As of March 5, 2019, there was an aggregate of (i) 2,000,000 Shares authorized and reserved for awards pursuant to the 2012 Plan and 622,373 Shares remaining available for issuance thereunder and (ii) 6,000,000 Shares authorized and reserved for awards pursuant to the Inducement Plan and 5,366,319 Shares remaining available for issuance thereunder. We are asking our shareholders to approve the 2019 Omnibus Long-Term Incentive Plan (the “2019 Plan”) to replace the 2012 Plan under which we grant equity awards. We grant equity incentive awards to motivate our trustees, officers, employees and other service providers of the Trust to achieve long-term financial and strategic goals and to attract and retain our trustees, officers and employees. During 2018, we used the Inducement Plan to grant awards to individuals who were not previously employees or members of the Board of Trustees, as an inducement material to the individual’s entry into employment with the Trust within the meaning of Rule 303A.08 of the NYSE Listing Company Manual. If the 2019 Plan is approved by our shareholders, awards previously granted under the 2012 Plan or the Inducement Plan would remain outstanding pursuant to the terms of such plans. The Trust anticipates that uponProposed Bylaw Amendment. Our current Bylaws require shareholder approval of the 2019 Plan, all subsequent equity awards wouldProposed Bylaw Amendment.
As permitted by Maryland law, our Bylaws currently provide the Board with the ability to adopt, alter or repeal any provision of our Bylaws and to make new bylaws, except that the following may be granted underamended only with the 2019 Plan, and no further awards would be made underaffirmative vote of a majority of the 2012 Plan or the Inducement Plan. The remaining Shares authorized and reserved for awards pursuantvotes cast on such amendment by holders of outstanding common shares of beneficial interest: (i) provisions relating to the 2012 Plan orannual meeting, voting of shares by certain holders and reports to shareholders, (ii) provisions relating to trustees, including regarding to vacancy and removal of trustees, and (iii) the Inducement Plan would not be rolled intoprovision that requires the 2019 Plan and would not become available for grant thereunder. As used in this Proposal 4,affirmative vote of a majority of the phrase the “Trust” includes the Trust and its consolidated subsidiaries. The 2019 Plan providesvotes cast for the awardaforementioned amendments.
Notwithstanding this authority granted to trustees, officers, employeesthe Board in our Bylaws, the Board approved the Proposed Bylaw Amendment and other service providersresolved to submit the Proposed Bylaw Amendment for shareholder consideration. The effectiveness of the Trust of restricted shares, restricted share units, options to purchase shares, share appreciation rights, unrestricted shares, and other awards to acquire up to an aggregate of 3,500,000 Shares plus any shares that become available under the 2012 Plan as a result of the forfeiture, expiration or cancellation of outstanding awards or any award settled in cash in lieu of shares. If an award under the 2019 Plan of restricted shares or restricted share unitsProposed Bylaw Amendment is forfeited or an award of options or other rights granted under the 2019 Plan expires without being exercised, or an award is settled in cash in lieu of share, the shares covered by any such award would again become available for issuance under new awards, however, shares not issued upon net settlement or net exercise of an award, shares delivered to the Trust or withheld to pay the exercise price or withholding tax obligations and shares repurchasedexpressly conditioned on the open market with the proceeds of an option exercise are not available for issuance under new awards. The Compensation Committee approved the 2019 Plan on March 7, 2019, subject to shareholder approval at the 2019 annual meeting. IfAnnual Meeting, and, accordingly, the Board will reconsider the Proposed Bylaw Amendment if it is not approved by the shareholders at the Annual Meeting.
Following the adoption of the Proposed Bylaw Amendment, any proposal submitted by shareholders to amend our shareholders approve the 2019 Plan, it would become effective as of April 29, 2019 and immediately become available for equity issuances thereunder. If our shareholders do not approve the 2019 Plan, the TrustBylaws would be unable to issue equity awards after the expiration of the 2012 Plan or earlier if, as a result of future equity awards, no Shares remain available for issuance under the 2012 Plan prior to such expiration, which could impair our ability to recruit and retain the talent necessary to maintain and grow our business. Description of the 2019 Plan
A description of the provisions of the 2019 Omnibus Long-Term Incentive Plan is set forth below. This summary is qualified in its entirety by the detailed provisions in the 2019 Plan, which is attached as Appendix A to this proxy statement.
Overview. The purpose of the 2019 Plan is to enhance the ability of the Trust to attract and retain highly qualified trustees, officers, key employees and other persons and to motivate such persons to serve the Trust and to improve the business results and earnings of the Trust by providing to such persons an opportunity to acquire or increase a direct proprietary interest in the operations and future success of the Trust. As discussed in this proxy statement, grants to employees of service-based restricted shares and performance-based restricted share units and awards to non-employee trustees of restricted shares are an important part of the Trust’s compensation program, providing a basis for long-term incentive compensation and helping to tie together the interests of the Trust’s shareholders and the Trust’s trustees, officers and employees.
Key Features Protecting Shareholder Interests and Promoting Corporate Governance. The 2019 Plan includes the following features to protect our shareholders’ interests and to ensure effective corporate governance:
Minimum one-year vesting. The 2019 Plan requires that all awards (or portion thereof) have a minimum vesting period of one year from the grant date, provided, that awards (including unrestricted Shares) with respect to 5% of the total Shares authorizedrequired to be issued undersubmitted in accordance with the 2019 Plan may be granted underadvance notice procedures contained in Article II, Section 13 of our Bylaws. The Proposed Bylaw Amendment would not change the 2019 Plan with a vesting period of less than one year.
No repricing of stock options. The 2019 Plan prohibits the repricing of options or share appreciation rightsBoard’s existing authority to amend our Bylaws without the approval of the shareholders. This provision relates to both direct repricings (lowering the exercise price of an option) and indirect repricings (canceling an outstanding option and granting a replacement or substitute option with a lower exercise price, or exchanging options for cash, other options or other awards).
No discounted options or share appreciation rights. The 2019 Plan prohibits the granting options or share appreciation rights with an exercise price of less than fair market value of a Share on the grant date.
No single trigger vesting on a change in control where awards are assumed or substituted. The 2019 Plan does not accelerate the vesting of unvested awards if the successor/acquirer company assumes or substitutes outstanding awards with successor/acquirer company awards equal in value to awards outstanding at the timeA draft of the change in control. If the successor/acquirer company assumes or substitutes outstanding awards, accelerated vesting will only occur upon an involuntary termination of employment without cause or a termination of employment for good reason within one year after a change in control.
No dividend or dividend equivalent rights. The 2019 Plan prohibits the payment of dividends or dividend equivalent rights on options, share appreciation rights and other unvested awards.
Individual limits. The 2019 Plan provides that the maximum number of Shares subjectProposed Bylaw Amendment is attached to an option or share appreciation right that can be awarded under the 2019 Plan is 500,000 per calendar year. Further, the maximum number of shares that can be awarded under the Plan other than pursuant to an option or share appreciation right is 500,000 per calendar year.
No evergreen provisions. The 2019 Plan does not include an evergreen provisionthis Proxy Statement as it relates to Shares available for issuance under the 2019 Plan.
Independent committee administration. The 2019 Plan is administered by the Compensation Committee, whose members are independent under NYSE rules and satisfy the “non-employee director” requirements of Rule 16b-3 of the Exchange Act.
Share Reserve and Award Limits. There are 3,500,000 Shares reserved for issuance under the 2019 Plan plus any shares that become available under the 2012 Plan as a result of forfeiture, expiration or cancellation of any outstanding award or any awards settled in cash in lieu of shares, under the 2012 Plan (“Shares Available for Issuance”), and no awards have been granted under the 2019 Plan. The Shares issued or to be issued under the 2019 Plan consist of authorized but unissued Shares or issued Shares that have been reacquired by the Trust, a subsidiary or affiliate. The maximum number of Shares subject to options or share appreciation rights that can be awarded under the 2019 Plan to any person is 500,000 per year. The maximum number of Shares that can be awarded under the 2019 Plan to any person, other than pursuant to an option or share appreciation rights, is 500,000 per year.
Administration. The 2019 Plan is administered by our Compensation Committee. Subject to the terms of the 2019 Plan, the Compensation Committee may select participants to receive awards, determine the types of awards and terms and conditions of awards and interpret provisions of the 2019 Plan. The Compensation Committee may delegate to a subcommittee of Trustees and/or officers the authority to grant or administer Awards to persons who are not then reporting persons under Section 16 of the Exchange Act.
Eligibility. Awards may be made under the 2019 Plan to our trustees, officers, employees or consultants and to any other individual whose participation in the 2019 Plan is determined to be in our best interests by our Compensation Committee. We estimate that currently approximately 100 persons are eligible to receive awards under the 2019 Plan.
Vesting. Any award (or portion thereof) made under the 2019 Plan will have a minimum vesting period of one year from the grant date, provided, however, that awards (including unrestricted Shares) with respect to 5% of the total Shares authorized to be issued under the 2019 Plan may have a vesting period for less than one year.
Types of Awards Available for Grant under the 2019 Plan
Restricted Shares and Restricted Share Units. The 2019 Plan permits the granting of restricted shares and restricted share units. Restricted shares are Shares granted subject to forfeiture if the grantee’s service with the Trust is terminated or specified holding periods and/or performance targets are not met. Restricted share units are substantially similar to restricted shares but result in the issuance of Shares upon meeting specified holding periods and/or performance targets, rather than the issuance of the Shares in advance. Restricted shares and restricted share units granted under the 2019 Plan may not be sold, transferred, pledged
or assigned prior to meeting the specified holding periods and/or performance targets. The Compensation Committee determines the holding periods and/or performance targets and the circumstances under which the holding periods and/or performance targets may be waived, such as upon death, disability, retirement, termination of employment, or change in control.
Performance Awards. The 2019 Plan permits the granting of performance awards, which is an award subject to the attainment of certain performance goals as determined by the Compensation Committee. Settlement of performance awards may be in cash, Shares, other Awards or other property. There may be more than one performance award in existence at any one time and performance periods may differ. Also, performance awards for different participants under the 2019 Plan may have different performance goals or other criteria.
Options. The 2019 Plan permits the granting of options to purchase Shares intended to qualify as incentive options under the Code and also options to purchase Shares that do not qualify as incentive stock options (“non-qualified options”). The exercise price of each option may not be less than 100% of the fair market value of the Shares on the date of grant. In the case of certain 10% shareholders who receive incentive options, the exercise price may not be less than 110% of the fair market value of the Shares on the date of grant. An exception to these requirements is made for any options that we grant in substitution for options held by Trustees, officers, employees and consultants of a company that we acquire. In such a case, the exercise price would be adjusted to preserve the economic value of such holder’s option from his or her former employer.
The term of each option is fixed by the Compensation Committee and may not exceed 10 years from the date of grant. The Compensation Committee determines at what time or times each option may be exercised and the period of time, if any, after death, disability, retirement, or termination of employment during which options may be exercised.
Options may be made exercisable in installments. The exercisability of options may be accelerated by the Compensation Committee, such as upon death, disability, retirement, termination of employment, or change in control (if not assumed or substituted). In general, an optionee may pay the exercise price of an option by cash, certified check, by tendering Shares (which, if acquired from us, have been held by the optionee for at least six months), or by means of a broker-assisted cashless exercise.
Options granted under the 2019 Plan may not be sold, transferred, pledged or assigned other than by will or under applicable laws of descent and distribution. However, we may permit limited transfers of non-qualified options for the benefit of immediate family members of grantees to address estate planning concerns.
Other Awards. The Compensation Committee may also award under the 2019 Plan:
dividend equivalent rights, which are rights entitling the recipient to receive amounts equal to dividends that would have been paid if the recipient had held a specified number of Shares; provided, that no dividends or dividend equivalent rights will provide for crediting or payment on any awards or portion of an award that is not vested; further, provided, that dividend equivalent rights may not be granted relating to Shares subject to an option or share appreciation right;
share appreciation rights, which are nontransferable rights to receive a number of Shares or, in the discretion of the Compensation Committee, an amount in cash or a combination of Shares and cash, based on the increase in the fair market value of the Shares underlying the right over the market value of such Shares on the date of grant (or over an amount greater than the grant date fair market value, if the Compensation Committee so determines) during a stated period specified by the Compensation Committee not to exceed 10 years from the date of grant; and
unrestricted Shares, which are Shares granted without restrictions.
Business Criteria. The Compensation Committee may use one or more business criteria, on a consolidated basis, and/or with respect to specified subsidiaries or business units (except with respect to the total shareholder return and earnings per share criteria), in establishing performance goals for awards including without limitation:
total shareholder return;
net income;
earnings per share;
funds from operations;
funds from operations per share;
return on equity;
return on assets;
return on invested capital;
increase in the market price of Shares or other securities;
revenues;
net operating income;
comparable center net operating income;
operating margin (operating income divided by revenues);
earnings before interest expense, taxes, depreciation and amortization (EBITDA) or adjusted EBITDA;
the performance of the Trust in any one or more of the items mentioned in the clauses above in comparison to the average performance of the companies used in a self-constructed peer group for measuring performance under an award; and
the performance of the Trust in any one or more of the items mentioned in the clauses above in comparison to a budget or target for measuring performance under an award.
Termination of Service(other than Change in Control)
Except as set forth in the applicable award agreement, in the event of a participant terminates service, all option awards will be treated as follows:
Upon a participant’s termination of service for “cause” (as defined in the 2019 Plan), all unexercised options, whether vested or unvested, will be forfeited and cancelled as of the date of the termination of service.
Upon a participant’s termination of service for any reason other than death, “disability” (as defined in the 2019 Plan) or “retirement” (as defined in the 2019 Plan), any unvested option will be forfeited and any vested option or unexercised portion thereof will terminated three (3) months after the date of such termination of service, but in no event later than the date of expiration of such option.
Upon a participant’s termination of service due to retirement, any unvested option will be forfeited and any vested option or unexercised portion thereof will continue in accordance with its terms and will expire upon its normal date of expiration, provided, that an incentive stock option will cease to be an incentive stock option upon the expiration of three (3) months from the date of the participant’s retirement and will be a non-qualified stock option.
Upon a participant’s termination of service due to disability, the option will become fully vested and will continue in accordance with its terms and will expire upon its normal date of expiration, provided, that an incentive stock option will cease to be an incentive stock option upon the expiration of twelve (12) months form the date of the participant’s disability and will be a non-qualified stock option.
Upon a participant’s termination of service due to death, the will become fully vested and will continue in accordance with its terms and will expires upon its normal expiration date, provided, that an incentive stock option will cease to be an incentive stock option upon the expiration of twelve (12) months from the date of the participant’s death and will be a non-qualified stock option.
Except as set forth in the applicable award agreement, in the event of a participant’s termination of service, all restricted shares and restricted share units will be treated as follows:
Upon a termination of service for any reason other than death, disability or retirement, all restricted shares or restricted share units held by such participant that have not vested or with respect to which all applicable restrictions and conditions have not lapsed, will immediately be deemed forfeited.
Upon a termination of service for death or disability, all restricted shares or restricted share units will be fully vested.
Upon a termination of service due to retirement, all restricted shares or restricted share units will be forfeited.
Except as set forth in the applicable award agreement, in the event of a participant’s termination of service:
With respect to share appreciation rights, the Compensation Committee will determine at the grant date of thereafter, the time or times at which share appreciation rights will cease to be or become exercisable following a termination of service or upon other conditions.
With respect to dividend equivalent rights, except as set forth in the applicable award agreement, a participant’s rights in all dividend equivalent rights will automatically terminate upon a participant’s termination of service for any reason.
With respect to performance awards, the Award Agreement will specify the circumstances in which such performance awards will be paid or forfeited in the event of a termination of service prior to the end of the performance period or the settlement of such performance awards.
Effect of Change in Control. The occurrence of a change in control will not automatically cause outstanding awards granted under the 2019 Plan to vest. If outstanding awards are not assumed or substituted, such awards will vest upon a change in control. Further, to the extent outstanding awards are assumed or substituted, if a grantee’s services is terminated without cause or good reason within one year following a change in control, such outstanding awards will vest.
Adjustments for Stock Dividends and Similar Events. The number of Shares subject to outstanding awards, the Shares Available for Issuance, the exercise price of each outstanding option or stock appreciation right and other terms and conditions of outstanding awards will be subject to adjustment in the event of any recapitalization, reclassification, share split, reverse split, combination of shares, share dividend or other distribution payable in capital stock, or other increase or decrease in such Shares effected without receipt of consideration by the Trust.
Expiration Date and Amendment or Termination of the Plan. The Board of Trustees may terminate or amend the 2019 Plan at any time and for any reason. However, no amendment may adversely impair the rights of grantees with respect to outstanding
awards. Further, unless terminated earlier, the 2019 Plan will terminate 10 years after its effective date. No amendment to the 2019 Plan may modify the 2019 Plan without shareholder approval to the extent such approval is required by applicable law or stock exchange requirements.
U.S. Federal Income Tax Consequences
Restricted Shares. A grantee who is awarded restricted shares will not recognize any taxable income for U.S. federal income tax purposes in the year of the award, provided that the Shares are subject to restrictions (that is, the restricted shares are nontransferable and subject to a substantial risk of forfeiture). However, the grantee may elect under Section 83(b) of the Code to recognize compensation income (which is ordinary income) in the year of the award in an amount equal to the fair market value of the Shares on the date of the award (less the purchase price, if any), determined without regard to the restrictions. If the grantee does not make such a Section 83(b) election, the fair market value of the Shares on the date the restrictions lapse (less the purchase price, if any) will be treated as compensation income to the grantee and will be taxable in the year the restrictions lapse and dividends or distributions that are paid while the Shares are subject to restrictions will be subject to withholding taxes. The Trust will generally be entitled to a compensation expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
Restricted Share Units. There are no immediate tax consequences of receiving or vesting in an award of restricted share units under the 2019 Plan; however, restricted share units are subject to the Federal Insurance Contribution Act tax upon vesting (based on the fair market value of the Shares on the vesting date). A grantee who is awarded restricted share units will recognize ordinary income upon receiving Shares under the award in an amount equal to the fair market value of the Shares at the time of delivery. The Trust will generally be entitled to a compensation expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
Incentive Stock Options. The grant of an incentive stock option will not be a taxable event for the grantee or for the employer. A grantee will not recognize taxable income upon exercise of an incentive option (except that the alternative minimum tax may apply), and any gain realized upon a disposition of Shares received pursuant to the exercise of an incentive option will be taxed as long-term capital gain if the grantee holds the Shares for at least two years after the date of grant and for one year after the date of exercise (the “holding period requirement”). The employer will not be entitled to any compensation expense deduction with respect to the exercise of an incentive option, except as discussed below.
For the exercise of an option to qualify for the foregoing tax treatment, the grant must be made by the employee’s employer or a parent or subsidiary of the employer. The employee must remain employed from the date the option is granted through a date within three months before the date of exercise of the option. If a grantee sells or otherwise disposes of the Shares acquired without satisfying the holding period requirement (known as a “disqualifying disposition”), the grantee will recognize ordinary income upon the disposition of the Shares in an amount generally equal to the excess of the fair market value of the Shares at the time the option was exercised over the option exercise price (but not in excess of the gain realized on the sale). The balance of the realized gain, if any, will be capital gain. The employer will generally be allowed a compensation expense deduction to the extent that the grantee recognizes ordinary income.
Non-Qualified Options. The grant of an option will not be a taxable event for the grantee or for us. Upon exercising a non-qualified option, a grantee will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the Shares on the date of exercise. Upon a subsequent sale or exchange of Shares acquired pursuant to the exercise of a non-qualified option, the grantee will have taxable capital gain or loss, measured by the difference between the amount realized on the disposition and the tax basis of the Shares (generally, the amount paid for the Shares plus the amount treated as ordinary income at the time the option was exercised). The Trust will generally be entitled to a compensation expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
Dividend Equivalent Rights. Participants who receive dividend equivalent rights will be required to recognize ordinary income in an amount equal to the amount paid to the grantee pursuant to the award. The Trust will generally be entitled to a compensation expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
Share Appreciation Rights. There are no immediate tax consequences of receiving an award of share appreciation rights under the 2019 Plan. Upon exercising a share appreciation right, a grantee will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the Shares on the date of exercise. The Trust will generally be entitled to a compensation expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
Unrestricted Shares. Participants who are awarded unrestricted Shares will be required to recognize ordinary income in an amount equal to the fair market value of the Shares on the date of the award, reduced by the amount, if any, paid for such Shares. The Trust will generally be entitled to a compensation expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
Registration with the SEC
If our shareholders approve the 2019 Plan, we intend to file a registration statement on Form S-8 covering the offering of the Shares Available for Issuance under the 2019 Plan.
New Plan Benefits
Awards under the 2019 Plan will be made at the discretion of the Compensation Committee. Accordingly, we cannot currently determine the amount of awards that will be made under the 2019 Plan. We anticipate that the Compensation Committee will utilize the 2019 Plan to continue to grant long-term equity incentive compensation to employees and equity awards to trustees similar to the awards described in this proxy statement.
Equity Compensation Plan Information
The following table sets forth information regarding our equity compensation plans as of December 31, 2018:
| | | | | | | | | | (A) | | (B) | | (C) | Plan Category | | Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
| | Weighted-average
exercise price of
outstanding options,
warrants and rights
| | Number of securities
remaining available for
future issuances under
equity compensation plans
(excluding securities
reflected in column (A))
| Equity compensation plans approved by security holders | | — | | $— | | 934,127 | Equity compensation plans not approved by security holders | | — | | — | | 5,366,319 | Total | | — | | $— | | 6,300,446 | | | | | | | |
Appendix A.
The Board recommends that the shareholders vote FOR the approval of the 2019 Omnibus Long-Term Incentive Plan.
Proposed Bylaw Amendment.
Vote Required Approval of the 2019 Plan requires theThe affirmative vote of holders of a majority of the votes cast at the annual meeting, provided thatAnnual Meeting will be necessary approve the total votes cast on the proposal represents more than 50% of the outstanding Shares entitled to vote on the proposal. Accordingly, a broker non-vote will have the same effect as a vote against the proposal, unless holders of more than 50% of the outstanding Shares entitled to vote on the proposal cast votes (in which case,Proposed Bylaw Amendment. Abstentions and broker non-votes will not have anno effect on the resultoutcome of the vote). In accordance with NYSE regulations, an abstention will be counted as a vote cast for purposes of the proposal and will have the same effect as a vote against the proposal.vote.
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Section 16(a) Beneficial Ownership Reporting ComplianceDELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Exchange Act requires the Trust’s executive officers and Trustees and persons who beneficially own more than 10% of a registered class of the Trust’s equity securities (“insiders”) to file reports with the SEC regarding their pecuniary interest in any of the Trust’s equity securities and any changes thereto and to furnish copies of these reports to the Trust. Based on the Trust’s review of the insiders’ forms furnished to the Trust or filed with the SEC and representations made by the Trustees and executive officers of the Trust, no insider failed to file on a timely basis a Section 16(a) report in 2018, except that Mr. Pashcow filed2021, except: Ms. Ohlberg was late in filing a late Form 4 on May 29, 2018March 18, 2021 to report the disposition of common shares of beneficial ownershipShares on May 24, 2018, Ms. Clark filed a late Form 4 on June 12, 2018 to report the acquisition of common shares of beneficial ownership on June 4, 2018, Mr. Gershenson filed a late Form 4 on July 10, 2018 to report the disposition of common shares of beneficial ownership on July 1, 2018 and Mr. Merk filed a late Form 3 on November 20, 2018 reporting his initial statement of beneficial ownership of securities after becoming an executive officer on April 20, 2018.March 2, 2021. Cost of Proxy SolicitationCOST OF PROXY SOLICITATION
The cost of preparing, assembling and mailing this proxy statement and all other costs in connection with this solicitation of proxies for the annual meeting will be paid by the Trust. The Trust will request banks, brokers and other nominees to send the proxy materials to, and to obtain proxies from, the beneficial owners and will reimburse such record holders for their reasonable expenses in doing so. In addition, the Trustees,trustees, officers and other employees of the Trust may solicit proxies by mail, telephone, electronically or in person, but they will not receive any additional compensation for such work. Presentation of Shareholder Proposals and Nominations at 2020 Annual MeetingPRESENTATION OF SHAREHOLDER PROPOSALS AND NOMINATIONS AT 2023 ANNUAL MEETING
Any shareholder proposal intended to be included in the Trust’s proxy statement and form of proxy for the 20202023 annual meeting (pursuant to Rule 14a-8 of the Exchange Act) must be received by the Trust at RPT Realty, Attention: Secretary, 31500 Northwestern Highway,19 W 44th Street, 10th Floor, Suite 300, Farmington Hills, Michigan 483341002, New York, New York 10036 by the close of business on November 19, 201918, 2022 and must otherwise be in compliance with the requirements of the SEC’s proxy rules. Any Trustee nomination or shareholder proposal of other business intended to be presented for consideration at the 20202023 annual meeting, but not intended to be considered for inclusion in the Trust’s proxy statement and form of proxy relating to such meeting (pursuant to the Trust's Bylaws), must be received by the Trust at the address stated above between January 30, 202028, 2023 and the close of business on February 29, 202027, 2023 to be considered timely. However, if the 20202023 annual meeting occurs more than 30 days before or 60 days after April 29, 2020,28, 2023, the Trust must receive nominations or proposals (A)(1) not later than the close of business on the later of the 60th day prior to the date of the 20202023 annual meeting or the 10th day following the day on which public announcement is made by the Trust of the date of the 20202023 annual meeting and (B)(2) not earlier than the 90th day prior to the 20202023 annual meeting. Such nominations or proposals must also be in compliance with the Bylaws. To comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Trust’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than February 27, 2023. HouseholdingHOUSEHOLDING
The Trust may elect to send a single copy of the Notice of Internet Availability of Proxy Materials or its 2021 annual report and this proxy statement, as applicable, to any household at which two or more shareholders reside, unless one of the shareholders at such address notifies the Trust that he or she desires to receive individual copies. This “householding” practice reduces the Trust’s printing and postage costs. Shareholders may request to discontinue or re-start householding, or to request a separate copy of the 20182021 annual report or 20192022 proxy statement, as follows: Shareholders owning Shares through a bank, broker or other holder of record should contact such record holder directly; and
Shareholders of record should contact the Trust at (248) 350-9900 or at Investor Relations, RPT Realty, 19 W 44th St. 10th Floor, Ste 1002, New York, New York 10036. The Trust will promptly deliver such materials upon request.
We urge you to vote promptly to ensure that your Shares are represented at the annual meeting.
(1)
| Shareholders owning Shares through a bank, broker or other holder of record should contact such record holder directly; and |
(2)
| Shareholders of record should contact the Trust at (212) 221-1261 or at Investor Relations, RPT Realty, 19 W 44th Street, 10th Floor, Suite 1002, New York, New York 10036. The Trust will promptly deliver such materials upon request. |
| | By Order of the Board of Trustees, | | Brian L. Harper | President and Chief Executive Officer | March 18, 201961
|
TABLE OF CONTENTS
PROPOSED BYLAW AMENDMENT
59
2018 Annual Report
The annual report of the Trust for the year ended December 31, 2018, including the financial statements for the three years ended December 31, 2018 audited by Grant Thornton, is being furnished with this proxy statement. If you did not receive a copy of such annual report, you can obtain a copy without charge at the Trust’s website, www.rptrealty.com, or by contacting the Trust at (248) 350-9900 or Investor Relations, RPT Realty, 19 W 44th St. 10th Floor, Ste 1002, New York, New York 10036.
Appendix A
RPT REALTY
2019 OMNIBUS LONG-TERM INCENTIVE PLAN
RPT Realty, a Maryland real estate investment trust (the “Trust”), sets forth herein the terms of its 2019 Omnibus Long-Term Incentive Plan (the “Plan”), as follows:
The Plan is intended to enhance the ability of the Trust, RPTI, RPTLP (as defined below) and the Subsidiaries and Affiliates of each of them to attract and retain highly qualified Trustees, officers, key employees and other persons and to motivate such persons to serve the Trust, RPTI, RPTLP, and the Subsidiaries of each of them and to improve the business results and earnings of the Trust and RPTLP, by providing to such persons an opportunity to acquire or increase a direct proprietary interest in the operations and future success of the Trust. To this end, the Plan provides for the grant of options, share appreciation rights, restricted shares, restricted share units, unrestricted shares and dividend equivalent rights. Any of these awards may, but need not, be made as performance incentives to reward attainment of performance goals in accordance with the terms hereof. Share options granted under the Plan may be incentive stock options or non-qualified options, as provided herein. The Plan shall replace the Ramco-Gershenson Properties Trust 2012 Omnibus Long-Term Incentive Plan (the “Predecessor Plan”) and as of the Effective Date no further grants of awards shall be made under the Predecessor Plan or the Ramco-Gershenson Properties Trust Inducement Incentive Plan.
For purposes of interpreting the Plan and related documents (including Award Agreements), the following definitions shall apply:
2.1 “Affiliate”means a person or entity which controls, is controlled by, or is under common control with the Trust, RPTI or RPTLP, as the case may be.
2.2 “Award”means a grant of an Option, Share Appreciation Right, Restricted Shares, Restricted Share Units, Unrestricted Shares, Dividend Equivalent Rights or cash-based award under the Plan.
2.3 “Award Agreement”means a written or electronic agreement or other instrument that evidences and sets out the terms and conditions of an Award.
2.4 “Benefit Arrangement”shall have the meaning set forth in Section 14 hereof.
2.5 “Board”means the Board of Trustees of the Trust.
2.6 “Cause”means, unless otherwise provided in an applicable written agreement with the Trust, RPTI, RPTLP or a Subsidiary or Affiliate of any of them, (i) actual dishonesty intended to result in substantial personal enrichment at the expense of the Trust or of any subsidiary of the Trust, (ii) the conviction of a felony, or (iii) repeated willful and deliberate failure or refusal to perform the duties normally associated with a Participant’s position which is not remedied in a reasonable period of time after receipt of written notice from the Trust.
2.7 “Change in Control” means:
(a)On or after the Effective Date of this Plan, any person (which, for all purposes hereof, shall include, without limitation, an individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate and a trustee, executor, administrator or other legal representative) (a “Person”) or any group of two or more Persons acting in concert becomes the beneficial owner, directly or indirectly, of securities of the Trust representing, or acquires the right to control or direct, or to acquire through the conversion of securities or the exercise of warrants or other rights to acquire securities, 40% or more of the combined voting power of the Trust's then outstanding securities; provided that for the purposes of this provision (A) “voting power” means the right to vote for the election of trustees, and (B) any determination of percentage of combined voting power shall be made on the basis that (x) all securities beneficially owned by the Person or group or over which control or direction is exercised by the Person or group which are convertible into securities carrying voting rights have been converted (whether or not then convertible) and all options, warrants or other rights which may be exercised to acquire securities beneficially owned by the Person or group or over which control or direction is exercised by the Person or group have been exercised (whether or not then exercisable), and (y) no such convertible securities have been converted by any other Person and no such options, warrants or other rights have been exercised by any other Person; or
(b)A reorganization, merger, consolidation, combination, corporate restructuring or similar transaction (an “Event”), in each case, in respect of which the beneficial owners of the outstanding Trust voting securities immediately prior to such Event do not, following such Event, beneficially own, directly or indirectly, more than 60% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of trustees of the Trust and any resulting parent entity of the Trust in substantially the same proportions as their ownership, immediately prior to such Event, of the outstanding Trust voting securities; or
(c)An Event involving the Trust as a result of which 40% or more of the members of the board of trustees of the parent entity of the Trust or the Trust are not persons who were members of the Board immediately prior to the earlier of (x) the Event, (y) execution of an agreement the consummation of which would result in the Event, or (z) announcement by the Trust of an intention to effect the Event.
Notwithstanding the preceding, to the extent “Change in Control” is a payment trigger, and not merely a vesting trigger, for any 409A Award, “Change in Control” means a change in the ownership or effective control of the Trust, or a change in the ownership of a substantial portion of the assets of the Trust, as described in Treas. Reg. Section 1.409A-3(i)(5), but replacing the term “Trust” for the term “corporation” in such regulation.
2.8 “Code”means the Internal Revenue Code of 1986, as now in effect or as hereafter amended, and the rules and regulations promulgated thereunder.
2.9 “Committee”means the Compensation Committee of the Board, or, if the Board so elects, a different committee of, and designated from time to time by resolution of, the Board, which shall be constituted as provided in Section 3.1.
2.10 “Disability”means a Participant’s physical or mental condition resulting from any medically determinable physical or mental impairment that renders such Participant incapable of engaging in any substantial gainful employment and that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than 365 days. Notwithstanding the foregoing, a Participant shall not be deemed to be Disabled as a result of any condition that:
(a)Was contracted, suffered, or incurred while such Participant was engaged in, or resulted from such Participant having engaged in, a felonious activity;
(b)Resulted from an intentionally self-inflicted injury or an addiction to drugs, alcohol, or substances which are not administered under the direction of a licensed physician as part of a medical treatment plan; or
(c)Resulted from service in the Armed Forces of the United States for which such Participant received or is receiving a disability benefit or pension from the United States, or from service in the armed forces of any other country irrespective of any disability benefit or pension.
The Disability of a Participant and the date on which a Participant ceases to be employed by reason of Disability shall be determined by the Trust, in accordance with uniform principles consistently applied, on the basis of such evidence as the Committee and the Trust deem necessary and desirable, and its good faith determination shall be conclusive for all purposes of the Plan. The Committee or the Trust shall have the right to require a Participant to submit to an examination by a physician or physicians and to submit to such reexaminations as the Committee or the Trust shall require in order to make a determination concerning the Participant’s physical or mental condition; provided, however, that a Participant may not be required to undergo a medical examination more often than once each 180 days, nor at any time after the normal date of the Participant’s Retirement. If any Participant engages in any occupation or employment (except for rehabilitation as determined by the Committee) for remuneration or profit, which activity would be inconsistent with the finding of Disability, or if the Committee, on the recommendation of the Trust, determines on the basis of a medical examination that a Participant no longer has a Disability, or if a Participant refuses to submit to any medical examination properly requested by the Committee or the Trust, then in any such event, the Participant shall be deemed to have recovered from such Disability. The Committee in its discretion may revise this definition of “Disability” for any grant, except to the extent that the Disability is a payment event under a 409A Award.
2.11 “Dividend Equivalent Right”means a right, granted to a Participant under Section 12 hereof, to receive cash, Shares, other Awards or other property equal in value to dividends paid with respect to a specified number of Shares, or other periodic payments.
2.12 “Effective Date”means the date that the PlanProposal 4 is approved by the shareholders, Article XIV of the Trust, provided that such date is not more than one year after the approval of the Plan by the Board.
2.13 “Exchange Act”means the Securities Exchange Act of 1934, as now in effect or as hereafter amended.
2.14 “Fair Market Value”means the value of a Share, determined as follows: if on the Grant Date or other determination date the Shares are listed on an established national or regional share exchange, is admitted to quotation on the New York Stock Exchange (“NYSE”) or is publicly traded on an established securities market, the Fair Market Value of a Share shallour Bylaws would be the closing price of the Shares on such exchange or in such market (if there is more than one such exchange or market the Committee shall determine the appropriate exchange or market) on the Grant Date or such other determination date (or if there is no such reported closing price, the Fair Market Value shall be the mean between the highest bid and lowest asked prices or between the high and low sale prices on such trading day) or, if no sale of Shares is reported for such trading day, on the next preceding day on which any sale shall have been reported. If the Shares are not listed on such an exchange, quoted on such system or traded on such a market, Fair Market Value shall be the value of the Shares as determined by the Committee in good faith; provided that such valuation with respect to any Award that the Trust intends to be a stock right not providing for the deferral of compensation under Treas. Reg. Section 1.409A-1(b)(5)(i) (Non-Qualified Options) shall be determined by the reasonable application of a reasonable valuation method, as described in Treas. Reg Section 1.409A-1(b)(5)(iv)(B).
2.15 “Family Member”means a person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive relationships, of the Participant, any person sharing the Participant’s household (other than a tenant or employee), a trust in which any one or more of these persons have more than fifty percent of the beneficial interest, a foundation in which any one or more of these persons (or the Participant) control the management of assets, and any other entity in which one or more of these persons (or the Participant) own more than fifty percent of the voting interests.
2.16 “409A Award”means any Award that is treated as a deferral of compensation subject to the requirements of Code Section 409A.
2.17 “Good Reason” shall mean, exceptamended as set forth in a separate agreement between the Trustbelow. Proposed deletions are indicated textually as stricken text and a Participant, the initial existenceproposed additions are indicated textually as bold and underlined text .The Trustees may adopt, alter or repeal any provisions of one or morethese Bylaws and to make new Bylaws; provided, however, that Article II, Sections 2, 10, 12 of the following conditions arising Article III and this Article XIV of these Bylaws shall not be amended without the consent of shareholders These Bylaws may be altered, amended or repealed or new bylaws may be adopted by the Board of Trustees or by a Participant within the one-year period followingvote of a Change in Control, provided that such Participant provides notice to the Trustmajority of the existencevotes cast at a meeting of such condition within 90 days of the initial existence of the condition, the Trust does not remedy the condition within 30 days after receiving notice,shareholders duly called and such Participant actually terminates employment with the Company within 30 days following the Trust’s failure to remedy the condition: (a)A material diminution in a Participant’s base salary in effect immediately before the date of the Change in Control or as increased from time to time thereafter;
(b)A material diminution in a Participant’s authority, duties, or responsibilities;
(c)A material diminution in the authority, duties, or responsibilities of the supervisor to whom a Participant is required to report, including a requirement that a Participant report to a corporate officer or employee instead of reporting directly to the Board;
(d)A material diminution in the budget over which a Participant retains authority;
(e)A material change in the geographic location at which a Participant must perform the services related to his or her position; orquorum is present
(f)Any other action or inaction; provided, however, that constitutes a material breach by the TrustArticle II, Section 2, 10, 12 of any agreement under which a Participant provides services to the Trust.
2.18 “Grant Date”means the date on which the Committee approves an Award or such later date as may be specified by the Committee.
2.19 “Incentive Stock Option”means an “incentive stock option” within the meaningArticle III and this Article XIV of Section 422 of the Code, or the corresponding provision of any subsequently enacted tax statute, as amended from time to time.
2.20 “Non-Qualified Option”means an Option that is not an Incentive Stock Option.
2.21 “Option”means an option to purchase Shares pursuant to the Plan, which may either be an Incentive Stock Option or a Non-Qualified Option.
2.22 “Option Price”means the exercise price for each Share subject to an Option.
2.23 “Other Agreement”shall have the meaning set forth in Section 14hereof.
2.24 “Outside Trustee”means a member of the Board who is not an officer or employee of the Trust, of RPTI, of RPTLP, or of any of their Affiliates.
2.25 “Participant”means a person who receives or holds an Award under the Plan.
2.26 “Performance Award”means an Award made subject to the attainment of performance goals (as described in Section 13) over a performance period of up to 10 years.
2.27 “Plan”means the RPT Realty 2019 Omnibus Long-Term Incentive Plan.
2.28 “Reorganization” means any reorganization, merger or consolidation of the Trust with one or more other entities which does not constitute a Change in Control.
2.29 “Restricted Share”means a Share awarded to a Participant pursuant to Section 10 hereof.
2.30 “Restricted Share Unit”means a bookkeeping entry representing the equivalent of a Share awarded to a Participant pursuant to Section 10 hereof.
2.31 “Retirement”means termination of Service with consent of the Committee on or after age 62, or any other definition established by the Committee, in its discretion, either in any Award Agreement or in writing after the grant of any Award, provided that the definition of Retirement with respect to the timing of payment (and not merely vesting) of any 409A Award cannot be changed after the Award is granted.
2.32 “RPTI”means RPT Realty, Inc., a Michigan corporation.
2.33 “RPTLP”means RPT Realty, L.P., a Delaware limited partnership.
2.34 “SAR Exercise Price”means the per share exercise price of an SAR granted to a Participant under Section 9 hereof.
2.35 “Securities Act”means the Securities Act of 1933, as now in effect or as hereafter amended.
2.36 “Service”means service as a Service Provider to the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them. Unless otherwise stated in the applicable Award Agreement, a Participant’s change in position or dutiesthese Bylaws shall not result in interrupted or terminated Service, so long as such Participant continues to be a Service Provider to the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them. Subject to the preceding sentence, whether a termination of Service shall have occurred for purposes of the Plan shall be determined by the Committee, which determination shall be final, binding and conclusive. With respect to the timing of payment (and not merely vesting) of any 409A Award, whether a termination of Service shall have occurred shall be determined in accordance with the definition of “Separation from Service” under Treas. Reg. Section 1.409(A)-1(h).
2.37 “Service Provider”means an employee, officer or Trustee of the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them, or a consultant or adviser providing services to the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them.
2.38 “Share”or “Shares”means the common shares of beneficial interest of the Trust.
2.39 “Share Appreciation Right”or “SAR”means a right granted to a Participant under Section 9 hereof.
2.40 “Subsidiary”means any “subsidiary corporation” of the Trust, of RPTI or of RPTLP within the meaning of Section 424(f) of the Code.
2.41 “Substitute Awards”means Awards granted upon assumption of, or in substitution for, outstanding awards previously granted by a company or other entity acquired by the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them or with which the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them combines.
2.42 “Ten Percent Shareholder”means an individual who owns more than ten percent (10%) of the total combined voting power of all classes of outstanding shares of the Trust, RPTI, RPTLP or any of their Subsidiaries. In determining share ownership, the attribution rules of Section 424(d) of the Code shall be applied.
2.43 “Termination Date”means the date upon which an Option shall terminate or expire, as set forth in Section 8.3hereof.
2.44 “Trust”means RPT Realty, a Maryland real estate investment trust.
2.45 “Unrestricted Share Award”means an Award pursuant to Section 11 hereof.
Section 3ADMINISTRATION OF THE PLAN
3.1 Committee. The Plan shall be administered by or pursuant to the direction of the Committee. The Committee shall have such powers and authorities related to the administration of the Plan as are consistent with the governing documents of the Trust and applicable law. The Committee shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan, any Award or any Award Agreement and shall have full power and authority to take all such other actions and make all such other determinations not inconsistent with the specific terms and provisions of the Plan that the Committee deems to be necessary or appropriate to the administration of the Plan, any Award or any Award Agreement. Subject to the governing documents of the Trust and applicable law, the Committee may delegate all or any portion of its authority under the Plan to a subcommittee of trustees and/or officers of the Trust for the purposes of determining or administering Awards granted to persons who are not then subject to the reporting requirements of Section 16 of the Exchange Act. The interpretation and construction by the Committee of any provision of the Plan, any Award or any Award Agreement shall be final, binding and conclusive. The Committee shall consist of not less than three (3) members of the Board, which members shall be “Non-Employee Trustees” as defined in Rule 16b-3 under the Exchange Act (or such greater number of members which may be required by said Rule 16b-3) and which members shall qualify as “independent” under any applicable stock exchange rules.
3.2 Terms of Awards. Subject to the other terms and conditions of the Plan, the Committee shall have full and final authority to:
(i)Designate Participants,
(ii)Determine the type or types of Awards to be made to a Participant,
(iii)Determine the number of Shares to be subject to an Award,
(iv)establish the terms and conditions of each Award (including, but not limited to, the exercise price of any Option, the nature and duration of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award or the Shares subject thereto, and any terms or conditions that may be necessary to qualify Options as Incentive Stock Options) or to ensure exemption from or compliance with Code Section 409A,
(v)Prescribe the form of each Award Agreement evidencing an Award, and
(vi)Amend, modify, or supplement the terms of any outstanding Award. Notwithstanding the foregoing, no amendment, modification or supplement of any Award shall,amended without the consent of shareholders.
TABLE OF CONTENTS NON-GAAP RECONCILIATIONS
FUNDS FROM OPERATIONS
(In thousands, except per share data)
(unaudited) | | Net (loss) income | | | $(10,572) | | | $(5,867) | | | $70,264 | | | $(10,474) | | | | Net loss (income) attributable to noncontrolling partner interest | | | 218 | | | 135 | | | (1,625) | | | 241 | | | | Preferred share dividends | | | (1,675) | | | (1,675) | | | (6,701) | | | (6,701) | | | | Net (loss) income available to common shareholders | | | (12,029) | | | (7,407) | | | 61,938 | | | (16,934) | | | | Adjustments: | | | | | | | | | | | | | | | | Rental property depreciation and amortization expense | | | 18,640 | | | 20,061 | | | 71,655 | | | 76,649 | | | | Pro-rata share of real estate depreciation from unconsolidated joint ventures(1) | | | 3,331 | | | 2,146 | | | 8,144 | | | 7,044 | | | | Gain on sale of income producing real estate | | | (13,278) | | | — | | | (88,693) | | | — | | | | Provision for impairment on income producing real estate | | | 17,196 | | | — | | | 17,201 | | | — | | | | FFO available to common shareholders | | | 13,860 | | | 14,800 | | | 70,245 | | | 66,759 | | | | Noncontrolling interest in Operating Partnership(2) | | | (218) | | | (135) | | | — | | | (241) | | | | Preferred share dividends (assuming conversion)(3) | | | — | | | — | | | — | | | — | | | | FFO available to common shareholders and dilutive securities | | | $13,642 | | | $14,665 | | | $70,245 | | | $66,518 | | | | Gain on sale of land | | | (222) | | | (318) | | | (222) | | | (318) | | | | Provision for impairment on land available for development | | | — | | | 598 | | | — | | | 598 | | | | Transaction costs(4) | | | 218 | | | — | | | 607 | | | 186 | | | | Insured expenses, net | | | — | | | — | | | — | | | (2,745) | | | | Loss on extinguishment of debt | | | 8,294 | | | — | | | 8,294 | | | — | | | | Severance expense(5) | | | 33 | | | 290 | | | 62 | | | 506 | | | | Above and below market lease intangible write-offs | | | (65) | | | — | | | (562) | | | (256) | | | | Pro-rata share of transaction costs from unconsolidated joint ventures(1) | | | — | | | — | | | — | | | 407 | | | | Pro-rata share of above and below market lease intangible write-offs from unconsolidated joint ventures(1) | | | (1) | | | (120) | | | (41) | | | (626) | | | | Payment of loan amendment fees(5) | | | — | | | — | | | — | | | 184 | | | | Bond interest proceeds(6) | | | — | | | — | | | — | | | (213) | | | | Operating FFO available to common shareholders and dilutive securities | | | $21,899 | | | $15,115 | | | $78,383 | | | $64,241 | | | | Weighted average common shares | | | 83,618 | | | 80,055 | | | 81,083 | | | 79,998 | | | | Shares issuable upon conversion of Operating Partnership Units (“OP Units”)(2) | | | 1,812 | | | 1,909 | | | — | | | 1,909 | | | | Dilutive effect of restricted stock | | | 1,322 | | | 410 | | | 1,215 | | | 496 | | | | Shares issuable upon conversion of preferred shares(3) | | | — | | | — | | | — | | | — | | | | Weighted average equivalent shares outstanding, diluted | | | 86,752 | | | 82,374 | | | 82,298 | | | 82,403 | | | | FFO available to common shareholders and dilutive securities per share, diluted | | | $0.16 | | | $0.18 | | | $0.85 | | | $0.81 | | | | Operating FFO available to common shareholders and dilutive securities per share, diluted | | | $0.25 | | | $0.18 | | | $0.95 | | | $0.78 | |
(1)
| Amounts noted are included in Earnings from unconsolidated joint ventures. |
(2)
| The total noncontrolling interest reflects OP units convertible on a one-of-one basis into common shares. The Company's net income for the year ended December 31, 2021 (largely driven by gain on sale of real estate), resulted in an income allocation to OP Units which drove an OP Unit ratio of $0.87 (based on 1,876 weighted average OP Units outstanding as of December 31, 2021). In instances when the OP Unit ratio exceeds basic FFO, the OP Units are considered anti-dilutive, and as a result are not included in the calculation of fully diluted FFO and Operating FFO for the twelve months ended December 31, 2021. |
(3)
| 7.25% Series D Cumulative Convertible Perpetual Preferred Shares of Beneficial Interest, $0.01 par (“Series D Preferred Shares”) are paid annual dividends of $6.7 million and are currently convertible into approximately 7.0 million shares of common stock. They are dilutive only when earnings or FFO exceed approximately $0.24 per diluted share per quarter and $0.96 per diluted share per year. The conversion ratio is subject to adjustment |
TABLE OF CONTENTS based upon a number of factors, and such adjustment could affect the Participant, impair the Participant’s rights under such Award, or subject to the requirements of Code Section 409A any Award that was excluded from Code Section 409A coverage upon grant, and no amendment, modification or supplement of any Award that would be treated as repricing under the rulesdilutive impact of the stock exchange or marketSeries D convertible preferred shares on whichFFO and earning per share in future periods. In instances when the Preferred Share ratio exceeds basic FFO, the Preferred Shares are listed or quoted shall be made without approval of the Trust’s shareholders. The Trust may retain the right in an Award Agreement to cause a forfeiture of the gain realized by a Participant on account of actions taken by the Participant in violation or breach of or in conflict with any employment agreement, non-competition agreement, any agreement prohibiting solicitation of employees, tenants or others of the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them or any confidentiality obligation with respect to the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them or otherwise in competition with the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them, to the extent specified in such Award Agreement applicable to the Participant. Furthermore, unless the Committee provides otherwise in the applicable Award Agreement, the Trust may annul an Award if the Participant is an employee of the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of themconsidered anti-dilutive, and is terminated for Cause as defined in the applicable Award Agreement or the Plan, as applicable.
Notwithstanding the foregoing, no amendment or modification may be made to an outstanding Option or SAR which reduces the Option Price or SAR Exercise Price, either by lowering the Option Price or SAR Exercise Price or by canceling the outstanding Option or SAR and granting a replacement or substitute Option or SAR with a lower exercise price, or exchange any outstanding Option or SAR with cash or other awards, in each case, without the approval of Trust’s shareholders, provided, that, appropriate adjustments may be made to outstanding Options and SARs pursuant to Section 16.
3.3 Deferral Arrangement. The Committee may permit or require the deferral of any award payment into a deferred compensation arrangement, subject to compliance with the provisions of Section 17, Code Section 409A, in each case, where applicable, and such other rules and procedures as it may establish, which may include provisions for the payment or crediting of interest or dividend equivalents, including converting such credits into deferred Share equivalents and restricting deferrals to
comply with hardship or unforeseeable emergency distribution rules affecting 401(k) plans and 409A Awards. Notwithstanding the foregoing, no deferral shall be allowed if the deferral opportunity would violate Code Section 409A.
3.4 No Liability. No member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award or Award Agreement.
3.5 Book Entry. Notwithstanding any other provision of this Plan to the contrary, the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them may elect to satisfy any requirement under this Plan for the delivery of Share certificates through the use of book-entry.
3.6 Minimum Vesting. Subject to Section 16.3, any Award (or portion thereof) shall have a minimum vesting period of one year from the Grant Date; provided, however, that Awards (including any Unrestricted Share Award) with respect to 5% of the total Shares authorized to be issued under the Plan pursuant to Section 4 may have a vesting period of less than one year. For the avoidance of doubt, no installment or portion of any Award may vest earlier than one year from the Grant Date.
Section 4SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 16 hereof, the aggregate number of Shares available for issuance under the Plan shall be Three Million Five Hundred Thousand (3,500,000) plus the number of Shares that become available under the Predecessor Plan as a result of any the cancellation, forfeiture or expiration of any award or any award settled in cash in lieu of Shares under such Predecessor Plan that occurs after the Effective Date. Such Three Million Five Hundred Thousand (3,500,000) Shares shall also be the aggregate number of Shares in respect of which Incentive Stock Options may be granted under the Plan. The aggregate number of Shares available under this Section 4 shall be reduced by one Share for every one Share subject to an Award under this Plan. Shares issued or to be issued under the Plan shall be authorized but unissued Shares or issued Shares that have been reacquired by the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them. If any Shares covered by an Award are not purchased or are forfeited, or if an Awardincluded in the calculation of fully diluted FFO and Operating FFO for the three and twelve months ended December 31, 2021 and 2020.
(4)
| For 2021, primarily costs associated with terminated acquisitions. For 2020, costs associated with a terminated acquisition and a terminated disposition. |
(5)
| Amounts noted are included in General and administrative expense. |
(6)
| Amounts noted are included in Other (expense) income, net. |
Operating FFO available to common shareholders and dilutive securities is settled in cash in lieu of Shares or otherwise terminates without delivery of Shares subject thereto, then the number of Shares related to such Award and subject to such forfeiture or termination shall not be counted against the limit set forth above, but shall again be available for making Awards under the Plan. If an Award (other than a Dividend Equivalent Right) is denominated in Shares, the number of Shares covered by such Award, or to which such Award relates, shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan as provided above. Notwithstanding the foregoing, the following Shares shall not be available for future grant: (a) Shares tendered or withheld in paymentnon-GAAP financial measure. A reconciliation of the exercise pricecomponents of an OptionOperating FFO available to common shareholder and (b) Shares withheld by the Trust or otherwise received by the Trust to satisfy tax withholding obligations in connection with an Award. In addition, all Shares covered by a SAR that were issued under the net settlement or net exercise of such SAR shall be counted against the number Shares available for issuance under the Plan and Shares purchased in the open market using Option proceeds shall not be available for future grant under the Plan. The Committee shall have the right to substitute or assume Awards in connection with mergers, reorganizations, separations, or other transactions to which Section 424(a) of the Code or Section 1.409A-1(b)(5)(v)(D) of the Treasury Regulations applies. The number of Shares reserved pursuant to Section 4 may be increased by the corresponding number of Awards assumed and, in the case of a substitution, by the net increase in the number of Shares subject to Awards before and after the substitution.
Section 5 EFFECTIVE DATE, DURATION AND AMENDMENTS
5.1 Effective Date. The Plan shall be effective as of the Effective Date.
5.2 Term. The Plan shall terminate automatically ten (10) years after the Effective Date and may be terminated on any earlier date as provided in Section 5.3. The termination of the Plan shall not affect any Award outstanding on the date of such termination.
5.3 Amendment and Termination of the Plan. The Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to any Shares as to which Awards have not been made. An amendment shall be contingent on approval of the Trust’s shareholdersdilutive securities to the extent stated by the Board, required by applicable law or required by applicable stock exchange listing requirements. In addition, an amendment will be contingent on approval of the Trust’s shareholders if the amendment would: (i) materially increase the benefits accruing to Participants under the Plan, (ii) except as permitted pursuant to the provisions of Section 16, increase the aggregate number of Shares that may be issued under the Plan (including upon exercise of Incentive Stock Options), (iii) modify the requirements as to eligibility for participation in the Plan, or (iv) except as permitted pursuant to the provisions of Section 16, reduce the Option Price of any previously granted Option or the grant price of any previously granted SAR, cancel any previously granted Options or SARs and grant substitute Options or SARs with a lower Option Price than the canceled Options or a lower grant price than the canceled SARs, or exchange any Options or SARs for cash, other awards, or Options or SARs with an Option Price or grant price that is less than the exercise price of the original Options or SARs. No
Awards shall be made after termination of the Plan. No amendment, suspension or termination of the Plan shall (i) without the consent of the Participant, impair rights or obligations under any Award theretofore awarded under the Plan, nor (ii) accelerate any payment under any 409A Award except as otherwise permitted by the regulations under Section 409A of the Code.
Section 6 AWARD ELIGIBILITY AND LIMITATIONS
6.1 Service Providers and Other Persons. Subject to this Section 6, Awards may be made under the Plan to: (i) any Service Provider to the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them, including any Service Provider who is an officer or Trustee of the Trust, RPTI, RPTLP or a Subsidiary or Affiliate of any of them, as the Committee shall determine and designate from time to time, (ii) any Outside Trustee and (iii) any other individual whose participation in the Plan is determined to be in the best interests of the Trust by the Committee.
6.2 Successive Awards and Substitute Awards. An eligible person may receive more than one Award, subject to such restrictions as are provided herein. Notwithstanding Sections 8.1 and 9.1, the Option Price of an Option or the grant price of an SAR that is a Substitute Award may be less than 100% of the Fair Market Value of a Share on the date of grant of the Substitute Award provided that the Option Price or grant price is determined in accordance with the principles of Code Section 424 and the regulations thereunder or the principles of Treasury Reg. Section 1.409A-1(b)(5)(v)(D).
6.3 Limitation on Shares Subject to Awards. During any time when the Trust has a class of equity security registered under Section 12 of the Exchange Act:
(i)The maximum number of Shares subject to Options or SARs that can be awarded under the Plan to any person eligible for an Award under this Section 6 is 500,000 per calendar year; and
(ii)The maximum number of Shares that can be awarded under the Plan, other than pursuant to an Option or SARs, to any person eligible for an Award under this Section 6 is 500,000 per calendar year.
The preceding limitations in this Section 6.3are subject to adjustment as provided in Section 16 hereof.
Section 7 AWARD AGREEMENT
Each Award granted pursuant to the Plan shall be evidenced by an Award Agreement, in such form or forms as the Committee shall from time to time determine. Award Agreements granted from time to time or at the same time need not contain similar provisions but shall be consistent with the terms of the Plan. Each Award Agreement evidencing an Award of Options shall specify whether such Options are intended to be Non-Qualified Options or Incentive Stock Options, and in the absence of such specification such options shall be deemed Non-Qualified Options.
Section 8 TERMS AND CONDITIONS OF OPTIONS
8.1 Option Price. The Option Price of each Option shall be fixed by the Committee and stated in the Award Agreement evidencing such Option. The Option Price of each Option shall be at least the Fair Market Value on the Grant Date of a Share; provided, however, that in the event that a Participant is a Ten Percent Shareholder, the Option Price of an Option granted to such Participant that is intended to be an Incentive Stock Option shall be not less than 110% of the Fair Market Value of a Share on the Grant Date.
8.2 Vesting. Subject to Sections 8.3, 8.4, 8.5 and 16.3hereof, each Option granted under the Plan shall become exercisable at such times and under such conditions (including based on achievement of performance goals and/or future service requirements) as shall be determined by the Committee and stated in the Award Agreement. For purposes of this Section 8.2, fractional numbers of Shares subject to an Option shall be rounded to the next nearest whole number.
8.3 Term. Each Option granted under the Plan shall terminate, and all rights to purchase Shares thereunder shall cease, upon the expiration of ten years from the date such Option is granted, or under such circumstances and on such date prior thereto asmost directly comparable GAAP financial measures is set forth in the Planabove. We present this metric because we believe it is useful for reviewing our comparative operating and financial performance between periods or asto compare our performance to different REITs, though our computation Operating FFO may be fixed by the Committee and stated in the Award Agreement relating to such Option (the “Termination Date”); provided, however, that in the event that the Participant is a Ten Percent Shareholder, an Option granted to such Participant that is intended to be an Incentive Stock Option shall not be exercisable after the expiration of five years from its Grant Date.
8.4 Termination of Service. Unless the Committee otherwise provides in an Award Agreement or in a written agreement with the Participant after the Award Agreement is issued, upon the termination of a Participant’s Service, except to the extent that such termination is due to death, Disability, or Retirement, any Option held by such Participant that has not vested shall immediately be deemed forfeited and any otherwise vested Option or unexercised portion thereof shall terminate three (3) months after the date of such termination of Service, but in no event later than the date of expiration of the Option. If a Participant’s
Service is terminated for Cause, the Option or unexercised portion thereof shall terminate as of the date of such termination. Unless the Committee otherwise provides in an Award Agreement or in a written agreement with the Participant after the Award Agreement is issued, if a Participant’s Service is terminated (i) due to Retirement any Option held by such Participant that has not vested shall immediately be deemed forfeited, subject to the Committee’s discretion to accelerate the vesting of all or part of such Option, and any vested Option or Option that vests upon the Committee’s exercise of its discretion shall continue in accordance with its terms and shall expire upon its normal date of expiration (except that an Incentive Stock Option shall cease to be an Incentive Stock Option upon the expiration of three (3) monthsdiffer from the date of the Participant’s Retirementcomputation utilized by other real estate companies, and thereafter shall be a Non-Qualified Option), (ii) due to Disability, the Option shall become fully vested and shall continue in accordance with its terms and shall expire upon its normal date of expiration (except that an Incentive Stock Option shall cease to be an Incentive Stock Option upon the expiration of twelve (12) months from the termination of the Participant’s service due to Disability and thereafter shall be a Non-Qualified Option) or (iii) due to death, any Option of the deceased Participant shall become fully vested and shall continue in accordance with its terms and shall expire on its normal date of expiration (except that an Incentive Stock Option shall cease to be an Incentive Stock Option upon the expiration of twelve (12) months from the date of the Participant’s death and thereafter shall be a Non-Qualified Option). Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.
8.5 Limitations on Exercise of Option. Notwithstanding any other provision of the Plan, in no event may any Option be exercised, in whole or in part, after the occurrence of an event referred to in Section 16 hereof which results in termination of the Option.
8.6 Method of Exercise. An Option that is exercisable may be exercised by the Participant’s delivery to the Trust of written notice of exercise on any business day, at the Trust’s principal office, on the form specified by the Committee. Such notice shall specify the number of Shares with respect to which the Option is being exercised and, except to the extent provided in Section 8.12.3 or Section 8.12.4, shall be accompanied by payment in full of the Option Price of the Shares for which the Option is being exercised plus the amount (if any) of federal and/or other taxes which the Trust or an Affiliate may, in its judgment, be required to withhold with respect to an Award. The minimum number of Shares with respect to which an Option may be exercised, in whole or in part, at any time shall be the lesser of (i) 100 Shares or such lesser number set forth in the applicable Award Agreement and (ii) the maximum number of Shares available for purchase under the Option at the time of exercise.
8.7 Rights of Holders of Options. A Participant holding or exercising an Option shall have none of the rights of a shareholder (for example, the right to receive cash or dividend payments or distributions attributable to the subject Shares or to direct the voting of the subject Shares) until the Shares covered thereby are fully paid and issued to the Participant. Except as provided in Section 16 hereof, no adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date of such issuance.
8.8 Delivery of Share Certificates. Promptly after the exercise of an Option to purchase Shares by a Participant and the payment in full of the Option Price, unless the Trust shall then have uncertificated Shares, such Participant shall be entitled to the issuance of a Share certificate or certificates evidencing his/her ownership of the Shares purchased upon such exercise.
8.9 Transferability of Options. Except as provided in Section 8.10, during the lifetime of a Participant, only the Participant (or, in the event of legal incapacity or incompetency, the Participant’s guardian or legal representative) may exercise an Option. Except as provided in Section 8.10, no Option shall be assignable or transferable by the Participant to whom it is granted, other than by will or the laws of descent and distribution. Any attempt to transfer an Option in violation of this Plan shall render such Option null and void.
8.10 Family Transfers. If authorized in the applicable Award Agreement, a Participant may transfer, not for value, all or part of an Option which is not an Incentive Stock Option to any Family Members. For the purpose of this Section 8.10, a “not for value” transfer is a transfer which is (i) a gift to a trust for the benefit of the participant and/or one or more Family Members, or (ii) a transfer under a domestic relations order in settlement of marital property rights. Following a transfer under this Section 8.10, any such Option shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer. Subsequent transfers of transferred Options are prohibited except in accordance with this Section 8.10or by will or the laws of descent and distribution. The events of termination of Service of Section 8.4hereof shall continue to be applied with respect to the original Participant, following which the Option shall be exercisable by the transferee only to the extent, and for the periods specified, in Section 8.4.
8.11 Limitations on Incentive Stock Options. An Option shall constitute an Incentive Stock Option only (i) if the Participant granted such Option is an employee of the Trust or any Subsidiary of the Trust; (ii) to the extent specifically provided in the related Award Agreement; and (iii) to the extent that the aggregate Fair Market Value (determined at the time the Option is granted) of the Shares with respect to which all Incentive Stock Options held by such Participant become exercisable for the first time during any calendar year (under the Plan and all other plans of the Participant’s employer and its Affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options into account in the order in which they were granted. Notwithstanding anything to the contrary contained herein, any Option designated as an Incentive Stock Option that fails to meet the requirements of Code Section 422 shall be a Non-Qualified Option.
8.12 Form of Payment.
8.12.1 General Rule. Payment of the Option Price for the Shares purchased pursuant to the exercise of an Option shall be made in cash or in cash equivalents acceptable to the Trust.
8.12.2 Surrender of Shares. To the extent approved by the Committee in its sole discretion, payment of the Option Price for Shares purchased pursuant to the exercise of an Option may be made all or in part through the tender to the Trust of Shares, which Shares, if acquired from the Trust, shall have been held for at least six months at the time of tender and which shall be valued, for purposes of determining the extent to which the Option Price has been paid thereby, at their Fair Market Value on the date of exercise or surrender.
8.12.3 Cashless Exercise. To the extent permitted by law and to the extent permitted by the Committee in its sole discretion, payment of the Option Price for Shares purchased pursuant to the exercise of an Option may be made all or in part by delivery (on a form acceptable to the Committee) of an irrevocable direction to a registered securities broker acceptable to the Trust to sell Shares and to deliver all or part of the sales proceeds to the Trust in payment of the Option Price and any withholding taxes described in Section 18.3.
8.12.4 Other Forms of Payment. To the extent permitted by the Committee in its sole discretion, payment of the Option Price for Shares purchased pursuant to exercise of an Option may be made in any other form that is consistent with applicable laws, regulations and rules.
Section 9 TERMS AND CONDITIONS OF SHARE APPRECIATION RIGHTS
9.1 Right to Payment and Grant Price. An SAR shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one Share on the date of exercise over (B) the grant price of the SAR as determined by the Committee. The Award Agreement for an SAR shall specify the grant price of the SAR, which shall be at least the Fair Market Value of a Share on the Grant Date. SARs may be granted in conjunction with all or part of an Option granted under the Plan or at any subsequent time during the term of such Option, in conjunction with all or part of any other Award or without regard to any Option or other Award.
9.2 Other Terms. The Committee shall determine at the Grant Date or thereafter, the time or times at which and the conditions under which an SAR may be exercised (including based on achievement of performance goals and/or future service requirements), the time or times at which SARs shall cease to be or become exercisable following termination of Service or upon other conditions (provided that no SAR shall be exercisable following the tenth anniversary of its Grant Date), the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which Shares will be delivered or deemed to be delivered to Participants, whether or not an SAR shall be in tandem or in combination with any other Award, and any other terms and conditions of any SAR.
9.3 Transferability of SARs. Unless the Committee otherwise provides in an Award Agreement or any amendment or modification thereof, no SAR may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise than by will or by the laws of descent and distribution. Further, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. Any attempt to transfer a SAR in violation of this Plan shall render such SAR null and void.
Section 10 TERMS AND CONDITIONS OF RESTRICTED SHARES AND RESTRICTED SHARE UNITS
10.1 Grant of Restricted Shares or Restricted Share Units. Awards of Restricted Shares or Restricted Share Units may be made to eligible persons. Restricted Shares or Restricted Share Units may also be referred to as performance shares or performance share units. If so indicated in the Award Agreement at the time of grant, a Participant may vest in more than 100% of the number of Restricted Share Units awarded to the Participant.
10.2 Restrictions. Subject to Section 3.6, at the time an Award of Restricted Shares or Restricted Share Units is made, the Committee may, in its sole discretion, establish a period of time (a “Restricted Period”) applicable to such Restricted Shares or Restricted Share Units, during which a portion of the Shares related to such Award shall become nonforfeitable or vest, on each anniversary of the Grant Date or otherwise, as the Committee may deem appropriate. Each Award of Restricted Shares or Restricted Share Units may be subject to a different Restricted Period. The Committee may, in its sole discretion, at the time a grant of Restricted Shares or Restricted Share Units is made, prescribe restrictions in addition to or other than the expiration of the Restricted Period, including the satisfaction of corporate or individual performance conditions, which may be applicable to
all or any portion of the Restricted Shares or Restricted Share Units in accordance with Section 13.1 and 13.2. Neither Restricted Shares nor Restricted Share Units may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the Restricted Period or prior to the satisfaction of any other restrictions prescribed by the Committee with respect to such Restricted Shares or Restricted Share Units. Each Participant may designate a beneficiary upon his or her death for the Restricted Shares or Restricted Share Units awarded to him or her under the Plan. If a Participant fails to designate a beneficiary, the Participant shall be deemed to have designated his or her estate as his or her beneficiary. Any attempt to transfer an Award of Restricted Shares or Restricted Share Units in violation of this Plan shall render such Award null and void.
10.3 Restricted Shares Certificates. The Trust shall issue, in the name of each Participant to whom Restricted Shares have been granted, Share certificates representing the total number of Restricted Shares granted to the Participant, as soon as reasonably practicable after the Grant Date. The Committee may provide in an Award Agreement that either (i) the Trust shall hold such certificates for the Participant’s benefit until such time as the Restricted Shares are forfeited to the Trust or the restrictions lapse, or (ii) such certificates shall be delivered to the Participant, provided, however, that such certificates shall bear a legend or legends that comply with the applicable securities laws and regulations and makes appropriate reference to the restrictions imposed under the Plan and the Award Agreement.
10.4 Rights of Holders of Restricted Shares. Unless the Committee otherwise provides in an Award Agreement, holders of Restricted Shares shall have the right to vote such Shares and holders of vested Restricted Shares shall have the right to receive any dividends or distributions declared or paid with respect to such Shares. All distributions, if any, received by a Participant with respect to Restricted Shares as a result of any share split, share dividend, combination of shares, or other similar transaction shall be subject to the restrictions applicable to the original Award. If any such dividends or distributions are paid in cash, the right to receive such cash payments shall be subject to the same restrictions on transferability as the Restricted Shares with respect to which they are paid, and shall be accumulated during the Restricted Period and paid or forfeited when the Restricted Shares vest or are forfeited. In no event shall any cash dividend or distribution be paid later than 2½ months after the end of the tax year in which the applicable Restricted Period ends.
10.5 Rights of Holders of Restricted Share Units.
10.5.1 Dividend Equivalent Rights. Unless the Committee otherwise provides in an Award Agreement, holders of Restricted Share Units shall have no rights as shareholders of the Trust including the right to direct the voting of the subject Shares underlying a Restricted Share Unit Award. A holder of a Restricted Share Units shall not have the right to receive Dividend Equivalent Rights to the extent such Restricted Share Units are not vested.
10.5.2 Creditor’s Rights. A holder of Restricted Share Units shall have no rights other than those of a general creditor of the Trust. Restricted Share Units represent an unfunded and unsecured obligation of the Trust, subject to the terms and conditions of the applicable Award Agreement.
10.6 Termination of Service. Unless the Committee otherwise provides in an Award Agreement or in a written agreement with the Participant after the Award Agreement is issued, upon the termination of a Participant’s Service, any Restricted Shares or Restricted Share Units held by such Participant that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited, except to the extent that such termination is due to death, Disability, or Retirement. Further, the Award Agreement may specify that the vested portion of the Award shall continue to be subject to the terms of any applicable transfer or other restriction. Unless the Committee otherwise provides in an Award Agreement or in a written agreement with the Participant after the Award Agreement is issued, if a Participant’s Service is terminated due to (i) death or Disability, any outstanding Award of Restricted Shares or Restricted Share Units shall be fully vested, and the Shares subject to such Awards shall be delivered in accordance with the terms of Section 10.7 below; or (ii) due to Retirement, any outstanding Award of Restricted Shares or Restricted Share Units shall be forfeited, subject to the Committee’s discretion to accelerate all or part of such Award, and the Shares subject to such Awards that are not forfeited shall be delivered in accordance with the terms of Section 10.7 below; provided, however, in the case of any Award relating to Restricted Share Units, the Shares subject to such Award shall be delivered in accordance with their original vesting schedule. Upon forfeiture of any Restricted Shares or Restricted Share Units, a Participant shall have no further rights with respect to such Award, including but not limited to any right to vote Restricted Shares or any right to receive dividends with respect to Restricted Shares or Restricted Share Units.
10.7 Delivery of Shares. Except as otherwise specified in an Award Agreement with respect to a particular Award of Restricted Shares or unless the Trust shall then have uncertificated Shares, within thirty (30) days of the expiration or termination of the Restricted Period, a certificate or certificates representing all Shares relating to such Award which have not been forfeited shall be delivered to the Participant or to the Participant’s beneficiary or estate, as the case may be. Except as otherwise specified with respect to a particular Award of Restricted Share Units or unless the Trust shall then have uncertificated Shares, within thirty (30) days of the satisfaction of the vesting criterion applicable to such Award, a certificate or certificates representing all Shares relating to such Award which have vested shall be issued or transferred to the Participant.
Section 11 TERMS AND CONDITIONS OF UNRESTRICTED SHARE AWARDS
The Committee may, in its sole discretion, grant (or sell at such purchase price determined by the Committee) an Unrestricted Share Award to any Participant pursuant to which such Participant may receive Shares free of any restrictions (“Unrestricted Shares”) under the Plan. Unrestricted Share Awards may be granted or sold as described in the preceding sentence in respect of past services and other valid consideration, or in lieu of, or in addition to, any cash compensation due to such Participant.
Section 12 TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS
12.1 Dividend Equivalent Rights. A Dividend Equivalent Right is an Award entitling the recipient to receive credits based on cash distributions that would have been paid on the Shares specified in the Dividend Equivalent Right (or other Award to which it relates) if such Shares had been issued to and held by the recipient. A Dividend Equivalent Right may be granted hereunder to any Participant, provided that any Award of Dividend Equivalent Rights shall comply with, or be exempt from, Code Section 409A. Dividend Equivalent Rightstherefore, may not be granted hereunder relatingcomparable.
SAME PROPERTY NET OPERATING INCOME (NOI)
(amounts in thousands)
(unaudited) Reconciliation of net (loss) income available to Shares which are subjectcommon shareholders to Options or Share Appreciation Rights. Notwithstanding any other provisionSame Property Net Operating Income (NOI) | | Net (loss) income available to common shareholders | | | $(12,029) | | | $(7,407) | | | $61,938 | | | $(16,934) | | | | Preferred share dividends | | | 1,675 | | | 1,675 | | | 6,701 | | | 6,701 | | | | Net (loss) income attributable to noncontrolling partner interest | | | (218) | | | (135) | | | 1,625 | | | (241) | | | | Income (benefit) tax provision | | | (41) | | | 12 | | | (88) | | | (25) | | | | Interest expense | | | 9,017 | | | 9,826 | | | 37,025 | | | 39,317 | | | | Loss on extinguishment of debt | | | 8,294 | | | — | | | 8,294 | | | — | | | | Earnings from unconsolidated joint ventures | | | (1,048) | | | (76) | | | (3,995) | | | (1,590) | | | | Gain on sale of real estate | | | (13,500) | | | (318) | | | (88,915) | | | (318) | | | | Insured expenses, net | | | — | | | — | | | — | | | (2,745) | | | | Other expense (income), net | | | 13 | | | 108 | | | 236 | | | (214) | | | | Management and other fee income | | | (714) | | | (478) | | | (1,986) | | | (1,395) | | | | Depreciation and amortization | | | 18,791 | | | 20,210 | | | 72,254 | | | 77,213 | | | | Transaction costs | | | 218 | | | — | | | 607 | | | 186 | | | | General and administrative expenses | | | 10,030 | | | 6,822 | | | 32,328 | | | 25,801 | | | | Provision for impairment | | | 17,196 | | | 598 | | | 17,201 | | | 598 | | | | Pro-rata share of NOI from R2G Venture LLC(1) | | | 4,372 | | | 1,999 | | | 11,876 | | | 8,155 | | | | Pro-rata share of NOI from RGMZ Venture REIT LLC(2) | | | 144 | | | — | | | 308 | | | — | | | | Lease termination fees | | | (264) | | | (183) | | | (845) | | | (368) | | | | Amortization of lease inducements | | | 214 | | | 212 | | | 848 | | | 766 | | | | Amortization of acquired above and below market lease intangibles, net | | | (523) | | | (655) | | | (2,662) | | | (2,903) | | | | Straight-line ground rent expense | | | 76 | | | 76 | | | 306 | | | 306 | | | | Straight-line rental income | | | (410) | | | 8 | | | (2,412) | | | 2,026 | | | | NOI at Pro-Rata | | | 41,293 | | | 32,294 | | | 150,644 | | | 134,336 | | | | NOI from Other Investments | | | (5,112) | | | 1,338 | | | (8,868) | | | 2,635 | | | | Non-RPT NOI from RGMZ Venture REIT LLC(3) | | | 1,635 | | | — | | | 3,884 | | | — | | | | Same Property NOI | | | $37,816 | | | $33,632 | | | $145,660 | | | $136,971 | |
(1)
| Represents 51.5% of the NOI from the properties owned by R2G Venture LLC for all periods presented. |
(2)
| Represents 6.4% of the NOI from the properties owned by RGMZ Venture REIT LLC after March 4, 2021. |
(3)
| Represents 93.6% of the properties owned by RGMZ Venture REIT LLC after March 4, 2021. |
Same property NOI is a non-GAAP financial measure. A reconciliation of the Plan, no dividend or Dividend Equivalent Right shall provide for any crediting or payment on any Award or portioncomponents of an Award that is not vested. The terms and conditions of Dividend Equivalent Rights shall be specified in the Award. Dividend Equivalent Rights may be settled in cash or Shares or a combination thereof, in a single installment or installments, all determined in the sole discretion of the Committee. A Dividend Equivalent Right granted as a component of another Award may provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other Award, unless such settlement would cause an Award that is otherwise exempt from Code Section 409A to become subject to and not in compliance with Code Section 409A (e.g., in the case of a Non-Qualified Option). Such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award. A Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions different from such other Award. 12.2 Termination of Service. Except as may otherwise be provided by the Committee either in the Award Agreement or in a written agreement with the Participant after the Award Agreement is issued, a Participant’s rights in all Dividend Equivalent Rights shall automatically terminate upon the Participant’s termination of Service for any reason.
Section 13 TERMS AND CONDITIONS OF PERFORMANCE AWARDS
13.1 Performance Conditions. The right of a Participant to exercise or receive a grant or settlement of any Performance Award, and the timing thereof, may be subject to such corporate or individual performance conditions as may be specified by the Committee. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to reduce the amounts payable under any Award subject to performance conditions.
13.2 Performance Awards. If andSame property NOI to the extent that the Committee determines to grant a Performance Award to a Participant, the grant, exercise and/or settlement of such Performance Award may be contingent upon achievement of pre-established performance goals and other termsmost directly comparable GAAP financial measures is set forth inabove. We present this Section 13.2.
13.2.1 Performance Goals Generally. The performance goals for such Performance Awards may consist of one or more business criteria and a targeted level or levels of performance with respect to each of such criteria, as specifiedmetric because it is considered by the Committee consistent with this Section 13.2. Performance goals may be objective and may require that the level or levels of performance targeted by the Committee result in the achievement of performance goals that are “substantially uncertain.” The Committee may determine that such Performance Awards shall be granted, exercised and/or settled upon achievement of any one performance goal or that two or more of the performance goals must be achieved as a condition to grant, exercise and/or settlement of such Performance Awards. Performance goals may differ for Performance Awards granted to any one Participant or to different Participants.
13.2.2 Business Criteria. One or more of the business criteria for the Trust, on a consolidated basis, and/or specified Subsidiaries or business units of the Trust or the Trust (except with respect to the total shareholder return and earnings per share criteria), may be used by the Committee in establishing performance goals for such Performance Awards, including without limitation: (1) total shareholder return (share price appreciation plus dividends), (2) net income, (3) earnings per share, (4) funds from operations, (5) funds from operations per share, (6) return on equity, (7) return on assets, (8) return on invested capital, (9) increase in the market price of Shares or other securities, (10) revenues, (11) net operating income, (12) comparable center net operating income, (13) operating margin (operating income divided by revenues), (14) earnings before interest, taxes, depreciation and amortization (EBITDA) or adjusted EBITDA, (15) the performance of the Trust in any one or more of the items mentioned in clauses (1) through (14) in comparison to the average performance of the companies used in a self-constructed peer group for measuring performance under an Award, or (16) the performance of the Trust in any one or more of the items mentioned
in clauses (1) through (14) in comparison to a budget or target for measuring performance under an Award. Business criteria may be measured on an absolute basis or on a relative basis (i.e., performance relative to peer companies) and on a GAAP or non-GAAP basis.
13.2.3 Timing For Establishing Performance Goals. Performance goals shall be established, in writing, not later than 90 days or such later time after the beginning of any performance period applicable to such Performance Awards.
13.2.4 Settlement of Performance Awards; Other Terms. Settlement of such Performance Awards shall be in cash, Shares, other Awards or other property, in the discretion of the Committee. The Committee may, in its discretion, reduce the amount of a settlement otherwise to be made in connection with such Performance Awards. The Committee shall specify in the Award Agreement the circumstances in which such Performance Awards shall be paid or forfeited in the event of termination of Service by the Participant prior to the end of a performance period or settlement of Performance Awards. Notwithstanding the foregoing, unless the Committee otherwise provides in an Award Agreement, if a Participant’s service is terminated (i) for any reason other than death, Disability or Retirement, any unvested and unearned portion of such Award shall be immediately forfeited; (ii) due to a Participant’s death or Disability, the Award shall be fully vested and settled at the end of the applicable performance period based on and if required by the Committee in its discretion following, certification by the Committee regarding the achievement of the performance goals applicable to such Award; and (iii) due to a Participant’s Retirement, any unvested and unearned portion of such Award shall be immediately forfeited subject to the Committee’s discretion to accelerate the vesting of such Award based on the actual achievement of any applicable performance goals.
13.3 Committee Determinations. All determinations as to the establishment of performance goals, the amount of any Performance Award pool or potential individual Performance Awards and as to the achievement of performance goals relating to Performance Awards shall be made by the Committee.
13.4 Dividends or Dividend Equivalent Rights for Performance Awards. Notwithstanding anything to the foregoing, the right to receive dividends, Dividend Equivalent Rights or distributions with respect to a Performance Award shall only be granted to a Participant if and to the extent that the underlying Award is vested and earned by the Participant.
Section 14 PARACHUTE LIMITATIONS.
Notwithstanding any other provision of this Plan or of any other agreement, contract, or understanding heretofore or hereafter entered into by a Participant with the Trust, RPTI, RPTLP, or a Subsidiary or affiliate of any of them, except an agreement, contract, policy or understanding hereafter entered into that expressly modifies or excludes application of this paragraph (an “Other Agreement”), and notwithstanding any formal or informal plan or other arrangement for the direct or indirect provision of compensation to the Participant (including groups or classes of Participants or beneficiaries of which the Participant is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Participant (a “Benefit Arrangement”), if the Participant is a “disqualified individual,” as defined in Section 280G(c) of the Code, any Option, Restricted Shares, Restricted Share Units or Performance Award held by that Participant and any right to receive any payment or other benefit under this Plan shall not become exercisable or vested and shall not be settled (i) to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for the Participant under this Plan, all Other Agreements, and all Benefit Arrangements, would cause any payment or benefit to the Participant under this Plan to be considered a “parachute payment” within the meaning of Section 280G(b)(2) of the Code as then in effect (a “Parachute Payment”) and(ii) if, as a result of receiving a Parachute Payment, the aggregate after-tax amounts received by the Participant from the Trust under this Plan, all Other Agreements, and all Benefit Arrangements would be less than the maximum after-tax amount that could be received by the Participant without causing any such payment or benefit to be considered a Parachute Payment. In the event that the receipt of any such right to exercise, vesting, payment, or benefit under this Plan, in conjunction with all other rights, payments, or benefits to or for the Participant under any Other Agreement or any Benefit Arrangement would cause the Participant to be considered to have received a Parachute Payment under this Plan that would have the effect of decreasing the after-tax amount received by the Participant as described in clause (ii) of the preceding sentence those rights, payments, or benefits under this Plan, any Other Agreements, and any Benefit Arrangements that are to be reduced or eliminated so as to avoid having the payment or benefit to the Participant under this Plan be deemedmanagement to be a Parachute Payment shall be determined inrelevant performance measure of our operations as it includes only the following order and priority: first, there shall be reduced or eliminated any such right, payment or benefit that is excluded from the coverageNOI of Code Section 409A, and then there shall be reduced or eliminated any right, payment or benefit that is subject to Code Section 409A (with the reduction in rights, payments or benefits subject to Code Section 409A occurring in the reverse chronological order in which such rights, payments or benefits would otherwise be or become vested, exercisable or settled).
Section 15 REQUIREMENTS OF LAW
15.1 General. The Trust shall not be required to sell, deliver or cause to be issued any Shares under any Award if the sale or issuance of such Shares would constitute a violation by the Participant, any other individual exercising an Option or receiving the benefit of an Award, or the Trust, RPTI and RPTLP of any provision of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or regulations. If at any time the Trust shall determine, in its discretion, that the listing, registration or qualification of any Shares subject to an Award upon any securities exchange or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase of shares hereunder, no Shares may be issued or sold to the Participant or any other individual exercising an Option pursuant to such Award unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Trust, RPTI and RPTLP, and any delay caused thereby shall in no way affect the date of termination of the Award. Any determination in this connection by the Trust, RPTI and RPTLP shall be final, binding, and conclusive. The Trust may, but shall in no event be obligated to, cause to be registered any securities covered hereby pursuant to the Securities Act. The Trust shall not be obligated to take any affirmative action in order to cause the exercise of an Option or the issuance of Shares pursuant to the Plan to comply with any law or regulation of any governmental authority.
15.2 Rule 16b-3. During any time when the Trust has a class of equity security registered under Section 12 of the Exchange Act, it is the intent of the Trust that Awards pursuant to the Plan and the exercise of Options granted hereunder will qualifycomparable operating properties for the exemption provided by Rule 16b-3 under the Exchange Act. To the extent that any provision of the Plan or action by the Committee does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and deemed advisable by the Committee and shall not affect the validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify this Plan in any respect necessary to satisfy the requirements of, or to take advantage of any features of, the revised exemption or its replacement.reporting period.
Section 16 EFFECT OF CHANGES IN CAPITALIZATION
16.1 Changes in Shares. If the number of outstanding Shares is increased or decreased or the Shares are changed into or exchanged for a different number or kind of shares or other securities of the Trust on account of any recapitalization, reclassification, share split, reverse split, combination of shares, exchange of shares, share dividend or other distribution payable in capital stock, or other increase or decrease in such Shares effected without receipt of consideration by the Trust, occurring after the Effective Date, the number and kinds of Shares for which grants of Options and other Awards may be made under the Plan shall be adjusted proportionately and accordingly by the Trust. In addition, the number and kind of Shares for which Awards are outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of the Participant immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in outstanding Options or SARs shall not change the aggregate Option Price or SAR Exercise Price payable with respect to Shares that are subject to the unexercised portion of an outstanding Option or SAR, as applicable, but shall include a corresponding proportionate adjustment in the Option Price or SAR Exercise Price per Share; provided, however, that all adjustments shall be made in compliance with Code Section 409A or Code Section 422, as applicable. The conversion of any convertible securities of the Trust shall not be treated as an increase in Shares effected without receipt of consideration. Notwithstanding the foregoing, in the event of any distribution to the Trust’s shareholders of securities of any other entity or other assets (including an extraordinary cash dividend but excluding a non-extraordinary dividend payable in cash or in shares of the Trust) without receipt of consideration by the Trust, the Trust may, in such manner as the Trust deems appropriate, adjust (i) the number and kind of Shares subject to outstanding Awards and/or (ii) the exercise price of outstanding Options and Share Appreciation Rights to reflect such distribution.
16.2 Reorganization.
16.2.1 Trust is the Surviving Entity. Subject to Section 16.3hereof, if the Trust shall be the surviving entity in any Reorganization, any then outstanding Option or SAR shall pertain to and apply to the securities to which a holder of the number of Shares subject to such Option or SAR would have been entitled immediately following such Reorganization, with a corresponding proportionate adjustment of the Option Price or SAR Exercise Price per share so that the aggregate Option Price or SAR Exercise Price thereafter shall be the same as the aggregate Option Price or SAR Exercise Price of the Shares remaining subject to the Option or SAR immediately prior to such Reorganization; provided, however, that all adjustments shall be made in compliance with Code Section 409A. Subject to any contrary language in an Award Agreement, any restrictions applicable to such Award shall apply as well to any replacement securities received by the Participant as a result of the Reorganization. In the event of a Reorganization described in the preceding sentence, any outstanding Restricted Share Units shall be adjusted so as to apply to the securities that a holder of the number of Shares subject to the Restricted Share Units would have been entitled to receive immediately following such transaction; provided, however, that all adjustments shall be made in compliance with Code Section 409A.
16.2.2 Trust is not the Surviving Entity. Subject to Section 16.3hereof, if the Trust shall not be the surviving entity in the event of any Reorganization, the Committee in its discretion may provide for the assumption or continuation of any outstanding Options, SARs, Restricted Shares and Restricted Share Units, or for the substitution for such Options, SARs, Restricted Shares and Restricted Share Units of new options, share appreciation rights, restricted shares and restricted shares units relating to the shares of stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number of shares (disregarding any consideration that is not common shares) and option and share appreciation right exercise prices, in which
event the outstanding Options, SARs, Restricted Shares and Restricted Share Units shall continue in the manner and under the terms (assumption or substitution) so provided. Appropriate adjustments shall be made in compliance with Code Section 409A, including the provisions of Treas. Reg. Section 1.409A-1(b)(5)(v)(D) regarding substitutions and assumptions of stock rights by reason of a corporate transaction. Notwithstanding the foregoing, in the event such successor entity (or a parent or subsidiary thereof) refuses to assume or substitute Awards as provided above, pursuant to a Reorganization described in this Section 16.2.2, such nonassumed or nonsubstituted Awards shall have their vesting accelerate as to all shares subject to such Award, with any Performance Awards being deemed to have vested at their target levels.
16.3 Change in Control.
16.3.1 Accelerated Vesting and Payment. Subject to the provisions of Section 16.3.2 below and except as otherwise provided for in an Award Agreement, in the event of a Change in Control in which the successor/acquirer company does not issue Alternative Awards (as defined below) within the meaning of Section 16.3.2, all outstanding Awards shall immediately become vested, with any Performance Awards being deemed to have vested at their target levels. Notwithstanding anything to the contrary contained in this Section 16.3, the treatment of any 409A Award in connection with a Change in Control shall be governed by Section 17 and the requirements of Code Section 409A.
16.3.2 Alternative Awards. Notwithstanding Section 16.3.1, no cancellation, acceleration of exercisability, vesting, cash settlement or other payment shall occur with respect to any Option, Share Appreciation Right, Restricted Share or Restricted Share Unit if the Committee reasonably determines in good faith prior to the occurrence of a Change in Control that such Award shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted award hereinafter called an “Alternative Award”), by a Participant’s employer (or the parent or an affiliate of such employer) immediately following the Change in Control; provided that any such Alternative Award must:
(a)Be based on stock which is traded on an established securities market;
(b)Provide such Participant with rights and entitlements substantially equivalent to or better than the rights, terms and conditions applicable under such award, including, but not limited to, an identical or better exercise or vesting schedule and identical or better timing and methods of payment;
(c)Have substantially equivalent economic value to such award (determined at the time of the Change in Control in accordance with principles applicable under Section 424 of the Internal Revenue Code);
(d)Have terms and conditions which provide that in the event that a Participant’s Service is involuntarily terminated by the successor employer without Cause or by a Participant for Good Reason, in either case within the one-year period following the Change in Control, all of such Participant’s Option and/or SARs shall be deemed immediately and fully exercisable, the Restricted Period shall lapse as to each of such Participant’s outstanding Restricted Share or Restricted Share Unit Awards, and each such Alternative Award shall be settled for a payment per each share of stock subject to the Alternative Award in cash, in immediately transferable, publicly traded securities or in a combination thereof, in an amount equal to, in the case of an Option or SAR, the excess of the Fair Market Value of such stock on the date of the Participant’s termination of Service over the corresponding exercise or base price per share and, in the case of any Restricted Shares or Restricted Share Unit award, the Fair Market Value of the number of shares of Common Stock subject or related thereto; and
(e)Solely with respect to any Performance Awards, be converted into restricted share awards at the target levels, with any new “restricted period” based on the remaining performance period previously applicable to such Performance Awards.
16.3.3 No Amendment. Notwithstanding Section 5.3, the provisions of this Section 16.3 may not be amended in any respect for two years following a Change in Control.
16.4 Adjustments. Adjustments under this Section 16 related to Shares or other securities of the Trust shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. No fractional Shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding down to the nearest whole Share. The Committee shall determine the effect of a Change in Control upon Awards other than Options, SARs, Restricted Shares and Restricted Share Units and such effect shall be set forth in the appropriate Award Agreement. The Committee may provide in the Award Agreements at the Grant Date, or any time thereafter with the consent of the Participant, for different provisions to apply to an Award in place of those described in Sections 16.1, 16.2 and 16.3.
16.5 No Limitations on Trust. The making of Awards pursuant to the Plan shall not affect or limit in any way the right or power of the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any part of its business or assets.
Section 17 CODE SECTION 409A
17.1 Generally. This Plan and any Award granted hereunder is intended to comply with, or be exempt from, the provisions of Code Section 409A, and shall be interpreted and administered in a manner consistent with that intention.
17.2 409A Awards. The provisions of this Section 17 shall apply to any 409A Award or any portion an Award that is or becomes subject to Code Section 409A, notwithstanding any provision to the contrary contained in the Plan or the Award Agreement applicable to such Award. 409A Awards include, without limitation:
17.2.1 Any Non-Qualified Option or SAR that permits the deferral of compensation other than the deferral of recognition of income until the exercise of the Award; and
17.2.2 Any other Award that either (i) provides by its terms for settlement of all or any portion of the Award on one or more dates following the Short-Term Deferral Period (as defined below), or (ii) permits or requires the Participant to elect one or more dates on which the Award will be settled.
Subject to any applicable U.S. Treasury Regulations promulgated pursuant to Section 409A or other applicable guidance, the term “Short-Term Deferral Period” means the period ending on the later of (i) the date that is 2 ½ months from the end of the Company’s fiscal year in which the applicable portion of the Award is no longer subject to a “substantial risk of forfeiture”, or (ii) the date that is 2 ½ months from the end of the Participant’s taxable year in which the applicable portion of the Award is no longer subject to a substantial risk of forfeiture. For this purpose, the term “substantial risk of forfeiture” shall have the meaning set forth in any applicable U.S. Treasury Regulations promulgated pursuant to Code Section 409A or other applicable guidance.
17.3 Deferral and/or Payment Elections. Except as otherwise permitted or required by Section 409A or any applicable Treasury Regulations promulgated pursuant to Code Section 409A or other applicable guidance, the following rules shall apply to any deferral and/or payment elections (each, an “Election”) that may be permitted or required by the Committee pursuant to a 409A Award:
17.3.1 All Elections must be in writing and specify the amount of the payment in settlement of an Award being deferred, as well as the time and form of payment as permitted by this Plan;
17.3.2 All Elections shall be made by the end of the Participant’s taxable year prior to the year in which services commence for which an Award may be granted to such Participant; provided, however, that if the Award qualifies as “performance-based compensation” for purposes of Code Section 409A and is based on services performed over a period of at least twelve (12) months, then the Election may be made no later than six (6) months prior to the end of such period; and
17.3.3 Elections shall continue in effect until a written election to revoke or change such Election is received by the Company, except that a written election to revoke or change such Election must be made prior to the last day for making an Election determined in accordance with Section 17.3.2 above or as permitted by Section 17.4.
17.4 Subsequent Elections. Any 409A Award in respects to which the Committee permits a subsequent Election to delay the payment or change the form of payment in settlement of such Award shall comply with the following requirements:
17.4.1 No subsequent Election may take effect until at least twelve (12) months after the date on which the subsequent Election is made;
17.4.2 Each subsequent Election related to a payment in settlement of an Award not described in Section 17.5.2, 17.5.3 or 17.5.6 must result in a delay of the payment for a period of not less than five (5) years from the date such payment would otherwise have been made; and
17.4.3 No subsequent Election related to a payment pursuant to Section 17.5.4 shall be made less than twelve (12) months prior to the date of the first scheduled installment relating to such payment.
17.5 Payments Pursuant to Deferral Elections. No payment in settlement of a 409A Award may commence earlier than:
17.5.1 Separation from service (as determined pursuant to Treasury Regulations or other applicable guidance);
17.5.2 The date the Participant becomes Disabled;
17.5.3 Death;
17.5.4 A specified time (or pursuant to a fixed schedule) that is either (i) specified by the Committee upon the grant of an Award and set forth in the Award Agreement evidencing such Award, or (ii) specified by the Participant in an Election complying with the requirements of Section 17.3 and/or 17.4, as applicable;
17.5.5 To the extent provided by Treasury Regulations promulgated pursuant to Code Section 409A or other applicable guidance, a change in the ownership or effective control or the Company or in the ownership of a substantial portion of the assets of the Company; or
17.5.6 The occurrence of an Unforeseeable Emergency.
Notwithstanding anything else herein to the contrary, to the extent that a Participant is a “Specified Employee” (as determined in accordance with the requirements of Code Section 409A), no payment pursuant to Section 17.5.1 in settlement of a 409A Award may be made before the date which is six (6) months after such Participant’s date of Separation from Service, or, if earlier, the date of the Participant's death.
17.6 Unforeseeable Emergency. The Committee shall have the authority to provide in the Award Agreement evidencing any 409A Award for payment in settlement of all or a portion of such Award in the event that a Participant establishes, to the satisfaction of the Committee, the occurrence of an Unforeseeable Emergency (as defined in Code Section 409A). In such event, the amount(s) distributed with respect to such Unforeseeable Emergency cannot exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of such payment(s), after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise, by cancellation of any deferral election previously made by the Participant or by liquidation of the Participant's assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). All payments with respect to an Unforeseeable Emergency shall be made in a lump sum as soon as practicable following the Committee’s determination that an Unforeseeable Emergency has occurred. The occurrence of an Unforeseeable Emergency shall be judged and determined by the Committee. The Committee’s decision with respect to whether an Unforeseeable Emergency has occurred and the manner in which, if at all, the payment in settlement of an Award shall be altered or modified, shall be final, conclusive, and not subject to approval or appeal.
17.7 No Acceleration of Payments. Notwithstanding anything to the contrary herein, this Plan does not permit the acceleration of the time or schedule of any payment under this Plan in settlement of a 409A Award, except as permitted by Code Section 409A and/or Treasury Regulations promulgated pursuant to Code Section 409A or other applicable guidance.
Section 18 GENERAL PROVISIONS
18.1 Disclaimer of Rights. No provision in the Plan or in any Award or Award Agreement shall be construed to confer upon any individual the right to remain in the employ or service of the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them, or to interfere in any way with any contractual or other right or authority of the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them either to increase or decrease the compensation or other payments to any individual at any time, or to terminate any employment or other relationship between any individual and the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them. In addition, notwithstanding anything contained in the Plan to the contrary, unless otherwise stated in the applicable Award Agreement, no Award granted under the Plan shall be affected by any change of duties or position of the Participant, so long as such Participant continues to be a Trustee, officer, consultant or employee of the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them. The obligation of the Trust to pay any benefits pursuant to this Plan shall be interpreted as a contractual obligation to pay only those amounts described herein, in the manner and under the conditions prescribed herein. The Plan shall in no way be interpreted to require the Trust to transfer any amounts to a third party or otherwise hold any amounts in trust or escrow for payment to any Participant or beneficiary under the terms of the Plan.
18.2 Nonexclusivity of the Plan. Neither the adoption of the Plan nor the submission of the Plan to the Trust’s shareholders for approval shall be construed as creating any limitations upon the right and authority of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual or particular individuals) as the Board in its discretion determines desirable, including, without limitation, the granting of options otherwise than under the Plan.
18.3 Withholding Taxes. The Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them, as the case may be, shall have the right to deduct from payments of any kind otherwise due to a Participant (or require a Participant to pay) any federal, state, or local taxes of any kind required by law to be withheld with respect to the vesting of or other lapse of restrictions applicable to an Award or upon the issuance of any Shares upon the exercise of an Option or pursuant to an Award. At the time of such vesting, lapse, or exercise, the Participant shall pay to the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them, as the
case may be, any amount that the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them may reasonably determine to be necessary to satisfy such withholding obligation. The Trust may elect to, or may cause RPTI, RPTLP, or a Subsidiary or Affiliate of any of them, to withhold Shares otherwise issuable to the Participant in satisfaction of a Participant’s withholding obligations not to exceed the statutory maximum withholding rate. Subject to the prior approval of the Trust, which may be withheld by the Trust in its sole discretion, the Participant may elect to satisfy such obligations, in whole or in part, by delivering to the Trust, RPTI, RPTLP, or a Subsidiary or Affiliate of any of them Shares already owned by the Participant, which Shares, if acquired from the Trust, shall have been held for at least six months at the time of tender. Any Shares so delivered or withheld shall have an aggregate Fair Market Value equal to such withholding obligations not to exceed the statutory maximum withholding rate. The Fair Market Value of the Shares used to satisfy such withholding obligation shall be determined by the Trust as of the date that the Shares are withheld. A Participant who is permitted to make and who has made an election pursuant to this Section 18.3to deliver Shares may satisfy his/her withholding obligation only with Shares that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements.
18.4 Captions. The use of captions in this Plan or any Award Agreement is for the convenience of reference only and shall not affect the meaning of any provision of the Plan or such Award Agreement.
18.5 Other Provisions. Each Award granted under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion.
18.6 Number and Gender. With respect to words used in this Plan, the singular form shall include the plural form, the masculine gender shall include the feminine gender, etc., as the context requires.
18.7 Severability. If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.
18.8 Governing Law. The validity and construction of this Plan and the instruments evidencing the Awards hereunder shall be governed by the laws of the State of Michigan, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan and the instruments evidencing the Awards granted hereunder to the substantive laws of any other jurisdiction.
18.9 Compensation Recoupment Policy. Notwithstanding any provision in the Plan, in any Award, or in any employment, consulting or severance agreement with the Trust or any Subsidiary, all Awards under this Plan shall be subject to any compensation recoupment, other compensation recovery, or clawback policy of the Trust that may be applicable to any Participant, as in effect from time to time and as approved by the Committee or the Board.
18.10 Complete Statement of Plan. This document is a complete statement of the Plan.
As adopted by the Board and the Committee as of March 7, 2019, subject to approval by the shareholders of the Trust as set forth in this Plan.
| | | | | | | | | | | | | | | | RPT REALTY
31500 NORTHWESTERN HIGHWAY
SUITE 300
FARMINGTON HILLS, MI 48334
| | VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on April 28, 2019. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
| | | | | During The Meeting - Go to www.virtualshareholdermeeting.com/rpt2019
You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
| | | | | | | | | | | | VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on April 28, 2019. Have your proxy card in hand when you call and then follow the instructions.
| | | | | VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
| | | | | | ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.B-2
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E56322-P16878 KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
TABLE OF CONTENTS NET DEBT TO ANNUALIZED ADJUSTED EBITDA
(amounts in thousands)
(unaudited) | | Reconciliation of net income to annualized proforma adjusted EBITDA | | | | | | | | | | Net loss | | | $(10,572) | | | $(5,867) | | | | Interest expense | | | 9,017 | | | 9,826 | | | | Income (benefit) tax provision | | | (41) | | | 12 | | | | Depreciation and amortization | | | 18,791 | | | 20,210 | | | | Gain on sale of income producing real estate | | | (13,278) | | | — | | | | Provision for impairment on income producing real estate | | | 17,196 | | | — | | | | Pro-rata share of interest expense from unconsolidated entities | | | 108 | | | — | | | | Pro-rata share of depreciation and amortization from unconsolidated entities | | | 3,331 | | | 2,146 | | | | EBITDAre | | | 24,552 | | | 26,327 | | | | | | | | | | | | | | Severance expense | | | 33 | | | 290 | | | | Above and below market lease intangible write-offs | | | (65) | | | — | | | | Transaction costs | | | 218 | | | — | | | | Gain on sale of land | | | (222) | | | (318) | | | | Provision for impairment on land available for development | | | — | | | 598 | | | | Pro-rata share of above and below market lease intangible write-offs from unconsolidated entities | | | (1) | | | (120) | | | | Loss on extinguishment of debt | | | 8,294 | | | — | | | | Adjusted EBITDA | | | 32,809 | | | 26,777 | | | | Annualized adjusted EBITDA | | | $131,236 | | | $107,108 | | | | Annualized gross rent from leases signed but not yet commenced | | | 10,221 | | | N/A | | | | Annualized adjusted EBITDA including the impact of signed but not commenced leases | | | $141,457 | | | $N/A | | | | | | | | | | | | | | Reconciliation of Notes Payable, net to Net Debt | | | | | | | | | | Notes payable, net | | | $884,185 | | | $1,027,751 | | | | Unamortized premium | | | (153) | | | (1,103) | | | | Deferred financing costs, net | | | 4,165 | | | 3,606 | | | | Consolidated notional debt | | | 888,197 | | | 1,030,254 | | | | Pro-rata share of debt from unconsolidated joint venture | | | 23,017 | | | — | | | | Finance lease obligation | | | 821 | | | 875 | | | | Cash, cash equivalents and restricted cash | | | (14,033) | | | (211,484) | | | | Pro-rata share of unconsolidated entities cash, cash equivalents and restricted cash | | | (3,088) | | | (1,914) | | | | Net debt | | | $894,914 | | | $817,731 | | | | | | | | | | | | | | Net debt to annualized adjusted EBITDA | | | 6.8x | | | 7.6x | | | | Net debt to annualized adjusted EBITDA including the impact of signed but not commenced leases | | | 6.3x | | | N/A | |
Net debt to annualized adjusted EBITDA is a non-GAAP financial measure. A reconciliation of the components of net debt to annualized adjusted EBITDA to the most directly comparable GAAP financial measures is set forth above. We present this ratio because it provides management investors and others with additional means of evaluating our overall financial flexibility, capital structure and leverage. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | RPT REALTYB-3
| | For All | | | | Withhold All | | For All
Except
| | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | | | | | | | | | | | | | | | | | | | | | | | | | | The Board of Trustees recommends you vote FOR the following: | | | | | | | | | | | | | | | | | | | | | | | 1.
| | | Election of Trustees
| | o | | | | o | | o | | | | | | | | | | | | | | | | Nominees: | | | | | | | | | | | | | | | | | | | | | | | | | | | 01) | | Richard L. Federico | | 05) David J. Nettina | | | | | | | | | | | | | | | | | | | 02) | | Arthur Goldberg | | 06) Laurie M. Shahon | | | | | | | | | | | | | | | | | | | 03) | | Brian L. Harper | | 07) Andrea M. Weiss | | | | | | | | | | | | | | | | | | | 04) | | Joanna T. Lau | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The Board of Trustees recommends you vote FOR proposals 2, 3, and 4: | | For | | Against | | Abstain | | | 2. | | | Ratification of the appointment of Grant Thornton LLP as the Trust’s independent registered public accounting firm for 2019. | | o | | o | | o | | | 3. | | | Advisory approval of the compensation of our named executive officers. | | o | | o | | o | | | 4. | | | Approval of 2019 Omnibus Long-Term Incentive Plan | | o | | o | | o | | | NOTE: Such other business as may properly come before the meeting or any adjournment thereof.
| | | | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | Date
| | | | | Signature (Joint Owners) | | Date | |
TABLE OF CONTENTS Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The 20192022 Proxy Statement and 20182021 Annual Report are available at www.proxyvote.com.www.proxyvote.com. TABLE OF CONTENTS RPT REALTY
ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 2022 9:00 AM
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
The undersigned shareholder of RPT Realty (the “Trust”) hereby appoints Brian L. Harper and Heather Ohlberg, or either of them, each with full power of substitution, as proxies of the undersigned to vote all common shares of beneficial interest of the Trust which the undersigned is entitled to vote at the 2022 Annual Meeting of Shareholders of the Trust (the “Annual Meeting”) to be held on Thursday, April 28, 2022, at 9:00 a.m., Eastern time, virtually via the Internet at www.virtualshareholdermeeting.com/rpt2022 and all adjournments or postponements thereof, and to otherwise represent the undersigned at the Annual Meeting with all powers possessed by the undersigned if personally present at the meeting. The undersigned revokes any proxy previously given to vote at such meeting. The undersigned hereby instructs said proxies or their substitutes to vote as specified on the reverse side of this card on each of the matters specified and in accordance with their judgment on any other matters which may properly come before the meeting or any adjournment or postponement thereof.
This proxy, when properly executed, will be voted as directed. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4.
E56323-P16878
Continued and to be signed on reverse side | | RPT REALTY
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
April 29, 2019
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
| The undersigned shareholder of RPT REALTY (the “Trust”) hereby appoints BRIAN L. HARPER and MICHAEL FITZMAURICE, or either of them, each with full power of substitution, as proxies of the undersigned to vote all common shares of beneficial interest of the Trust which the undersigned is entitled to vote at the Annual Meeting of Shareholders of the Trust to be held on Monday, April 29, 2019, at 9:00 a.m., Eastern time, at the office of RPT Realty, 19 W 44th St. 10th Floor, Ste 1002, New York, New York 10036 and all adjournments or postponements thereof, and to otherwise represent the undersigned at the annual meeting with all the powers possessed by the undersigned if personally present at the meeting. The undersigned revokes any proxy previously given to vote at such meeting. The undersigned hereby instructs said proxies or their substitutes to vote as specified on the reverse side of this card on each of the matters specified and in accordance with their judgment on any other matters which may properly come before the meeting or any adjournment or postponement thereof.
This proxy, when properly executed, will be voted as directed. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES IN PROPOSAL 1, AND FOR PROPOSALS 2, 3, AND 4.
| Continued and to be signed on reverse side |
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