| | • Advisory vote approving the compensation of our named executive officers | | 2. | The ratification• Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.2018 |
For the Trustees: | 3. | An advisory vote approving the compensation of our named executive officers. |
| 4. | The transaction of such other business as may properly come before the Annual Meeting or any adjournment. |
Shareholders
Dawn M. Becker Executive Vice President—General Counsel and Secretary March 23, 2018 HOW TO VOTE Your vote is important to us. You are eligible to vote and receive notice of the meeting if you were a registered owner of record of our common shares of beneficial interest (“Shares”) at the close of business on the record date of March 18, 2016 are14, 2018. A majority of the Shares entitled to notice of and to vote at the Annual Meeting must be present in person or by proxy for us to proceed with the Annual Meeting. ForIf you own your Shares directly with our transfer agent, American Stock Transfer and Trust, LLC, you are a registered shareholder and can vote either in person at the Trustees:Annual Meeting or by proxy without attending the Annual Meeting through one of the following methods:
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| Visitwww.voteproxy.com. You will need the control number on your Notice of Internet Availability, proxy card or voting instruction form. Votes must be submitted by 11:59pm EDT to be counted for the meeting. | | Call1-800-Proxies(1-800-776-9437). You will need the control number on your Notice of Internet Availability, proxy card or voting instruction form. Votes must be submitted by 11:59pm EDT to be counted for the meeting. | | You can vote my marking, signing and dating your proxy card. |
Dawn M. Becker
Executive Vice President—General
Counsel and Secretary
Your vote is important. Even if you plan to attend the meeting, please vote via the Internet (www.voteproxy.com) or by telephone (1-800-PROXIES or 1-800-776-9437) by following the instructions on the Notice of Internet Availability or Proxy Materials or as instructed in the accompanying proxy. If you received or requested a copy of the proxy card by mail or by e-mail, you may submit your vote by mail; however, we encourage you to vote via the Internet or by telephone. These methods are convenient and save us significant postage and processing charges. If you attend the meeting, youYou may revoke your proxy at any time before it is voted at the Annual Meeting by notifying the secretary in writing, submitting a proxy dated later than your original proxy, or attending the Annual Meeting and votevoting in person.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 4, 2016 The 2016OUR ANNUAL MEETING.Our 2018 Proxy Statement and 20152017 Annual Report to Shareholders, which includes our Annual Report on Form10-K for the year ended December 31, 2015,2017, are available atwww.federalrealty.com.
ABOUT FEDERAL REALTY INVESTMENT TRUST Federal Realty Investment Trust is a recognized leader in the ownership, operation and redevelopment of high-quality retail based real estate located primarily in major coastal markets from Washington, D.C. to Boston as well as San Francisco and Los Angeles. Founded in 1962, our mission is to deliver long term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply. Our expertise includes creating urban,1626 East Jefferson Street, Rockville,mixed-use neighborhoods like Santana Row in San Jose, California, Pike & Rose in North Bethesda, Maryland 20852and Assembly Row in Somerville, Massachusetts. These unique and vibrant environments combine shopping, dining, living and working and provide a destination experience that serves the needs of the broader surrounding community. Federal Realty’s 104 properties include approximately 3,000 tenants, in approximately 24 million square feet, and over 2,300 residential units. PROXY STATEMENTThroughout this proxy statement, we use the terms “Federal”, “Company”, “Trust”, “we”, “our” and “us” to refer to Federal Realty Investment Trust.
ANNUAL MEETING INFORMATION We are providing these proxy materials in connection with the 20162018 Annual Meeting of the Shareholders (“Annual Meeting”) of Federal Realty Investment Trust (the “Trust”).the Trust. These materials will assist you in voting your common shares of beneficial interest of the Trust (“Shares”)Shares by providing information on matters that will be presented at the Annual Meeting. | | | | | Meeting Date: | | Wednesday, May 2, 2018 | Meeting Time: | | 10:00 a.m. local time | Meeting Location: | | AMP by Strathmore, 11810 Grand Park Avenue, North Bethesda, Maryland | Record Date: | | March 14, 2018 |
The following matters are being presented for a vote at the 2018 Annual Meeting of Shareholders: | | | | | Proposal | | Board
Recommendation | | Vote Required
For Approval | | | | Election of 7 Trustees to serve until our 2019 annual meeting | | FOR each nominee | | Majority of votes cast | | | | Advisory vote on the compensation of our named executive officers | | FOR | | Majority of votes cast | | | | Ratification of the appointment of Grant Thornton LLP as our auditors | | FOR | | Majority of votes cast |
NOTICE OF ELECTRONIC AVAILABILITY OF PROXY MATERIALS We are furnishing proxy materials including this proxy statement and our 20152017 Annual Report to Shareholders, which includes our Annual Report on Form10-K for the year ended December 31, 20152017 (“Annual Report”), to each shareholder by providing access to such documents on the Internet instead of mailing printed copies unless the shareholder hasyou previously requested to receive these materials by mail ore-mail. On or about March 25, 2016,23, 2018, we mailed to our shareholders who have not previously requested to receive these materials by mail ore-mail a “Notice of Internet Availability of Proxy Materials” (“Notice”) containing instructions on how to access and review this proxy statement and our Annual Report and how to submit your vote on the Internet or by telephone. You cannot vote by marking the Notice and returning it. If you received the Notice by mail, you will not automatically receive a printed copy of our proxy materials or Annual Report unless you follow the instructions for requesting these materials included in the Notice. ABOUT THE ANNUAL MEETING
Who is soliciting my vote?
| CORPORATE GOVERNANCE INFORMATION |
The Board is responsible for providing governance and oversight of Trustees (the “Board” or “Board of Trustees”)the strategy, operations and management of the Trust is soliciting your proxy to vote on mattersbehalf of our shareholders. The Board has adopted the following key documents that will be presented at our Annual Meeting. Who is payingform the governance framework for the solicitationTrust. Each of proxies?
The cost of this solicitation of proxies will be borne by us. We may solicit proxies through the mail, Internet, in personthese documents is periodically reviewed and by telephone or facsimile,updated to comply with current regulatory and may request brokerage houses and other custodians, nominees and fiduciaries to forward soliciting materials to the beneficial owners of Shares and reimburse them for their reasonable expenses. We may also hire a proxy solicitation firm at a standard industry compensation rate.
When will the Annual Meeting take place?
The Annual Meeting will be held at 10:00 a.m. EDT, Wednesday, May 4, 2016, at AMP by Strathmore, 11810 Grand Park Avenue, North Bethesda, Maryland.
What is the purpose of the Annual Meeting?
To vote on the following matters:governance requirements.
The electionCorporate Governance Guidelines
Code of seven Trustees to serve until our 2017 Annual MeetingBusiness Conduct Code of Shareholders;Ethics for Senior Financial Officers The ratification ofThese documents are available under the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016;
An advisory vote approving the compensation of our named executive officers; and
The transaction of such other business as may properly come before the Annual Meeting or any adjournment.
What are the Board’s recommendations?
The Board recommends a vote:
FOR the election of each of the seven Trustees to serve until our 2017 Annual Meeting;
FOR the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016; and
FOR the approval of the compensation of our named executive officers.
Why am I receiving these proxy materials?
You are receiving these materials because you owned our Shares as a “registered” shareholder or you held Shares in “street name” at the close of business on the record date for the Annual Meeting and that entitles you to vote at our Annual Meeting.
What is the difference between a “registered” shareholder and holding Shares in “street name?”
If your Shares are registered directly in your name with American Stock Transfer and Trust Company, our transfer agent, you are a “registered” shareholder. If you own Shares through a broker, bank, trust or other nominee rather than in your own name, you are the beneficial owner of the Shares, but considered to be holding the Shares in “street name.”
Who is entitled to vote at the Annual Meeting?
The Board established March 18, 2016 as the record date for the Annual Meeting. Holders who owned our Shares at the close of business on that date are entitled to receive notice of and may attend and vote at the Annual Meeting or any postponements or adjournments of the meeting. We had 70,861,269 Shares outstanding on March 18, 2016.
How many votes must be present to hold the Annual Meeting?
A quorum is required for our shareholders to conduct business at the Annual Meeting. A quorum occurs when a majority of the Shares entitled to vote at the Annual Meeting are present in person or by proxy. Properly executed proxy cards marked “for,” “against”, “withhold” or “abstain” and broker “non-votes” will be counted as present at the Annual Meeting for purposes of determining a quorum.
How many votes do I have?
As to each item, you are entitled to cast one vote per Share; however, as to the election of Trustees, you are entitled to cast one vote per Share for each of the seven open trustee positions.
What is a proxy?
A proxy is your legal designation of another person (the “proxy”) to vote your Shares on your behalf. By completing your proxy through the Internet, by telephone or by returning a completed proxy card, you are giving Dawn M. Becker and James M. Taylor, Jr. the authority to vote your Shares in the manner you indicate on your proxy.
How do I vote?
If you are a “registered” shareholder, you can vote either in person at the Annual Meeting or by proxy without attending the Annual Meeting. We urge you to vote by proxy even if you plan to attend the Annual
Meeting so that we will know as soon as possible that enough votes will be present for us to hold the meeting. If you attend the Annual Meeting in person, you may vote at the meeting and your proxy will not be counted. You can vote by proxy by any of the following methods:
Voting by Telephone or Through the Internet. If you are a “registered” shareholder, you may vote by proxy by using either the telephone or Internet methods of voting. Proxies submitted by telephone or through the Internet must be received by 11:59 p.m., eastern daylight time, on May 3, 2016. Please see the Notice or proxy card for instructions on how to access the telephone and Internet voting systems.
Voting by Proxy Card. Each “registered” shareholder electing to receive shareholder materials by mail may vote by proxy by using the accompanying proxy card. If you return a proxy card that is properly signed and completed, the Shares represented by your proxy will be voted as you specify on the proxy card. If you sign and return a proxy card without indicating how you want your Shares to be voted, Dawn M. Becker and James M. Taylor, Jr. will vote your Shares in accordance with the recommendations of the Board.
For those of you holding your Shares in “street name,” we have supplied copies of our proxy materials for the Annual Meeting to the broker, bank, trust or other nominee holding your Shares of record and they have the responsibility to send these proxy materials to you. You must either direct the broker, bank, trust or nominee as to how to vote your Shares, or obtain a proxy from the broker, bank, trust or nominee to vote at the Annual Meeting. Please refer to the notice of internet availability of proxy materials or the voter instruction card used by your broker, bank, trust or nominee for specific instructions on methods of voting, including by telephone or using the Internet. If you fail to give your broker, bank, trust or nominee specific instructions on how to vote your Shares with respect to Items 1 and 3, your vote will NOT be counted for those matters. It is important for every shareholder’s vote to be counted on these matters so we encourage you to provide your broker, bank, trust or nominee with voting instructions. If you fail to give your broker, bank, trust or nominee specific instructions on how to vote your Shares on Item 2, such broker, bank, trust or nominee will generally be able to vote on Item 2 as he, she or it determines.
What if I don’t vote my Shares?
If you do not vote your Shares, your Shares will not be counted for purposes of determining a quorum or for determining whether the matters presented at the Annual Meeting are approved.
What if I return my proxy but abstain?
Abstentions are counted as present for determining a quorum; however, abstentions will have no effect on any of the items to be considered at the Annual Meeting.
May I change my vote after I return my proxy?
Yes. A proxy may be revoked by a “registered” shareholder at any time before it is exercised at the Annual Meeting by submitting a proxy bearing a later date or by voting in person at the Annual Meeting. If you hold your Shares in “street name,” you must contact your broker, bank, trust or other nominee to determine how to revoke your original proxy. In general, submitting a subsequent proxy executed by the party that executed the original proxy will revoke the earlier proxy.
Why did I receive more than one Notice, proxy card, voting instruction form and/or email?
You will receive more than one Notice, proxy card, voting instruction form or email, or any combination of these, if you hold your Shares in different ways (i.e., joint tenancy, trusts, custodial accounts) or in multiple accounts. You should provide voting instructions for all Notices, proxy cards, voting instruction forms and email links you receive.
Are there other matters to be acted upon at the Annual Meeting?
The Trust does not know of any matter to be presented at the Annual Meeting other than those described in the proxy statement. If, however, other matters are properly presented for action at the Annual Meeting, Dawn M. Becker and James M. Taylor, Jr. will have the discretion to vote on such matters in accordance with their best judgment.
How may “registered” shareholders and shareholders holding Shares in “street name” elect to receive future shareholder materials by electronic mail (“email”) delivery?
Opting to receive all future proxy materials via email delivery is another method of saving us the cost of producing and mailing documents to your home or business and helps us to conserve natural resources. “Registered” shareholders who wish to receive their proxy materials in this manner may register to do so on American Stock Transfer & Trust Company’s website atwww.amstock.com in which case you will receive an email containing links to our proxy materials. If you own Shares in “street name” and wish to receive proxy materials via an email containing links, you must contact your broker, bank, trust or nominee for instructions on how to receive future proxy materials in this manner. Shareholders who hold Shares in different ways (i.e., joint tenancy, trusts, custodial accounts) or in multiple accounts will need to complete the applicable process for each account. Your election to receive your proxy materials by email delivery will remain in effect for all future annual meetings until you revoke it.
How can I obtain paper copies of future shareholder materials?
Shareholders can access this Proxy Statement, our Annual Report and our other filings with the Securities and Exchange Commission (“SEC”) on the Investors pageInvestors/Corporate Governance section of our website atwww.federalrealty.comwww.federalrealty.com.. A copy Printed copies of our Annual Report, including the financial statements and financial statement schedules (“Form 10-K”) is being providedthese documents are also available free of charge upon written request to shareholders along with this Proxy Statement. The Form 10-K includes certain exhibits, which we will provide to you only upon request, addressed toour Investor Relations Department at 1626 East Jefferson Street, Rockville, Maryland 20852.
CORPORATE GOVERNANCE PRACTICES The request must be accompanied by paymentTrust has a history of a feestrong corporate governance and is committed to cover our reasonable expenses for copyingpractices and mailingpolicies that best serve the Form 10-K. The SEC’s rules permit us to deliver a single Notice or single set of Annual Meeting materials to one address shared by two or moreinterests of our shareholders unless we have received contrary instructions from shareholders. This procedure, referred to as “householding”, reducesOur practices and policies include, among other things, the volume of duplicate information shareholders receive and can result in significant savings on mailing and printing costs. To take advantage of this opportunity, only one Notice, Proxy Statement and the Annual Report is being delivered to multiple shareholders who share a single address, unless any shareholder residing at that address gave contrary instructions. If any shareholder sharing an address with another shareholder desires at this time to receive a separate copy of this Proxy Statement and the Annual Report or wishes to receive a separate proxy statement and annual report in the future, or receives multiple copies of the proxy statement and Annual Report and wishes to receive a single copy, the shareholder should provide such instructions by calling our Investor Relations Department at (800) 937-5449, by writing to Investor Relations at 1626 East Jefferson Street, Rockville, Maryland 20852, or by sending an e-mail to Investor Relations atIR@federalrealty.com.following:
If you elected to receive our shareholder materials via the Internet or via email delivery, you may request paper copies, without charge, by written request addressed to the address set forth above.
What if I have questions about the Notice, voting or email delivery?
Questions regarding the Notice, voting or email delivery should be directed to our Investor Relations Department at (800) 937-5449 or by email atIR@federalrealty.com.
SHARE OWNERSHIP
Who are the largest owners of Shares?
Based upon our records and the information reported in filings with the SEC, the following were beneficial owners of more than 5% of our Shares as of March 18, 2016:
| | | | | | | | | Name and Address of Beneficial Owner | | Amount and Nature
of Beneficial Ownership | | | Percentage of Our Outstanding Shares (1) | | The Vanguard Group, Inc.(2) 100 Vanguard Blvd. Malvern, PA 19355 | | | 10,102,534 | | | | 14.3 | % | | | | BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10055 | | | 8,338,015 | | | | 11.8 | % | | | | Vanguard Specialized Funds—Vanguard REIT Index Fund(4) 100 Vanguard Blvd. Malvern, PA 19355 | | | 4,978,229 | | | | 7.0 | % | | | | State Street Corporation(5) State Street Financial Center One Lincoln Street Boston, MA 02111 | | | 4,778,001 | | | | 6.7 | % |
(1) | The percentage | | | | Governance Practice: | | Explanation: | | | Annual Election of outstanding Shares is calculated by takingTrustees | | All of our Trustee positions are elected annually | | | Shareholder Approval Required to Classify Board | | We have opted out of the numberprovision of Shares stated inMaryland law that allows companies to amend their Bylaws without shareholder approval to adopt a classified board | | | Majority Vote Standard for Trustee Elections | | In uncontested elections, each of our Trustees must receive a majority of votes cast to be elected to the Schedule 13G or 13G/A, as applicable, filed with the SEC divided by 70,861,269, the total numberBoard | | | No Shareholders Rights Plan | | We do not have a poison pill | | | Independent Board | | All of Shares outstanding on March 18, 2016. |
(2) | Information based on a Schedule 13G/A filed with the SEC on February 10, 2016 by The Vanguard Group. The Schedule 13G/A states that The Vanguard Group, an investment advisor, has sole voting power over 169,618 Shares, shared voting power over 59,500 Shares, sole dispositive power over 9,969,728 Shares and shared dispositive power over 132,806 Shares; that Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, is the beneficial owner of 46,716 Shares as a result of serving as investment manager of collective trust accounts, the voting of which it directs; and that Vanguard Investments Australia, Ltd., a wholly owned subsidiary of The Vanguard Group, is the beneficial owner of 208,992 Shares as a result of serving as investment manager of Australian investment offerings, the voting of which it directs. |
(3) | Information based on a Schedule 13G/A filed with the SEC on January 8, 2016 by BlackRock, Inc., which states BlackRock, Inc., a parent holding company, has sole voting power over 7,832,627 Shares, sole dispositive power over 8,338,015 Shares and that none of its subsidiaries owns 5% or more of Sharesour Trustees are independent other than BlackRock Fund Advisors. The Schedule 13G/A states that BlackRock, Inc.’s subsidiariesour CEO. Our governance guidelines preclude us from having more than 1non-independent Trustee | | | Independent Board Committees | | All committees of our Board are BlackRock (Luxembourg) S.A., BlackRock (Netherlands) B.V., BlackRock Advisors (UK) Limited, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management North Asia Limited, BlackRock Asset Management Schweiz AG, BlackRock Capital Management, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Fund Managers Ltd., BlackRock Institutional Trust Company, N.A., BlackRock International Limited, BlackRock Investment Management (Australia) Limited, BlackRock Investment Management (UK) Ltd., BlackRock Investment Management, LLC, BlackRock Japan Co. Ltd. and BlackRock Life Limited.made up entirely of independent Trustees |
(4) | Information based on a Schedule 13G/A filed with the SEC on February 9, 2016 by Vanguard Specialized Funds—Vanguard REIT Index Fund. The Schedule 13G/A states that Vanguard Specialized Funds—Vanguard REIT Index Fund, | Non-Executive Chairman | | We have an investment company registered under Section 8independent,Non-Executive Chairman of the Investment Company ActBoard | | | Robust Annual Board Self-Assessment | | The Nominating Committee conducts an annual evaluation of 1940, has sole voting power over 4,978,229 Shares.the Board and of each individual trustee through written surveys as well as individual discussions with each Trustee to elicit and deliver feedback | | | Equity Ownership Requirements for Trustees and Senior Executives | | Our named executive officers are required to hold equity with a value of least 3 times base and annual bonus for our CEO and 2.5 times for each of our other named executive officers. Our Trustees are required to hold equity with a value of at least 5 times the cash portion of their annual retainer. Officers and Trustees have 5 years after joining the Trust to meet these requirements. | | | Prohibition on Hedging and Pledging | | Our Trustees and all employees are prohibited from hedging or pledging our Shares |
(5) | Information based on a Schedule 13G filed with the SEC on February 12, 2016 by State Street Corporation, which states State Street Corporation, a parent holding company, has shared voting and dispositive power over 4,778,001 Shares. The Schedule 13G also states that State Street Corporation’s subsidiaries are SSGA Funds Management, Inc., State Street Global Advisors Limited, State Street Global Advisors, Ltd., State Street Global Advisors, Australia, Limited, State Street Global Advisors (Asia) Limited, State Street Global Advisors France, S.A., State Street Global Advisors (Japan) Co., Ltd. and State Street Global Advisors Ireland Limited, each an investment advisor, and State Street Bank and Trust Company, a bank. |
BOARD LEADERSHIP STRUCTURE How many Shares do our Trustees and executive officers own?
As of March 18, 2016, our Trustees and executive officers, both individually and collectively, beneficially owned the Shares reflected in the table below. The number of Shares shown in this table reflects beneficial ownership determined in accordance with Rule 13d-3Our Board has been directed by aNon-Executive Chairman of the Securities Exchange Act of 1934,Board since 2003. The Board believes that having its own leadership separate from our Chief Executive Officer provides the Board with an effective way to ensure that it is fully informed and has the opportunity to fully debate all important issues as amended (the “Exchange Act”)necessary to fulfill its oversight responsibilities and therefore, includes unvested Shares and Shares that have not been issued but as to which options are outstanding and may be exercised within 60 dayshold management accountable for the performance of the dateTrust. This also allows our Chief Executive Officer to focus his time on running ourday-to-day business. OurNon-Executive Chairman presides at all meetings of this proxy statement. Except as noted in the footnotes that followBoard and helps to set the table, each Trustee and executive officer has sole voting and investment power as to all Shares listed. Fractional Shares have been rounded to the nearest full Share.agendas for Board meetings.
INDEPENDENCE OF TRUSTEES | | | | | | | | | | | | | | | | | | | | | | Name and Address of Beneficial Owner (1) | | Common | | | Unvested
Restricted
Shares | | | Options
Currently
Exercisable or
Exercisable
Within 60
Days | | | Total
Shares
Beneficially
Owned | | | Percentage
of
Outstanding
Shares
Owned (2) | | Dawn M. Becker | | | 102,311 | | | | 12,143 | | | | 39,941 | | | | 154,395 | | | | * | | Jon E. Bortz(3) | | | 8,062 | | | | 0 | | | | 0 | | | | 8,062 | | | | * | | David W. Faeder | | | 7,719 | | | | 0 | | | | 0 | | | | 7,719 | | | | * | | Kristin Gamble(4) | | | 29,347 | | | | 0 | | | | 0 | | | | 29,347 | | | | * | | Gail P. Steinel | | | 7,515 | | | | 0 | | | | 0 | | | | 7,515 | | | | * | | James M. Taylor, Jr. | | | 14,708 | | | | 17,151 | | | | 0 | | | | 31,859 | | | | * | | Warren M. Thompson | | | 7,594 | | | | 0 | | | | 0 | | | | 7,594 | | | | * | | Joseph S. Vassalluzzo | | | 18,945 | | | | 0 | | | | 0 | | | | 18,945 | | | | * | | Donald C. Wood(5) | | | 234,189 | | | | 84,212 | | | | 247,996 | | | | 566,397 | | | | * | | Trustees, trustee nominees and executive officers as a group (9 individuals) | | | 430,390 | | | | 113,506 | | | | 287,937 | | | | 831,833 | | | | 1.2 | % |
(1) | Unless otherwise indicated, the address of each beneficial owner is 1626 East Jefferson Street, Rockville, MD 20852. |
(2) | The percentage of outstanding Shares owned is calculated by taking the number of Shares reflected in the column titled “Total Shares Beneficially Owned” divided by 70,861,269, the total number of Shares outstanding on March 18, 2016, plus the number of options for such person or group reflected in the column titled “Options Currently Exercisable or Exercisable Within 60 Days.” |
(3) | As to these Shares, voting and investment power is shared with Mr. Bortz’ wife. |
(4) | Includes 19,035 Shares as to which Ms. Gamble shares investment power for clients. Includes 1,400 Shares as to which Ms. Gamble is a trustee of a profit sharing plan, of which Ms. Gamble has a direct interest in 581 Shares and of which 581 Shares are owned by Ms. Gamble’s husband’s estate. |
(5) | Includes 53,879 Shares owned by Mr. Wood’s wife. |
CORPORATE GOVERNANCE
Independence of Trustees
Article III, Section 1 of our Bylaws provides that no more than one of our Trustees can fail to qualify as independent under the requirements of the New York Stock Exchange (“NYSE”), the SEC, our Corporate Governance Guidelines and other applicable rules and regulations. At its first quarterly meeting each calendar year, the Board reviews on an ongoing basis all relationships between us and each Trustee to determine whether each Trustee is independent under all applicable requirements. That review includes a determination of whether there areor otherwise has any material relationships between us andrelationship to the Trustee which, in the opinion of the Board,Trust that could adversely affect the Trustee’s ability to exercise independent judgment as a trustee. The Boardjudgment. This review also considersdetermines whether each Trustee satisfies the independence on an ongoing basis throughout the year if there are any changes in circumstances that could impact a Trustee’s independence.
The Board, on recommendationrequirements of the NominatingNew York Stock Exchange (“NYSE”), the Securities and Exchange Commission (“SEC”), our Corporate Governance Committee,Guidelines and after considering all relevant factsother applicable rules and circumstances, determinedregulations and whether we are in eachcompliance with our Bylaws which provide that no more than one of February 2015 and February 2016 that, except for Mr. Wood, the Trust’s Chief Executive Officer, each Trustee then serving on the Board satisfied all applicable requirementsour Trustees can fail to be consideredqualify as independent. In making that determination, the Board concludedOur Corporate Governance Guidelines include a standard that a Trustee’s position as a director, officer or owner of a company with which we do business does not constitute a material relationship so long as payments made by that company do not account for more than five percent (5%) of our gross revenues or more than ten percent (10%) of the gross revenues of that company. This standard is set forth in our
The Board, on recommendation of the Nominating and Corporate Governance Guidelines. Further, the Board has concluded that except for Mr. Wood, who is an employee of the Trust, there are no relationships, material or otherwise, between usCommittee, considered all relevant facts and any of the Trustees except as described below. All of these relationships were considered by the Board in making its determinationcircumstances and determined that all Trustees other than Mr. Wood, our Chief Executive Officer, are independent. The specific relationships considered byindependent for purposes of Board and committee service under the standards of the NYSE, the SEC, our Corporate Governance Guidelines and applicable law. In making the independence determination, the Nominating and Corporate Governance Committee and the Board in considered the following:making its independence determinations wereMr. Bortz – occasional usage by Trust employees for business purposes of hotels owned by Pebblebrook Hotel Trust. Mr. Bortz is the following,CEO of Pebblebrook Hotel Trust.
Mr. Faeder – a1-year lease of space at a Trust property by an entity in which includes all of those relationshipsMr. Faeder is a partner. That lease expired in January 2017. Mr. Thompson – the items described in the “Certain Relationships and Related Transactions” section below:below. | | | | | NameMr. Vassalluzzo – five leases between Office Depot, Inc. and the Trust. Mr. Vassalluzzo is theNon-Executive | | Affiliated Company/Position | | Relationship1 | Jon E. Bortz | | Chief Executive Officer and Chairman of the Board of Trustees of Pebblebrook Hotel Trust | | • Pebblebrook Hotel Trust owns hotels we used for one quarterly board meeting and accommodations for conferences and business trips for various employees in each of 2013, 2014 and 2015
| | | | David W. Faeder | | Managing Member of The Kensington of Falls Church, LLC | | • The Kensington of Falls Church, LLC, leases on a temporary basis 1 location from us totaling 3,003 square feet
| | | | Kristin Gamble | | None | | • None
| | | | Gail P. Steinel | | None | | • None
| | | | Warren M. Thompson | | President and Chairman of the Board of Directors of Thompson Hospitality Corporation | | • Wholly owned subsidiaries of Thompson Hospitality Corporation (collectively “THC”) lease 4 locations from us totaling 23,855 square feet
• In 2012 we entered into a partnership with THC to operate the restaurant at one of these locations
| | | | Joseph S. Vassalluzzo | | Director of Office Depot | | • Office Depot and its subsidiary, Office Max, collectively lease 5 locations totaling 104,594 square feet
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1 | In no instance did the payments made by us or to us by any tenant with which our Trustees are affiliated, or the payments made by us to Pebblebrook Hotel Trust, account for more than five percent (5%) of our gross revenues or more than ten percent (10%) of the gross revenues of any tenant or Pebblebrook Hotel Trust. Further, (a) the payments made by us to Pebblebrook Hotel Trust in each of the last three fiscal years accounted for significantly less than the greater of $1 million or 2% of both our and Pebblebrook Hotel Trust’s consolidated gross revenues for each of the last three fiscal years, (b) the payments from The Kensington of Falls Church, LLC in 2016 are anticipated to be significantly less than $1 million, and (c) the payments made by us and to us by two of Thompson Hospitality Corporation’s wholly-owned subsidiaries collectively accounted for less than 2% of both our and Thompson Hospitality Corporation’s consolidated gross revenues for each of the last three fiscal years. |
Board of Trustees and Board CommitteesOffice Depot, Inc. BOARD MEETINGS Board of Trustees:
The Board of Trustees discharges its responsibilities throughholds regularly scheduledin-person meetings as well asand if needed, will also act through telephonic meetings, action by written consent and other communications with management as appropriate.management. During 2015,2017, the Board of Trustees held fivefourin-person meetings and thenon-management, independent Trustees held an executive session at each of those meetings. The non-management Trustees (all of whom are independent) held four executive sessions at the meetings that were attended by all non-management Trustees. Mr. Vassalluzzo, theNon-Executive Chairman of the Board, presided over all Board meetings as well as all executive sessions of thenon-management Trustees during 2015. Trustees. TheNon-Executive Chairman of the Board is expected to preside over all future Board meetings and executive sessions ofnon-management Trustees. Since 2003, we have operated under a governance structure where the Chairman of the Board and Chief Executive Officer are separate positions held by different individuals. The Board continues to believe that this structure is the best structure for us. Having the Board operate under the leadership and direction of someone independent from management provides the Board with the most appropriate mechanism to fulfill its oversight responsibilities and hold management accountable for the performance of the Trust. It also allows our Chief Executive Officer to focus his time on running our day-to-day business. The Board believes that one of the most important attributes for the Board is independence from management and that belief has been reflected in the separation of the chairman and CEO roles as well as in our Corporate Governance Guidelines which permit no more than one member of the Board to be a non-independent trustee.
Each of the Trustees attended 100% of allthe meetings of the Board and the Boardas well as 100% of all committee meetings, including committees on which eachthe Trustee serveddid not serve during 2015. Our Corporate Governance Guidelines provide that2017. It is the Trust’s policy for all Trustees are expected to attend all meetingsour annual meeting of the Board and the Board committees on which he or she serves as well as the Annual Meeting of Shareholders.shareholders absent exceptional cause. All Trustees attended our 20152017 Annual Meeting of Shareholders. Board Committees:BOARD COMMITTEES
The Board has three standing committees which are– the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each committee operates under a written charter which is available in the Investors section of our website atwww.federalrealty.comwww.federalrealty.com.. Each committee member of these committees meets and throughout 2015 met, the independence, experience and, with respect to the Audit Committee, the financial literacy requirements, of the NYSE, the SEC and our Corporate Governance Guidelines. The membership, primary functions and number of meetings during 2015 forInformation about each of these standing committees are describedis included in the chart below: | | | | | Committee Members | | Primary Responsibilities | | Number of Meetings
During 2015 | | | | Committee/Membership | | Primary Responsibilities | | # of 2017
Meetings | | | | Audit Committee: | | | | | | | | | | | | | Gail P. Steinel*Steinel(1) Jon E. Bortz David W. Faeder**Faeder(2) Warren M. Thompson | | • selecting the | | Selecting our independent registered public accounting firmauditor and approving and overseeing its work;work | | 4 | | | | | | • overseeing | | Overseeing our financial reporting, including reviewing results with management and theour independent registered public accounting firm; andauditor | | | | • overseeing | | Overseeing our internal systems of accounting and controls | | | | • | | 4Overseeing financial, cybersecurity and similar risks | | | Compensation Committee: | | | | | Compensation Committee:
| | | | | | | | David W. Faeder*Faeder(1) Kristin Gamble(3) Elizabeth I. Holland(3) Gail P. Steinel Joseph Vassalluzzo | | • reviewing | | Reviewing and recommending compensation for our officers;senior officers | | 2 | | | | | | • administering our Amended | | Administering and Restated 2001 Long-Term Incentive Plan (“2001 Plan”) and our 2010 Performance Incentive Plan (“2010 Plan”), including making awards under the 2010 Plan; andour long-term incentive award plans | | | | • administering | | Administering other benefit programs of the Trust | | 3 | | | Nominating and Corporate Governance Committee: | | | | | | | | | | Warren M. Thompson*Thompson(1) Jon E. Bortz Kristin Gamble(3) Elizabeth I. Holland(3) Joseph S. Vassalluzzo | | • recommending | | Recommending individuals to stand for election to the Board;Board | | 2 | | | | | | • making | | Making recommendations regarding committee memberships; andmemberships | | | | • overseeing | | Overseeing our corporate governance policies and procedures, including Board and Trustee evaluations | | 2 |
*(1) | Denotes currentCommittee chairperson of the committee |
**(2) | Denotes our audit committee financial expert.Financial expert |
| (3) | Ms. Gamble served on these committees from January 1, 2017 until she retired from the Board on May 2, 2017. Ms. Holland began her service on these committees on May 2, 2017. |
Identifying individuals to stand for election as TrusteesRISK MANAGEMENT OVERSIGHT
The Nominating and Corporate Governance CommitteeBoard is responsible for identifying individuals to stand for election as Trustees. It begins the process by determining whether there are any changes that should be made to the Board in terms of size or skill sets in order for the Board to appropriately perform its responsibilities. If the Committee concludes that no changes are needed, it first reviews eachoverseeing enterprise level risk of the incumbent Trustees whose terms are expiring to determine whether those individuals should be nominated for reelection to the Board. If the Committee determines that the Board should be expanded or that the incumbent Trustees whose terms are expiring should not be nominated for reelectionTrust and those positions need to be filled, the Committee will seek recommendations from other Board members for possible candidates. If no appropriate candidates are identified, the Committee will consider retaining a search firm. Recommendations provided by shareholders will also be considered and will be evaluated on the same basis as all other Board candidates.
The primary factors included in the Committee’s determination are whether the individual possesses skills which are desirable for the effective oversight of the Trust’s operation and complementary to the skills of the other Trustees. If the individual is an incumbent Trustee, the Committee also considers whether he or she is performing his or her responsibilities as a Trustee well and adding value to the Board and its operations as reflected on the most recent individual Trustee evaluations. All candidates for election to the Board should, at a minimum, possess public company, real estate, retail and/or other financial experience and have a history of honesty, integrity and fair dealing with third parties. The Board has no specific policy on diversity but believes that Board membership should reflect diversity in a broad sense, including, among other things, geography, gender and ethnicity. In addition, the Board specifically reviews and considers the backgrounds, experience and competencies of each Trustee nominee and Trustee to ensure that the Board reflects as a whole an appropriate diversity of knowledge, experience, skill and expertise required to enable the Board to perform its responsibilities in managing and directing our business efficiently and effectively.
Once a candidate is identified who has not previously served on the Board, the Committee arranges meetings between the candidate and Board membersdoes so directly as well as our senior management. The Committee also undertakes whatever investigative and due diligence activities it deems necessary to verify the candidate’s credentials and determine whether the candidate would be a positive contributor to the operationsthrough its committees. As part of the Board and a good representative of our shareholders. Critical to this whole process is the Committee’s determination that any candidate presented to the shareholders for election to the Board satisfies all of the independence requirements imposed by the NYSE, the SEC, our Corporate Governance Guidelines and other applicable rules and regulations.
Any shareholder may propose a candidate to be nominated for election to the Board by following the procedures outlined in Article II, Section 13 of our Bylaws. Any shareholder wishing to present a candidate for consideration as a Trustee for election at the Trust’s 2017 Annual Meeting of Shareholders must provide the Committee with the name of the shareholder proposing the candidate as well as contact information for that shareholder, the name of the individual proposed for election, a resume or similar summary that includes the individual’s qualifications and such other factual information that would be necessary or helpful for the Committee to evaluate the individual. The information should be sent to the Committee, in care of the Trust’s Secretary, by no later than November 25, 2016 so that the Secretary can forward it to the Committee chair for consideration. The Committee will not have sufficient time to evaluate any candidate submitted after that date. A copy of our Bylaws may be obtained by sending a written request to Investor Relations at 1626 East Jefferson Street, Rockville, MD 20852.
Risk Management Oversight
Although the Board has delegated to the Audit Committee responsibility for overseeing our risks and exposures on an ongoing basis,carrying out its risk oversight responsibilities, the entire Board regularly receives updates from management on the continued viability of our business plan, market conditions, capital position, and our business results and specifically reviews potential business risks from time to time. The Board reviews that information together with our quarterly and annual financial statements and operating results and short and long-term business prospects to assess the risks that we may encounter and to establish appropriate direction to avoid or minimize the potential impact of the identified risks. Some of the details that are discussed as part of the Board’s review of potential risks facing us include, without limitation: (a)
the impact of market conditions on our business; (b) operational risks such as the ability of our tenants to be successful and the ability to grow the company through increasing rents and redeveloping our properties; (c) liquidity and credit risks, including our ability to access capital to run and grow our business and our overall cost of capital and the impact on our profitability; (d) investment risks from acquisitions and our development and redevelopment projects; (e) regulatory risks that may impact our profitability such as environmental laws and regulations, the Americans with Disabilities Act of 1990 and variousprofitability; other federal, state and local laws; (f) REIT risks such asrelating to our failure to qualifystatus as a REIT for federal income tax purposes; (g) real estate investment trust;
cybersecurity risks; and (h) general risks inherent in the real estate industry. As part of the Board’s risk oversight function,
COMPENSATION RISK ASSESSMENT In February 2018, our Compensation Committee reviewed in February 2016 our compensation policies and practices for all of our employees to determine whether any of such policies or programs created any risk that couldis reasonably likely to have a material adverse impacteffect on us. Approximately 97%the Trust. Based on that review, the Committee does not believe that our compensation programs encourage unnecessary or excessive risk taking. Specifically, the compensation of more than 96% of our corporate employees is based on corporate performance objectives. For the approximately, 4% of our employees participate inwho earn compensation programs tied to either corporate performance or regional performance necessary to achieve corporate objectives and the Committee believes that those programs do not encourage excessive and unnecessary risk taking. The Committee focused its review on the approximately 3% of our employees (8 individuals) who are compensated on a full or partial commission/bonus basis where significant portions of their annual compensation is driven by completing leasing transactions or closing acquisitions. As part of that review, the Committee reviewed the internal approval processes of the Trust and determined that none of the individuals who are compensated on a transactional commission/bonus basis canacquisitions, they cannot complete any leasing or acquisition transactiondeals without getting approvalfirst obtaining approvals from either the Board and/or one or more members of senior management whose compensation is tied to achieving corporate objectives.performance. Trustee CompensationCOMMUNICATIONS WITH THE BOARD
The Trustees received the following fees for their service on the Board in 2015:
| | | | | Annual Retainer for Non-Employee Trustees | | $ | 175,000 | | Annual Retainer for Non-Executive Chairman | | $ | 250,000 | | Annual Fee for Audit Committee Chairman | | $ | 20,000 | | Annual Fee for Compensation Committee Chairman | | $ | 10,000 | | Annual Fee for Nominating Committee Chairman | | $ | 10,000 | |
Each non-employee Trustee and the Non-Executive Chairman of the Board are paid sixty percent (60%) of his/her annual retainer in the form of Shares. All Shares paid as part of the annual retainer vested immediately upon issuance. The equity portion of the annual retainer for 2015 was paid in Shares on January 4, 2016. The number of Shares actually received by each Trustee on January 4, 2016 was determined by dividing the amount of the annual retainer to be paid in Shares by $146.10, the closing price of our stock on the NYSE on December 31, 2015, the last business day prior to the date the Shares were issued. The remainder of the annual retainer as well as the annual fees paid to the Chairs of the Audit, Compensation and Nominating and Corporate Governance Committees were paid in cash. Each Trustee is required to hold at all times an amount of Shares valued at least at five times the amount of the cash portion of the annual retainer. As of December 31, 2015, all Trustees complied with the required level of stock ownership.
In addition to the annual retainer described above, Mr. Vassalluzzo receives administrative support for both Trust business and personal use from our regional office in Wynnewood, Pennsylvania. Except for the annual fee for serving as a Trustee, the annual fee for serving as the chair of a committee and the use of administrative support made available to Mr. Vassalluzzo, all as described above, there were no additional fees paid to any Trustee, including the Non-Executive Chairman, for service on any of the Board committees or for attendance at any Board or committee meetings.
Total compensation awarded to Trustees for service in 2015 was as follows:
| | | | | | | | | | | | | | | | | | 2015 TRUSTEE COMPENSATION TABLE | | | Name | | Fees Earned or
Paid in Cash | | | Stock Awards | | | All Other
Compensation | | | Total | | | | | ($) | | | ($) (1)(2) | | | ($) | | | ($) | | Jon E. Bortz | | $ | 70,000 | | | $ | 105,000 | | | $ | — | | | $ | 175,000 | | David W. Faeder | | $ | 80,000 | | | $ | 105,000 | | | $ | — | | | $ | 185,000 | | Kristin Gamble | | $ | 70,000 | | | $ | 105,000 | | | $ | — | | | $ | 175,000 | | Gail P. Steinel | | $ | 90,000 | | | $ | 105,000 | | | $ | — | | | $ | 195,000 | | Warren M. Thompson | | $ | 80,000 | | | $ | 105,000 | | | $ | — | | | $ | 185,000 | | Joseph S. Vassalluzzo | | $ | 100,000 | | | $ | 150,000 | | | $ | 6,975 | | | $ | 256,975 | | | | | | | Total | | $ | 490,000 | | | $ | 675,000 | | | $ | 6,975 | | | $ | 1,171,975 | |
(1) | Amounts in this column reflect the aggregate grant date fair value of the stock awards calculated in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“FASB ASC Topic 718”) for the fiscal year ended December 31, 2015. Dividends are paid on all Shares awarded at the same rate as paid to all other holders of our Shares as declared by our Board from time to time. |
(2) | As of December 31, 2015, Mr. Bortz owned 7,343 Shares; Mr. Faeder owned 7,000 Shares; Ms. Gamble owned 8,774 Shares; Ms. Steinel owned 6,796 Shares; Mr. Thompson owned 6,875 Shares and Mr. Vassalluzzo owned 17,918 Shares. |
(3) | The amount in the “All Other Compensation” column represents our estimated value of the administrative services we made available to Mr. Vassalluzzo for both Trust business and personal use in our regional office in Wynnewood, Pennsylvania. We believe there is no incremental cost to us of providing this administrative support. |
Communications with the Board
Any shareholder of the Trust or any other interested party may communicate with the Board as a whole, the non-management Trustees of the Board as a group, the Non-Executive Chairman of the Board, and/or any individual Trustee by sending the communication to the Trust’s corporate offices at 1626 East Jefferson Street, Rockville, MD 20852 in care of the Trust’s Secretary. All such communicationcommunications should identify the party to whom it is being sent, and any communication which indicates it is for the Board of Trustees or fails to identify a particular Trustee will be deemed to be a communication intended for the Trust’sNon-Executive Chairman of the Board. The Trust’s Secretary will promptly forward to the appropriate Trustee all communications she receives for the Board or any individual Trustee which relate to the Trust’s business, operations, financial condition, management, employees or similar matters. The Trust’s Secretary will not forward to any Trustee any advertising, solicitation or similar materials. Other Corporate DocumentsCERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Board
Review and Approval of Trustees has adopted a Code of Ethics for senior financial officers as well as aRelated Party Transactions Our Code of Business Conduct requires that applies toour Trustees and all of our employees deal with the Trust on an arms-length basis in any related party transaction. All transactions between us and any of our Trustees, our named executive officers or other vice presidents, or entity in which any of them has an ownership interest must be approved in advance by the Audit Committee. Audit Committee approval is not required for us to enter into a lease with an entity in which any of our Trustees is a director, employee or owner so long as the lease is entered into in the ordinary course of business and employees.is negotiated at arms-length and on market terms. Related Party Transactions Mr. Thompson, one of our Trustees, serves as the President and Chairman of the Board of Directors of Thompson Hospitality Corporation (“THC”). THC leases from us approximately 11,000 square feet for two restaurant locations. Those leases were negotiated at arms’ length, reflecting market conditions at the time they were negotiated, and are scheduled to expire on June 30, 2020 and December 31, 2021, subject to a tenant extension option. We anticipate receiving approximately $750,000 in rent and other related charges in 2018 from these two locations. In addition, during 2017 we had in place a partnership with THC pursuant to which our partnership leased a restaurant location from us in one of our properties. We owned 80% of the partnership and THC owned the remaining 20% of the partnership and acted as the manager of the restaurant and the partnership. The terms and structure of the partnership were negotiated at arms-length and reflected terms, structures and conditions consistent with other restaurant investments we have made. In 2017, we made the decision collectively with THC to terminate the partnership as well as the lease. This decision was based on the operating performance of the restaurant and not as a result of any disagreements between us and THC. We have finalized the dissolution of the partnership and termination of the lease and have already entered into a lease for the space with a new, unrelated restaurant tenant. The Board operates under Corporate Governance Guidelines. The Code of Ethicsreviewed these relationships with Mr. Thompson and determined that Mr. Thompson met all independence requirements for our senior financial officers, our Code of Business Conduct and our Corporate Governance Guidelines are availablehis service as a Trustee during 2017 as described in the Investors“Independence of Trustees” section above. None of our website atwww.federalrealty.com.named executive officers had or has any indebtedness to the Trust or any relationship with the Trust other than as an employee and shareholder. Employment andchange-in-control arrangements between the Trust and the named executive officers are described in the “Potential Payments on Termination of Employment andChange-in-Control” section below. ITEMPROPOSAL 1
– ELECTION OF TRUSTEES Our Board of Trustees currently has seven Trustees. The Board, on recommendation of the Nominating Committee, approved the nomination of the following individuals,Trustees, all of whom are currently serving on the Board,have been nominated to stand for election asat the 2018 Annual Meeting. All trustees toelected at the meeting will hold office until the 20172019 Annual Meeting of Shareholders and until their successors have been duly elected and qualified: | | | | | | | | | | | | Name | | Age | | | Position | | Trustee Since | | | Jon E. Bortz | | | 59 | | | Independent Trustee | | | 2005 | | | David W. Faeder | | | 59 | | | Independent Trustee | | | 2003 | | | Kristin Gamble | | | 70 | | | Independent Trustee | | | 1995 | | | Gail P. Steinel | | | 59 | | | Independent Trustee | | | 2006 | | | Warren M. Thompson | | | 56 | | | Independent Trustee | | | 2007 | | | Joseph S. Vassalluzzo | | | 68 | | | Independent Trustee Non-Executive Chairman of the Board | | | 2002 | | | Donald C. Wood | | | 55 | | | Non-Independent Trustee President and Chief Executive Officer of the Trust | | | 2003 | |
In connection with reviewing nominees to stand for election at the 2016 Annual Meeting of Shareholders, the Nominating Committee considered the following qualifications for each nominee:
Jon E. Bortz, President, Chief Executive Officer and Chairman of the Board of Pebblebrook Hotel Trust, a REIT that acquires and invests in upper upscale hotels in large US cities (from 2009 to the present); Chief Executive Officer and a Trustee (from 1998 to 2009), President (from 1998 to 2008) and Chairman of the Board (from 2001 to 2009) of LaSalle Hotel Properties, a multi-tenant, multi-operator hotel REIT; and various real estate related positions with Jones Lang LaSalle (from 1981 to 1998). Mr. Bortz brings to the Board public company, REIT and real estate experience. His experience as chief executive officer of LaSalle Hotel Properties and Pebblebrook Hotel Trust provide a valuable perspective for running a public real estate company while his real estate experience at Jones Lang LaSalle provides fundamental real estate experience critical to our core business.
David W. Faeder, Managing Partner of Fountain Square Properties, a diversified real estate company, since 2003; Vice Chairman (from 2000 to 2003), President (from 1997 to 2000) and Executive Vice President and Chief Financial Officer (from 1993 to 1997) of Sunrise Senior Living, Inc., a provider of senior living services in the United States, United Kingdom and Canada; and prior to that time, Vice President of Credit Suisse First Boston (formerly First Boston Corporation) and Morgan Stanley and Company, Inc. specializing in real estatetransactions. Director of Arlington Asset Investment Corp., a company that acquires and holds mortgage-related and other assets, including residential mortgage-backed securities issued by U.S. government agencies or guaranteed as to principal and U.S. government agencies or U.S. government-sponsored entities and mortgage-backed securities issued by private organizations. Mr. Faeder is a valuable member of the Board because of his public company and accounting experience, having previously served as the chief financial officer of Sunrise Senior Living, and his real estate investment experience from his time as a private real estate investor.
Kristin Gamble, Sr. Managing Director of American Capital Management, Inc., an investment management organization since January 2016. President of Flood, Gamble Associates, Inc. (from 1984 to 2015), an investment counseling firm, and prior to that time, various management positions with responsibility for investments and investment research with brokerage firms and other financial services companies. Director of Ethan Allen Interiors Inc., a furniture manufacturer and retailer (from 1992 to 2015). Ms. Gamble benefits the Board through her broad financial related experience from an investor perspective, including as President of her own investment counseling company for over 30 years, and before that, as an executive with responsibility for investments and investment research with various brokerage firms and other financial services companies.
Gail P. Steinel, Owner of Executive Advisors (from 2007 to present), which provides consulting services and leadership seminars to companies. Executive Vice President with BearingPoint, Inc. (from 2002 to 2007), a management and technology consulting firm that provides application services, technology solutions and managed services to companies and government organizations with responsibility for overseeing the global commercial services business unit; global managing partner and a founding member of Arthur Andersen’s business consulting practice (from 1984 to 2002). Director of MTS Systems Corporation, a provider of mechanical test systems, material testing, fatigue testing and tensile testing equipment as well as motion simulation systems and calibration services. Ms. Steinel has over 25 years of auditing and consulting experience that provides the Board with a helpful perspective on managing risk and systems operations.
Warren M. Thompson, President and Chairman of Thompson Hospitality Corporation, a food service company that owns and operates restaurants and contract food services, since founding the company in October 1992. Mr. Thompson is the president, chairman and founder of his own private food service company, Thompson Hospitality Corporation since 1992. Mr. Thompson’s experience running restaurants owned by Thompson Hospitality provides the Board and management with a unique perspective that is shared by a large percentage of the Trust’s retail tenants.
Joseph S. Vassalluzzo, Non-Executive Chairman of the Board of Trustees since February 2006; Vice Chairman of Staples, Inc. (from 2000 to 2005), a retailer specializing in home, office, and computer products, with responsibility for overseeing domestic and international growth in its retail and commercial operations; various other officer positions with Staples’ and Staples Realty & Development, a subsidiary of Staples, Inc. (from 1997 to 2000); Director of Office Depot, Inc., a global supplier of office products and services; Director of Life Time Fitness, Inc., an operator of distinctive and large sports, athletic, fitness and family recreation centers (from 2006 to 2015); Director of iParty Corp., a premier multi-channel party supply and party planning company (from 2004 to 2013). Mr. Vassalluzzo’s extensive background in retail and real estate as a result of having served as an executive with Staples, expanding the real estate owned by Staples Realty & Development, a subsidiary of Staples, Inc. for over 10 years and serving on the boards of a number of retailers provides the board and management with retail and retail real estate expertise that is essential to our core business.
Donald C. Wood, President and Chief Executive Officer of the Trust since January 2003; prior to that time, various officer positions with the Trust, including President and Chief Operating Officer (from 2001 to 2003), Senior Vice President and Chief Operating Officer (from 2000 to 2001), Senior Vice President-Chief Operating Officer and Chief Financial Officer (from 1999 to 2000) and Senior Vice President-Treasurer and Chief Financial Officer (from 1998 to 1999); Chairman of the Board of the National Association of Real Estate Investment Trusts (from November 2011 to November 2012); member of the Board of Governors (since 2010) and the Executive Committee (from February 2014 to May 2015) of the International Council of Shopping Centers; Director of Post Properties, Inc., a developer and operator of upscale multifamily communities in the United States. Mr. Wood has been employed by the Trust for over seventeen years and serves on the Board as the sole non-independent Trustee. His tenure with the Trust and his responsibilities as chief executive officer provides the Board with familiarity and details on all aspects of the operations of the Trust.
Vote Required
The affirmative vote of a plurality of votes cast at the Annual Meeting, in person or by proxy, is required for the election of Trustees. If any Trustee does not receive at least 50% of the votes cast at the Annual Meeting, he or she must tender his or her resignation to the Chairman of the Nominating Committee within five (5) business days after certification of the vote. The Nominating Committee will promptly consider the resignation and make a recommendation to the Board of Trustees. In deciding whether to accept or reject a resignation that has been tendered, the Nominating Committee and the Board will consider such factors as they deem appropriate and relevant which may include, among others: (a) the stated reasons why votes were withheld from the Trustee and whether those reasons can be cured; (b) the Trustee’s length of service, qualifications and contributions as a Trustee; (c) listing requirements of the NYSE, rules and regulations of the SEC and other applicable rules and regulations; (d) our Corporate Governance Guidelines; and (e) such other factors as the Nominating Committee
or the Board deems appropriate. Any rejection of a resignation may (but does not have to) be conditioned on curing the underlying reason for the withheld votes. The Board will take action on any resignation no later than sixty (60) days after the certification of the vote, and will disclose the action taken with a full explanation of the process used by the Board and the reason for its decision in a Form 8-K filed with the SEC within four (4) business days after the Board’s decision. If a Trustee’s resignation is accepted by the Board of Trustees, then the Board of Trustees may fill the resulting vacancy pursuant to our Bylaws. The Trustee who tenders his or her resignation will not participate in the recommendation of the Nominating Committee or the decision of the Board.
If you are a “registered” shareholder who elects to receive materials by mail and you sign and return but fail to give any voting instructions on your proxy card on this matter, the proxies identified on the proxy card will vote FOR the election of the named individuals. An abstention or broker non-vote will have no effect on the outcome of the vote on this proposal.qualified. You are entitled to cast one vote per Share for each of the seven named individuals. Proxies may not be voted for more than seven individuals.
Our Bylaws provide that in uncontested elections such as this one, a nominee must receive a majority of votes cast in order to be elected. An “abstention” or “brokerTHE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE SEVEN NOMINEES FOR TRUSTEE.non-vote” REPORT OF THE AUDIT COMMITTEE
The following Report will have no effect on the outcome of the Auditvote for this proposal.
| | | | |  | | The Board recommends that you vote “FOR” each of the nominees. |
NOMINEES The Nominating and Corporate Governance Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Trust filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Trust specifically incorporates this Report by reference therein. Management is responsible for identifying individuals who are qualified candidates to serve on our Board. The committee has identified the financial reporting process, including the systemfollowing seven individuals to stand for election at our 2018 Annual Meeting of internal controls, for the preparationShareholders. Each of consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) and for management’s report on internal control over financial reporting. The Trust’s independent registered public accounting firm, Grant Thornton LLP (“GT”),these nominees is responsible for auditing the consolidated financial statements and expressing an opinion on the financial statements and the effectiveness of internal control over financial reporting. The Audit Committee oversees the financial reporting process on behalf of the Board. In addition, the Audit Committee oversees the workcurrently a member of our internal audit function, which is performed by PricewaterhouseCoopers LLP (“PwC”).Board.
The Audit Committee meets at least quarterly and at such other times as it deems necessary or appropriate to carry out its responsibilities. The Audit Committee met four times during 2015 and three
| | | | | | Jon E. Bortz | 
| | Age: 61 Trustee since: 2005 Independent | | Business Experience: • President, Chief Executive Officer and Chairman of the Board of Pebblebrook Hotel Trust (2009 – present) • Various positions with LaSalle Hotel Properties including President, Chief Executive Officer, Trustee and Chairman of the Board (1998 – 2009) | Committees: | | | | Public Company Boards | • Audit | | • Pebblebrook Hotel Trust (2009 – present) | • Nominating and Corporate Governance | | | Specific Qualifications and Skills: Mr. Bortz brings to the Board public company, REIT and real estate experience. His experience as chief executive officer of LaSalle Hotel Properties and Pebblebrook Hotel Trust provide a valuable perspective for running a public real estate company while his real estate experience at Jones Lang LaSalle provides fundamental real estate experience critical to our core business. |
| | | | | | David W. Faeder | 
| | Age: 61 Trustee since: 2003 Independent | | Business Experience: • Managing Partner of Fountain Square Properties (2003 – present) • Various positions with Sunrise Senior Living, Inc. including Vice Chairman-President and Executive Vice President-Chief Financial Officer (1993 to 2003) | Board Committees: | | Public Company Boards: | • Audit | | • Arlington Asset Investment Corp. (2013 – present) | • Compensation (Chair) | | | Specific Qualifications and Skills: Mr. Faeder provides public company experience, accounting experience and real estate investing acumen to the Board, having previously served as the president and chief financial officer of Sunrise Senior Living and as an active private real estate investor. |
| | | | | | Elizabeth I. Holland | 
| | Age: 52 Trustee since: 2017 Independent | | Business Experience: • Chief Executive Officer of Abbell Credit Corporation and Abbell Associates, LLC (1997 – present) • Board of Trustees of the International Council of Shopping Centers (from 2004-2010 and 2015 to present), Chairman of these quarterly meetings included executive sessions with GT without management being present. In the course of fulfilling its oversight responsibilities, the Audit Committee met with both management and GT to review and discuss all annual and quarterly financial statements and quarterly operating results prior to their issuance. Management advised the Audit Committee that all financial statements were prepared in accordance with GAAP. The Audit Committee also discussed with GT matters required to be discussed pursuant to applicable Public Company Accounting Oversight Board audit standards, including the reasonableness of judgments and the clarity and completeness of financial disclosures. In addition, the Audit Committee discussed with GT matters relating to its independence and has received from GT the written disclosures and letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with GT its independence.
The Audit Committee continually monitors the non-audit services provided by GT. During 2015, the Audit Committee limited non-audit services primarily to income tax return preparation for us and our subsidiaries and the
provision of advice on the tax impacts and structuring of acquisition and other property related transactions. GT also performed the 2015 audit of the financial statements of two of our joint ventures. The Audit Committee approved GT’s performing these audits only after determining that it would not adversely impact GT’s independence.
The Audit Committee engaged PwC to provide our internal audit function in 2012 and continued to oversee PwC’s ongoing testing of the effectiveness of our internal controls during 2015. The findings of PwC were reported to the Audit Committee three times during 2015, and the Audit Committee met in executive session with PwC without management being present once during 2015. GT, as part of its 2015 audit of our financial statements, independently reviewed our internal controls and concluded that there were no material weaknesses.
On the basis of the reviews and discussions the Audit Committee has had with GT, PwC and management, the Audit Committee recommended to the Board of Trustees (2016 – 2017) and Vice Chairman of the Board of Trustees (2015 – 2016)
| Board Committees: | | Public Company Boards: | • Compensation | | • VICI Properties, Inc. (2017 – present) | • Nominating and Corporate Governance | | | Specific Qualifications and Skills: Ms. Holland brings to the Board a deep understanding of owning and investing in retail real estate from her experience as a private investor. Her insights into issues affecting many of our tenants learned from her experience as Chairman of the International Council of Shopping Centers also provides a valuable perspective for the Board to understand the Trust’s business. |
| | | | | | Gail P. Steinel | 
| | Age: 61 Trustee since: 2006 Independent | | Business Experience: • Owner of Executive Advisors (2007 – present) • Executive Vice President of BearingPoint, Inc. (2002 – 2007) • Global Managing Partner of Management and Technology Consulting Practice for Arthur Andersen (1984 – 2002) | Board Committees: | | Public Company Boards: | • Audit (Chair) | | • MTS Systems Corporation (2009 – present) | • Compensation | | | Specific Qualifications and Skills: Ms. Steinel has over 25 years of auditing and consulting experience that provides the Board with valuable accounting and financial expertise, as well as a helpful perspective on leadership and on managing risk and systems operations. |
| | | | | | Warren M. Thompson | 
| | Age: 58 Trustee since: 2007 Independent | | Business Experience: • President and Chairman of Thompson Hospitality Corporation since founding the company in October 1992 (1992 – present) | Board Committees: | | | • Audit | | | | • Nominating and Corporate Governance (Chair) | | | Specific Qualifications and Skills: Mr. Thompson’s experience running restaurants owned by Thompson Hospitality provides the Board and management with a unique perspective that is shared by a large percentage of the Trust’s retail tenants. |
| | | | | | Joseph S. Vassalluzzo | 
| | Age: 70 Trustee since: 2002 Non-Executive Chairman Independent | | Business Experience: • Non-Executive Chairman of the Board of Office Depot, Inc. (2017 – present) • Non-Executive Chairman of the Board of Federal Realty Investment Trust (from 2006 to present) • Various positions including Vice Chairman with Staples, Inc. (1989 – 2005) | Board Committees: | | Public Company Boards: | • Compensation | | • Office Depot, Inc. (2013 – present) | • Nominating and Corporate Governance | | • Life Time Fitness, Inc. (2006 – 2015) | | | • IParty Corp. (2004 to 2013) | Specific Qualifications and Skills: Mr. Vassalluzzo’s extensive background in retail and real estate as a result of having served as an executive with Staples, including his responsibility for expanding Staples real estate presence, as well as his current and prior service on the boards of a number of retailers provides the board and management with retail and retail real estate expertise that is essential to our core business. |
| | | | | | Donald C. Wood | 
| | Age: 57 Trustee since: 2003 CEO | | Business Experience: • President and Chief Executive Officer of Federal Realty Investment Trust (2003 – present) • Various other position including Chief Financial Officer and Chief Operating Officer (1998 – 2003) • Chairman of the Board of the National Association of Real Estate Investment Trusts (2011 – 2012) • Board of Governors of the International Council of Shopping Centers (2010 – present) | Board Committees | | Public Company Boards: | • None | | • Quality Care Properties, Inc. (2016 – present) | | | • Post Properties, Inc. (2011 – 2016) | Specific Qualifications and Skills: Mr. Wood’s tenure with the Trust and his responsibilities as chief executive officer provides the Board with familiarity and details on all aspects of the operation of the Trust. |
QUALIFICATIONS AND CHARACTERISTICS OF TRUSTEES In determining who should stand for election as a Trustee, the Nominating and Corporate Governance Committee tries to ensure that the Board approveis composed of individuals whose backgrounds, skills and experiences, when taken together, will provide the inclusion of our audited financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 for filingBoard with the SEC. Submitted by:
Gail P. Steinel, Chairperson
Jon E. Bortz
David W. Faeder
Warren M. Thompson
RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
GT has served asrange of skills and expertise to be able to effectively guide and oversee our independent registeredstrategy, operations and management. At a minimum, candidates should have the ability to exercise judgment in fulfilling his/her responsibilities, a professional background that would enable him/her to understand our business, public accounting firm forcompany, real estate, retail and/or other financial experience and a history of honesty, integrity and fair dealing with third parties. The skills and experience of the year 2015. The Audit Committee approvesTrustees in advance all fees paidareas we consider critical to and services provided by GT. In addition, the Audit Committee has considered those services provided by GT and has determined that such servicesour business are compatible with maintaining the independence of GT. During 2015 and 2014, we retained GT to provide servicesdescribed in detail in the following categoriesbiographies above and amounts:summarized below:
| | | | | | | | | | | | 2015 | | | 2014 | | Audit Fees(1) | | $ | 654,051 | | | $ | 591,951 | | Audit-Related Fees(2) | | | 59,063 | | | | 26,763 | | Tax Fees(3) | | | 287,854 | | | | 238,205 | | Other | | | 0 | | | | 0 | | | | | | | | | | | Total | | $ | 1,000,968 | | | $ | 856,919 | |
(1) | Audit fees include all fees and expenses for services in connection with: (a) the audit | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Qualifications/Skills of our financial statements included in our annual reports on Form 10-K; (b) Sarbanes-Oxley Section 404 relating to our annual audit; (c) the review of the financial statements included in our quarterly reports on Form 10-Q; and (d) consents and comfort letters issued in connection with debt offerings and common stock offerings. These figures do not include $15,750 in 2015 and $17,325 in 2014 we paid to GT as our 30% share of the cost of the 2015 and 2014 financial statement audits of our joint venture with affiliates of a discretionary fund created and advised by Clarion Partners.Nominees | | Bortz | | Faeder | | Holland | | Steinel | | Thompson | | Vassalluzzo | | Wood | | | | | | | | | Business/Executive Leadership | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | | | | | | | | REIT/Public Company | | ● | | ● | | ● | | ● | | | | ● | | ● | | | | | | | | | Investment/Financial/Accounting | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | | | | | | | | Real Estate | | ● | | ● | | ● | | | | | | ● | | ● | | | | | | | | | Retailing Industry | | | | | | ● | | | | ● | | ● | | | | | | | | | | | Operational Management | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | | | | | | | | Risk Oversight/Management | | ● | | ● | | ● | | ● | | ● | | ● | | ● |
(2) | Audit-related fees primarily include the audit of our employee benefit plan and the audit of one of our properties. |
(3) | $234,224 and $204,308 of the amounts shown for 2015 and 2014, respectively, relate solely to tax compliance and preparation, including the preparation of original and amended tax returns and refund claims and tax payment planning. These figures do not include $3,210 in 2015 and $3,120 in 2014 we paid to GT as our 30% share of the cost of tax return preparation for our joint venture with affiliates of a discretionary fund created and advised by Clarion Partners. The remaining amounts relate to requested tax research, none of which research related to tax shelters. |
ITEM 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The AuditNominating and Corporate Governance Committee ofalso seeks geographic, age, gender and ethnic diversity on the Board. Although the Board of Trustees has retained GT as our independent registered public accounting firm fornot adopted any specific policies on diversity, the year ending December 31, 2016Committee and is asking the shareholders to ratify that selection. Our organizational documents do not require ratification of the selection of our independent registered public accounting firm; however, we are seeking ratification because weBoard believe that itdiversity is a matterfactor to be considered that is consistent with the goal of good corporate practice to do so. Ifcreating a Board that best serves the selection of GT is not ratified, the Audit Committee may reconsider whether to retain GT. Even if the selection of GT is ratified, the Audit Committee may change the appointment of GT at any time if it determines such a change would be in the best interestsneeds of the Trust and our shareholders. Our nominees reflect the Board’s efforts and commitment to diversity with two women and one African American included in that group. A representative of GT will be presentPROCESS FOR SELECTING TRUSTEES
In considering nominees to stand for election at the Annual Meeting, the Board and will have the opportunity to make a statementCommittee evaluate each person’s background, qualifications and answer appropriate questions from shareholders. The Audit Committee believes that GT is qualifiedattributes to serve as a Trustee based on the criteria described above and for incumbent Trustees, their years of experience working together on the Board and the deep knowledge of the Trust they have developed as a result of such service on the Board. This is especially important in our independent registered public accounting firm. GT is familiar with our affairscompany where real estate decisions and financial procedures, having served as our independent accountant since June 2002. GT is registered withstrategy often take years to develop and require a full understanding of history in setting strategies and making decisions. The Board and the Public Company Accounting Oversight Board. Pursuantcommittee also consider each incumbent Trustee’s contributions to the effectiveness of the Board and its charter,committees based on the Audit Committee must pre-approve all auditin-depth individual trustee evaluations completed each year for each Board member by each other Board member.
To identify, recruit and non-audit services provided by GT. For 2016,evaluate qualified new candidates for the Audit CommitteeBoard, the Board first looks to date has approved GT providing the following non-audit services: (a) tax planningindividuals known to current Board members through business and other consultationrelationships. If the Board is not able to identify qualified candidates in that way, the services of a professional search firm would be used. Ms. Holland was identified by Board members through her participation and leadership position in the International Council of Shopping Centers, a key industry organization for purposesthe Trust’s business. Prior to her nomination, Ms. Holland met separately with and was evaluated by ourNon-Executive Chairman, the Chair of structuring acquisitions, dispositions, joint venturesthe Nominating and other investment or financing opportunitiesCorporate Governance Committee, our CEO as well as consultation associated with financial reporting matters providedother Board members. It was only after this process was complete that Ms. Holland was nominated for the aggregate amount paidBoard. PROCESS FOR SHAREHOLDERS TO RECOMMEND TRUSTEE NOMINEES Shareholders may propose a candidate to Grant Thorntonbe nominated for such services does not exceed $100,000; (b) issuanceelection to the Board by following the procedures outlined in our Bylaws, a copy of comfort letters and consents in connection with capital markets transactions approvedwhich can be obtained by sending a written request to Investor Relations at 1626 East Jefferson Street, Rockville, Maryland 20852. If you want to recommend a nominee, you can submit a written recommendation in accordance with our Bylaws that includes the name, qualifications and other pertinent information about the nominee to the Trust’s policiesSecretary at our Rockville office. Any recommendation for a nominee to be considered at our 2019 Annual Meeting must be submitted no later than November 23, 2018. TRUSTEE COMPENSATION Ournon-employee Trustees receive the following compensation for their service on the Board: | | | | | Compensation Element | | Form of Payment | | Amount | Non-Executive Chairman Annual Retainer | | Cash | | $106,000 | Non-Executive Chairman Annual Retainer | | Shares | | $159,000 (fully vested on grant date) | Non-Employee Trustee Annual Retainer | | Cash | | $76,000 | Non-Employee Trustee Annual Retainer | | Shares | | $114,000 (fully vested on grant date) | Committee Chair Fees | | Cash | | $20,000 for Audit Committee $10,000 for Compensation Committee $10,000 for Nominating Committee | Equity Ownership Guidelines | | | | Trustees are required to maintain ownership of Trust stock having a value equal to 5 times the amount of the annual cash retainer. This requirement must be met within 5 years after joining the Board |
As of December 31, 2017, all Trustees then serving on the Board complied with the required level of stock ownership with the exception of Ms. Holland, who joined the Board in February 2017 and procedures provided thatis expected to satisfy the aggregate amount paid to Grant Thornton for such services does not exceed $125,000; (c) issuance of audit opinions related to acquisition audits required under Rule 3-14 of Regulation S-X provided thatrequirement within the aggregate amount paid to Grant Thornton for such services does not exceed $75,000; and (d) a limited review of the Trust’s letter to the State of California EPA provided that the aggregate amount paid to Grant Thornton for such services does not exceed $3,400. The scope and amount of non-audit services that GT can perform in 2016 has remained relatively unchanged the last few years. Once the pre-approved dollar limit for the applicable non-audit service has been reached, no additional services of that type can be provided by GT without further approval by the Audit Committee. The Audit Committee has concluded that GT’s providing these permissible non-audit services up to the aggregate pre-approved amounts would not compromise GT’s independence. The Audit Committee may approve GT providing additional non-audit services or services in excess of the amounts specified above if it determines that it is in our best interest and that GT’s independence would not be compromised. All audit and non-audit services provided to the Trust by GT for the 2015 fiscal year are described in the “Relationship With Independent Registered Public Accounting Firm” section above.5-year time frame.
In addition to the foregoing non-auditannual retainer described above, Mr. Vassalluzzo receives administrative support for both Trust business and personal use from our regional office in Wynnewood, Pennsylvania. There were no additional fees paid or services the Audit Committee also approved GT performing auditsprovided to any Trustee for service on any of the Board committees or for attendance at any Board or committee meetings other than those described above. Total compensation awarded to Trustees for service in 2017 was as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Retainer | | | Committee Chair Fees | | | All Other Compensation | | | Total | | Name | | Paid in Cash | | | Paid in Shares(1) | | | | | | | | | | | Jon E. Bortz | | $ | 76,000 | | | $ | 114,000 | | | $ | — | | | $ | — | | | $ | 190,000 | | | | | | | | David W. Faeder | | $ | 76,000 | | | $ | 114,000 | | | $ | 10,000 | | | $ | — | | | $ | 200,000 | | | | | | | | Kristin Gamble(2) | | $ | 63,507 | | | $ | — | | | $ | — | | | $ | — | | | $ | 63,507 | | | | | | | | Elizabeth I. Holland(3) | | $ | 69,545 | | | $ | 104,500 | | | $ | — | | | $ | — | | | $ | 174,045 | | | | | | | | Gail P. Steinel | | $ | 76,000 | | | $ | 114,000 | | | $ | 20,000 | | | $ | — | | | $ | 210,000 | | | | | | | | Warren M. Thompson | | $ | 76,000 | | | $ | 114,000 | | | $ | 10,000 | | | $ | — | | | $ | 200,000 | | | | | | | | Joseph S. Vassalluzzo(4) | | $ | 106,000 | | | $ | 159,000 | | | $ | — | | | $ | 7,500 | | | $ | 272,500 | | | | | | | | Total | | $ | 543,052 | | | $ | 719,500 | | | $ | 40,000 | | | $ | 7,500 | | | $ | 1,310,052 | |
| (1) | Shares were issued on January 2, 2018 with the number of Shares received by each Trustee determined by dividing the amount to be paid in Shares by $132.81, the closing price of our Shares on the NYSE on December 29, 2017, the last business day prior to the date the Shares were issued. |
| (2) | Pro-rated for partial year of service through retirement from the Board on May 2, 2017. |
| (3) | Pro-rated for partial year of service beginning February 1, 2017. |
| (4) | Estimated value of the administrative services. We do not believe there is any incremental cost to us of providing this administrative support. |
| | EXECUTIVE OFFICER AND COMPENSATION INFORMATION |
EXECUTIVE OFFICERS Our named executive officers (“NEOs”) are: | | | | | | | | Name | | Age | | Position | | | | Donald C. Wood | | 57 | | President and Chief Executive Officer | | | | Daniel Guglielmone | | 51 | | Executive Vice President – Chief Financial Officer and Treasurer | | | | Dawn M. Becker | | 54 | | Executive Vice President – General Counsel and Secretary |
Donald C. Wood, Information for Mr. Wood is provided above in “Proposal 1 – Election of Trustees.” Daniel Guglielmone, Executive Vice President – Chief Financial Officer and Treasurer of the Trust (since August 2016) with responsibility for overseeing the Trust’s capital markets, financial statementsreporting, investor relations, corporate communications and East Coast acquisitions; Senior Vice President-Acquisitions & Capital Markets of Vornado Realty Trust (2003 – 2016); Director of the real estate and lodging group of Salomon Smith Barney / Citigroup (1993 – 2003) and the retail division of Douglas Elliman Commercial Real Estate (1989 to 1992). Dawn M. Becker, Executive Vice President – General Counsel and Secretary (since April 2002) with responsibility for properties owned in twooverseeing various of the Trust’s corporate functions including the Trust’s Legal, Human Resources and Information Technology Departments; and prior to that time, various officer positions with the Trust, including Executive Vice President – Managing Director Mixed Use Operations (2015 – 2016), Executive Vice President – Chief Operating Officer (2010 – 2015) and Vice President – Real Estate and Finance Counsel (2000 – 2002). PROPOSAL 2 – ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS You are being asked to approve on an advisory basis the compensation of our joint venturesNEOs as described in the Compensation Discussion and Analysis (“CD&A”), the Summary Compensation Table, the supplemental tables and the disclosure narratives that follow. This is an opportunity to express your opinion regarding the decisions made by the Compensation Committee on the compensation of our NEOs for 2017; however, it will not affect any compensation already paid or awarded for 2017 and will not be binding on the fiscal year ending December 31, 2016.Compensation Committee, the Board or the Trust. The AuditBoard and our Compensation Committee approved GT performingvalue the opinions of our shareholders and will review the results of this vote and take those results into consideration in addressing future compensation policies and decisions. As described in more detail below, our compensation packages include base salaries, annual cash incentive compensation, long-term equity incentives and other market appropriate benefits and perquisites. We believe our compensation programs and policies are appropriate and effective in retaining and motivating our NEOs to achieve superior results for our shareholders and that it aligns those individuals with your interests as our shareholders. A few highlights of our compensation programs are: A significant portion of our NEOs’ compensation is directly linked to our performance and the creation of long-term shareholder value through long-term incentive awards. The value of these audits usingawards is only recognized over a6-year period that includes a3-year performance period, an award date, plus a minimum3-year vesting period after the same criteria it usesaward date. The compensation of our NEOs is strongly tied to our performance and to the performance of the individual. The annual incentive compensation is only paid if we achieve our annual FFO (see definition below in Compensation Discussion and Analysis) per share objective and long-term incentives are earned on the basis of our absolute and relative total shareholder returns as well as our return on invested capital. We have an appropriate balance of pay between short-term and long-term objectives. Our NEOs are incentivized to act in the best long-term interests of the Trust through stock ownership guidelines. We have no perquisites for approving non-audit services.our NEOs that are not widely available to other employees other than as described in the CD&A and the “Potential Payments on Termination of Employment andChange-in Control” section below. Vote Required
The affirmative vote of a majority of votes cast at the Annual Meeting, in person or by proxy, is required to approve the proposal to ratify the Audit Committee’s selection of GT as our independent registered public accounting firm for 2016. If you are a “registered” shareholder who elects to receive materials by mail and you sign and return but fail to give any voting instructions on your proxy card on this matter, the proxies identified on the proxy card will vote FOR this proposal. An “abstention” or broker “non-vote”“brokernon-vote” will have no effect on the outcome of the vote on this proposal, however, if you fail to give instructions to your broker, your broker may have authority to vote the shares for this proposal. | | | | | | | | The Board recommends that you vote “FOR” this proposal on the compensation of our NEOs for 2017. |
The text of the resolution if Proposal 2 is passed is: RESOLVED, that the shareholders of the Trust hereby approve, on an advisory basis, the compensation of our NEOs as described in the CD&A, the Summary Compensation Table, the supplemental tables and the narrative disclosures accompanying these materials as required by Item 402 of RegulationTHE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSAL TO RATIFY THE AUDIT COMMITTEE’S SELECTION OF GT AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2016.S-K. EXECUTIVE OFFICERSCOMPENSATION DISCUSSION AND ANALYSIS
Our current “named executive officers” are:
This Compensation Discussion and Analysis describes the Trust’s compensation programs and compensation decisions for our NEOs for 2017. 2017 Performance Highlights The Trust’s business plan of delivering long-term sustainable growth through investment in high quality, retail based properties located primarily in major coastal US markets resulted in record levels of performance in 2017 including total revenue, operating income and funds from operations (“FFO”)1 per share. These record level results were achieved despite the headwinds from significant levels of retailer failures and store closures in 2017. 
The sustained long-term growth in these and other financial metrics reflects the Trust’s disciplined approach to investing in and operating its assets and provided the foundation for 2017 to have marked the 50th consecutive year that the Trust increased its common dividend to shareholders, a milestone achieved by a small percentage of other US public companies and by no other real estate investment trust. 
The ability to achieve these results during such uncertain times for any business that is tied to the retail industry was only possible because of the creation and execution of the long-term business plan developed by our Board of Trustees and management team focused on generating increasing streams of cash flow and the creation of long-term value for our shareholders during all kinds of economic cycles. Some of the key components of that business plan include: Income diversification so that no one retailer accounts for more than approximately 3% of our income in any given year Income diversification through investment in retail and office uses inmixed-use environments that benefit from a strong retail base Investing and reinvesting in those locations where demand for retail exceeds supply Investing in those retailers who we believe have the best chance of adapting to changing trends for long-term success Managing the balance sheet for the long-term including raising capital opportunistically when market conditions are favorable despite short-term dilution | 1 | FFO is a supplementalnon-GAAP financial measure of a real estate company’s operating performance. We follow the definition of FFO provided by the National Association of Real Estate Investment Trusts (“NAREIT”) which is included on Appendix A along with a reconciliation of net income to FFO available for common shareholders. |
Part of the Trust’s long-term focused business plan includes its ongoing environmental, workplace and social initiatives. Since 2012, the Trust has invested more than $1.2 billion in building construction that has been certified as green by the United States Green Building Council and other similar groups. During that same time period, we’ve also invested nearly $35 million dollars in 22 active production solar photovoltaic systems with an additional $12 million dollars currently being invested in 10 more solar photovoltaic systems expected to be placed into service in 2018. In total, these 32 solar systems are projected to generate nearly 18.5 kWH of electricity on an annualized basis, offsetting nearly 30 million pounds of CO2 which is the equivalent of providing all electricity needs for more than 2,000 households for one year. In 2017, the Trust again participated in the Global Real Estate Sustainability benchmark report and achieved 4 Green Stars with an overall score of 78. In addition to the direct investment in sustainable development, social impact is pursued through innovative partnerships such as Up Top Acres where existing green roof infrastructure at properties is being farmed and producing vegetables used by restaurants in those properties, reflecting the Trust’s commitment to enhancing the communities in which we do business. 2017 marked the 10th consecutive year that the Trust received the Alliance for Workplace Excellence Seal of Approval for both Overall Workplace Excellence and Health and Wellness as well as the 7th consecutive year of receiving the Workplace Excellence Seal of Approval for ECO Leadership. The company also expanded its charitable giving in 2017 by creating a program for employees to donate vacation days which the Trust converted to cash that was donated to help the victims of the 2017 hurricanes in addition to its other ongoing programs. We take our social responsibility seriously. 2017 Compensation Highlights Significant portions of the total pay for our NEOs is variable incentive pay tied to shareholder returns and operational performance. Despite delivering record financial results in 2017, our three-year total return to shareholders on an absolute basis fell below our minimum acceptable level and our three-year total shareholder return relative to the other shopping center REITs in the Bloomberg REIT Shopping Center Index (“BBRESHOP”) was not as strong as it was in previous years. As a result, and even taking into account exceeding targeted performance on our annual operating goals, the total pay earned by our CEO in 2017 was lower than total pay earned by our CEO in 2016 by nearly 19%. This result is a reflection of the effectiveness of the design of our compensation programs to reward executives when we create value for our shareholders and not to reward our executives when we do not create value. Some specific decisions and results impacting 2017 compensation for our NEOs include: No base pay increase for our CEO No change in the target compensation levels for our CEO’s performance based compensation Payout under our annual bonus plan of 110.71% of target versus 100.00% of target in 2016 Payout under our long-term incentive plan of 93.75% of target in 2017 versus 146.29% of target in 2016 At each of our Annual Shareholder Meetings for the past three years, we have received at least 94% approval for our advisorysay-on-pay vote. We believe this strong level of support reflects a high degree of shareholder confidence that our compensation plans are rewarding our executives appropriately and as a result, no changes were made to the basic plan design in 2017. 2017 Compensation and Compensation Components We provide our NEOs with three primary components of compensation, each of which serves a unique purpose in compensating and rewarding our NEOs and creates alignment between our NEOs and our shareholders. Those primary compensation elements include base salary, annual cash bonus and long-term equity incentives. | | | | | | | Name | | Age | | | Position | Donald C. Wood
Type and Form of Pay | | | 55 | Objectives | | | | | | | | | | | | | | | President and Chief Executive Officer | | | Compensates executives for carrying out the duties of the job | | Fixed | | | | Base Salary | | | | James M. Taylor, Jr.Recognizes individual experience, skills and performance
| | | | | | 49 | | | Provides value to attract and retain talented executives | | | | | | | | | | At Risk Pay Tied to Performance | | | | | Executive Vice President—Chief Financial Officer and Treasurer | | | Incentivizes accomplishment of annual business objectives | | | | Annual Bonus | | | | Dawn M. BeckerAligns interests of executives with our shareholders
| | | | | 52 | | | Provides value to attract and retain talented executives | | | | | | | | | | | | | Executive Vice President—General Counsel and Secretary |
Donald C. Wood, Information for Mr. Wood is provided above in “Item 1—Election of Trustees.”
James M. Taylor, Jr.,Executive Vice President-Chief Financial Officer and Treasurer of the Trust (since August 2012) with responsibility for overseeing the Trust’s capital markets, financial reporting, investor relations, corporate communications, information technology and East Coast acquisitions; Executive Vice President-Managing Director Southeast Core Operations of the Trust (since June 2015) with responsibility for overseeing the southeast core shopping center operations and asset management functions; Executive Vice President of the Trust from July 30, 2012 until August 14, 2012; and a senior managing director in the real estate investment banking division of Eastdil Secured and predecessors Wachovia Securities and First Union Securities (1998 to 2012). Prior to his career in investment banking, Mr. Taylor practiced corporate and securities law at Hunton & Williams (1994 to 1998) and worked as a senior accountant for Price Waterhouse (1988 to 1991).
Dawn M. Becker, Executive Vice President-General Counsel and Secretary of the Trust (since April 2002) with responsibility for overseeing the Trust’s Legal Department; Executive Vice President-Managing Director Mixed Use Operations of the Trust (since June 2015) with responsibility for overseeing the Trust’s mixed use operations and asset management functions and prior to that time, various officer positions with the Trust, including Executive Vice President – Chief Operating Officer (2010 to 2015) and Vice President—Real Estate and Finance Counsel (2000 to 2002).
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation, Discussion and Analysis (“CD&A”) describes the material components of, and the material factors and considerations behind, the compensation and benefits paid to our named executive officers.
You will be asked in Item 3 of this proxy statement to provide a non-binding, advisory vote on the compensation of our named executive officers as described in the following sections of this proxy statement. Please keep that in mind as you review the CD&A, summary compensation table, the supplemental tables and narrative disclosures that follow.
Executive Summary:
At our 2015 annual shareholder meeting, more than 98% of the Shares voted at the meeting supported our advisory vote on compensation for our named executive officers. We believe this high level of support reflected a high degree of shareholder confidence in our executive compensation programs and as a result, no changes were made to the compensation programs for our named executive officers in 2015.
Financially, 2015 was another record year of performance that kept us on track with our long-term business plan objectives. Some of the 2015 highlights included:
Revenues:
Record level of gross revenues
Funds from Operations Available for Common Shareholders (“FFO”). FFO is a metric commonly used by REITs to measure performance:
Record level of FFO per share of $5.32 (excluding the impact of a debt prepayment charge)
7.7% greater than 2014 (both years adjusted to exclude the impact of debt prepayment charges)
| | • | | 4th consecutive yearIncentivizes accomplishment of FFO per share growth of 7% or greater (excluding the impact of debt prepayment charges)
|
Leasing:
Signed 316 new and renewal leases (1.4 million square feet) for space in which there was a prior tenant
Cash basis rents 17% higher than the prior rent (an additional $6.4 million of rent per year)
Balance Sheet:
Raised $564.7 million of debt and equity capital
Lowered weighted average interest rate on debt to 4.1% and increased weighted average term to 10 years
Acquisitions/Developments:
Acquired $272.7 of new properties which provide immediate cash flow benefit as well as longer-term redevelopment opportunities
Opened The Point, El Segundo, CA, a 115,000 square foot retail and office project adjacent to our Plaza El Segundo property
Broke ground on the next phases of development at Assembly Row, Somerville, MA and Pike & Rose, North Bethesda, MD
Signed a lease for the entirety of our 234,500 square foot office building under construction at Santana Row, San Jose, CA
Dividends:long-term business objectives critical to delivering shareholder value
| | • | | Long-Term Equity Incentive | | | | IncreasedAligns interests of executives with our cash dividendshareholders
| | | | | | | | Promotes executives’ ownership in the company | | | | | | | | Provides value to shareholders for the 48th consecutive yearattract and retain talented executives |
Shareholder Returns:
Delivered total returnsWe also provide various health and welfare related benefits to our shareholders (including reinvestment of dividends) of 116.0% overNEOs that are generally the past 5 years, 52.5% over the past 3 years and 12.3% over the past 1 year.
With respectsame as provided to compensationall of our named executive officers, the Compensation Committee took the following actions:
Chief Executive Officer—increased Mr. Wood’s target award level under our performance based, long-term equity program to $5 millionemployees. These benefits are competitive with those offered by companies that we compete with for talent and based on 2015 performance, exercised discretion permitted underprovide another tool that program to increase his award by approximately 5%. This was the first change of any kind to Mr. Wood’s target compensation since 2010 and the first time in more than 5 years the Committee exercised discretion to increase Mr. Wood’s award under our equity program.
Chief Financial Officer—increased annual base pay for Mr. Taylor to $450,000, the first such increase to his base pay since he joined the Trust in 2012, and based on 2015 performance, exercised discretion permitted under our long-term equity program to increase Mr. Taylor’s award by approximately 4%. This was the first time since Mr. Taylor joined the Trust that the Committee exercised discretion to increase his award under our equity program.
General Counsel—increased annual base pay for Ms. Becker to $450,000, the first such increase to her base pay since 2011.
No other changes were made for 2015 to the compensation of our named executive officers.
The following chart sets forth the target compensation for each of our named executive officers for 2013, 2014 and 2015 and the actual compensation earned by each such officer for those years based on company performance as measured against our performance hurdles for our annual performance bonus plan and our long-term, performance based equity plan.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2013 | | | 2014 | | | 2015 | | | NEO | | Compensation Component | | Target | | | Actual | | | Target | | | Actual | | | Target | | | Actual | | Wood | | Base | | $ | 850,000 | | | $ | 850,000 | | | $ | 850,000 | | | $ | 850,000 | | | $ | 850,000 | | | $ | 850,000 | | | | Annual Performance Bonus(a) | | $ | 1,275,000 | | | $ | 1,540,583 | | | $ | 1,275,000 | | | $ | 1,540,583 | | | $ | 1,275,000 | | | $ | 1,540,583 | | | | Long-Term Performance Based Equity(b) | | $ | 4,000,000 | | | $ | 6,000,000 | | | $ | 4,000,000 | | | $ | 3,000,000 | | | $ | 5,000,000 | | | $ | 7,000,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 6,125,000 | | | $ | 8,390,583 | | | $ | 6,125,000 | | | $ | 5,390,583 | | | $ | 7,125,000 | | | $ | 9,390,583 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Becker | | Base | | $ | 425,000 | | | $ | 425,000 | | | $ | 425,000 | | | $ | 425,000 | | | $ | 450,000 | | | $ | 450,000 | | | | Annual Performance Bonus(a) | | $ | 318,750 | | | $ | 385,146 | | | $ | 318,750 | | | $ | 385,146 | | | $ | 337,500 | | | $ | 407,801 | | | | Long-Term Performance Based Equity(b) | | $ | 600,000 | | | $ | 900,000 | | | $ | 600,000 | | | $ | 450,000 | | | $ | 600,000 | | | $ | 798,750 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 1,343,750 | | | $ | 1,710,146 | | | $ | 1,343,750 | | | $ | 1,260,146 | | | $ | 1,387,500 | | | $ | 1,656,551 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Taylor | | Base | | $ | 400,000 | | | $ | 425,000 | | | $ | 400,000 | | | $ | 425,000 | | | $ | 450,000 | | | $ | 450,000 | | | | Annual Performance Bonus(a) | | $ | 300,000 | | | $ | 362,490 | | | $ | 300,000 | | | $ | 362,490 | | | $ | 337,500 | | | $ | 407,801 | | | | Long-Term Performance Based Equity(b) | | $ | 750,000 | | | $ | 900,000 | | | $ | 750,000 | | | $ | 450,000 | | | $ | 750,000 | | | $ | 798,750 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 1,450,000 | | | $ | 1,687,490 | | | $ | 1,450,000 | | | $ | 1,237,490 | | | $ | 1,537,500 | | | $ | 1,656,551 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(a) | Does not include additional amounts paid in consideration of any portion of the annual performance bonus the named executive officer elects to have paid in stock that vests over a 3 year period. |
(b) | Awards are earned based on performance for the three-year period ending on December 31 of the year indicated and then vest equally over the next three years. For example, the awards reflected for 2015 were earned based on performance from January 1, 2013 through December 31, 2015 and will vest equally in each of 2017, 2018 and 2019. |
The actual compensation earned by our named executive officers for the annual performance bonus and performance based, long-term equity program as reflected in the chart above differs from the amounts shown in the Summary Compensation Table for the years shown primarily because the chart above reflects those amounts in the performance year in which they were earned and the Summary Compensation Table reflects these amounts in the year in which they were paid. We believe the chart above is helpful because it allows the actual compensation earned in any given year to be understood in the context of the Trust’s financial and other performance for that year.
Compensation Philosophy and Objectives:
Our compensation programs are designed to create a compensation package for each named executive officer that is sufficiently competitiveus to attract and retain top-level real estate professionalstalented executives.
Annual Compensation Annual compensation for our NEOs is paid in both cash and to motivate those individuals to achieve superior results for us and our shareholders. As part of this compensation philosophy, we try to provide a strong link between an executive’s total earnings opportunity and both our short-term and long-term performance based on the achievement of pre-determined financial targets and operating goals and to encourage our executives to enhance shareholder value by acting and thinking like shareholders. The key principles guiding our compensation decisions are: 1. Total compensation opportunities must be competitiverestricted stock with the marketplace so that we can attract, retain and motivate talented executives who are necessary for achieving superior results for the Trust; however, the aggregate compensation levels must be reasonable in the context of our overall cost structure and must support our business strategy.
2. The compensation of our named executive officers should include a significant portion that is “at risk”at risk and variable dependingcontingent on both our short-term financialachieving either annual or longer term performance and long-term creation of shareholder value with the largest portion of that “at risk” compensation designed to incentivize the creation of sustainable, long-term shareholder value. The “at risk” portion of 2015 compensation for our named executive officers is comprised of annual performance bonuses under our Annual Bonus Plan and performance based, long-term equity awards under our LTIAP, both of which are earned only if the Trust meets pre-established performance hurdles. As you can see from the chart below, these “at risk” portions of compensation represent a significant percentage of the total compensation for each of our named executive officers—91% for Mr. Wood, 73% for Ms. Becker and 75% for Mr. Taylor.
3. We want our executives to act in the best interest of our shareholders and incentivize that behavior by having a significant portion of their compensation paid in the form of equity and by requiring that they maintain a meaningful ownership position. We require Mr. Wood, as our CEO, to have an equity ownership in the Trust of at least three times his base salary and annual performance bonus and that Ms. Becker and Mr. Taylor each have an equity ownership in the Trust of at least two and one-half times their respective base salary and annual performance bonus. Each of Mr. Wood, Ms. Becker and Mr. Taylor were in compliance with this requirement as of December 31, 2015. We also prohibit all of our officers and Trustees from engaging in any hedging or pledging activities with respect to the Trust’s stock.
4. The amount each executive actually earns out of his or her total compensation opportunity should vary based on the individual’s performance, contribution and overall value to the business. The proportion of an individual’s total compensation that varies with individual and company performance objectives should increase as the individual’s business responsibilities increase.
In crafting our compensation policies and programs, we also consider whether they will encourage excessive or unnecessary risk taking and as described in the “Risk Management Oversight” section, we have concluded that our compensation programs do not do so. We do not currently have any clawback or other compensation recovery policy with respect to compensation that may have been paid on the basis of incorrect financial results. Given the SEC’s pending clawback rule and the expectation that the final rule will be adopted in 2016, the Board elected to wait until the final rulemaking was in place before adopting a clawback policy so that our policy would be in full compliance with SEC requirements.
Compensation Methodology
The Compensation Committee of the Board is responsible for approving all compensation for our named executive officers and periodically reviews all elements of compensation to ensure that we remain competitive in the market and that overall compensation, including the means by which payment is made, is aligned with our business objectives, our performance and the interests of our shareholders. The Compensation Committee conducts an annual review of our CEO’s performance and takes those results into consideration when setting his compensation. Our CEO makes recommendation for the compensation for our other named executive officers based on his evaluation of their performance and the Compensation Committee has the discretion to accept, reject or modify the CEO’s recommendations.
goals. The total potential compensation for our named executive officers is established based on the scope of theirhis/her individual responsibilities and contributions to our performance taking into account competitive market compensation paid for similar positions. Competitive marketOur Compensation Committee determines appropriate levels of total compensation for our named executive officers is generally determinedNEOs by the Compensation Committee members applying their individual understanding, experiences and judgments in the national marketplace of senior level real estate positions and related industry pay in both public and private concernscompanies that may compete for our executives while also considering the relative importance of various positions at the Trust given our business plan and organization compared with the business plans of our major competitors. The Compensation Committee consulted the National Association of Real Estate Investment Trust’s 2014 and 2015 Compensation Surveysalso consults compensation surveys prepared for NAREIT (“NAREIT Surveys”) to confirm its assessment of appropriate market compensation for our named executive officers, bothNEOs, reviewing the information reported for each position by the 121126 real estate investment trusts (“REITs”) that participated in the latest survey as well as by the approximately 28 retail focused REITs that participated in thethat survey. Not all REITs that participated in the survey provided information for each of the named executive officer positions and it is not possible to determine from the NAREIT Survey which of the participating REITs provided information for which executive officer position. Once the Compensation Committee determines an appropriate level of aggregate compensation for our named executive officers, anAn individual compensation package is then created for each NEO using a combination of base salary, annual cash bonus and long-term equity incentives all in accordance withto provide the compensation philosophy and objectives described earlier. Elements of Total Compensation
Base Salaries
Base salaries are used to compensate the executive for services rendered during the year. Base salaries are set at the beginning of each year and are intended to be competitive with the market and commensurate with the executive’s level of responsibility, experience and sustained individual performance. Base salaries provide retention value and also align the executive with shareholder interests. Generally, we believe that executive base salaries should account for a relatively modest portion of each individual’s total compensation package. Because we start our process with determining an appropriate level of potential total annual compensation and the right balance of fixed versusat-risk compensation. For our CEO, approximately 87% of his total compensation earned for 2017 wasat-risk and earned based on the level of attainment of our performance goals. Approximately 69% of the total compensation earned for 2017 by our NEOs other than the CEO was at risk.
| | | 2017 CEO Compensation Mix | | 2017 Other NEO Compensation Mix |  | |  |
Fixed Compensation – Base Salary Base salary is the only fixed component of the compensation paid to our NEOs. Because base salaries are just one component of total pay, we do not target base salaries to any specific level. We did, however, use information in the NAREIT Survey as a guide tolevel but do confirm that the base salaries for our named executive officersNEOs are within market parameters.parameters using the NAREIT Survey and market knowledge. All base salary decisions for our NEOs are made at the first Compensation Committee meeting of the year and take effect on January 1 of that year. In 2017, neither Mr. Wood nor Ms. Becker received an increase in base salary. Mr. Guglielmone’s base salary was increased in January 2017 in accordance with the compensation package approved by the Compensation Committee when Mr. Guglielmone was hired in August 2016. Annual Performance Bonus:At Risk Compensation
Annual performance bonuses for eachA significant portion of the compensation of our named executive officers are determined each year in accordance withNEOs is provided under our Annual Bonus Plan that covers approximately 97%and Long-Term Incentive Award Plan both of our employees. which are at risk forms of compensation where the amount ultimately earned and paid is dependent on whether the company achieves short-term and longer-term performance objectives set by the Compensation Committee. The performance metrics and target pay for each of these plans is set forth below:
| | | | | | | | | | | | | Incentive Pay Element | | | | | Performance Metric | | | | Achievement Hurdles | | | | | | | | | | | | | | Annual Bonus (annual cash incentive) | | | | | | | | | | 75% Payout: | | $5.82 FFO/share | | | | | | FFO Per Share | | | | 100% Payout: | | $5.88 FFO/share | | | | | | | | | | 125% Payout: | | $5.95 FFO/share | | | | | | | | | | | | | | Long-Term Incentive Plan (long-term restricted shares) | | | | | | 3 Year TSR Relative to BBRESHOP (accounts for 50% of the total award) | | | | Threshold: | | 40th Percentile | | | | | | | | | Target: | | 60th Percentile | | | | | | | | | Stretch: | | 80th Percentile | | | | | | | | | | | | | | | | | | 3 Year Absolute TSR (annualized) (accounts for 25% of the total award) | | | | Threshold: | | 8% annualized return | | | | | | | | | Target: | | 10% annualized return | | | | | | | | | Stretch: | | 12% annualized return | | | | | | | | | | | | | | | | | | 3 Year Return on Invested Capital (accounts for 25% of the total award) | | | | Threshold: | | 7.50% return | | | | | | | | | Target: | | 7.75% return | | | | | | | | | Stretch: | | 8.00% return |
Annual Bonus Plan The Annual Bonus Plan is intended to compensate individuals for performance during a calendar year. Paymentan annual cash incentive program with payment under the Annual Bonus Plan is dependent on: (a)plan contingent on the Trust’s achieving an annual level of FFO per share within a range set by the Compensation Committee for that is consistent withyear. The Compensation Committee sets that range to reflect acceptable to exceptional levels of performance in light of our business objectives for that year; and (b) the individual’s achieving his/her annual performance objectives as subjectively evaluated by the Board with respect to our CEO and by our CEO with respect to each of our other named executive officers. Under our Annual Bonus Plan, the Compensation Committee sets annually a potential bonus payout for each of our named executive officers for achieving various levels of FFO per share for that calendar year. The Compensation Committee also has the ability to decrease the final annual bonus payout to any of these individuals based on their performance for the year. Each of our named executive officers (as well as approximately 85 other employees) has the option to receive up to 25% of the annual bonus in the form of Shares that vest equally over three years. The amount an individual elects to receive in Shares is paid out at 120% of that amount in consideration of the extended vesting. The level of FFO per share at which payouts are established is set at the beginning of each year by the Compensation Committee after a thorough review and discussion of our budget and investor expectations for that year and considering recommendations of our CEO.the year. The FFO per share levels established by the Compensation Committee are intended to reflect acceptable to exceptional performance in light of our business objectives. FFO is widely accepted in the REIT industry as an appropriate measurement of operating performance on an annual basis and as a result, we believebelieves that FFO per share is anthe appropriate metricmeasure to use for determining short-term financial success which is being rewarded inan annual performance bonuses. The following chart showsprogram because it reflects the potential 2015impacts of operational decisions, capital allocation decisions and balance sheet management for that year.
Target bonus payouts for our NEOs are set as a percentage of the NEO’s base salary with the target at 150% of base salary for our CEO and at 75% of base salary for our other NEOs. Our NEOs can earn between 75% to 125% of their annual bonus payouts establishedtarget depending on where actual FFO per share for the year falls within the range set by the Compensation Committee. The bonus targets for our NEOs as a percentage of base salary were not changed in 2017. The Compensation Committee then determines the final payout to each NEO after evaluating his/her individual performance. The 2017 Annual Bonus calculation for each of our named executive officers at various levelsNEOs is set forth below. | | | | | | | | | | | | | Annual Bonus Plan | | | | NEO Bonus targets Determined | | | | FFO/share Range Established | | | | Final Payout Calculated | | | | | | | | | | | | | | | | | | Wood = 150% of base | | | | 125% Payout: $5.95 FFO/sh | | | | | | 2017 Plan | |  | | Becker = 75% of base | |  | | 100% Payout: $5.88 FFO/sh | |  | | Final Payout to each NEO | | | | | Guglielmone = 75% of base | | | | 75% Payout: $5.82 FFO/sh | | | | | | | | | | | | | | | | | | | | | | Wood = $1,425,000 | | | | | | | | Wood = $1,577,618 | Final Calculation | | | | Becker = $337,500 | | | | 110.71% payout: $5.91 FFO/share | | | | Becker = $373,646 | | | | | Guglielmone = $356,250 | | | | | | | | Guglielmone = $394,404 |
In 2017, we reported FFO per share of $5.74 which included a charge of approximately $0.17 per share for early prepayment in December 2017 of higher rate debt due in 2020. The decision to repay that debt prior to its maturity date was made in December 2017 in order to opportunistically take advantage of favorable interest rates before the expected rate increases that occurred in 2018. Had bonus payouts been determined on the basis of reported FFO per share, no payments would have been made under our annual bonus plan for 2017. The Compensation Committee, however, determined that such a result would not be appropriate and could potentially discourage management from making sound, long-term financing decisions in the future. Accordingly, the Compensation Committee determined that it would be appropriate and in the best interest of the Trust’s shareholders to exclude that prepayment charge from the calculation of FFO per share and the final potential annualfor bonus payout based on our 2015 results: | | | | | | | | | | | | | | | | | | | | | NEO | | Potential Bonus Payout | | | | FFO Below
$4.94 per share | | | FFO at $4.94
per share | | | FFO at $5.00
per share | | | FFO at $5.06
per share | | | Final Payout Based on Results | | Donald Wood | | $ | 0 | | | $ | 956,250 | | | $ | 1,275,000 | | | $ | 1,593,750 | | | $ | 1,540,583 | | Dawn Becker | | $ | 0 | | | $ | 253,125 | | | $ | 337,500 | | | $ | 421,875 | | | $ | 407,801 | | James Taylor | | $ | 0 | | | $ | 253,125 | | | $ | 337,500 | | | $ | 421,875 | | | $ | 407,801 | |
In 2015, we achievedpurposes resulting in FFO of $5.05 per share which resulted in an annualfor bonus purposes of $5.91 and a bonus payout of 96.7%110.71% of the maximum potential payout.target. The $5.91 of FFO levelsper share used for Annual Bonusbonus purposes includeincluded the impact of an approximately $0.27 per Share debt prepayment charge. A reconciliationall of net income to FFO available for common shareholders can be found on page 49, in Item 7, of our Form 10-K for calendar year 2015 filedthe additional interest and other charges associated with the SECopportunistic capital raise completed in December 2017 other than the prepayment premium mentioned above. Based on February 9, 2016.
Thetheir individual contributions to the Trust in 2017, the Compensation Committee determined, after reviewing individual performance, thatawarded each of our named executive officers should be paidNEOs the full amountannual bonus for which he/she was eligible.
The Annual Bonus plan for our NEOs is the same bonus plan that covers nearly 95% of our employees. The NEOs and approximately 80 other participants in the Annual Bonus plan have the option to receive up to 25% of the annualfinal bonus to which he or she is entitled basedpayout in the form of Shares that vest equally over three years with accelerated vesting on death, disability, change in control and termination without cause. In consideration of the Trust’s 2015 results. The Compensation Committee’s determination with respect to Mr. Wood took into consideration our financial resultsextended payment period for the year, progress made with our acquisitions and development projects to set the Trust up for future long-term growth, Mr. Wood’s effectiveness in leading the company, long-term strategic planning, succession planning, relationship with the Board, and relationship with shareholders and other stakeholders, among other factors. With respect to eachthis portion of Ms. Becker and Mr. Taylor, the Compensation Committee accepted Mr. Wood’s recommendations as to the amount of their annual bonus payouts. Mr. Wood’s recommendations as to the bonus payouts for each of Ms. Becker and Mr. Taylor were based on his subjective assessment of each individual’s contributions toalready earned, the Trust’s performance in 2015 in their respective job functions. Those contributions included, without limitation, the following: (a) Ms. Becker’s oversightemployee receives Shares valued at 120% of the Trust’s East Coast restructuringportion of the Annual Bonus he/she elected to receive in 2015; and (b) Mr. Taylor’s work in financing our development pipeline and growing our portfolio through acquisitions. Shares. For 2015,2017, Mr. Wood elected to receive 25% of his annual bonus in Shares and Mr. Taylorour other NEOs elected to receive 20%all of histheir annual bonus in Shares.cash. The cash portion of the 2017 annual bonuses is reflected in the “Non-Equity“Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table in this proxy statement. The stock portion of these annual bonusesAnnual Bonus paid in Shares will be included in the “Stock Awards” column in the Summary Compensation Table and the Grants of Plan-Based Awards Table in next year’s proxy statement. Annual Performance Based Long-Term Equity Incentives:Incentive Award Program
We believe that outstanding long-term performance is achieved through an ownership culture that encourages a focus on long-term performance by our executive officers through the use of equity-based awards. Long-term incentive awards are made annually to all officers under our LTIAP. This program was structured to align the most significantThe largest portion of compensation for our senior management teamNEOs comes from our equity based Long-Term Incentive Award Program. This program aligns the interests of our NEOs with the creation of long-term shareholder value. Recipients of awards under this program realizeshareholders by incentivizing our NEOs to identify and accomplish longer-term business objectives that generate value through stock price appreciation and dividend growth over a minimum6-year time horizon comprised of a3-year performance period followed by a minimum of a3-year vesting period for shares and a5-year vesting period for options.
Awards under this program are made in the form of restricted shares with time based vesting period. We believe that the combinationover a three year period; however, each NEO can elect to take up to 50% of this extended period with the requirements described above for our named executive officers to continually hold a meaningful equity positionhis/her award in the company creates a strong long-term alignmentform of interests between those individuals and our shareholders. The performance metrics used under the LTIAP, the levels of performance required to be achieved for our named executive officers to earn an LTIAP award and the performance actually achieved for the three year period from January 1, 2013 through December 31, 2015 are set forth below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Relative Total Shareholder Return (a) (b) Weight 50% | | | | | | | Absolute
Total Shareholder Return (a)
Weight 25% | | | | | | | Return on
Invested Capital
Weight 25% | | Performance | | Payout % Target | | | | | | | Performance | | | Payout % Target | | | | | | | Performance | | | Payout % Target | | < 40th percentile | | | 0% | | | | | | | | < 8% | | | | 0% | | | | | | | | < 8.00% | | | | 0% | | 40th percentile | | | 50% | | | | | | | | 8% | | | | 50% | | | | | | | | 8.00% | | | | 50% | | 60th percentile | | | 100% | | | | | | | | 10% | | | | 100% | | | | | | | | 8.25% | | | | 100% | | ³ 80th percentile | | | 150% | | | | | | | | ³ 12% | | | | 150% | | | | | | | | ³ 8.50% | | | | 150% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Actual Achieved | | | Actual Payout | | | | | | | | Actual Achieved | | | | Actual Payout | | | | | | | | Actual Achieved | | | | Actual Payout | | 66.58 percentile | | | 133.13% | | | | | | | | 15.09% | | | | 150% | | | | | | | | 8.59% | | | | 150% | |
(a) | Total shareholder return takes into account both stock price appreciation and dividends assuming all dividends are reinvested. |
(b) | Measured against the Bloomberg REIT Shopping Center Index (“BBRESHOP”). |
options which vest over five years. The Compensation Committee believes that relative totalallowing NEOs to choose to receive a portion of his/her award in the form of options provides value to the NEO that outweighs any diminution in retention value from the granting of options in lieu of Shares. Each of our NEOs chose to receive the full value of his her 2017 LTIAP award in Shares. Dividends are paid on all Shares issued under the LTIAP. The amount of LTIAP awards is determined based on how well the Trust performs on three performance metrics: (a) Total shareholder return absoluterelative to the Bloomberg REIT Shopping Center index (“BBRESHOP”). Performance on this metric accounts for 50% of the total shareholder return and return on invested capital are appropriate metrics to use for rewarding long-term performance.LTIAP award. The relative shareholder return metric reflects how well we have performed for our shareholders as compared to other companies facing the same general market dynamics. The Compensation Committee determined that the BBRESHOP wasis the best index to use because the BBRESHOPgiven that it is an industry index made up of primarily companies that own and operate stripopen are shopping centers whose businesses are most closely aligned with ours. AbsoluteTotal shareholder return measurestakes into account both stock price appreciation and dividends assuming all dividends are reinvested. (b) Absolute total shareholder return. Performance on this metric accounts for 25% of the total LTIAP award and reflects whether we have actually created any value forand delivered acceptable returns to our shareholders duringover the3-year performance period. Total shareholder return takes into account both stock price appreciation and dividends assuming all dividends are reinvested. (c) Return on invested capital. Performance on this time while returnmetric accounts for 25% of the total LTIAP award. Return on invested capital determinesreflects how effectively we have investedallocated our shareholders’ capital. These performance metrics support the objectivescapital during that time and incentivizes our executives to make sound, long-term investment decisions that will generate strong future returns to our shareholders. Performance Period Award Made Vesting Period 2015 2016 2017 2018 2019 2020 2021 2022 2023 Shares Options The target levels of the company and the LTIAP andpayout for each of our NEOs in 2017 remain unchanged from prior years. Mr. Wood and Ms. Becker can earn an award equal to 50% of target for performance at the threshold level and an award of 150% of target for performance at the stretch level. Mr. Guglielmone can earn an award equal to 67% of target for threshold level performance and 133% of target for stretch level performance. Payout levels are interpolated for results falling between threshold, target and stretch levels. The potentiallevels of performance and target payout percentages for the LTIAP paymentsawards for each of our named executive officers at the various levels of performance for each ofNEOs and the performance metrics under the LTIAP and the amounts actually earned byachieved on each individualmetric for the prior 3-yearthree year period from January 1, 2015 through December 31, 2017 are set forth in the following table:chart below: | | | | | | | | | | | | | | | | | | | | Threshold | | | Target | | | Stretch | | | Actual Award | | Donald Wood | | | | | | | | | | | | | | | | | Relative Total Return | | $ | 1,250,000 | | | $ | 2,500,000 | | | $ | 3,750,000 | | | $ | 2,906,250 | | Absolute Total Return | | $ | 625,000 | | | $ | 1,250,000 | | | $ | 1,875,000 | | | $ | 1,875,000 | | Return on Invested Capital | | $ | 625,000 | | | $ | 1,250,000 | | | $ | 1,875,000 | | | $ | 1,875,000 | | | | | | | | | | | | | | | | | | | Total Potential Award | | $ | 2,500,000 | | | $ | 5,000,000 | | | $ | 7,500,000 | | | $ | 6,656,250 | | Exercise of permitted discretion | | | | | | | | | | | | | | $ | 343,750 | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | $ | 7,000,000 | | | | | | | Dawn Becker | | | | | | | | | | | | | | | | | Relative Total Return | | $ | 150,000 | | | $ | 300,000 | | | $ | 450,000 | | | $ | 348,750 | | Absolute Total Return | | $ | 75,000 | | | $ | 150,000 | | | $ | 225,000 | | | $ | 225,000 | | Return on Invested Capital | | $ | 75,000 | | | $ | 150,000 | | | $ | 225,000 | | | $ | 225,000 | | | | | | | | | | | | | | | | | | | Total Potential Award | | $ | 300,000 | | | $ | 600,000 | | | $ | 900,000 | | | $ | 798,750 | | | | | | | James Taylor | | | | | | | | | | | | | | | | | Relative Total Return | | $ | 300,000 | | | $ | 375,000 | | | $ | 450,000 | | | $ | 435,938 | | Absolute Total Return | | $ | 150,000 | | | $ | 187,500 | | | $ | 225,000 | | | $ | 225,000 | | Return on Invested Capital | | $ | 150,000 | | | $ | 187,500 | | | $ | 225,000 | | | $ | 225,000 | | | | | | | | | | | | | | | | | | | Total Potential Award | | $ | 600,000 | | | $ | 750,000 | | | $ | 900,000 | | | $ | 885,938 | | Exercise of permitted discretion | | | | | | | | | | | | | | $ | 39,062 | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | $ | 925,000 | |
The Compensation Committee approved paying each of our named executive officers
Based on the full amount ofresults achieved, the LTIAP awards for Mr. Wood (CEO) and Ms. Becker (GC) were paid at 93.75% of target and the award to which they were entitled. In addition, under our LTIAP, thefor Mr. Guglielmone (CFO) was paid at 87.50% of his target award. The Compensation Committee has the discretion to increase or decrease anythe award for each executive by up to 20% to reflect individual performance and chose to exercise that discretion to increase Mr. Wood’s award by 5.2% and Mr. Taylor’s award by 4.4%. The Compensation Committee determined that such modest increases were appropriate to recognize the significant contributions made by Mr. Wood and Mr. Taylor in 2015. The LTIAP awards are made in the form of restricted Shares that vest in equal installments over a three-year period; however, each individual can elect to take up to 50% of his or her award in the form of options which vest equally over five years. Although the Compensation Committee believes that paying these awards in restricted Shares provides the most retention value for employees, it has agreed to permit individuals to elect to take up to 50% of the award in options in order to giveaccount for personal performance but did not adjust the individual employee some ability to structure his or her own equity compensation in a way that best matches the individual’s needs and provides the most value to that individual. The Compensation Committee has concluded that individual employees place value in having the ability to match the form of their equity compensation to their individual financial objectives and that this value to employees outweighsawards for any diminution in the retention value of LTIAP awards by permitting up to 50% to be paid in options. Dividends are paid on all Shares issued under the LTIAP.
Each of our named executive officers elected to takeNEOs for the entirety of this or her 2015 LTIAP awardperformance period ending in Shares.2017. The number of Shares actually awarded to each individual wasof our NEOs under the LTIAP is determined by dividing the amount of the award by $152.34, the closing price of our stock on the NYSE on the date the awards wereare made. There is no amount included for 20152017 in the Summary Compensation Table or Grants of Plan-Based Awards Table in this proxy statement for these awards.LTIAP awards earned for the 2015-2017 performance period. The LTIAP awards reflected for 20152017 in the Summary Compensation Table and the Grants of Plan-Based Awards Table for our named executive officers in this proxy statement relate to performanceawards made in February 2017 for the3-year performance period ending December 31, 20142016.
LTIAP Performance Period 2015-2017 Relative Total Return (50%) Absolute Total Return (25%) Return on Invested Capital (25%) Payout as % of Target Payout as % of Target Payout as % of Target Percentile Return Return 100th 80th 150% 133% Actual 65th 60th 100% 100% 40th 50% 67% Below 40th 0% 0% 12% 150% 133% 10% 100% 100% 8% 50% 67% Actual 2.60% Below 8% 0% 0% 8.00% 150% 133% Actual 8.30% 7.75% 100% 100% 7.50% 50% 67% Below 7.50% 0% 0% CEO/GC CFO CEO/GC CFO CEO/GC CFO 2017 Total Compensation The following chart sets out the compensation earned by each of our named executive officers for 2017 based on company and individual performance for the 1 and3-year periods ending December 31, 2017: | | | | | | | | | | | | | | | | | | Compensation Component | | Donald C. Wood | | | Daniel Guglielmone | | | Dawn M. Becker | | | | | | | Base Salary | | $ | 950,000 | | | $ | 475,000 | | | $ | 450,000 | | | | | | | Target Bonus | | | 150% of base | | | | 75% of base | | | | 75% of base | | | | | | | Actual 2017 Bonus | | $ | 1,577,618 | | | $ | 394,404 | | | $ | 373,646 | | | | | | | LTIAP | | | | | | | | | | | | | | | | | | Threshold | | $ | 2,500,000 | | | $ | 600,000 | | | $ | 300,000 | | | | | | | Target | | $ | 5,000,000 | | | $ | 900,000 | | | $ | 600,000 | | | | | | | Stretch | | $ | 7,500,000 | | | $ | 1,200,000 | | | $ | 900,000 | | | | | | | Actual 2017 LTIAP | | $ | 4,687,500 | | | $ | 787,500 | | | $ | 562,500 | | | | | | | Total 2017 Comp | | $ | 7,215,118 | | | $ | 1,656,904 | | | $ | 1,386,146 | |
The amounts set forth above for the annual performance bonus and performance based, long-term equity program differ from the amounts shown for 2017 in the Summary Compensation Table because the chart above reflects the amount earned for the year while the Summary Compensation Table reflects these amounts in the year in which they are paid regardless of the time period during which those amounts were awardedearned. We believe the chart above is helpful because it allows the actual compensation earned for 2017 to be understood in February 2015. the context of the Trust’s financial and other performance for the performance periods ending in 2017.Chief Executive Officer CompensationOther Benefits
More than 90% of Mr. Wood’s compensation is performance driven. Approximately 16% is earned throughWe provide other health and welfare benefits to our Annual Bonus PlanNEOs on the same basis of 1-year FFO goals reflecting our business objectives for that year and approximately 75% is earned through our LTIAP on the basis of total shareholder return (on both an absolute and relative basis) and return on invested capital over the longer-term 3-year performance period. The Compensation Committee believes that this mix of compensation creates an appropriate alignment between Mr. Wood’s compensation and company performance.
as we provide those benefits to all employees. In addition to the base salary, annual bonus and LTIAP award described above,those benefits, we have an agreement in place with Mr. Wood (“Health Coverage Continuation Agreement”) pursuant to which we have agreed to provide to Mr. Wood, his spouse and his dependents continuation of health coverage after Mr. Wood’s termination upon death, disability, retirement, change in control or otherwise (other than a termination with cause or resignation). TheThis coverage will continue as to Mr. Wood and his spouse until their death, or with respect to his spouse until divorce, if earlier. As toearlier, and coverage continues for three of Mr. Wood’s children coverage will continueuntil that child is no longer a dependent as to threedefined under Section 106 of the children until each reaches age twenty-fiveInternal Revenue Code and as to one of the children, until her death. The continued medical coverage isWe are required to beprovide coverage of at least the same level as provided to Mr. Wood and his family at the time of his termination and such coverage will be secondary to certain other coverages that may be available to Mr. Wood and his family. TheThis agreement has been in place and remained unchanged since 2008. Other Compensation Committee has determined that these perquisitesConsiderations Equity Ownership: Each of our NEOs is required to maintain a level of ownership of equity in the company equal to 3 times the sum of base salary and other personal benefits are a relatively small portion of Mr. Wood’s overall compensation, are reasonable in light of the total compensation packageannual bonus for Mr. Wood and are consistent2.5 times the sum of base salary and annual bonus for each of Mr. Guglielmone and Ms. Becker. Both Mr. Wood and Ms. Becker were in compliance with the equity ownership requirement as of December 31, 2017. Mr. Guglielmone who joined the Trust in August 2016 was not in compliance with the requirements as of December 31, 2017; however, is in compliance as of the date of this proxy statement. Risk Assessment:As described in the “Risk Management Oversight” section, we have concluded that our compensation objectives of creating programs that will allow us to retain talented executives.do not encourage excessive or unnecessary risk taking. Timing of Equity Grants: Equity awards to our employees under our Annual Bonus Plan and LTIAP described above are made at the first Compensation Committee’sCommittee meeting thatof the year which generally occurs in February of each calendar year. Whether these awards are made before or after we releaseyear-end financial results for the prior fiscal year depends solely on when the Compensation Committee meets in relation to the meetings of the Board and the Audit Committee, the dates for all of which are set during the preceding year. We have no policy that times the granting of equity awards relative to the release of materialnon-public information. Equity awards to new hires are generally made on the first day on which the employee starts work and equity awards to employees who are promoted generally are made on the day on which the promotion has been fully approved. All of our options are awarded at the closing price of our Shares on the NYSE on the date the award is made. The Compensation Committee has neverre-priced options, granted options with an exercise price that is less than the closing price on the NYSE on the date of the grant or granted options which are priced on a date other than the grant date. Equity awards for Vice Presidents and aboveour NEOs for the3-year performance period ending on December 31, 20152017 were made at the Compensation Committee’s meeting on February 3, 20167, 2018 based on the closing price of our Shares on the NYSE on that date. Termination andChange-in-Control Arrangements: We have agreements in place with each of our named executive officersNEOs providing for various payments and benefits to be made to them if there is a change in control or their employment with us is terminated for certain reasons. The circumstances in which payments may be made and the potential amounts of those payments are described in more detail in the “Potential Payments on Termination of Employment andChange-in-Control” section below. We believe that the payments provided for in these agreements are reasonable and appropriate as part of the total compensation packages available for our named executive officers.NEOs. Deductibility of Executive Compensation in Excess of $1.0 Million: For tax years ending on or prior to December 31, 2017, Section 162(m) of the Internal Revenue Code generally prohibitsprohibited any publicly held corporation from taking a federal income tax deduction for compensation in excess of $1 million in any taxable year paid to an executive officer who is named in the Summary Compensation Table. Exceptions areAn exception was made for qualified performance-based compensation, among other things. InAlthough the Compensation Committee considered the impact of Section 162(m) in structuring our compensation programs, the Compensation Committee considers this Section 162(m) exception; however,Committee’s primary focus was on creating programs that addressed the Compensation Committee does not believe that it is necessarily in our best interestsneeds and objectives of the best interestscompany regardless of our shareholders for all compensation to meet the requirementsimpact of Section 162(m) for deductibility.. As a result, the Compensation Committee has determinedmade awards and structured programs that it is appropriate at times to make compensation awards that are werenon-deductible under Section 162(m). Further, because The Tax Cuts and Jobs Act of ambiguities2017 modified Section 162(m) to, among other things, modify who is subject to the $1 million deduction limit and uncertainties underto eliminate the exception for performance based pay from the $1 million deduction limit starting with tax years ending after December 31, 2017. We do not anticipate these changes to Section 162(m), to have a material impact on us. We do not anticipate anyone other than our three NEOs being subject to the $1 million deduction limit and we cannot give any assurance thatanticipate our taxable income to only increase modestly on an annual basis as a result of the loss of the performance based compensation thatdeduction. To maintain our status as a real estate investment trust, we intendare required to satisfydistribute at least 90% of our taxable income to our shareholders in the requirements for deductibility underform of dividends. The modest increase in taxable income resulting from the change in Section 162(m) will be taken into account as our Board determines the amount of dividend to be paid to our shareholders in fact be deductible.tax years ending after December 31, 2017. COMPENSATION COMMITTEE REPORT The Compensation Committee of the Board has reviewed and discussed the Compensation Discussion and AnalysisCD&A required by Item 402(b) of RegulationS-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and AnalysisCD&A be included in this Proxy Statement. Submitted by: David W. Faeder, Chairman Kristin GambleElizabeth I. Holland
Gail P. Steinel Joseph S. Vassalluzzo SUMMARY COMPENSATION TABLE The following table summarizes the total compensation earned by each of the named executive officersour NEOs for the fiscal years ended December 31, 2015, 20142017, 2016 and 2013,2015, in accordance with current SEC rules. The Summary Compensation Table below does not include the value of the Shares issued to our named executive officersNEOs on February 3, 20167, 2018 for the performance period ending December 31, 2015. Those awards2017. The value of those Shares will appear in next year’s proxy statement in the Grants of Plan-Based Awards Table as well as the “Stock Awards” column of the Summary Compensation Table. The cash portion of the annual bonuses awarded pursuant to the Annual Bonus Plan in February 2016 based on 2015 performance is included below in the “Non-Equity Incentive Plan Compensation” column. | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary | | | Stock
Awards | | | Non-Equity
Incentive Plan
Compensation | | | All Other
Compensation | | | Total | | | | | | | | ($) (1) | | | ($) (2) | | | ($) (3) | | | ($) (4) | | | ($) | | Donald C. Wood,
President and Chief
Executive Officer (PEO) | | | 2015 | | | $ | 850,000 | | | $ | 3,462,159 | | | $ | 1,155,437 | | | $ | 15,435 | | | $ | 5,483,031 | | | | | 2014 | | | $ | 850,000 | | | $ | 6,369,693 | | | $ | 1,155,437 | | | $ | 13,140 | | | $ | 8,388,270 | | | | | 2013 | | | $ | 850,000 | | | $ | 6,351,889 | | | $ | 1,232,466 | | | $ | 16,716 | | | $ | 8,451,071 | | | | | | | | | James M. Taylor, Jr.,
Executive Vice President-
Chief Financial Officer
and Treasurer (PFO) | |
| 2015
2014
2013 |
| | $
$ $ | 450,000
400,000 400,000 |
| | $
$ $ | 108,717
1,886,948 982,810 |
| | $
$ $ | 326,241
271,868 289,992 |
| | $
$ $ | 1,977
1,977 1,392 |
| | $
$ $ | 886,935
2,560,793 1,674,194 |
| | | | | | | | Dawn M. Becker, Executive
Vice President-General
Counsel and Secretary | | | 2015 | | | $ | 450,000 | | | $ | 565,500 | | | $ | 407,801 | | | $ | 10,384 | | | $ | 1,433,685 | | | | | 2014 | | | $ | 425,000 | | | $ | 1,015,465 | | | $ | 288,859 | | | $ | 10,159 | | | $ | 1,739,483 | | | | | 2013 | | | $ | 425,000 | | | $ | 1,009,986 | | | $ | 288,859 | | | $ | 9,652 | | | $ | 1,733,497 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary(1) | | | Bonus | | | Stock Awards(2) | | | Non-Equity Incentive Plan Compensation(3) | | | All Other Compensation(4) | | | Total | | | | | | | | | | Donald C. Wood, President and Chief Executive Officer (PEO) | | | 2017 | | | $ | 950,000 | | | $ | — | | | $ | 6,927,569 | | | $ | 1,183,213 | | | $ | 17,000 | | | $ | 9,077,782 | | | | | 2016 | | | $ | 950,000 | | | $ | — | | | $ | 7,462,223 | | | $ | 1,068,750 | | | $ | 15,767 | | | $ | 9,496,740 | | | | | 2015 | | | $ | 850,000 | | | $ | — | | | $ | 3,462,159 | | | $ | 1,155,437 | | | $ | 15,435 | | | $ | 5,483,031 | | | | | | | | | | Daniel Guglielmone, Executive VicePresident-Chief Financial Officer and Treasurer (PFO)(5) | | | 2017 | | | $ | 475,000 | | | $ | 250,000 | | | $ | 899,958 | | | $ | 394,404 | | | $ | 38,701 | | | $ | 2,058,064 | | | | | 2016 | | | $ | 164,423 | | | $ | — | | | $ | 1,500,080 | | | $ | 337,500 | | | $ | 20,802 | | | $ | 2,022,805 | | | | | 2015 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | Dawn M. Becker, Executive VicePresident-General Counsel and Secretary | | | 2017 | | | $ | 450,000 | | | $ | — | | | $ | 979,017 | | | $ | 373,646 | | | $ | 11,073 | | | $ | 1,813,737 | | | | | 2016 | | | $ | 450,000 | | | $ | — | | | $ | 798,719 | | | $ | 253,125 | | | $ | 10,307 | | | $ | 1,512,151 | | | | | 2015 | | | $ | 450,000 | | | $ | — | | | $ | 565,500 | | | $ | 407,801 | | | $ | 10,384 | | | $ | 1,433,685 | |
| (1) | Amounts shown in the Salary column include all amounts deferred at the election of the named executive officersNEOs into ournon-qualified deferred compensation plan. |
| (2) | Amounts shown in the Stock Awards column reflectsreflect the aggregate grant date fair value of the awards calculated in accordance with FASB ASC Topic 718 for the fiscal years ended December 31, 2015, 20142017, 2016 and 2013.2015. For a discussion of the valuation of these awards, please refer to Note 1512 in the notes to our consolidated financial statements in our Annual Report on Form10-K filed on February 9, 2016.13, 2018. |
| (3) | Amounts shown in this column represent only the cash portion paid under our Annual Bonus Plan and include amounts deferred by our named executive officersNEOs into ournon-qualified deferred compensation plan. For 2015, Mr. Wood received 75% of his Annual Bonus in cash Mr. Taylor received 80%for each of his Annual Bonus in cash2017, 2016 and 2015. Ms. Becker received 100% of her bonus in cash. For 2014, allcash for 2017 and 2015 and 75% in cash for 2016. Mr. Guglielmone received 100% of the named executive officers received 75% of theirhis Annual Bonus in cash for 2017 and for 2013 Messrs. Wood and Taylor received 80% of their Annual Bonus in cash and Ms. Becker received 75% of her Annual Bonus in cash.2016. The remaining amounts earned under the Annual Bonus Plan in 2015, 20142017, 2016 and 20132015 were paid in Shares in an amount equal to 120% of the cash value in consideration of a3-year vesting schedule. The aggregate Annual Bonus paid to Ms. Becker and Messrs. Wood and Taylor for 2015 including both cash and Shares is as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2015 Annual Incentive Bonus Information | | | Name | | Annual
Incentive
Bonus
Awarded | | | Amount
Paid in Cash | | | Amount
Paid in
Shares | | | 20%
Premium
Paid in
Shares | | | Total
Annual
Incentive
Bonus Paid | | | Number
of
Shares
Issued | | | | | ($) | | | ($) | | | ($) (a) | | | ($) (a) | | | ($) | | | (#) (b) | | Donald C. Wood | | $ | 1,540,583 | | | $ | 1,155,437 | | | $ | 385,146 | | | $ | 77,029 | | | $ | 1,617,612 | | | | 3,034 | | James M. Taylor, Jr. | | $ | 407,801 | | | $ | 326,241 | | | $ | 81,560 | | | $ | 16,312 | | | $ | 424,113 | | | | 642 | | Dawn M. Becker | | $ | 407,801 | | | $ | 407,801 | | | $ | — | | | $ | — | | | $ | 407,801 | | | | 0 | |
| (a) | The value of the Shares awarded in 2016 as part of the Annual Bonus for 2015, will be reflected in the Summary Compensation Table and the Grant of Plan-Based Awards Table in next year’s proxy statement. |
| (b) | The number of Shares actually awarded to Mr. Wood and Mr. Taylor was determined by dividing the amount of the award by $152.34, the closing price of our stock on the NYSE on February 3, 2016, the date the award was made. |
| (4) | The amounts shown in this column for the last fiscal year include the amounts below. The group-terminclude: (a) payments for group term life insurance, long-term disability insurance and supplement life insurance of $10,250 for Mr. Wood, $2,932 for Mr. Guglielmone and $3,324 for Ms. Becker; (b) contributions to our 401(k) plan of $6,750 for each of our NEOs; and (c) for Mr. Guglielmone, $29,019 as the 401K plan arerental value of a temporary apartment we provided to the named executive officers on the same terms, condition and scopehim for one year as are available to allpart of our full-time employees.his initial hiring compensation package. |
| | | | | | | | | | | | | | | | | | | | | | All Other Compensation Table | | | Name | | Group Term
Life
Insurance | | | Long-Term
Disability
Insurance
Premium | | | Supplemental
Life
Insurance | | | Trust
Contribution
to Section
401(k) Plan | | | Total | | | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | Donald C. Wood | | $ | 4,128 | | | $ | 1,291 | | | $ | 3,390 | | | $ | 6,625 | | | $ | 15,434 | | James M. Taylor, Jr. | | $ | 630 | | | $ | 1,347 | | | $ | — | | | $ | — | | | $ | 1,977 | | Dawn M. Becker | | $ | 1,035 | | | $ | 1,291 | | | $ | 1,432 | | | $ | 6,625 | | | $ | 10,383 | |
| (5) | The bonus is a portion of the cash hiring bonus agreed to as part of Mr. Guglielmone’s initial hiring compensation package. |
2015 GRANTS OF PLAN-BASED AWARDS TABLE
The following Share awards were made in 2015 for either a one2017, all of which were earned based on the1-year or three-year3-year performance period ending December 31, 2014.2016. Awards made in 20162018 to the named executive officersNEOs under theour Annual Bonus Plan and LTIAPlong-term incentive plan for either a one or three-yearthe1-year and3-year performance periodperiods ending December 31, 20152017 will be reported in the Grants of Plan-Based Awards Table in next year’s proxy statement. | | Name | | Grant
Date | | All Other Stock
Awards: Number of
Shares of Stock or Units (3) | | | Grant Date
Fair Value | | | Grant Date | | All Other Stock Awards:
Number of Shares of Stock or Units(3) | | Grant Date Fair Value(4) | | | | | | (#) | | | ($) | | | Donald C. Wood | | | 2/6/2015 | (1) | | | 3,248 | | | $ | 462,190 | | | | | 2/7/2017 | (1) | | | | 3,061 | | | | $ | 427,560 | | | | | 2/6/2015 | (2) | | | 21,082 | | | $ | 2,999,969 | | | | | 2/7/2017 | (2) | | | | 46,535 | | | | $ | 6,500,009 | | James M. Taylor | | | 2/6/2015 | (1) | | | 764 | | | $ | 108,717 | | | Daniel Guglielmone | | | | | 2/7/2017 | (2) | | | | 6,443 | | | | $ | 899,958 | | Dawn M. Becker | | | 2/6/2015 | (1) | | | 812 | | | $ | 115,548 | | | | | 2/7/2017 | (1) | | | | 725 | | | | $ | 101,268 | | | | | 2/6/2015 | (2) | | | 3,162 | | | $ | 449,953 | | | | | 2/7/2017 | (2) | | | | 6,284 | | | | $ | 877,749 | |
| (1) | Issued under our Annual Bonus Plan. These Shares vest equally over 3 years. |
| (2) | Issued under our LTIAP. These Shares vest equally over 3 years. |
| (3) | Dividends are paid on all Shares issued at the same rate and time as paid to all other holders of our Shares as declared by our Board from time to time. |
| (4) | Represents the grant date fair value of Share awards as computed in accordance with FASB ASC Topic 718. The grant date fair value for these Share awards was based on the closing price of the Trust’s Shares on the grant date. |
2015 OUTSTANDING EQUITY AWARDS AT FISCALYEAR-END TABLE
The following table sets forth information about outstanding equity awards held on December 31, 20152017 by our named executive officers.NEOs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | | | | Number of
Securities
Underlying
Unexercised
Options | | | Number of
Securities
Underlying
Unexercised
Options | | | Option
Exercise
Price | | | Option
Expiration
Date | | | Number of
Shares or
Units of
Stock That
Have Not
Vested | | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested | | | Name | | Exercisable | | | Unexercisable | | | | | | | | | (#) | | | (#) | | | ($) | | | | | | (#) | | | ($) | | Donald C. Wood | | | 144,788 | | | | 0 | | | $ | 43.48 | | | | 2/17/2019 | | | | 3,248 | (1) | | $ | 474,533 | | | | | 84,507 | | | | 0 | | | $ | 73.03 | | | | 2/10/2018 | | | | 21,082 | (1) | | $ | 3,080,080 | | | | | 18,701 | | | | 0 | | | $ | 92.30 | | | | 2/12/2017 | | | | 2,207 | (2) | | $ | 322,443 | | | | | | | | | | | | | | | | | | | | | 35,810 | (2) | | $ | 5,231,841 | | | | | | | | | | | | | | | | | | | | | 1,096 | (3) | | $ | 160,126 | | | | | | | | | | | | | | | | | | | | | 18,693 | (3) | | $ | 2,731,047 | | James M. Taylor, Jr. | | | 0 | | | | 0 | | | | | | | | | | | | 764 | (1) | | $ | 111,620 | | | | | | | | | | | | | | | | | | | | | 519 | (2) | | $ | 75,826 | | | | | | | | | | | | | | | | | | | | | 6,446 | (4) | | $ | 941,761 | | | | | | | | | | | | | | | | | | | | | 6,446 | (4) | | $ | 941,761 | | | | | | | | | | | | | | | | | | | | | 258 | (3) | | $ | 37,694 | | | | | | | | | | | | | | | | | | | | | 2,804 | (3) | | $ | 409,664 | | Dawn M. Becker | | | 39,941 | | | | 0 | | | $ | 73.03 | | | | 2/10/2018 | | | | 812 | (1) | | $ | 118,633 | | | | | | | | | | | | | | | | | | | | | 3,162 | (1) | | $ | 461,968 | | | | | | | | | | | | | | | | | | | | | 689 | (2) | | $ | 100,663 | | | | | | | | | | | | | | | | | | | | | 5,371 | (2) | | $ | 784,703 | | | | | | | | | | | | | | | | | | | | | 343 | (3) | | $ | 50,112 | | | | | | | | | | | | | | | | | | | | | 2,804 | (3) | | $ | 409,664 | | | | | | | | | | | | | | | | | | | | | 1,220 | (5) | | $ | 178,242 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Name | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable | | Option
Exercise
Price | | Option
Expiration
Date | | Number of
Shares or
Units of
Stock That
Have Not
Vested | | Market Value of Shares or Units of
Stock That
Have Not
Vested(6) | Donald C. Wood | | | | 104,788 | | | | | 0 | | | | $ | 43.48 | | | | | 2/17/2019 | | | | | 3,061 | (1) | | | $ | 406,531 | | | | | | | | | | | | | | | | | | | | | | | | | | 46,535 | (1) | | | $ | 6,180,313 | | | | | | | | | | | | | | | | | | | | | | | | | | 2,023 | (2) | | | $ | 268,675 | | | | | | | | | | | | | | | | | | | | | | | | | | 30,633 | (2) | | | $ | 4,068,369 | | | | | | | | | | | | | | | | | | | | | | | | | | 1,083 | (3) | | | $ | 143,833 | | | | | | | | | | | | | | | | | | | | | | | | | | 7,027 | (3) | | | $ | 933,256 | | Daniel Guglielmone | | | | 0 | | | | | 0 | | | | | | | | | | | | | | | 6,443 | (1) | | | $ | 855,695 | | | | | | | | | | | | | | | | | | | | | | | | | | 2,089 | (4) | | | $ | 277,440 | | | | | | | | | | | | | | | | | | | | | | | | | | 5,371 | (5) | | | $ | 713,323 | | Dawn M. Becker | | | | 0 | | | | | 0 | | | | | | | | | | | | | | | 725 | (1) | | | $ | 96,287 | | | | | | | | | | | | | | | | | | | | | | | | | | 6,284 | (1) | | | $ | 834,578 | | | | | | | | | | | | | | | | | | | | | | | | | | 3,495 | (2) | | | $ | 464,171 | | | | | | | | | | | | | | | | | | | | | | | | | | 271 | (3) | | | $ | 35,992 | | | | | | | | | | | | | | | | | | | | | | | | | | 1,054 | (3) | | | $ | 139,982 | |
| (1) | One-third of these Shares vested on February 12, 20162018 and the remaining Shares will vest on February 12, 20172019 and 2018.2020. |
| (2) | One-half of these Shares vested on February 12, 20162018 and the remaining Shares will vest on February 12, 2017.2019. |
| (3) | These shares vested on February 12, 2016.2018. |
| (4) | One-fourthOne-third of these Shares vested on February 12, 2016August 15, 2017 and the remaining Shares will vest on February 12, 2017,August 15, 2018 and 2019. |
| (5) | TheOne-seventh of these Shares vested on August 15, 2017 and the remaining Shares will vest equally on February 10,August 15 of each of 2018 through 2023. |
| (6) | The market value of outstanding unvested Shares is based on $132.81, the closing price of our Shares on the NYSE on December 29, 2017. |
2015 OPTION EXERCISES AND STOCK VESTED TABLE
The following table includes certain information with respect to options exercised in 20152017 by each named executive officerof our NEOs and Shares that vested during 2015.2017. | | | | Option Awards | | | Stock Awards | | | Option Awards | | Stock Awards | | Name | | Number of Shares
Acquired on Exercise | | | Value
Realized
on Exercise | | | Number of Shares
Acquired on Vesting | | | Value Realized
on Vesting | | | Number of Shares
Acquired on Exercise | | Value
Realized
on Exercise(1) | | Number of Shares
Acquired on Vesting | | Value
Realized
on Vesting(2) | | | | (#) | | | ($) | | | (#) | | | ($) | | | Donald C. Wood | | | 0 | | | $ | — | | | | 121,656 | | | $ | 17,432,440 | | | | | 124,507 | | | | $ | 9,021,283 | | | | | 43,446 | | | | $ | 6,211,040 | | James M. Taylor | | | 0 | | | $ | — | | | | 6,544 | | | $ | 945,870 | | | Daniel Guglielmone | | | | | 0 | | | | $ | — | | | | | 1,939 | | | | $ | 250,655 | | Dawn M. Becker | | | 8,203 | | | $ | 602,693 | | | | 10,382 | | | $ | 1,497,967 | | | | | 26,627 | | | | $ | 1,545,694 | | | | | 7,323 | | | | $ | 1,046,896 | |
| (1) | The value realized is based on the difference between the price at which the Shares were sold and the exercise price of the option. |
| (2) | The value realized is based on the closing price of a Share on the date of the Share vesting. |
2015 NON-QUALIFIED DEFERRED COMPENSATION TABLE
We maintain anon-qualified deferred compensation plan that is open to participation by 34 members of our management team, including our named executive officers.NEOs. Each participant can elect to defer up to 100% of his or her base salary and cash payment under our Annual Bonus Plan with deferral elections made in December of each year for amounts to be earned in the following year. A number of widely available investment options are made available to each plan participant who then decides how to allocate amounts deferred among those investment options. The amount earned by plan participants on their deferrals is calculated by our third party plan administrator as if the amounts deferred had actually been invested in the investment options selected by each participant. We do not make any contributions to the deferred compensation plan for any individual nor do we guaranty any rate of return on amounts deferred. Amounts deferred into the plan, including amounts earned on the deferrals, are generally payable to the participant shortly after he or she retires or is otherwise no longer employed by us; however, there are a few other alternatives where amounts may be paid to a participant sooner. We have an unsecured contractual obligation to each participant in the plan to pay him or her the actual amount he or she deferred into the plan together with a return calculated as if the deferred amounts had been invested in the investment options selected by the participant. We try to invest amounts deferred by participants into the same investment options in the same proportions as selected by the participant so that sufficient amounts will be available to pay each participant when required. The amounts deferred by Ms. Becker and Mr. Wood into the plan in 2015,2017, the earnings on plan investments in 20152017 and aggregate withdrawals and distributions made in 20152017 are described below. Mr. TaylorGuglielmone does not participate in our deferred compensation plan. | | Name | | Executive
Contributions
in Last Fiscal
Year | | | Registrant
Contributions
in Last Fiscal
Year | | | Aggregate
Earnings
in Last
Fiscal
Year | | Aggregate
Withdrawals /
Distributions | | | Aggregate
Balance at
Last Fiscal
Year-End | | | Executive
Contributions in
Last Fiscal Year(1) | | Registrant
Contributions in
Last Fiscal Year | | Aggregate
Earnings in
Last Fiscal Year | | Aggregate
Withdrawals /
Distributions | | Aggregate Balance at
Last Fiscal Year-End | | | | ($) (a) | | | ($) | | | ($) | | ($) | | | ($) | | | Donald C. Wood | | $ | 250,000 | | | $ | — | | | $ | (4,689 | ) | | $ | — | | | $ | 4,154,235 | | | | $ | 250,000 | | | | $ | — | | | | $ | 954,058 | | | | $ | — | | | | $ | 5,961,156 | | Dawn M. Becker | | $ | 44,971 | | | $ | — | | | $ | 15,457 | | | $ | — | | | $ | 1,130,477 | | | | $ | 45,000 | | | | $ | — | | | | $ | 251,820 | | | | $ | — | | | | $ | 1,530,856 | |
(a)(1) | All amounts in this column are included in either the “Salary” or “Non-Equity“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.Table for 2017. |
POTENTIAL PAYMENTS ON TERMINATION OF EMPLOYMENT ANDCHANGE-IN-CONTROL We have entered into severance agreements with each of our named executive officersNEOs that require us to make certain payments and provide certain benefits to them in the event of a termination of employment or change in control of the Trust. Regardless of the reason for a named executive officer’san NEO’s termination of employment, he or she will be entitled to receive upon termination all accrued but unused vacation pay and a distribution of any amounts in ournon-qualified deferred compensation plan.plan as described in the “2017Non-Qualified Deferred Compensation” section above. No named executive officerNEO is entitled to receive ana new award under the Annual Bonus Plan or the LTIAP for the year in which the termination occurs. Further, no named executive officer is entitled to receive an award under the Annual Bonus Plan or LTIAP for the year prior to the year of termination unless he or she is still employed when those awards are made in February of the following year. The agreements with each of our named executive officersNEOs contain provisions restricting the executive from engaging in competing behavior and soliciting and/or hiring our employees for a period of time after termination. The payments that will be made to a named executive officerNEO on termination vary depending on the reason for termination and are summarized below. 1. Paymentsmay be conditioned on Voluntary Termination:On any voluntary terminationthe signing of employment, the named executive officers receive no additional compensation and all unvested options and Shares are forfeited. Each named executive officer has one year after terminating employment to exercise all vested options (subject to the 10-year term of those options). With respect to Mr. Wood, all rights to receive extended health insurance coverage under the Health Coverage Continuation Agreement are terminated.
2. Payments on Death and Disability:Upon death, the estates of our named executive officers receive the amount of his or her then current salary through the montha release in which death occurs. In the event of disability, our named executive officers are entitled to receive payments for one year equal to the difference between his or her then current salary and the amount of any payments received under any disability policy we maintained for his or her benefit and to receive health benefits for one year. Those payments are subject to gross-up for taxes on any non-tax exempt payments. On death or disability, there is accelerated vesting of all Shares issued under the Annual Bonus Plan and all Shares and options issued under the LTIAP. This accelerated vesting is the same for all employees on a non-discriminatory basis who hold any Shares or options issued under the Annual Bonus Plan or the LTIAP. The Retention/Non-Solicitation Award to Ms. Becker in February 2011 does not provide for accelerated vesting in the event of death or disability. Each named executive officer or his or her beneficiary has two years after the executive’s death or disability to exercise all vested options (subject to the 10-year term of those options), including options that vested as a resultfavor of the death or disability. In addition, Mr. Wood will receive the benefits described in his Health Coverage Continuation Agreement.
3. Payment on Termination for Cause:Upon termination for cause resulting from a failure to substantially perform his or her job responsibilities, each of our named executive officers is entitled to receive one month of base salary for every year he or she has been employed by us over 5 years up to a maximum of 6 months of base salary and to receive health benefits for that same time period. Our named executive officers are not entitled to receive any compensation on a termination with cause for any reason other than failure to perform. On a termination for cause, all unvested options and Shares are forfeited. In addition, the right to exercise any previously vested options issued under the LTIAP immediately terminates. With respect to Mr. Wood, all rights to receive extended health insurance coverage under the Health Coverage Continuation Agreement are terminated.
4. Termination without Cause:Upon a termination without cause, each of our named executive officers is entitled to receive the following:
A lump sum cash payment equal to a multiple of the highest base salary and the highest annual bonus earned by the named executive officer in the prior three year period. For Ms. Becker and Mr. Taylor, the multiple is 1 time and for Mr. Wood, the multiple is 1.5 times.
Continuation of health and welfare benefits for a period of 9 months
Outplacement and administrative assistance for a period of 6 months
In addition, the vesting of all unvested Shares issued under the Annual Bonus Plan and all unvested Shares and options issued under the LTIAP is accelerated for each of our named executive officers. This accelerated vesting is the same for all employees on a non-discriminatory basis who hold any Shares or options issued under the Annual Bonus Plan or the LTIAP. The Retention/Non-Solicitation Award to Ms. Becker in February 2011 does not provide for accelerated vesting in the event of a termination without cause. Each named executive officer has one year after the executive’s termination to exercise all vested options (subject to the 10-year term of those options), including options that vested as a result of the termination. In addition, Mr. Wood will receive the benefits described in his Health Coverage Continuation Agreement.
5. Change of Control:Upon a change of control, each named executive officer is entitled to receive the following payments so long as he or she is terminated from employment or leaves for good reason within two (2) years after the change of control or voluntarily leaves employment within the thirty day window following the 1-year anniversary of the change of control:
A lump sum cash payment equal to a multiple of the highest base salary and highest annual bonus earned by the named executive officer in the prior three year period. For Ms. Becker and Mr. Taylor the multiple is 2 times and for Mr. Wood, the multiple is 3 times
Continuation of health, welfare and other benefits such as administrative assistance for a period of 2 years for Ms. Becker and Mr. Taylor and 3 years for Mr. Wood
Continued use of any company owned automobile for 3 years for Mr. Wood
An amount equal to the excise tax charged to the named executive officer as a result of receiving any change of control payments plus an additional “gross-up” amount sufficient to pay the taxes to be paid by the named executive officer on the excise tax payment received
In addition, if the named executive officer is terminated within one year after the change of control, the vesting of all unvested Shares issued under the Annual Bonus Plan and all unvested Shares and options issued under the LTIAP is accelerated. This accelerated vesting is the same for all employees on a non-discriminatory basis who hold any Shares or options issued under the Annual Bonus Plan or the LTIAP. Each named executive officer has one year after the executive’s termination to exercise all vested options (subject to the 10-year term of those options), including options that vested as a result of the termination. In addition, in the event of a change of control, the unvested Shares issued under the Retention/Non-Solicitation Award to Ms. Becker in February 2011 will vest. Mr. Wood will also receive the benefits described in his Health Coverage Continuation Agreement.
Under our 2001 and 2010 Plans, a change of control is deemed to have occurred when a person acquires a 20% interest in us, or our current Trustees, or those subsequently approved by our current Trustees, constitute less than two-thirds of our Board.Trust.
The amount of compensation payable to each of the named executive officersour NEOs under various termination scenarios is reflected below. The following table does not include amounts for accrued but unused vacation pay or the distribution of any amounts in our non-qualified deferred compensation plan because all employees or participants in the applicable plan are entitled to the same benefit on a non-discriminatory basis. Our corporate policy permits employees, including our named executive officers, to accrue up to eight weeks of unused vacation time. The amounts shown below assumeassuming that the terminationseparation of service was effective on December 31, 2015 and therefore, includes all amounts earned to that date as well as an estimate of amounts that would be payable upon the termination.2017:
| | | | | | | | | | | | | | | | Cash
Payment(1) | | Medical
Benefits(2) | | Accelerated
Equity(3) | | Other
Benefits(4) | | Excise Tax
Gross-Up | | Total | | | | | Cash
Payment | | | Medical
Benefits (1) | | | Accelerated
Equity (2) | | | Other
Benefits (3) | | | Excise Tax
Gross-Up | | | Total | | | Donald C. Wood | | | | | | | | | | | | | | | | | | | | | | | | | | Death | | $ | — | | | $ | 894,000 | | | $ | 9,825,883 | | | $ | — | | | $ | — | | | $ | 10,719,883 | | | $ | — | | | $ | 2,095,000 | | | $ | 12,000,977 | | | $ | — | | | | N/A | | | $ | 14,095,977 | | Disability(4) | | $ | 923,919 | | | $ | 1,221,033 | | | $ | 9,825,883 | | | $ | — | | | $ | — | | | $ | 11,970,835 | | | | Disability | | | $ | 1,358,701 | | | $ | 2,662,160 | | | $ | 12,000,977 | | | $ | — | | | | N/A | | | $ | 16,021,838 | | | TWOC | | $ | 3,585,874 | | | $ | 1,242,275 | | | $ | 9,825,883 | | | $ | 62,028 | | | $ | — | | | $ | 14,716,060 | | | $ | 3,791,426 | | | $ | 2,719,120 | | | $ | 12,000,977 | | | $ | 60,250 | | | | N/A | | | $ | 18,571,774 | | | Termination for Cause | | $ | 425,000 | | | $ | 15,517 | | | $ | — | | | $ | — | | | $ | — | | | $ | 440,517 | | | $ | 475,000 | | | $ | 20,080 | | | $ | — | | | $ | — | | | | N/A | | | $ | 495,080 | | CIC | | $ | 7,171,748 | | | $ | 1,312,100 | | | $ | 9,825,883 | | | $ | 124,055 | | | $ | — | | | $ | 18,433,786 | | | | James M. Taylor, Jr. | | | | | | | | | | | | | | CIC(5) | | | $ | 7,582,853 | | | $ | 2,809,481 | | | $ | 12,000,977 | | | $ | 167,165 | | | $ | — | | | $ | 22,560,475 | | | Daniel Guglielmone | | | | | | | | | | | | | | | Death | | $ | — | | | $ | — | | | $ | 1,934,329 | | | $ | — | | | $ | — | | | $ | 1,934,329 | | | $ | — | | | $ | — | | | $ | 1,846,457 | | | $ | — | | | | N/A | | | $ | 1,846,457 | | Disability(4) | | $ | 342,559 | | | $ | 23,965 | | | $ | 1,934,329 | | | $ | — | | | $ | — | | | $ | 2,300,853 | | | | Disability | | | $ | 403,128 | | | $ | 32,843 | | | $ | 1,846,457 | | | $ | — | | | | N/A | | | $ | 2,282,428 | | | TWOC | | $ | 857,801 | | | $ | 17,974 | | | $ | 1,934,329 | | | $ | 54,250 | | | $ | — | | | $ | 2,864,354 | | | $ | 869,404 | | | $ | 32,843 | | | $ | 1,846,457 | | | $ | 60,250 | | | | N/A | | | $ | 2,808,955 | | | Termination for Cause | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | N/A | | | $ | — | | CIC | | $ | 1,715,602 | | | $ | 47,930 | | | $ | 1,934,329 | | | $ | 81,375 | | | $ | — | | | $ | 3,779,236 | | | | CIC(5) | | | $ | 1,738,809 | | | $ | 65,686 | | | $ | 1,846,457 | | | $ | 90,375 | | | | N/A | | | $ | 3,741,327 | | | Dawn M. Becker | | | | | | | | | | | | | | | | | | | | | | | | | | Death | | $ | — | | | $ | — | | | $ | 1,579,100 | | | $ | — | | | $ | — | | | $ | 1,579,100 | | | $ | — | | | $ | — | | | $ | 1,571,009 | | | $ | — | | | | N/A | | | $ | 1,571,009 | | Disability(4) | | $ | 328,591 | | | $ | 11,097 | | | $ | 1,579,100 | | | $ | — | | | $ | — | | | $ | 1,918,788 | | | | Disability | | | $ | 380,790 | | | $ | 14,226 | | | $ | 1,571,009 | | | $ | — | | | | N/A | | | $ | 1,966,026 | | | TWOC | | $ | 857,801 | | | $ | 8,323 | | | $ | 1,579,100 | | | $ | 54,250 | | | $ | — | | | $ | 2,499,474 | | | $ | 857,801 | | | $ | 10,670 | | | $ | 1,571,009 | | | $ | 60,250 | | | | N/A | | | $ | 2,499,730 | | | Termination for Cause | | $ | 225,000 | | | $ | 5,549 | | | $ | — | | | $ | — | | | $ | — | | | $ | 230,549 | | | $ | 225,000 | | | $ | 7,113 | | | $ | — | | | $ | — | | | | N/A | | | $ | 232,113 | | CIC | | $ | 1,715,602 | | | $ | 22,195 | | | $ | 1,679,115 | | | $ | 81,375 | | | $ | — | | | $ | 3,498,287 | | | | CIC(5) | | | $ | 1,715,602 | | | $ | 28,453 | | | $ | 1,571,009 | | | $ | 90,375 | | | $ | — | | | $ | 3,405,439 | |
| (1) | For disability, payments are for 1 year in an amount equal to the difference between then current salary and the amount of any payments received under any disability policy we maintained plus a taxgross-up onnon-tax exempt payments. The estimated taxgross-ups included in these amounts are $636,701 for Mr. Wood, $156,128 for Mr. Guglielmone and $158,790 for Ms. Becker. For termination without cause (“TWOC”), payment are 1.5 times the highest annual base salary and annual bonus paid during the prior3-year period for Mr. Wood and 1.0 times that amount for Mr. Guglielmone and Ms. Becker. For termination for cause, the payments equal 1 month of base salary for each year of employment greater than 5 years, capped at a total of 6 months. For change in control (“CIC”), the payments equal 3.0 times the highest annual base salary and annual bonus paid during the prior3-year period for Mr. Wood and 2.0 times that amount for Mr. Guglielmone and Ms. Becker. |
| (2) | Amounts in this column represent our estimate of the COBRA equivalent to provide the same benefits as being provided to each named executive officerNEO at December 31, 20152017 for a period of: (a) 1 year in the required time period. This estimate wasevent of death or disability for each of our NEOs; (b) 6 months for Mr. Wood and Ms. Becker on a termination with cause; (c) 9 months for Mr. Wood and Ms. Becker and 12 months for Mr. Guglielmone on a TWOC; and (d) 3 years for Mr. Wood and 2 years for Mr. Guglielmone and Ms. Becker on a CIC. These estimates were determined by us with input from our health insurance broker and health coverage insurer to confirm that our estimate was consistent with the market cost of providing a stand-alone health insurance program with similar coverage. Because our health insurance program includes a self-insured retention, it is impossible to determine the exact cost to us of the continued health insurance. We believewe use the COBRA equivalent isas a reasonable estimate of the best possible measure of potential costs for these benefits. For Mr. Wood, this column also includes the following estimated costs (calculated in accordance with GAAP)Generally Accepted Accounting Principles) pursuant to the Health Continuation Coverage Agreement with Mr. Wood: $894,000$2,095,000 in the event of death; $1,190,000$2,622,000 in the event of disability; and $1,219,000$2,689,000 in the event of termination without cause and change in control. |
(2)(3) | All unvested Shares and options held by our NEOs will vest in the event of death, disability, TWOC or CIC. Amounts in this column were calculated by multiplying the number of unvested Shares and options that vest on the occurrence of the specified event as of December 31, 20152017 by the value for each Share and option determined in accordance with the |
| FASB ASC Topic 718. Each NEO or NEO beneficiary has 2 years after the NEO’s death or disability and 1 year after a TWOC or CIC to exercise any outstanding options, subject to the terms of the applicable option agreement. |
(3)(4) | Amounts in this column includeare estimated costs for the following: (a) the annual costa full-time administrative assistant and outplacement assistance for a period of administrative assistance6 months in the amountevent of $93,500a TWOC for each of our named executive officers. This amount is based on estimated personnel costsNEOs and for executive administrative assistants and assumes that each named executive officer has full time usea period of an assistant; (b) annual outplacement costs of $15,000 based on a current estimate of these costs; and (c) the estimated annual cost of $15,55512 months for Mr. Wood’sWood and 9 months for Mr. Guglielmone and Ms. Becker in the event of a CIC; and (b) use of a company vehicle for three years for Mr. Wood in the event of a change in controlCIC should he choose to use that benefit. There are no additional incremental costs to us for continuing to provide these individuals with office space, e-mail capability or a telephone. |
(4)(5) | The cash severance payment includesUnder our 2010 Plan, a paymentCIC is deemed to have occurred when a person acquires a 20% interest in us, or our current Trustees, or those subsequently approved by our current Trustees, constitute less than 2/3 of $622,000 plus $301,919our Board. Upon a CIC, each NEO is entitled to receive payments and benefits so long as a tax gross-uphe or she (a) is terminated from employment by the Trust other than for cause or leaves for good reason within 2 years after the change of control or (b) as to Mr. Wood a paymentand Ms. Becker only, he or she voluntarily leaves employment within the 30 day window following the1-year anniversary of $222,000 plus $120,559 as a tax gross-up for Mr. Taylor and a payment of $222,000 plus $106,591 as a tax gross-up for Ms. Becker.the CIC. |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Compensation Committee consists of Mr. Faeder, Ms. Gamble,Holland, Ms. Steinel and Mr. Vassalluzzo. There are no Compensation Committee interlocks and no member of the Compensation Committee serves, or has in the past served, as an employee or officer of the Trust. ITEM 3CEO PAY RATIO
ADVISORY VOTE ON THE
Our compensation and benefit programs are substantially similar throughout the company and are designed to reward all employees who contribute to our success with a total compensation package that is competitive in the marketplace for each employee’s position and performance. We are required to calculate and disclose the compensation of our median paid employee as well as the ratio of the total compensation of our median paid employee to the compensation paid to our CEO. To determine our median paid employee, we used our employee population as of December 31, 2017, excluding our CEO, which included 318 full-time and part-time employees ranging from executive vice presidents to landscapers and maintenance technicians. We identified our median paid employee using annual base pay plus annual bonus at target levels plus overtime actually paid, the combination of which we believe most closely approximates the total annual direct compensation of our employees. For purposes of the calculation, base pay was annualized for the 46 employees who started with us in 2017. No other adjustments were made. The actual total annual compensation of our Chief Executive Officer and median paid employee was calculated in accordance with the requirements of the Summary Compensation Table included in this proxy statement. Based on this methodology, we have determined that the total annual compensation paid to our Chief Executive Officer in 2017 was $9,077,782 and the total annual compensation paid to our median paid employee in 2017 was $101,598 resulting in a ratio of 89:1. We calculated our pay ratio in accordance with SEC rules; however, those rules allow companies discretion in methodologies used to identify the median paid employee and the compensation used to determine the median paid employee. As a result, this ratio is unique to our company. Other companies may make their determinations differently and as a result, the ratio may not be comparable across companies. We believe our ratio is a reasonable estimate. Our ratio is very heavily influenced by what employees/services we choose to provide through employees as opposed to through third parties who are not taken into account in the calculation of the pay ratio. EQUITY COMPENSATION PLAN INFORMATION The following table provides information as of December 31, 2017 regarding our equity compensation plans, all of which were approved by our shareholders. | | | | | | | | | | | | | | | | | | | | Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights(1) (Column A) | | Weighted average exercise price of outstanding options, warrants and rights | | Number of securities
remaining available for
future issuance (excluding securities
reflected in Column A(2) | | | | | Equity compensation plans approved by security holders | | | | 106,485 | | | | $ | 44.18 | | | | | 1,602,719 | | | | | | Equity compensation plans not approved by security holders | | | | — | | | | | — | | | | | — | | | | | | Total | | | | 106,485 | | | | $ | 44.18 | | | | | 1,602,719 | |
| (1) | Consists of Shares authorized for issuance under our 2001 Plan and our 2010 Plan. |
| (2) | Consists entirely of Shares authorized for issuance under our 2010 Plan. |
PROPOSAL3 – NON-BINDING RATIFICATION OF OUR NAMED EXECUTIVE OFFICERSINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM You
Shareholders are being asked to approveratify in anon-binding vote the selection of Grant Thornton, LLP (“GT”) as our independent registered public accounting firm for the fiscal year ending December 31, 2018. Although shareholder ratification of GT is not required by our governance documents; the Board is submitting the selection of GT to shareholders to solicit shareholder views on an advisory basisour selection of GT as our independent registered public accounting firm. GT has served in this role since 2002 and the compensation of our named executive officers as describedBoard believes it is in the Compensation Discussion and Analysis (“CD&A”), the Summary Compensation Table, the supplemental tables and the disclosure narratives accompanying these sections of this proxy statement. Our compensation philosophy is designed to attract and retain top level real estate professionals and to motivate those professionals to achieve superior results for us and our shareholders. Our compensation packages include base salaries, annual incentive compensation, long-term incentives and various other benefits and perquisites. We believe our compensation programs and policies are appropriate and effective in implementing our compensation philosophy and in achieving our goals and that they are aligned with the interests of our shareholders. In considering whether to approve this proposal, we believe our shareholders should consider the following:
1. A significant portion of our named executive officers’ compensation is directly linked to our performance and the creation of long-term shareholder value through long-term incentive awards. The value of these awards is only recognized over a 6-year period that consists of a 3-year performance period plus a 3-year vesting period.
2. The compensation of our named executive officers is strongly tied to our performance and to the performance of the individual. The annual incentive compensation is only paid if we achieve our annual FFO objective and long-term incentives are earned on the basis of our absolute and relative shareholder returns as well as our return on invested capital.
3. We have an appropriate balance of pay between short-term and long-term objectives.
4. Our Chief Executive Officer, Chief Financial Officer and General Counsel are incentivized to act in the best long-term interests of the Trust through stock ownership guidelines.
5. We have no perquisitesand our shareholders for our named executive officers that areGT to continue in this role. If the selection of GT is not widely availableratified, the Audit Committee may reconsider whether to other employees other than as describedretain GT. Even if the selection of GT is ratified, the Audit Committee may change the appointment of GT at any time if it determines such a change would be in the CD&A and the “Potential Payments on Termination of Employment and Change-in Control” section above.
We are requesting your advisory and non-binding approvalbest interests of the compensation of our named executive officers for 2015 as disclosed in the CD&A, the Summary Compensation Table, the supplemental tables and the disclosure narratives accompanying these sections of this proxy statement. This proposal allows our shareholders to express their opinions regarding the decisions made by the Compensation Committee on the annual compensation to the named executive officers for 2015; however, because the vote on this proposal is advisory in nature, it will not affect any compensation already paid or awarded to any named executive officer for 2015 and will not be binding on the Compensation Committee, the Board or the Trust. The BoardTrust and our Compensation Committee valueshareholders.
A representative of GT will be present at the opinions of our shareholdersAnnual Meeting and will review the results of this vote and take them into consideration in addressing future compensation policies and decisions. Our shareholders have the opportunity at our Annual Meeting to vote, in person or by proxy, on the following:
RESOLVED, that the shareholders of the Trust hereby approve, on an advisory basis, the compensation of our named executive officers as described in the Compensation Discussion and Analysis, the Summary Compensation Table, the supplemental tables and the narrative disclosures accompanying these materials as required by Item 402 of Regulation S-K.answer appropriate questions from shareholders.
The affirmative vote of a majority of votes cast at the Annual Meeting, in person or by proxy, is required to approve on an advisory basis, this proposal. If you are a “registered” shareholder who elects to receive materials by mail and you sign and return but fail to give any voting instructions on your proxy card on this matter, the proxies identified on the proxy card will vote FOR this proposal. An “abstention” or broker “non-vote”“brokernon-vote” will have no effect on the outcome of the vote onfor this proposal.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DESCRIBED IN THE COMPENSATION DISCUSSION AND ANALYSIS, THE SUMMARY COMPENSATION TABLE, THE SUPPLEMENTAL TABLES AND NARRATIVE DISCLOSURES ACCOMPANYING THESE SECTIONS.
| | | | | | The Board recommends that you vote “FOR” thenon-binding ratification of the appointment of GT as our independent registered public accounting firm for 2018. |
EQUITY COMPENSATION PLAN INFORMATIONAUDIT COMMITTEE REPORT
The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Trust filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Trust specifically incorporates this Report by reference therein. The Audit Committee is made up entirely of trustees who meet all independence requirements under the SEC and NYSE and have the requisite financial competence to serve on the Audit Committee. The Audit Committee meets at least quarterly and operates pursuant to a written charter that is reviewed at least every three years. That charter can be accessed under the Investors section of our website atwww.federalrealty.com. In 2017, the Audit Committee met four times and each meeting included an executive session with the Trust’s independent registered public accounting firm and no members of management present. The Audit Committee is directly responsible for the appointment, retention and oversight of GT, the independent registered public accounting firm retained to audit the Trust’s financial statements, and also oversees management, including its internal audit firm, in their performance of its financial functions. Specifically, 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 in the United States (“GAAP”) and for reporting on internal control over financial reporting. Management uses Pricewaterhouse Coopers, LLC (“PwC”) to provide its internal audit function, including oversight of the ongoing testing of the effectiveness of our internal controls. GT is responsible for auditing the consolidated financial statements of the Trust and expressing an opinion on the financial statements and the effectiveness of internal control over financial reporting. During 2017, as part of its oversight function, the Audit Committee: | Ø | | Reviewed and discussed with management and GT, individually and collectively, all annual and quarterly financial statements and operating results prior to their issuance; |
| Ø | | Discussed with GT matters required to be discussed pursuant to applicable audit standards, including the reasonableness of judgments and the clarity and completeness of financial disclosures; |
| Ø | | Reviewed and discussed with GT and PwC, individually and collectively, the ongoing assessment and testing of the Trust’s systems of internal controls and procedures; |
| Ø | | Discussed with GT matters relating to GT’s independence from the Trust and received written confirmation from GT that GT is not aware of any relationships, that in their professional judgment may impair their independence; and; |
| Ø | | Monitored thenon-audit services provided by GT to ensure that performance of such services did not adversely impact GT’s independence. |
Based on the Audit Committee’s reviews and discussions with GT, PwC and management, the Audit Committee recommended to the Board of Trustees that the Board approve the inclusion of our audited financial statements in our Annual Report on Form10-K for the fiscal year ended December 31, 2017 for filing with the SEC. Submitted by the Audit Committee: Gail P. Steinel, Chairperson Jon E. Bortz David W. Faeder Warren M. Thompson INDEPENDENT AUDITOR’S FEES The following table provides information as ofsets forth the fees for services rendered by GT for the years ended December 31, 2015 regarding our equity compensation plans, all of which were approved by our shareholders.2017 and 2016: | | | | | | | | | | | | | | Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) (a) | | | Weighted average exercise price of outstanding options, warrants and rights (b) | | | Number of securities
remaining available for
future issuance
(excluding securities
reflected in column (a)(2)) (c) | | Equity compensation plans approved by security holders | | | 313,802 | | | $ | 60.93 | | | | 1,865,984 | | Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | | | | | | | | | | | | | | | Total | | | 313,802 | | | $ | 60.93 | | | | 1,865,984 | | | | | | | | | | | | | | |
| | | | | | | | | | | | 2017 | | | 2016 | | Audit Fees(1) | | $ | 906,750 | | | $ | 652,808 | | Audit-Related Fees(2) | | $ | 133,875 | | | $ | 61,950 | | Tax Fees(3) | | $ | 239,980 | | | $ | 255,791 | | All Other Fees | | $ | — | | | $ | — | | Total Fees | | $ | 1,280,605 | | | $ | 970,549 | |
| (1) | Consists entirelyAudit fees include all fees and expenses for services in connection with: (a) the audit of Shares authorized for issuance under our 2001 Plan.financial statements included in our annual reports on Form10-K; (b) Sarbanes-Oxley Section 404 relating to our annual audit; (c) the review of the financial statements included in our quarterly reports on Form10-Q; and (d) consents and comfort letters issued in connection with debt offerings and common share offerings. |
| (2) | Consists entirelyAudit-related fees primarily include the audit of our employee benefit plan, which are paid by the plan and not the Trust, and certain property level audits. |
| (3) | $233,400 and $246,070 of the amounts shown for 2017 and 2016, respectively, relate solely to tax compliance and preparation, including the preparation of original and amended tax returns and refund claims and tax payment planning. These figures do not include $6,645 in 2016 we paid to GT as our 30% share of the cost of tax return preparation for our joint venture with affiliates of a discretionary fund created and advised by Clarion Partners. On January 13, 2016, we acquired the Clarion Partners interest in the joint venture arrangement. The remaining amounts relate to requested tax research, none of which research related to tax shelters. |
PROCEDURES FOR AUDIT COMMITTEEPRE-APPROVAL OF AUDIT AND PERMISSIBLENON-AUDIT SERVICES As required by its charter, the Audit Committee is responsible for reviewing and approving in advance all audit and permissiblenon-audit services to be provided by GT to the Trust. The Audit Committee approves such services only after concluding that the provision of these services would not affect the independence of GT. The Audit Committee approved all audit services provided by GT in 2017 and haspre-approved GT providing the following permissiblenon-audit services in 2018 up to specified maximum amounts that are consistent with prior years: | Ø | | Issuance of comfort letters and consent for capital markets transactions |
| Ø | | Tax planning and other consultation for purposes of structuring investment or financing opportunities as well as consultation associated with financial reporting matters |
| Ø | | Issuance of audit opinions related to acquisition audits required under Rule3-14 of RegulationS-X (if any) |
| Ø | | Limited review of the Trust’s letter to the State of California Department of Environmental Quality |
OWNERSHIP OF PRINCIPAL SHAREHOLDERS Based upon our records and the information reported in filings with the SEC, the following were beneficial owners of more than 5% of our Shares as of March 14, 2018: | | | | | Name and Address of Beneficial Owner | | Amount and Nature
of Beneficial Ownership | | Percentage of Our Outstanding Shares(1) | The Vanguard Group, Inc.(2) 100 Vanguard Blvd. Malvern, PA 19355 | | 12,575,705 | | 17.2% | BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10055 | | 7,899,850 | | 10.8% | State Street Corporation(4) State Street Financial Center, One Lincoln Street Boston, MA 02111 | | 6,242,324 | | 8.5% | Vanguard Specialized Funds – Vanguard REIT Index Fund(5) 100 Vanguard Blvd. Malvern, PA 19355 | | 4,605,432 | | 6.3% | JPMorgan Chase & Co.(6) 270 Park Avenue New York, NY 10017 | | 3,785,397 | | 5.2% |
| (1) | The percentage of outstanding Shares is calculated by taking the number of Shares authorized for issuancestated in the Schedule 13G or 13G/A, as applicable, filed with the SEC divided by 73,186,370, the total number of Shares outstanding on March 14, 2018. |
| (2) | Information based on a Schedule 13G/A filed with the SEC on February 9, 2018 by The Vanguard Group which states The Vanguard Group, an investment advisor, has sole voting power over 189,034 Shares, shared voting power over 113,832 Shares, sole dispositive power over 12,362,260 Shares and shared dispositive power over 213,445 Shares. |
| (3) | Information based on a Schedule 13G/A filed with the SEC on January 19, 2018 by BlackRock, Inc., which states BlackRock, Inc., a parent holding company, has sole voting power over 7,141,098 Shares and sole dispositive power over 7,899,850 Shares. |
| (4) | Information based on a Schedule 13G filed with the SEC on February 14, 2018 by State Street Corporation, which states that State Street Corporation, a parent holding company, has shared voting and dispositive power over 6,242,324 Shares. |
| (5) | Information based on a Schedule 13G/A filed with the SEC on February 2, 2018 by Vanguard Specialized Funds – Vanguard REIT Index Fund which states that Vanguard Specialized Funds – Vanguard REIT Index Fund, an investment company registered under our 2010 Plan.Section 8 of the Investment Company Act of 1940, has sole voting power over 4,605,432 Shares. |
| (6) | Information based on a Schedule 13G filed with the SEC on January 10, 2018 by JPMorgan Chase & Co. which states that JPMorgan Chase & Co., a parent holding company, has sole voting power over 3,306,021 Shares, sole dispositive power over 3,771,226 Shares and shared dispositive power over 14,075 Shares. |
CERTAIN RELATIONSHIPSOWNERSHIP OF TRUSTEES AND RELATED TRANSACTIONSEXECUTIVE OFFICERS
Related Party Policies:
Our CodeThe table below reflects beneficial ownership of Business Conduct requires that our Trustees and all of our employees deal with the Trust on an arms-length basis in any related party transaction. All transactions between us and any of our Trustees, named executive officers or other vice presidents, or between us and any entity in which any of our Trustees, named executive officers or other vice presidents is an officer or director or has an ownership interest, must be approved in advance by the Audit Committee. Audit Committee approval is not required for us to enter into a lease with an entity in which any of our Trustees is a director, employee or owner of a company so long as the lease is entered into in the ordinary course of ours and the tenant’s businesses and is negotiated at arms-length and on market terms.
Related Party Transactions:
None of our named executive officers had any indebtedness to the TrustNEOs as of March 18, 2016 or at any time during 2015.
Mr. Thompson serves as the President and Chairman14, 2018 determined in accordance with Rule13d-3 of the BoardSecurities Exchange Act of Directors of Thompson Hospitality Corporation. Thompson Hospitality Corporation and its wholly owned subsidiaries (collectively, “THC”) lease from us approximately 17,400 square feet in three of the Trust’s properties under leases that were negotiated prior to Mr. Thompson’s joining the Board in July 2007. These leases were negotiated at arms-length and reflected market conditions at the time each lease was signed. In June 2012 we entered into a fourth lease with
THC for 6,500 square feet of space (“New Location”) because we believed that THC’s American Tap Room restaurant concept would be a successful fit for the market. The terms of the lease were negotiated at arms-length and reflected market conditions consistent with leases for similar uses at that time. The four leases expire on August 31, 2017, June 30, 2020, December 31, 2021 and September 30, 2023. We anticipate receiving approximately $1.3 million in rent and other related charges in 2016 from the four leased locations. In addition to the leases, one of our wholly owned subsidiaries entered into a partnership with THC to operate the restaurant at the New Location. We own 80% of the partnership and THC owns the remaining 20% of the partnership and acts1934, as the manager of the restaurant. The terms and structure of the partnership with THC were negotiated at arms-length and reflect terms, structures and conditions consistent with other restaurant investments we have made and include market management and license fees payable to THC. The Board determined that Mr. Thompson met all independence requirements established by the NYSE, the SEC, the Trust’s Corporate Governance Guidelines and other applicable rules and regulations during his service as a Trustee during 2015 as describedamended (the “Exchange Act”). Unless noted in the “Independence of Trustees” section above.footnotes following the table, each Trustee and NEO has sole voting and investment power as to all Shares listed.
Mr. Faeder serves as the managing member of The Kensington of Falls Church, LLC which entered into a one-year lease with us in January 2016 for approximately 3,003 square feet in one of our properties. The lease was negotiated at arms-length and reflects market conditions. We anticipate receiving approximately $150,000 in rent and other related charges in 2016 from this lease.
| | | | | | | | | | | | | | | | | | | Name and Address of Beneficial Owner(1) | | Common | | | Unvested
Restricted
Shares | | | Options Currently
Exercisable or
Exercisable Within
60 Days | | | Total Shares Beneficially
Owned | | | Percentage of
Outstanding
Shares
Owned(2) | Dawn M. Becker | | | 115,043 | | | | 11,472 | | | | 0 | | | | 126,515 | | | * | Jon E. Bortz(3) | | | 9,659 | | | | 0 | | | | 0 | | | | 9,659 | | | * | David W. Faeder | | | 9,316 | | | | 0 | | | | 0 | | | | 9,316 | | | * | Daniel Guglielmone | | | 3,217 | | | | 18,828 | | | | 0 | | | | 22,045 | | | * | Elizabeth I. Holland | | | 787 | | | | 0 | | | | 0 | | | | 787 | | | * | Gail P. Steinel | | | 9,112 | | | | 0 | | | | 0 | | | | 9,112 | | | * | Warren M. Thompson | | | 9,191 | | | | 0 | | | | 0 | | | | 9,191 | | | * | Joseph S. Vassalluzzo | | | 21,198 | | | | 0 | | | | 0 | | | | 21,198 | | | * | Donald C. Wood(4) | | | 284,529 | | | | 95,744 | | | | 104,788 | | | | 485,061 | | | * | Trustees, trustee nominees and executive officers as a group (9 individuals) | | | 462,052 | | | | 126,044 | | | | 104,788 | | | | 692,884 | | | * |
Employment and change-in-control arrangements between the Trust and the named executive officers are described in the “Potential Payments on Termination of Employment and Change-in-Control” section above.
| (1) | The address of each beneficial owner is 1626 East Jefferson Street, Rockville, MD 20852. |
| (2) | The percentage of outstanding Shares owned is calculated by taking the number of Shares reflected in the column titled “Total Shares Beneficially Owned” divided by 73,186,370, the total number of Shares outstanding on March 14, 2018, plus the number of options for such person or group reflected in the column titled “Options Currently Exercisable or Exercisable Within 60 Days.” |
| (3) | Voting and investment power is shared with Mr. Bortz’ wife. |
| (4) | Includes 53,879 Shares owned by Mr. Wood’s wife. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Our Trustees, executive officers and any persons who beneficially own more than 10% of our Shares are required by Section 16(a) of the Exchange Act to file reports of initial ownership and changes of ownership of our Shares with the SEC and with the NYSE. To our best knowledge, based solely on review of copies of such reports furnished to us and written representations that no other reports were required, the required filings of all such Trustees and executive officers were filed timely during 2015.2017. Annual Meeting and Voting You are receiving these materials because you owned our Shares as of March 14, 2018, the record date established by our Board of Trustees (“Board”) for our Annual Meeting. Everyone who owned our Shares as of this date, whether directly as a registered shareholder or indirectly through a broker or other nominee, is entitled to vote at the Annual Meeting. We had 73,186,370 Shares outstanding on March 14, 2018. A majority of the Shares entitled to vote at the Annual Meeting must be present in person or by proxy for us to proceed with the Annual Meeting. If you own your Shares directly with our transfer agent, American Stock Transfer and Trust, LLC, you are a registered shareholder and can vote either in person at the Annual Meeting or by proxy without attending the Annual Meeting through one of the following methods: | | | | |
| | | | | Visitwww.voteproxy.com. You will need the control number on your Notice of Internet Availability, proxy card or voting instruction form. Votes must be submitted by 11:59pm EDT to be counted for the meeting. | | Call1-800-Proxies(1-800-776-9437). You will need the control number on your Notice of Internet Availability, proxy card or voting instruction form. Votes must be submitted by 11:59pm EDT to be counted for the meeting. | | You can vote my marking, signing and dating your proxy card. |
For those of you holding your Shares indirectly in an account at a bank, brokerage firm, broker-dealer or nominee, you are a beneficial owner of Shares held in “street name”. You will receive all proxy materials directly from your bank, brokerage firm, broker-dealer or nominee and you must either direct them as to how to vote your Shares or obtain from them a proxy to vote at the Annual Meeting. Please refer to the notice of internet availability of proxy materials or the voter instruction form used by your bank, brokerage firm, broker-dealer or nominee for specific instructions on methods of voting. If you fail to give your bank, brokerage firm, broker-dealer or nominee specific instructions on how to vote your Shares with respect to Items 1 and 2, your vote will NOT be counted for those matters. It is important for every shareholder’s vote to be counted on these matters so we encourage you to provide your bank, brokerage firm, broker-dealer or nominee with voting instructions. If you fail to give your bank, brokerage firm, broker-dealer or nominee specific instructions on how to vote your Shares on Item 3, your bank, brokerage firm, broker-dealer or nominee will generally be able to vote on Item 3 as he, she or it determines. If you do not vote your Shares, your Shares will not be counted and we may not be able to hold the Annual Meeting. We encourage you to vote by proxy using one of the methods described above even if you plan to attend the Annual Meeting in person so that we will know as soon as possible whether enough votes will be present. In the future, if you own your Shares directly and would like to receive proxy materials by email, you may register to do so atwww.astfinancial.com in which case you will receive an email containing links to our proxy materials. If you own Shares through a bank, brokerage firm, broker-dealer or other similar nominee and want to receive proxy materials via email, you must contact your bank, brokerage firm, broker-dealer or other similar nominee for instructions. Your election to receive your proxy materials by email delivery will remain in effect for all future annual meetings until you revoke it. Shareholders can access this Proxy Statement, our Annual Report and our other filings with the SEC on the Investors page of our website atwww.federalrealty.com. A copy of our Annual Report, including the financial statements and financial statement schedules (“Form10-K”) is being provided to shareholders along with this Proxy Statement. The Form10-K includes certain exhibits, which we will provide to you only upon request addressed to Investor Relations at 1626 East Jefferson Street, Rockville, Maryland 20852. The request must be accompanied by payment of a fee to cover our reasonable expenses for copying and mailing the Form10-K. If you elected to receive our shareholder materials via the Internet or email, you may request paper copies, without charge, by written request addressed to the address set forth above. The SEC’s rules permit us to deliver a single Notice or single set of Annual Meeting materials to one address shared by two or more of our shareholders unless we have received contrary instructions from shareholders. This procedure, referred to as “householding”, reduces the volume of duplicate information shareholders receive and can result in significant savings on mailing and printing costs. To take advantage of this opportunity, only one Notice, Proxy Statement and Annual Report is being delivered to multiple shareholders who share a single address, unless any shareholder residing at that address gave contrary instructions. If any shareholder sharing an address with another shareholder wants to receive a separate copy of this Proxy Statement and the Annual Report or wishes to receive a separate proxy statement and annual report in the future, or receives multiple copies of the proxy statement and Annual Report and wishes to receive a single copy, the shareholder should provide such instructions by calling our Investor Relations Department at(800) 937-5449, by writing to Investor Relations at 1626 East Jefferson Street, Rockville, Maryland 20852, or by sending ane-mail to Investor Relations atIR@federalrealty.com. Questions regarding the Notice, voting or email delivery should be directed to our Investor Relations Department at(800) 937-5449 or by email atIR@federalrealty.com. SOLICITATION OF PROXIES, SHAREHOLDER PROPOSALS AND OTHER MATTERS Proposals
The Board of shareholders intendedTrustees is soliciting your proxy to vote on matters that will be presented at the 2017our Annual Meeting and the cost of Shareholders, including nominations for persons for electionthis solicitation of proxies will be borne by us. We may solicit proxies through the mail, Internet, in person and by telephone or facsimile, and may request brokerage houses and other custodians, nominees and fiduciaries to forward soliciting materials to the Boardbeneficial owners of Trustees, must be received by us no later than November 25, 2016 to be consideredShares and reimburse them for inclusion in ourtheir reasonable expenses. We may also hire a proxy statement and form of proxy relating to such meeting. solicitation firm at a standard industry compensation rate. The Trustees know of no other business to be presented at the Annual Meeting. If other matters properly come before the meeting, the persons named as proxies will vote on them in their discretion. Proposals of shareholders intended to be presented at the 2019 Annual Meeting of Shareholders, including nominations for persons for election to the Board of Trustees, must be received by us no later than November 23, 2018 to be considered for inclusion in our proxy statement and form of proxy relating to such meeting. You are urged to vote either by telephone (1-800-PROXIES(1-800-PROXIES or1-800-776-9437) or on the Internet (www.voteproxy.com) by following the instructions on your Notice. For those of you who have elected email delivery, please follow the instructions for voting provided in the email. If you elect to receive your proxy materials by mail, please make sure to complete, sign, date and return your proxy card promptly to make certain your Shares will be voted at the Annual Meeting. For the Trustees,
| For the Trustees, |
| Dawn M. Becker | Executive Vice President – General | Counsel and Secretary |
Dawn M. Becker
Executive Vice President—General
Counsel and Secretary
YOUR PROXY IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE SUBMIT IT TODAY. | APPENDIX A – FUNDS FROM OPERATIONS |
The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as follows: net income, computed in accordance with U.S. GAAP, plus real estate related depreciation and amortization and excluding extraordinary items and gains and losses on the sale of real estate, and impairment write-downs of depreciable real estate. We compute FFO in accordance with the NAREIT definition, and we have historically reported our FFO available for common shareholders in addition to our net income and net cash provided by operating activities. We consider FFO available for common shareholders a meaningful, additional measure of operating performance primarily because it excludes the assumption that the value of the real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation. We use FFO primarily as one of several means of assessing our operating performance in comparison with other REITs. The reconciliation of net income to FFO available for common shareholders is as follows: | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | | | 2017 | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | | | (In thousands, except per share data) | | Net income | | $ | 297,870 | | | $ | 258,883 | | | $ | 218,424 | | | $ | 172,289 | | | $ | 167,608 | | Net income attributable to noncontrolling interests | | | (7,956 | ) | | | (8,973 | ) | | | (8,205 | ) | | | (7,754 | ) | | | (4,927 | ) | Gain on sale of real estate and change in control of interests, net | | | (77,632 | ) | | | (31,133 | ) | | | (28,330 | ) | | | (4,401 | ) | | | (28,855 | ) | Depreciation and amortization of real estate assets | | | 188,719 | | | | 169,198 | | | | 154,232 | | | | 154,060 | | | | 146,377 | | Amortization of initial direct costs of leases | | | 19,124 | | | | 16,875 | | | | 15,026 | | | | 12,391 | | | | 10,694 | | Funds from operations | | | 420,125 | | | | 404,850 | | | | 351,147 | | | | 326,585 | | | | 290,897 | | Dividends on preferred shares(1) | | | (1,917 | ) | | | (541 | ) | | | (541 | ) | | | (541 | ) | | | (541 | ) | Income attributable to operating partnership units | | | 3,143 | | | | 3,145 | | | | 3,398 | | | | 3,027 | | | | 888 | | Income attributable to unvested shares | | | (1,374 | ) | | | (1,095 | ) | | | (1,147 | ) | | | (1,474 | ) | | | (1,306 | ) | Funds from operations available for common shareholders(2) | | $ | 419,977 | | | $ | 406,359 | | | $ | 352,857 | | | $ | 327,597 | | | $ | 289,938 | | Weighted average number of common shares, diluted(1) | | | 73,122 | | | | 71,869 | | | | 69,920 | | | | 68,410 | | | | 65,778 | | Funds from operations available for common shareholders, per diluted share(2) | | $ | 5.74 | | | $ | 5.65 | | | $ | 5.05 | | | $ | 4.79 | | | $ | 4.41 | |
| (1) | For the year ended December 31, 2017, dividends on our Series 1 preferred stock are not deducted in the calculation of FFO available to common shareholders, as the related shares are dilutive and included in “weighted average common shares, diluted.” The weighted average common shares used to compute FFO per diluted common share also includes operating partnership units that were excluded from the computation of diluted EPS. Conversion of these operating partnership units is dilutive in the computation of FFO per diluted common share but is anti-dilutive for the computation of diluted EPS for the periods presented. |
| (2) | If the $12.3 million early extinguishment of debt charge incurred in 2017 was excluded, our FFO available for common shareholders would have been $432.2 million and FFO available for common shareholders, per diluted share would have been $5.91. |
 
0The undersigned, a shareholder of FEDERAL REALTY INVESTMENT TRUST (“the Turst”) hereby
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES The undersigned, a shareholder of Federal Realty Investment Trust (the “Trust”), hereby
constitutes and appoints DAWN M. BECKER and JAMES M. TAYLOR, JR.,DANIEL GUGLIELMONE, or either of them, as the true and lawful attorneys and proxies of the undersigned, with full power of substitution in each of them, for and in the name of the undersigned, to vote and otherwise act at the Annual Meeting of Shareholders of the Trust to be held at AMP by Strathmore, 11810 Grand Park Avenue, North Bethesda, Maryland on Wednesday, May 4, 20162, 2018 at 10:00 a.m., or at any postponement or adjournment thereof, with respect to all of the Common Shares of Beneficial Interest of the Trust which the undersigned would be entitled to vote, with all the powers the undersigned would possess if personally present, on the following matters. The undersigned hereby ratifies and confirms all that the aforesaid attorneys and proxies may do hereunder. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and of the accompanying Proxy Statement and revokes any proxy previously given with respect to the Annual Meeting. (Continued and to be signedsinged on the reverse side) 14475 1.1 14475
 
ANNUAL MEETING OF SHAREHOLDERS OF FEDERAL REALTY INVESTMENT TRUST May 4, 20162, 2018 GO GREENe-Consent makes it easy to go paperless. Withe-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.comwww.astfinancial.com to enjoy online access. NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Annual Report/Form10-K/Notice of Annual Meeting of Shareholders,& Proxy Statement Form of Proxy Card and Annual Report/Form 10-K Wrap areis available at: http://ir.federalrealty.com/phoenix.zhtml?c=84166&p=proxy Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. 20730300000000000000 9 05041600003333333030300000 4 050218 THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED “FOR” ALL NOMINEES IN PROPOSAL 1, AND “FOR” PLEASE PROPOSALS SIGN, 2 AND DATE 3 AND AND THE RETURN PROXIES WILL PROMPTLY VOTE IN THEIR IN SOLE THE JUDGMENT ENCLOSED UPON ANY ENVELOPE. OTHER MATTERS PLEASE PROPERLY MARK COMING YOUR BEFORE VOTE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF. PLEASE SIGN, AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR ANY OR POSTPONEMENT BLACK INK OR AS ADJOURNMENT SHOWN HERE THEREOF. xELECTRONIC ACCESS TO FUTURE DOCUMENTS exclusively, and no longer receive any material by mail please visit http://www.astfinancial.com. Click on Shareholder Account Access to enroll. Pl3
ease enter your account number and tax identification number to log in, then select Receive Company Mailings viaE-Mail and provide youre-mail address. 1. To elect the following Trustees as set forth in the accompanying Proxy Statement:t. NOMINEES: FOR ALL NOMINEES O OAGAINST ABSTAIN Jon E. Bortz David E. W. Bortz Faeder WITHHOLD AUTHORITY O Kristin Gamble FOR ALL NOMINEES OElizabeth I. Holland Gail P. Steinel O Warren M. Thompson FOR (See ALL instructions EXCEPT below) O Joseph S. Vassalluzzo O Donald C. Wood INSTRUCTIONS:FOR AGAINST ABSTAIN 2. To withhold authorityhold an advisory vote approving the compensation of our named executive officers. registered public accounting firm for the fiscal year ending December 31, 2018. FOR AGAINST ABSTAIN 3. to voteratify the appointment of grant Thornton LLP as our independent registarted public accounting firm for the fiscal year ending December31, 2018 4. To consider and act upon any individual nominee(s), mark “FOR ALL EXCEPT” and fill inother matters properly coming before the circle next to each nominee you wish to withhold, as shown here:meeting or any postponement or adjournment thereof. To indicate changes change your to the the new address registered address on name(s) your in the account, address on the please account space check above.above may not the . Please be box submitted at note right and that via this method. Signature of Shareholder Date: Signature of Shareholder Date: Note: Please full title sign as such. exactly If the as signer your name is a corporation, or names appear please on sign this full Proxy. corporate When name shares by duly are authorized held jointly, officer, each holder giving should full title sign. as such. When If signer signing is a as partnership, executor, administrator, please sign in attorney, partnership trustee name by authorized person.
FEDERAL ANNUAL REALTY MEETING OF INVESTMENT SHAREHOLDERS OF TRUST May 2, 2018 PROXY VOTING INSTRUCTIONS INTERNET—Access “www.voteproxy.com” and follow theon-screen instructions or by guardian, authorized please person. give 2. To ratifyscan the appointment of Grant Thornton LLP as our independent registered public accounting firm forQR code with your smartphone. Have your proxy card available when you access the fiscal year ending December 31, 2016. 3. To hold an advisory vote approvingweb page.TELEPHONE—Call toll-free1-800-PROXIES(1-800-776-9437) in the compensation of our named executive officers. 4. To considerUnited States or1-718-921-8500 from foreign countries from any touch-tone telephone and act upon any other matters properly comingfollow the instructions. Have your proxy card available when you call.Vote online/phone until 11:59 PM EDT the day before the meetingmeeting. MAIL—Sign, date and mail your proxy card in the envelope provided as soon as possible. IN PERSON—You may vote your shares in person by attending the Annual Meeting. GOGREEN—e-Consent makes it easy to go paperless. Withe-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. COMPANY NUMBER ACCOUNT NUMBER NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Annual Report/Form10-K/Notice & Proxy Statement Wrap is available at: http://ir.federalrealty.com/phoenix.zhtml?c=84166&p=proxy Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or any postponement or adjournment thereof.the Internet. 00003333333030300000 4 050218 PLEASE SIGN, AND THE DATE PROXIES AND WILL RETURN VOTE IN THEIR PROMPTLY SOLE JUDGMENT IN THE UPON ENCLOSED ANY OTHER MATTERS ENVELOPE PROPERLY . COMING PLEASE BEFORE MARK THE MEETING YOUR OR VOTE ANY POSTPONEMENT IN BLUE OR OR BLACK ADJOURNMENT INK AS THEREOF SHOWN . HERE ELECTRONIC ACCESS TO FUTURE DOCUMENTS If you would like to receive future shareholder communications over the Internet exclusively, and no longer receive any material by mail please visit http://www.amstock.com.www.astfinancial.com. Click on Shareholder Account Access to enroll. Please enter your account number and tax identification number to log in, then select Receive Company Mailings viaE-Mail and provide youre-mail address.
FEDERAL ANNUAL REALTY MEETING OF INVESTMENT SHAREHOLDERS OF TRUST May 4, 2016 PROXY VOTING INSTRUCTIONS INTERNET—Access “www.voteproxy.com” and follow 1. To elect the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page. TELEPHONE—Call toll-free 1-800-PROXIES (1-800-776-9437)following Trustees as set forth in the United States or 1-718-921-8500 from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call. Vote online/phone until 11:59 PM?EDT?the day before the meeting. COMPANY NUMBER MAIL—Sign, date and mail your proxy card in the envelope provided as soon as possible. IN?PERSON—You may vote your shares in person by attending ACCOUNT NUMBER the Annual Meeting. GO GREEN—e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access. NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Annual Meeting of Shareholders,accompanying Proxy Statement, Form of Proxy Card and Annual Report/Form 10-K Wrap are available at: http://ir.federalrealty.com/phoenix.zhtml?c=84166&p=proxy Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. 20730300000000000000 9 050416 THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED “FOR” ALL NOMINEES IN PROPOSAL 1 AND “FOR” PLEASE PROPOSALS SIGN, 2 AND DATE 3, AND AND THE RETURN PROXIES WILL PROMPTLY VOTE IN THEIR IN SOLE THE JUDGMENT ENCLOSED UPON ANY ENVELOPE. OTHER MATTERS PLEASE PROPERLY MARK COMING YOUR BEFORE VOTE THE MEETING IN BLUE OR ANY OR POSTPONEMENT BLACK INK OR AS ADJOURNMENT SHOWN HERE THEREOF. x Statement:t. NOMINEES: FOR ALL NOMINEES O O DavidAGAINST ABSTAIN Jon E. Bortz David W. Bortz Faeder WITHHOLD AUTHORITY O Kristin Gamble FOR ALL NOMINEES OElizabeth I. Holland Gail P. Steinel O Warren M. Thompson FOR (See ALL instructions EXCEPT below) O Joseph S. Vassalluzzo O Donald C. Wood INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: JOHN SMITH 1234 MAIN STREET APT. 203 NEW YORK, NY 10038 To indicate changes change your to the the new address registered address on name(s) your in the account, address on the please account space check above. may not the Please be box submitted at note right and that via this method. 2.FOR AGAINST ABSTAIN executive officers. 3. To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016. 3. To hold an advisory vote approving2018. FOR AGAINST ABSTAIN indicate changes this method your to the compensation of our named executive officers.. new registered address name(s) in the address on the account space above may not . Please be submitted note that via 4. To consider and act upon any other matters properly coming before the meeting or any postponement or adjournment thereof. ELECTRONIC ACCESS TO FUTURE DOCUMENTS If you would like to receive future shareholder communications over the Internet exclusively, and no longer receive any material by mail please visit http://www.amstock.com. Click on Shareholder Account Access to enroll. Please enter your account number and tax identification number to log in, then select Receive Company Mailings via E-Mail and provide your e-mail address. Signature of Shareholder Date: Signature of Shareholder Date: Note: Please full title sign as such. exactly If the as signer your name is a corporation, or names appear please on sign this full Proxy. corporate When name shares by duly are authorized held jointly, officer, each holder giving should full title sign. as such. When If signer signing is a as partnership, executor, administrator, please sign in attorney, partnership trustee name or by guardian, authorized please person. give
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