UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x☒ Filed by a Party other than the Registrant ¨☐
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material under §240.14a-12 |
Retail Properties of America, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ No fee required. ☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) | ||||
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RETAIL PROPERTIES OF AMERICA, INC.☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
You are cordially invited to attend the 20162020 Annual Meeting of Stockholders (the “Annual Meeting”“Annual Meeting”) of Retail Properties of America, Inc. (the “Company”“Company”). The Annual Meeting will be held on May 26, 201628, 2020 at 9:00 a.m. Eastern Time atCentral Time. The Westin Buckhead Atlanta, 3391 Peachtree Road, N.E.Annual Meeting will be held entirely online due to the public health impact of the coronavirus (COVID-19) outbreak and to support the health and well-being of our stockholders, employees and partners. You can attend and participate in the Annual Meeting online by visiting www.virtualshareholdermeeting.com/RPAI2020, Atlanta, Georgia, 30326.where you will be able to listen to the Annual Meeting, submit questions and vote. Please see the “Questions and Answers” section of this proxy statement for more details regarding the logistics of the virtual Annual Meeting, including the ability of shareholders to submit questions during the Annual Meeting, and technical details and support related to accessing the virtual platform.
The Annual Meeting will be held for the following purposes:
1. | To elect eight directors, nominated by the Board of Directors of the Company, to hold office until the |
2. | To approve the Company’s executive compensation on an advisory basis; |
3. | To ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for |
4. | To transact any other business as may properly come before the meeting or any adjournments or postponements of the meeting. |
The Board of Directors of the Company has fixed the close of business on March 18, 201624, 2020 as the record date for determining stockholders of record entitled to notice of and to vote at the meeting.Annual Meeting.
We hope to haveThe Board of Directors of the maximum number of stockholders presentCompany appreciates and encourages your participation in person or by proxy at the meeting.Annual Meeting. To assure your representation at the meeting,Annual Meeting, please authorize your proxy by completing, signing, dating and mailing the enclosed proxy card. You may also authorize your proxy through the Internet,internet or by calling a toll-free telephone number byand following the procedures described on the enclosed proxy card.YOUR COOPERATION IN PROMPTLY SUBMITTING YOUR PROXY WILL BEIS VERY MUCH APPRECIATEDAPPRECIATED.. For specific instructions, please refer to the instructions on the proxy card. Proof of stock ownership and a form of photo identification will be required for admission to the meeting. For further information on admission, please refer to the question entitled “Who can attend the meeting?” on page 1 of the proxy statement which follows this notice.
Thank you for your continued support of and interest in our Company.
| By order of the Board of Directors, | |||||
| /s/ | |||||
| Ann M. Sharp Hult | |||||
Dated: April 3, 2020 | Secretary |
Important Notice Regarding the Availability of Proxy Materials for Stockholder Meeting To Be Held on May 26, 2016:28, 2020:
The Proxy Statement, Annual Report to Stockholders and Proxy Card are available free of charge at www.rpai.com/proxy.
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RETAIL PROPERTIES OF AMERICA, INC.
2021 SPRING ROAD, SUITE 200
OAK BROOK, ILLINOIS 60523
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 26, 201628, 2020
This proxy statement contains information related to the Annual Meeting of Stockholders (the “Annual Meeting”“Annual Meeting”) of Retail Properties of America, Inc. (the “Company,“Company,” “we,“we,” “our”“our” or “us”“us”), which will be held on May 26, 201628, 2020 at 9:00 a.m. Eastern TimeCentral Time. Our stockholders are invited to attend the Annual Meeting online at The Westin Buckhead Atlanta, 3391 Peachtree Road, N.E., Atlanta, Georgia, 30326. Please contact our Investor Relations department at (800) 541-7661 or via email at IR@rpai.com if you plan to attend.www.virtualshareholdermeeting.com/RPAI2020.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
Why did you send me this ProxyProxy Statement?
We sent you this proxy statement and the proxy card because our Board of Directors (the “Board”“Board”) is soliciting a proxy from you to vote your shares at the Annual Meeting. This proxy statement contains information we are required to provide to you and is designed to assist you in voting your shares. On or about April 4, 2016,3, 2020, we will begin mailing the proxy materials to all stockholders of record as of the close of business on March 18, 2016,24, 2020, the record date fixed by the Board for determining the holders of record of our Class A common stock, $.001$0.001 par value per share, entitled to notice of and to vote at the Annual Meeting.
Why did some stockholders receive a Notice of Internet Availability of Proxy Materials?
Certain of our stockholders may receive a Notice of Internet Availability of Proxy Materials, or Notice, which was sent to stockholders on or about April 4, 2016,3, 2020, containing information on the availability of our proxy materials on the Internet.internet. Stockholders who received the Notice by mail will not receive a printed copy of our proxy materials unless requested in the manner described in the Notice. The Notice explains how to access and review this proxy statement and our Annual Report to Stockholders and how you may vote by proxy.
Who is entitled to vote?attend and vote at the Annual Meeting?
If you were a stockholder of record as of the close of business on March 18, 2016,24, 2020, which is referred to as the record date, you are entitled to receive notice of, and to attend, the Annual Meeting and to vote the shares of Class A common stock that you held as of the close of business on the record date at the Annual Meeting. You may authorize a proxy to vote your shares without attending the Annual Meeting. Each of the outstanding shares of Class A common stock, as of the record date, is entitled to one vote on all matters to be voted upon at the Annual Meeting. On the record date, there were 237,346,768214,121,973 shares of Class A common stock issued and outstanding. We refer to our Class A common stock as our “common stock.”
Who can
Attendance and participation at the Annual Meeting is limited to stockholders of record and to stockholders whose shares are registered in the name of a broker, bank or other nominee, and for which such stockholder has requested and obtained a valid proxy card, with a unique 16-digit control number, from their broker, bank or other nominee.
How do I attend the meeting?virtual Annual Meeting?
Only persons who are
The Annual Meeting will be held entirely online due to the public health impact of the coronavirus (COVID-19) outbreak and to support the health and well-being of our stockholders, employees and
partners. Stockholders of record of shares of our common stock of the Company at the close of business on the record date or their designated proxies or who are invited guests of the Company maywill be able to attend and participate in the Annual Meeting online by accessing www.virtualshareholdermeeting.com/RPAI2020 and following the login instructions below. Even if you plan to attend the Annual Meeting online, we recommend that you also vote by proxy as described herein so that your vote will be admittedcounted if you decide not to attend the Annual Meeting.
Access to the Audio Webcast of the Annual Meeting. The live audio webcast of the Annual Meeting will begin promptly at 9:00 a.m. Central Time. Online access to the audio webcast will open approximately thirty minutes prior to the start of the Annual Meeting to allow time for you to log in and test the computer audio system. We encourage our stockholders to access the Annual Meeting prior to the start time.
Login Instructions. To attend the online Annual Meeting, log in at www.virtualshareholdermeeting.com/RPAI2020. Stockholders will need their unique 16-digit control number, which appears on the Notice and the instructions that accompany the proxy materials. In the event that you do not have a control number, please contact your broker, bank or other nominee as soon as possible and no later than May 14, 2020, so that you can be provided with the control number and gain access to the Annual Meeting. All stockholders attendingIf, for any reason, you are unable to locate your control number, you will still be able to join the virtual Annual Meeting as a guest by accessing www.virtualshareholdermeeting.com/RPAI2020 and following the guest login instructions; you will not, however, be able to vote or ask questions.
Submitting questions at the virtual Annual Meeting. As part of the Annual Meeting, we will hold a live question and answer session, during which time we intend to answer questions submitted during the Annual Meeting in accordance with the rules of conduct for the Annual Meeting that are pertinent to the Company and meeting matters, as time permits. Questions and answers will be grouped by topic and substantially similar questions will be grouped and answered once. The rules of conduct for the Annual Meeting will be required to show photo identification (a valid driver’s license, state identification or passport)posted on www.virtualshareholdermeeting.com/RPAI2020 approximately two weeks prior to admission. If a stockholder’s shares are registered in the name of a broker, bank or other nominee, the stockholder must also bring a proxy or a letter from that broker, bank or other nominee or their most recent brokerage account statement that confirms that the stockholder was a beneficial owner of our shares asdate of the record date. We reserveAnnual Meeting. Only stockholders who log in using their unique 16-digit control number, which appears on the rightNotice and the instructions that accompany the proxy materials, will be able to determineask questions at the
validityTechnical Assistance. Beginning thirty minutes prior to the start of and during the virtual Annual Meeting, we will have a support team ready to assist stockholders with any purported prooftechnical difficulties they may have accessing or hearing the virtual Annual Meeting. If you encounter any difficulties accessing the virtual Annual Meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual Annual Meeting login page.
Availability of beneficial ownership. Please contact our Investor Relations department at (800) 541-7661 or via email at IR@rpai.com if you planlive webcast to attend. Cameras (including cell phones with photographic capabilities), recording devicesteam members and other electronic devicesconstituents. The live audio webcast will be available to not only our stockholders, but also to our team members and other constituents. Such constituents will be able to attend the virtual Annual Meeting by accessing www.virtualshareholdermeeting.com/RPAI2020 and following the guest login instructions; they will not, however, be permittedable to be used at the meeting.vote or ask questions.
How do I vote?
If some or all of your shares are registered in your own name with our transfer agent, you are a “stockholder of record” or “record holder” with respect to such shares, and you can vote those shares either in persononline at the Annual Meeting by following the instructions posted at www.virtualshareholdermeeting.com/RPAI2020 or by proxy without attending the Annual Meeting by any of the following methods:
By Internet. Stockholders may authorize a proxy to vote via the Internetinternet by using the website provided on their proxy card or Notice until 11:59 p.m. Eastern Time on May 25, 2016.27, 2020. The Internetinternet proxy authorization procedures are designed to authenticate stockholders’ identities and to allow stockholders to authorize a proxy to vote their shares and confirm that their instructions have been properly recorded.If you vote via the Internet,internet, you do not need to return your proxy card.
By Telephone. Stockholders may authorize a proxy to vote via touch-tone telephone by calling the toll-free telephone number provided on their proxy card or Notice until 11:59 p.m. Eastern Time on May 25, 2016.27, 2020. The touch-tone telephone proxy authorization procedures are designed to authenticate stockholders’ identities and to allow stockholders to authorize a proxy to vote their shares and confirm that their instructions have been properly recorded.If you vote via telephone, you do not need to return your proxy card.
By Mail. If you received printed materials and you choose not to authorize your proxy over the Internetinternet or by touch-tone telephone, please complete the paper proxy card and return it to our transfer agent in the pre-addressed, postage-paid envelope provided with this proxy statement.
Please refer to the Notice or, if you received printed materials, the enclosed proxy card for voting instructions.
If you hold some or all of your shares in “street name,” you must either direct the bank, broker or other nominee as to how to vote your shares or obtain a legal proxy from the bank, broker or other nominee to vote your shares online at the Annual Meeting. Please refer to the voter instruction cards used by your bank, broker or other nominee for specific instructions on methods of voting, including using the Internetinternet or by telephone.
Each executed and timely-returned proxy will be voted in accordance with the directionsinstructions indicated on it. Except for “broker non-votes” described below, executed but unmarked proxies will be voted by the person(s) named thereon (i) for the election of the nominees named herein as directors (or a substitute for a nominee if such nominee is unable or refuses to serve); (ii) for the approval of an advisory resolution approving the Company’s executive compensation; (iii) for the ratification of the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2016;2020; and (iv) in the discretion of such person(s) upon such matters not presently known or determined that may properly may come before the Annual Meeting.
Can I revoke or change my proxy?
Yes. If you are a stockholder of record, you may revoke or change your proxy at any time before the shares it represents are voted by (i) giving written notice of the revocation to our Secretary, by(ii) delivering a later-dated proxy (which automatically revokes the earlier proxy), or by(iii) voting in persononline at the Annual Meeting. For shares you hold beneficially in “street name,” you may change your vote by submitting new voting instructions to your broker, bank or other nominee or, if you have obtained a legal proxy from your broker, bank or other
nominee giving you the right to vote your shares, by attending the Annual Meeting and voting in person.online. If you are a stockholder of record as of the record date attending the Annual Meeting, you may vote in persononline whether or not a proxy has been previously submitted, but your presenceattendance online (without further action) at the Annual Meeting will not constitute revocation of a previously submitted proxy.
What happens if I do not provide instructions to my bank, broker or other nominee on how to vote the shares that I own beneficially?
Other than for the proposal to ratify the Company’s selection of its independent registered public accounting firm (Proposal 3), banks, brokers and other nominees of record-holding shares beneficially owned by their clients do not have the ability to cast votes on the matters presented for consideration at the Annual Meeting unless they have received instructions from the beneficial owner of the shares. Accordingly, if you do not instruct your bank, broker or other nominee on how to vote in the election of the directors (Proposal 1) or the advisory resolution approving executive compensation (Proposal 2), no votes will be cast on these proposals on your behalf.
What constitutes a quorum?
The presence, in persononline or by proxy, at the Annual Meeting of holders of a majority of our outstanding shares of common stock entitled to vote on the record date constitutes a quorum for the transaction of business at the Annual Meeting. If you have returned valid proxy instructions (in writing, by phonetelephone or over the Internet)internet) or attend the virtual Annual Meeting and vote in person,online, your shares will be counted for purposes of determining whether there is a quorum. Abstentions and “broker non-votes” will each be counted as present for purposes of determining the presence of a quorum. A “broker non-vote” occurs when a nominee (such as a custodian or bank) holding shares for a beneficial owner returns a signed proxy but does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner.
What vote is required to approve each Proposal assuming a quorum is present?
1. | Election of |
will only be elected if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. There are no cumulative voting rights in the election of directors. |
2. | Approval of Executive Compensation on an Advisory |
3. | Ratification of the Selection of Deloitte & Touche LLP as the Company’s |
Abstentions and “broker non-votes” will not be counted as votes cast.cast for purposes of these Proposals. A “broker non-vote” occurs when a nominee (such as a custodian or bank) holding shares for a beneficial owner returns a signed proxy but does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner.
If you are a beneficial owner of shares held in “street name” and do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote on “routine” matters but cannot vote on
“non-routine” matters.“non-routine” matters. The proposal regarding the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2016 is a matter considered routine under applicable rules and, therefore, no broker non-votes are expected to exist in connection with the proposal regarding the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2016.
How do I learn the results of the vote?
Voting results of the Annual Meeting will be disclosed on a Form 8-K filed with the Securities and Exchange Commission (“SEC”) within four business days after the Annual Meeting.
What is the cost of proxy solicitation?
We will bear all expenses incurred in connection with the solicitation of proxies. In an effort to have as large a representation at the Annual Meeting as possible, special solicitations of proxies may, in certain circumstances, be made by the Company’s officers, directors and employees by mail, personal contact, telephone, facsimile or other electronic means. They will not receive any additional compensation for those activities, but they may be reimbursed for their out-of-pocket expenses. We may also reimburse brokers, banks, nominees and other fiduciaries for postage and reasonable clericaladministrative expenses of forwarding the proxy material to their principals who are beneficial owners of shares of our common stock. In addition, we have engaged Morrow & Co., LLC, 470 West Avenue, Stamford, Connecticut 06902, to assist with the solicitation of proxies on our behalf for an estimated fee of $7,500 plus expenses.
Will stockholders be asked to vote on any other matters?
As of the date of this proxy statement, the above-referenced proposals are the only matters we are aware of that are to be voted upon at the Annual Meeting. If any other matter should properly come before the Annual Meeting, the persons appointed by you in your proxy will vote on those matters in accordance with the recommendation of the Board, or, in the absence of such a recommendation, in accordance with their discretion. The affirmative vote of a majority of the votes cast on any such other matter will be required for approval.
How can I manage the number of Proxy Statements and Annual Reports I receive?
The rules of the SEC permit companies to provide a single copy of our proxy statement and annual report to households in which more than one stockholder resides. This process is known as householding. Stockholders who share an address and who have been previously notified that their broker, bank or other intermediary will be householding their proxy materials will receive only one copy of our proxy statement and annual report unless they have affirmatively objected to the householding notice.
Stockholders sharing an address who received only one set of these materials may request a separate copy, which will be sent promptly at no cost, by writing or callingto our Investor Relations department at: Investor Relations, Retail Properties of America, Inc., 2021 Spring Road, Suite 200, Oak Brook, ILIllinois 60523 or by contacting us by telephonevia email at (800) 541-7661.IR@rpai.com. For future annual meetings, a stockholder may request
separate proxy statements or annual reports, or the householding of such materials, by contacting us as noted above.
This proxy statement and our annual report to stockholders are available at www.rpai.com/proxy.
Where can I find more information about the Company?
We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information we file with the SEC at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of these documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please contact the SEC at (800) SEC-0330 for further information regarding their public reference facilities. Our SEC filings are also available to the public on the SEC’s website at www.sec.gov.
In 2019, we increased our commitment to invest in sustainable projects, make positive contributions to our communities and invest in our talented and diverse team. We continue to expand our environmental, social and governance (“ESG”) efforts within our portfolio and at our corporate headquarters. Our efforts are backed by the integrity of our team, our ESG taskforce and our Board. We continue to invest in our people and local communities to build a sense of empowerment with an emphasis on social cohesion, safety and corporate stewardship. We provide full, fair, accurate, timely and understandable disclosures in reports and filed documents via PROPOSAL 1 - ELECTION OF DIRECTORSwww.RPAI.com. Finally, we introduced a new microsite to highlight our ESG efforts at www.RPAIesg.com. Below are a few highlights that further outline our 2019 ESG successes:
ENVIRONMENTAL | |
US GREEN BUILDING COUNCIL – LEED SILVER CERTIFICATIONS: § Corporate headquarters (Oak Brook, IL) § Fordham Place – Mixed-Use Asset (Bronx, NY) § Tysons Corner Divisional Office (McLean, VA) |
GREEN DEVELOPMENT We are committed to working with best-in-class partners such as AvalonBay, KETTLER, Trammel Crow and Fore Property who share similar values related to corporate responsibility. As of December 31, 2019, we are executing approximately $360 million in active and near-term RE/Development and RE/Expansion project starts. |
RENEWABLE ENERGY |
INVESTED $50 MILLION IN ENERGY EFFICIENT ROOFING Since 2013, we have replaced over 7,000,000 square feet of roofs with new green roofing systems. |
LED LIGHTING |
SOCIAL | |
HUMAN CAPITAL § Team investment in professional development through our “Make Your Mark” leadership training series § Performance management program encourages team members to develop and pursue challenging and measurable goals § Diversity and Respect in the Workplace training |
SAFETY § Regular workplace safety and preparedness training § OSHA, HVAC, AED, CPR and active shooter response training § Monthly safety meetings and New Hire Safety Orientation |
CORPORATE OUTREACH § Annually fulfill over 300 holiday wishes for the children of Hephzibah Children’s Orphanage § Raised over $250,000 for the Wellness House to support families affected by cancer § Donated over $500,000 in charitable contributions as part of events that took place at our centers, in-kind donations and corporate-sponsored events |
GOVERNANCE | |
CORPORATE GOVERNANCE DOCUMENTS § Comprehensive Code of Business Conduct and Ethics § Policy on Company Political Spending § Maintain detailed internal policies and procedures for each organizational discipline and related risk § Non-Retaliation Policy § Guidelines on Corporate Governance |
COMMITTEE CHARTERS § Audit Committee Charter § Nominating and Corporate Governance Committee Charter § Executive Compensation Committee Charter § Full, fair, accurate, timely and understandable disclosures in reports and documents we file with regulatory agencies and in other public communications |
RISK & INSURANCE § Robust risk management profile § Maintain and implement regular updates to the Company’s Business Continuity Plan § Evolving disaster recovery plan |
PROPOSAL NO. 1: ELECTION OF EIGHT INDIVIDUALS TO SERVE AS DIRECTORS TO HOLD OFFICE UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS AND UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFY.
The Board currently consists of nineeight directors, each of whom has a term that expires at the Annual Meeting. The numberBased on the recommendation of directors that constitute our Board increased from eight to nine as a result of the appointment of Bonnie S. Biumi as a director on July 28, 2015. Ms. Biumi, a director and nominee who has not previously stood for election, was initially identified as a potential candidate for election to the Board by a third-party search firm that was retained by the Nominating and Corporate Governance Committee or the NCG Committee, to assist in the identification and evaluation of director candidates. Based on the recommendation of the NCG Committee,(the “NCG Committee”), our Board has nominated each of our current Board members to stand for re-election at the Annual Meeting, except for Kenneth E. Masick, who will not be standing for re-election as a member of the Board. Upon the expiration of Mr. Masick’s term as a director at the Annual Meeting, the number of directors that will constitute our Board will be decreased from nine to eight.Meeting.
Each nominee is currently serving as a director of the Company. We have no reason to believe that any of the nominees will be unable or unwilling to serve, if elected. However, should any nominee be unable or unwilling to accept the office of director, and if the Board shall designate a substitute nominee, the persons named as proxies will vote for the election of the substitute nominee designated by the Board, and if none, for such other persons as the Board shall determine. After an evaluation, the Board determined that all of the current directors of the Company satisfy the definition of “independent” under the New York Stock Exchange’s (“NYSE”(the “NYSE”) listing standards, except for Steven P. Grimes.
In connection with the determination by the Board that Mr. Robert G. Gifford is independent, including for purposes of his service on the Audit Committee, the Board considered that Mr. Gifford serves on the advisory board of an affiliate of an entity that is in negotiations with us relating to a potential real estate investment.
The election of members of the Board is conducted on an annual basis. The individuals elected to the Board serve a one-year term and until their successors are elected and qualify. Accordingly, the term of office of each of our current directors will expire at the Annual Meeting. Four of the nominees have been directors since January 1, 2008, three of whom have been directors since 2003. Information regarding the business experience of each nominee is provided below based upon information furnished to us by the individuals named.
Nominees for ElectionElection as Directors
The following sets forth information with regard to the nominees for election to the Board, with ages set forth as of March 15, 2016.24, 2020.
Name, Positions with RPAI and Age | Business Experience | |
GERALD M. GORSKI Director since 2003 and Chairman of the Board since 2010 Age | Gerald M. Gorski has been one of our directors since |
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BONNIE S. BIUMI Director since 2015 Age | Bonnie S. Biumi has been one of our directors since |
Name, Positions with RPAI and Age | Business Experience | |
as a Chief Financial Officer or other | ||
FRANK A. CATALANO, JR. Director since 2003 Age 58
| Frank A. Catalano, Jr. has been one of our directors since our inception | |
license and is certified in cybersecurity. | ||
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ROBERT G. GIFFORD Director since Age 63
| Robert G. Gifford has been one of our directors since |
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Name, Positions with RPAI and Age | |||
recapitalization of a super-regional shopping center portfolio at AEW. Mr. Gifford serves as | |||
STEVEN P. GRIMES Director since Age 53 | Steven P. Grimes has served as Chief Executive Officer of the Company since 2009 and as a Director since 2011. Previously, Mr. Grimes | ||
RICHARD P. IMPERIALE Director since 2008 Age | Richard P. Imperiale has been one of our directors since |
Name, Positions with RPAI and Age | Business Experience | ||
PETER L. LYNCH Director since Age | Peter L. Lynch has been one of our directors since | ||
THOMAS J. SARGEANT Director since Age | Thomas J. Sargeant has been one of our directors since |
Diversity. Neither
Director Qualifications. The NCG Committee takes into consideration many factors when identifying director nominees, including diversity, which has multiple dimensions such as age, professional experience, industry, geography, gender and race. On an annual basis, the NCG Committee norperforms a skill set analysis of existing members of the Board, hasand in conjunction with the strategic initiatives of the Company, determines what skill sets may be needed. The current composition of the Board is a specific policy with regard todirect result of this effort, specifically in the considerationareas of diversity in identifying director nominees, although both may consider diversity when identifyinggender, industry, financial and evaluating proposed director candidates.development expertise.
Director Qualifications.
In concluding that each of the foregoing directors should serve as a director, the NCG Committee and the Board focused on each director’s participation and performance on the Board during his or her tenure, as
well as each director’s experience, qualifications, attributes and skills discussed in each director’s individual biographies set forth above. In particular, with respect to each Director,director, the NCG Committee and the Board noted the following:
Mr. Gorski’s experience as a lawyer and focus on local government law not only gives the Board a valuable perspective on the numerous legal issues (including land-use law) that the Company faces, but also on local political issues;
Ms. Biumi’s financial experience, including her serving as chief financial officer or other senior level financial position of both public and private companies, and experience as a certified public accountant, brings financial expertise to the Board and the Audit Committee;
§ | Mr. Gorski’s experience as an attorney and focus on local government law gives the Board a valuable perspective on the numerous legal issues (including land-use law) that the Company faces, as well as on local political issues; |
Mr. Catalano’s experience in leading a firm engaged in the brokerage, management, rehabilitation and leasing of commercial property coincides closely with the business of the Company;
§ | Ms. Biumi’s financial experience, including her serving as chief financial officer or in other senior-level financial positions of both public and private companies, and experience as a certified public accountant, brings financial expertise to the Board and the Audit Committee; |
Mr. Gauvreau’s financial experience, including his serving as chief financial officer of a NYSE-listed company and on the audit committee of a NASDAQ-listed company, brings financial expertise to the Board and the Audit Committee;
§ | Mr. Catalano’s experience in leading a firm engaged in the brokerage, management, rehabilitation and leasing of commercial property coincides closely with the Company’s business; |
Mr. Grimes’s experience and position as the Company’s Chief Executive Officer;
§ | Mr. Gifford’s leadership and real estate experience, including his serving as chief executive officer of a $20 billion real estate investment platform, brings expertise to the Board regarding creating strategic growth opportunities for the Company; |
Mr. Imperiale’s experience in the brokerage and investment advisory industries provides the Board with a REIT investor’s perspective as to the Company’s financial results and corporate messaging;
§ | Mr. Grimes’ experience and position as the Company’s Chief Executive Officer; |
Mr. Lynch’s significant leadership experience, including his serving as president and chief executive officer of a retail grocer and NASDAQ-listed company for approximately eight years, and his extensive knowledge of financial management, strategic business planning, mergers and acquisitions and both retail and non-retail operations; and
§ | Mr. Imperiale’s experience in the brokerage and investment advisory industries provides the Board with a REIT investor’s perspective as to the Company’s financial results and corporate messaging; |
Mr. Sargeant’s financial and real estate experience, including his experience serving as chief financial officer of a NYSE-listed real estate investment trust for over 15 years, brings financial expertise to the Board and the Audit Committee.
§ | Mr. Lynch’s leadership experience, including his serving as president and chief executive officer of a retail grocer and Nasdaq-listed company, and his knowledge of financial management, strategic business planning, mergers and acquisitions and of both retail and non-retail operations; and |
Vote
§ | Mr. Sargeant’s financial and real estate experience, including his serving as chief financial officer of a NYSE-listed REIT, brings financial expertise to the Board and the Audit Committee. |
The affirmative vote of a majority of the votes cast is required for the election of each of the eight directors to be elected at the Annual Meeting, which means that a director nominee will only be elected if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. There are no cumulative voting rights in the election of directors. Broker non-votes, if any, and abstentions will not be treated as votes cast.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF ITS DIRECTOR NOMINEES.
Corporate GoverCORPORATE GOVERNANCE AND BOARD MATTERSnance Profile
We have structured our corporate governance in a manner we believe closely aligns our interests with those of our stockholders. Notable features of our corporate governance structure include the following:
§ | the Board is not staggered, with each of our directors subject to re-election annually; |
§ | of the |
§ | we have a majority voting standard for uncontested director elections; |
four
§ | two current members of our Audit Committee qualify as “audit committee financial experts” as defined by SEC rules; |
we have an independent Chairman of the Board;
we have opted out of the Maryland business combination and control share acquisition statutes and provide that we may not opt in without stockholder approval;
§ | we have an independent Chairman of the Board; |
we do not have a stockholder rights plan, and in the future, we will not adopt a stockholder rights plan unless our stockholders approve in advance the adoption of a plan or, if adopted by the Board, we will submit the stockholder rights plan to our stockholders for a ratification vote within 12 months of the adoption or the plan will terminate; and
§ | we have opted out of the Maryland business combination and control share acquisition statutes and we may not opt in without stockholder approval; |
we intend to conduct an annual stockholders’ advisory vote on executive compensation in accordance with the stockholders’ advisory vote on the frequency of executive compensation.
§ | our bylaws may be amended by the affirmative vote of a majority of all votes entitled to be cast by stockholders of the issued and outstanding shares of common stock of the Company at a meeting of stockholders duly called and at which a quorum is present; |
§ | we do not have a stockholder rights plan and in the future, we will not adopt a stockholder rights plan unless our stockholders approve in advance the adoption of a plan or, if adopted by the Board, we will submit the stockholder rights plan to our stockholders for a ratification vote within twelve (12) months of the adoption or the plan will terminate; |
§ | we have a robust anti-hedging and anti-pledging policy that prohibits such action by members of the Board or our Named Executive Officers (as defined herein); |
§ | we have stock ownership guidelines for members of the Board, our Chief Executive Officer and our other Named Executive Officers (as defined herein); and |
§ | we intend to conduct an annual stockholders’ advisory vote on executive compensation in accordance with the stockholders’ advisory vote on the frequency of executive compensation. |
Board of Directors. OurThe Board is currently comprised of nineeight members. The current members of ourthe Board are Mr. Gerald M. Gorski, Ms. Bonnie S. Biumi, Mr. Frank A. Catalano, Jr., Mr. Paul R. Gauvreau,Robert G. Gifford, Mr. Steven P. Grimes, Mr. Richard P. Imperiale, Mr. Peter L. Lynch Mr. Kenneth E. Masick and Mr. Thomas J. Sargeant. Upon the expiration of Mr. Masick’s term as a director at the Annual Meeting, the number of directors that will constitute our Board will be decreased from nine to eight.
Board Leadership Structure.Structure. Since its inception, the Company has had separate individuals serving in the positions of Chief Executive Officer and Chairman of the Board. The Board believes this structure best serves the Company by allowing one person (Chiefour Chief Executive Officer)Officer to focus his efforts on setting the strategic direction of the Company and providing day-to-day leadership of the Company while the other person (ChairmanChairman of the Board)Board focuses on presiding at meetings of the Board and overall planning and relations with the directors. The Board believes that the needs of a corporationcompany with thea large portfolio of properties and thea wide spectrum of issuesbusiness decisions that we faceit faces are best met by allowing these two different functions to be handled by two separate individuals.
Executive Sessions.Sessions. The independent directors meet in executive session without management present at least once per year at regularly scheduled meetings and at such other times as they deem appropriate.
The independent directors also meet in executive session at least once per year. The Chairman of the Board acts as the presiding director for these executive sessions of independent directors provided that if the Chairman of the Board is not an independent director or is not present, the Chair of the NCG Committee shall act as the presiding director and if such chair is not present, the
directors present at the executive session shall determine the director to preside at such executive session by majority vote.
Board Role in Risk Management.Management. The Board plays an important role in the risk oversight of the Company, primarily through direct decision-making authority with respect to significant matters and the oversight of management by the Board and its committees.
In particular, the Board administers its risk oversight function through (1)(i) the review and discussion of regular periodic reports to the Board and its committees on topics relating to the risks that we face, including, among others, market conditions, tenant concentrations and credit worthiness, leasing activity and lease expirations, compliance with debt covenants, management of debt maturities, access to debt and equity capital markets, existing and potential legal claims against usthe Company, cybersecurity and various other matters relating to our business, (2)(ii) the required approval by the Board (or a committee thereof) of significant transactions and other decisions, including, among others, significant acquisitions and dispositions of properties, certain new borrowings and the appointment of our senior executives, (3)executive officers, (iii) the direct oversight of specific areas of our business by the Executive Compensation Committee (the “ECC”), Audit and NCG committees, and (4)(iv) regular periodic reports from our auditors and other outside consultants regarding various areas of potential risk, including, among others, those relating to our qualification as a REIT and our internal controls over financial reporting. The Board also relies on management to bring significant matters affecting the Company to its attention.
Pursuant to its charter, the Audit Committee is specifically responsible for discussing with management the guidelines and policies that govern the process by which the Company’s exposure to risk is assessed and managed. As part of this discussion, the Audit Committee may discuss or consider major financial risk exposures and the steps management has taken to monitor and control such exposures. The results of the risk assessment are discussed with management and are reviewed quarterly by the Audit Committee. In addition, our Non-Retaliation Policy enables anonymous and confidential submission by employees of complaints or concerns regarding violations of applicable laws, regulations, or business ethical standards or questionable accounting, internal control or auditing matters. These complaints or concerns may be submitted directly to the compliance officer who is responsible for administering the program, or if they involve the Company’s accounting, auditing or internal controls and disclosure practices, directly to the Audit Committee.
Given its role in the risk oversight of the Company, the Board believes that any leadership structure that it adopts must allow it to effectively oversee the management of the risks relating to our operations. Although there are different leadership structures that could allow the Board to effectively oversee the management of such risks, and while the Board believes its current leadership structure enables it to effectively manage such risks, it was not the primary reason the Board selected its current leadership structure over other potential alternatives.
See the discussion under the heading “—Board Leadership Structure” above for a discussion of why the Board has determined that its current leadership structure is appropriate.
Anti-Hedging and Anti-Pledging Policy
We have a formal anti-hedging and anti-pledging policy that prohibits all of our executive officers and directors, including our Named Executive Officers (as defined herein), and any other employee we notify in writing from (i) buying or selling puts, calls or other derivative securities of ours or any derivative securities that provide the economic equivalent of ownership of any of our securities or an opportunity, direct or indirect, to profit from any change in the value of our securities or engage in any other hedging transaction with respect to our securities, at any time, (ii) pledging our securities as collateral for a loan, or (iii) holding our securities in an account that is marginable or using our securities as collateral in a margin account. Other than the policy described above, we do not have any practices or policies regarding the ability of any other employees to purchase financial instruments or otherwise engage in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our equity securities.
Board MeBoard Meetingsetings in 20152019
The Board met 1211 times during 2015.2019. Each incumbent director who was a director during 20152019 attended more than 75% of the aggregate of (1) the (i) total number of meetings of the Board (held during the period for which he or she has been a director) and (2) the(ii) total number of meetings of all committees of the Board on which the director served (during the period he or she served). We do not have a policy with regard to Board members’ attendance at annual stockholder meetings. However,meetings; however, each director who was a director at such time attended the 2015 Annual Meeting.
Committees2019 annual meeting of stockholders of the Company.
The Board has established three standing committees: the Audit Committee, the Executive Compensation CommitteeECC and the NCG Committee. The composition of each of the Audit Committee, the Executive Compensation CommitteeECC and the NCG Committee complies with the listing requirements and other rules and regulations of the NYSE, as amended or modified from time to time. In 2015,2019, the Audit Committee held foursix meetings, the NCG CommitteeECC held five meetings and the Executive CompensationNCG Committee held ninefive meetings. All members of the committees described below are independent as such term is defined in the NYSE’s listing standards and as affirmatively determined by the Board.
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n CC = Chairperson n FE = Financial Expert n = Member
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Audit Committee
The Board has established an Audit Committee currently comprised of Ms. Biumi and Messrs. Gauvreau,Gifford, Imperiale Masick and Sargeant (chair). The Board has determined that Ms. Biumi and Messrs. Gauvreau, Masick andMr. Sargeant each qualify as an “audit committee financial expert” under the applicable SEC rules. Upon the expiration of Mr. Masick’s term as a director at the Annual Meeting, he will cease to be a member of the Audit Committee. The Audit Committee operates under a written charter approved by the Board. A copy of the charter is publicly available on our website at www.rpai.com under “Corporate Governance” in the Investor RelationsInvest section.
The Audit Committee is responsible for the engagement of our independent registered public accounting firm, reviewing the plans and results of the audit engagement with our independent registered public accounting firm, approving services performed by, and the independence of, our independent registered public accounting firm, considering the range of audit and non-audit fees, and consulting with our independent registered public accounting firm regarding the adequacy of our internal controls over financial reporting.
Audit Committee Report.The members of the Audit Committee submit this report in connection with the committee’s review of the financial reports for the fiscal year ended December 31, 20152019 as follows:
1. The Audit Committee has reviewed and discussed with management the audited financial statements for Retail Properties of America, Inc. for the fiscal year ended December 31, 2015.
2. The Audit Committee has discussed with representatives of Deloitte & Touche LLP the matters required to be discussed under applicable Public Company Accounting Oversight Board (“PCAOB”) standards.
3.
1. | The Audit Committee has reviewed and discussed with management the audited financial statements for Retail Properties of America, Inc. for the fiscal year ended December 31, 2019. |
2. | The Audit Committee has discussed with representatives of Deloitte & Touche LLP the matters required to be discussed under applicable Public Company Accounting Oversight Board (“PCAOB”) standards. |
3. | The Audit Committee has received the written disclosures and the letter from the independent accountant required by the applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence and has discussed with the independent accountant the independent accountant’s independence. |
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20152019 for filing with the SEC.
Submitted by the Audit Committee
Thomas J. Sargeant (Chair) Bonnie S. Biumi Robert G. Gifford Richard P. Imperiale
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Executive Compensation Committee
The Board has established an Executive Compensation CommitteeECC currently comprised of Ms. Biumi (chair) and Messrs. Catalano, Gorski, Imperiale, (chair), Lynch and Sargeant. The Executive Compensation CommitteeECC operates under a written charter approved by the Board. A copy of the charter is publicly available on our website at www.rpai.com under “Corporate Governance” in the Investor RelationsInvest section.
The Executive Compensation Committee provides assistance toECC assists the Board in discharging its responsibilities related to the compensation of our directors, executive officers and other employees, and develops and implements our compensation policies. The Executive Compensation Committee’sECC’s responsibilities
include, among others, (i) reviewing and approving corporate goals and objectives related to the compensation of the Chief Executive Officer, evaluating the performance of the Chief Executive Officer in light of these goals and objectives, and determining and approving the compensation of the Chief Executive Officer based on such evaluation, and (ii) determining and approving the compensation of all executive officers other than the Chief Executive Officer.
Executive Compensation Committee Interlocks and Insider Participation. None of the members of the Executive Compensation CommitteeECC has any relationship with usthe Company requiring disclosure under Item 404 of Regulation S-K. No member of the Executive Compensation CommitteeECC is a current or former officer or employee of ours or any of our subsidiaries. NoneIn addition, none of our executive officers serve as a member of the board of directors or compensation committee of any company that has one or more of its executive officers serving as a member of our Board or Executive Compensation Committee.the ECC.
Nominating and Corporate Governance Committee
The Board has established an NCG Committee currently comprised of Messrs. Catalano, (chair), Gauvreau,Gifford, Gorski and Lynch and Masick. Upon the expiration of Mr. Masick’s term as a director at the Annual Meeting, he will cease to be a member of the NCG Committee.(chair). The NCG Committee operates under a written charter approved by the Board. A copy of the charter is publicly available on our website at www.rpai.com under “Corporate Governance” in the Investor RelationsInvest section. The NCG Committee will consider for recommendation to the Board nominations made by stockholders that comply with the procedures described below under the caption “Stockholder Proposals for the 20172021 Annual Meeting,” including, without limitation, providing notice setting forth all information required by the rules of the SEC or Section 12 of our bylaws, as the case may be. We did not receive any stockholder recommendations for director candidates for election at the Annual Meeting.
The NCG Committee identifies possible director nominees (whether through a recommendation from a stockholder or otherwise) and makes an initial determination as to whether to conduct a full evaluation of the candidate(s). This initial determination is based on the information provided to the NCG Committee
when the candidate is recommended, the NCG Committee’s own knowledge of the prospective candidate and information, if any, obtained by the NCG Committee’s inquiries. The preliminary determination is based primarily on the need for additional Board members to fill vacancies, expand the size of the Board or obtain representation in market areas or expertise without Board representation and the likelihood that the candidate can satisfy the evaluation factors described below. If the members of the NCG Committee determine that additional consideration is warranted, the NCG Committee may gather additional information about the candidate’s background and experience. The members of the NCG Committee take into account many factors, including the nominee’s (i) ability to make independent analytical inquiries, (ii) general understanding of finance, accounting, marketing and other elements relevant to the success of a public company in today’s business environment, (iii) understanding of the Company’s business on a technical level, and (iv) other community service, business, educational and professional experiences. Each director must also possess fundamental qualities of intelligence, honesty, good judgment, high ethics and standards of integrity, fairness and responsibility. In determining whether to recommend a director for re-election, the NCG Committee also considers the director’s past attendance at meetings and participation in and contributions to the activities of the Board.
The members of the NCG Committee may consider all facts and circumstances that it deems appropriate or advisable, including, among others, the skills of the prospective director candidate, his or her depth and breadth of business experience or other background characteristics, his or her independence and the needs of the Board. In connection with this evaluation, the members of the NCG Committee determine whether to interview the candidate, and if they decide that an interview is warranted, one or more of those members and others, as appropriate, interview the candidate in person or by telephone. After completing this evaluation and interview, upon the recommendation of the NCG Committee, the full Board would nominate such candidatescandidate for election. Other than circumstances in which we may be legally required by contract or otherwise to provide third parties with the ability to nominate directors, the NCG
Committee will evaluate all proposed director candidates that it considers or who have been properly recommended to it by a stockholder based on the same criteria and in substantially the same manner, with no regard to the source of the initial recommendation of the proposed director candidate.
GuideGuidelineslines on Corporate Governance and Code of Business Conduct and Ethics
The Board, upon the recommendation of the NCG Committee, has adopted guidelines on corporate governance establishing a common set of expectations to assist the Board in performing its responsibilities. Our corporate governance policies and guidelines address a number of topics, including, among other things, (i) director qualification standards and responsibilities, (ii) majority voting, (iii) the responsibilities and composition of the Board committees, (iv) director access to management and independent advisors, (v) director compensation, (vi) director and management stock ownership guidelines, (vii) director orientation and continuing education, (viii) management succession, (ix) evaluations of the performance of the Board and its committees, (x) related person transaction approval and (xi) disclosure policies. Our guidelines on corporate governance meet the requirements of the NYSE’s listing standards and are publicly available on our website at www.rpai.com under “Corporate Governance” in the Investor RelationsInvest section.
The Board has also adopted a code of business conduct and ethics, which includes a conflicts of interest policy that applies to all the directors and executive officers. The code of business conduct and ethics meets the requirements of a “code of ethics” as defined by the rules and regulations of the SEC and is publicly available on our website at www.rpai.com under “Corporate Governance” in the Investor RelationsInvest section. We intend to disclose on thisour website any amendment to, or waiver of, any provision of the code of business conduct and ethics applicable to our directors and executive officers that would otherwise be required to be disclosed under the rules of the SEC or the NYSE. A printed copy of our guidelines on corporate governance and the code of business conduct and ethics may also be obtained by any stockholder upon request.
ComCommunicationsmunications with the Board
Stockholders or other interested parties may communicate with any of the Company’s directors or the Board as a group by writing to them at [Name(s) of Director(s)/Board of Directors of Retail Properties of America, Inc.], c/o General Counsel, Retail Properties of America, Inc., 2021 Spring Road, Suite 200, Oak Brook, Illinois 60523.
Stockholders or other interested parties may communicate with independent directors of the Company as a group by writing to Independent Directors of Retail Properties of America, Inc., c/o General Counsel, Retail Properties of America, Inc., 2021 Spring Road, Suite 200, Oak Brook, Illinois 60523.
All communications received as set forth in the preceding paragraphs will be opened by the officeSecretary of the General CounselCompany for the sole purpose of determining the nature of the communication. Communications that constitute advertising, promotions of a product or service, or patently offensive materialcommunications that do not relate to the Company or its business will not be forwarded to the directors. Other communications will be forwarded promptly to the addressee(s) as deemed appropriate.
Directors who are employees of the Company do not receive compensation for their service as directors.
We provide the following
In 2019, our non-employee director compensation for non-employee directors:program was as follows:
§ an annual restricted stock award having a value of $115,000, effective January 1, 2016, which increased from $100,000 previously;$125,000;
§ an additional annual restricted stock award having a value of $50,000 for service as Chairman of the Board;
§ an annual cash retainer of $75,000 for service as a director;
§ an additional annual cash retainer of $50,000 for service as Chairman of the Board;
§ an additional annual cash retainer of $25,000 for service as the chair of the Audit Committee;
§ an additional annual cash retainer of $15,000 for service as the chair of the Executive Compensation Committee;
an additional annual retainer of $15,000 for service as the chair ofECC or the NCG Committee; and
§ an additional annual cash retainer of $10,000 for service as a non-chair member of the Audit, Executive CompensationECC or NCG Committee, effective January 1, 2016.Committee.
The annual restricted stock awards are granted on the fifth business day after each annual meeting of stockholders and are subject to vesting on the earlier of the date of the next annual meeting of stockholders or the first anniversary of the grant date.
On May 29, 2015,31, 2019, each non-employee director elected at the 20152019 annual meeting of stockholders received a restricted stock award of 6,66710,514 shares valued at a price of $15.00$11.89 per share, which was the closing price per share of our common stock on the NYSE on May 29, 2015.31, 2019. Mr. Gorski also received an additional restricted stock award of 3,3334,205 shares valued at a price of $15.00$11.89 per share, which was the closing price per share of our commonscommon stock on the NYSE on May 29, 2015,31, 2019, in connection with his service as Chairman of the Board. These equity awards are all subject to vesting on the earlier of the date of the Annual Meeting or the first anniversary of the grant date.
On August 7, 2015, in connection with Ms. Biumi’s appointment as a director, and consistent with our existing director compensation program, Ms. Biumi received a restricted stock award of 6,153 shares, valued at a price of $14.90 per share, which was the closing price per share of our common stock on the NYSE on August 6, 2015 (which equals a prorated portion of the $100,000 annual grant made to independent directors). This equity award is subject to vesting on the earlier of the date of the Annual Meeting or May 29, 2016.
2019 Director Compensation Table
The following table sets forth a summary of the compensation we paid to or earned by our non-employee directors during 2015:2019:
2015 Director Compensation | ||||||||||||||||
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Option Awards ($) (2) | Total ($) | ||||||||||||
Gerald M. Gorski | $ | 137,500 | $ | 150,000 | $ | — | $ | 287,500 | ||||||||
Bonnie S. Biumi | 63,750 | (3) | 91,667 | (4) | — | 155,417 | ||||||||||
Frank A. Catalano, Jr. | 96,250 | 100,000 | — | 196,250 | ||||||||||||
Paul R. Gauvreau | 87,500 | 100,000 | — | 187,500 | ||||||||||||
Richard P. Imperiale | 96,250 | 100,000 | — | 196,250 | ||||||||||||
Peter L. Lynch | 87,500 | 100,000 | — | 187,500 | ||||||||||||
Kenneth E. Masick | 87,500 | 100,000 | — | 187,500 | ||||||||||||
Barbara A. Murphy (5) | 20,000 | — | — | 20,000 | ||||||||||||
Thomas J. Sargeant | 106,250 | 100,000 | — | 206,250 |
2019 Director Compensation | ||||||||||||
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | |||||||||
Gerald M. Gorski | $ | 145,000 | $ | 175,009 | $ | 320,009 | ||||||
Bonnie S. Biumi | 100,000 | 125,011 | 225,011 | |||||||||
Frank A. Catalano, Jr. | 95,000 | 125,011 | 220,011 | |||||||||
Robert G. Gifford | 95,000 | 125,011 | 220,011 | |||||||||
Richard P. Imperiale | 95,000 | 125,011 | 220,011 | |||||||||
Peter L. Lynch | 100,000 | 125,011 | 225,011 | |||||||||
Thomas J. Sargeant | 110,000 | 125,011 | 235,011 |
(1) | Represents the aggregate grant date fair value of restricted stock awards granted during the year ended December 31, |
the NYSE on the grant date multiplied by the number of shares granted. As of December 31, |
As of December 31, |
Biographiesphies of our Executive Officers
The following sets forth information regarding our executive officers (other than Steven P. Grimes, the Chief Executive Officer, and President, whose biography appears above under the caption, “Proposal 1 — Election of Directors — Nominees for Election as Directors”), with ages set forth as of March 15, 2016:24, 2020:
Name, Positions with RPAI and Age | Business Experience | |
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SHANE C. GARRISON
Operating Officer Age 50
| Shane C. Garrison serves as our |
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Financial Officer and Treasurer Age 44
| Julie M. Swinehart has served as our Executive Vice President, Chief Financial Officer and Treasurer since |
Compensationpensation Discussion and Analysis
The following discussion and analysis is set forth with respect to the compensation and benefits for our fiscal year ended December 31, 20152019 for Mr. Steven P. Grimes, our Chief Executive Officer, Mr. Shane C. Garrison, our President and Chief Operating Officer and Ms. Julie M. Swinehart, our Chief Financial Officer and the other executive officers included in the “Summary Compensation Table” below.Officer. In this “—Compensation Discussion and Analysis,” we refer to Messrs. Grimes Fear,and Garrison and Holland,Ms. Swinehart, collectively, as our Named Executive Officers. The discussion and analysis also covers compensation and benefits for 2015 for Ms. Aman and Mr. Byrne, both of whom departed from us during 2015. See “— Compensation Discussion and Analysis — Separation Agreement with Ms. Aman” and“— Compensation Discussion and Analysis — Separation Agreement with Mr. Byrne” for more information regarding Ms. Aman’s and Mr. Byrne’s departures, respectively. For all other sections included under “Executive Compensation,” Ms. Aman and Mr. Byrne are also included in the term “Named Executive Officers.” Also, Mr. Holland previously notified us that he will retire from his position as Executive Vice President, General Counsel and Secretary, effective June 30, 2016.
Executive Summary
In 2015, our executive management team continued to work to strategically position us for long-term performance by focusing their efforts on certain growth objectives, including, among others, strategically repositioning
During 2019, with our portfolio by opportunistically increasingtransformation complete, we focused on our concentration in certain target markets, efficiently recycling capital to enhance the strengthstrategic objectives of growing our portfolio through (i) accretive leasing activity and the quality(ii) mixed-use expansion and redevelopment projects. In doing so, we drove growth through opportunities organic to our existing portfolio, recording a series of our long-term cash flow stream, and significantly improving our credit metrics and enhancing our financial flexibility to allow us to capitalize on internal and external growth opportunities. accomplishments in each of these primary areas of focus, including, we:
§ | signed 498 new and renewal leases across 3,255,000 square feet of gross leasable area (“GLA”) for a blended comparable re-leasing spread of 8.1%; |
§ | achieved positive comparable cash leasing spreads of 19.7% on signed new leases and 5.3% on signed renewal leases; |
§ | achieved record highs in a number of leasing, occupancy and annualized base rent (“ABR”) statistics as of December 31, 2019; |
§ | achieved average annual contractual rent increases on signed new leases of approximately 180 basis points; |
§ | placed the redevelopment of the multi-family rental units at Plaza del Lago, our first multi-family rental redevelopment, in service; |
§ | executed a joint venture agreement for the medical office component at phase one of Carillon; |
§ | completed demolition work on approximately 290,000 square feet of vacant retail GLA at Carillon; |
§ | broke ground on Pads G & H at One Loudoun Downtown; |
§ | signed our first lease at the Circle East redevelopment with a prominent fast casual restaurant operator; |
§ | maintained our investment grade balance sheet flexibility and low leverage, which allows us to be opportunistic when allocating capital; and |
§ | focused on talent development. |
Our executive compensation program and decisions for 20152019 are designed to reward company and individual performancesperformance and achievements commensurate with our business results and the execution of our growthstrategic objectives which we believe advance our strategy to become a dominant shopping center owner in 10-15 target markets.described above. We also believe that our executive compensation program and decisions for 2015 will further2019 compensation encourage the alignment of management’s and stockholders’ interests with those of our stockholders and help us continue to attract, retain and motivate the key employees who are responsible for driving our long-term value creation.
The principles underlying our
2019 Executive Compensation Profile
Performance-Based Incentive Compensation — Over 80% of Total Target CEO Compensation. In 2019, target incentive compensation policies and practices andrepresented greater than 80% of the resultstotal target compensation of our Chief Executive Officer, Mr. Grimes, and greater than 70% of the total target compensation decisions for 2015 forof Mr. Garrison and Ms. Swinehart. We believe our pay-for-performance compensation structure incentivizes our Named Executive Officers are included in “— 2015 Compensation Program Design” below.
2015 Total Annual Compensation
For 2015, incentive compensation constitutes a majority ofto maximize the total compensation for each ofCompany’s performance and aligns our Named Executive Officers,Officers’ interests with our annual cash incentive compensation and a significant majoritythose of our long-term equity incentive compensation based on our actual performance as compared to pre-established performance goals. Overall, we increased the target 2015 compensation for each Named Executive Officer in connection with the completion of our migration of the target total compensation for each Named Executive Officer to approximate the median of our 2015 peer group for each of their comparable positions as discussed above. The following table sets forth the amounts of base salary, annual cash incentive bonus and annual long-term equity incentive compensation (based on the value approved) awarded by the Committee for each of our Named Executive Officers for 2015.stockholders.
Named Executive Officer | Base Salary (1) | Annual Cash Incentive Award (2) | Performance- Based Restricted Stock Unit Award (3) | Restricted Stock Award (4) | 2015 Total Annual Compensation (5) | |||||||||||||||
Steven P. Grimes | $ | 850,000 | $ | 2,375,000 | $ | 1,237,500 | $ | 412,500 | $ | 4,875,000 | ||||||||||
Heath R. Fear | 440,000 | 656,000 | 345,000 | 115,000 | 1,556,000 | |||||||||||||||
Shane C. Garrison | 590,000 | 912,000 | 562,500 | 187,500 | 2,252,000 | |||||||||||||||
Dennis K. Holland | 425,000 | 477,000 | 300,000 | 100,000 | 1,302,000 |
2015 Executive Compensation Highlights
Annual Cash Incentive Compensation — Achievement of Maximum Company Goals.Formulaic Pay-For-Performance Plan Design. For 2015,2019, each of our Named Executive Officers was eligible to earn cash incentive compensation if and to the extent that pre-established company and individual goals were achieved. In particular, the company goals used to determine the corporate component of cash incentive compensation for 20152019 were based on (i) growth in our same store EBITDAre, (ii) our Operating FFOFunds From Operations (“Operating FFO”) per diluted share, and (iii) our Net Debt to Adjusted EBITDAre ratio, which we believe are each key financial metrics that accuratelyappropriately reflect our progress and ongoing performance and measure the health of our balance sheet. Annual
cash incentive compensation based on these company goals represents 75% of the target value of our Chief Executive Officer’s cash incentive compensation and 60%70% of the target value for each of our other Named Executive Officers,Officers’ cash incentive compensation, an increase from 60% in 2018 in order to more closely align with the median of our peer group and market practice in this regard. The remainder of the target value of cash incentive compensation was based on the achievement of individual goals. For 2015, we achieved the maximum amount for each of these company goals.
Performance-Based Restricted Stock UnitsLong-Term Equity Incentive Compensation — Amount Earned to be75% Based on Relative Total Stockholder Return vs. Peers overOver Three-Year Performance PeriodPeriod. . For 2015,2019, each of our Named Executive Officers was granted performance-based restricted stock units, which represented 75% of their long-term equity incentive compensation. The performance-based restricted stock units may be earned by our Named Executive Officers based on our relative total stockholder return compared to that of the peer companies in the NAREIT Shopping Center Index over a three-year performance period, which we believe further aligns the interests of our Named Executive Officers with those of our stockholders over the longer term, supports the objectives of long-term value creation, rewards management based on our relative performance compared to our peers and serves as a retention tool for our Named Executive Officers.
Completion of Migration to Median TargetRetention Agreements — Double-Trigger Vesting Acceleration; Cash Severance Based Solely on Annual Cash Compensation. In 2013, we began the realignment of certain aspectsThe terms of our executive compensation programretention agreements with Messrs. Grimes and Garrison and Ms.
Swinehart require a double-trigger for acceleration of vesting of time-based equity awards in connection with a change-in-control and limit cash severance to better reflect our business strategy, talent priorities and market practices. The goala multiple of this realignment was to migrate our executive compensation, which historically has lagged the market in total compensation, including base salary and annual cash incentive compensation toward the median ofand are summarized below under “Executive Compensation – Retention Agreements.”
Stock Ownership Guidelines. We have stock ownership guidelines that require our peer group over a three-year period beginning in 2013. During 2015, consistent with this goal, we increased the target 2015 compensation for each Named Executive Officernon-employee directors and completed our migration of the target total compensation for each Named Executive Officer to approximate the median of our 2015 peer group for each of their comparable positions. In connection with this migration, we also continued to shift to greater performance-based compensation for 2015, by increasing the percentage of each Named Executive Officer’s target incentive compensation as a percentage of his target total compensation and also increasing the amount of the target incentive compensation for each Named Executive Officer. For 2015, target incentive compensation represented 60% or more of each of our Named Executive Officer’s total potential compensation and,Officers to own certain levels of common stock in the case of our Chief Executive Officer, represented more than 75% of his total potential compensation.Company.
Anti-Hedging and Anti-Pledging Policy. We believe these changes createhave a more performance-based compensation structureformal anti-hedging and better incentivizeanti-pledging policy that prohibits our Named Executive Officers to maximizeand directors from engaging in any hedging transactions or pledging any shares of our performance.common stock. See “Corporate Governance and Board Matters—Corporate Governance Profile—Anti-Hedging and Anti-Pledging Policy.”
Strong Stockholder Support for Executive Compensation. At our 20152019 annual meeting, we received strong support for our say-on-pay vote approving the compensation paid to our named executive officers for 2014.2018. Approximately 92% of the votes cast on the proposal were voted in favor of this proposal. The CommitteeECC viewed this result as an indication of stockholders’ overall satisfaction with our executive compensation programs. Accordingly, in 2019, the ECC did not implement significant changes to our executive compensation programs as a result of the stockholder advisory vote.
2015
2019 Compensation Program Design
The primary objectives of our executive compensation programs are:program are to (i) to attract, retain and reward experienced, highly motivatedhighly-motivated executives who effectively lead and contribute to our long-term growthvalue creation and profitability; (ii) to motivate and direct the performance of management with clearly-definedclearly defined goals and measures of achievement; and (iii) to align the interests of management with the interests of our stockholders. We attempt toTo achieve ourthese objectives, by offeringwe offer our executives the opportunity to earn a combination of cash and long-term equity-based incentive compensation.
Overall, we designed our executive compensation programsprogram to achieve the objectives described above. In particular, consistent with our objectives, incentive compensation constitutes the majority of our total executive compensation. We also structured our annual cash incentive compensation and a significant majority of our long-term equity incentive compensation to be based on our actual performance compared to pre-established
performance goals. The following table summarizes the primary components of our 20152019 executive compensation programsprogram for our Named Executive Officers.
Component | Form of Payout | Objective | Characteristic | |||
Base Salary | Cash | Annual | Competitive base salary compensation based on comparative market analysis | |||
Annual Cash Incentive Compensation | Cash | Incentive to achieve annual company and individual objectives in support of annual performance goals related to corporate/financial performance as well as individual performance | Earned based on the achievement of annual company goals, including growth in | |||
Long-Term Equity Incentive Compensation | Performance-Based Restricted Stock | Encourage alignment of interests with stockholders and | Awards issued with (i) 75% earned based on the achievement of relative total |
Component | Form of Payout | Objective | Characteristic | |||
Units/Time-Based Restricted Stock | term retention of executives and provide an incentive for long-term relative total stockholder return performance compared to peers | stockholder return performance compared to the peer companies in the NAREIT Shopping Center Index over a three-year performance period, with one-third of the shares earned, if any, vesting following the performance period and |
Each of these components of our executive compensation is discussed in detail below, including a description of the particular component and how it fits into our overall executive compensation program and a discussion of the amounts of compensation paid to our Named Executive Officers for 20152019 under each of these components. In the descriptions below, we highlight particular compensation objectives that are addressed by specific components of our executive compensation program; however, it should be noted that we have designed our compensation programs toprogram so that the various components complement each other and collectively serve all of our executive compensation objectives described above. Accordingly, whether or not specifically mentioned below, we believe that, as a part of our overall executive compensation, each component, to a greater or lesser extent, serves each of our objectives.
2015 Total Annual Compensation
The following table sets forth the amounts of base salary, annual cash incentive bonus and annual long-term equity incentive compensation (based on the value approved) awarded by the Executive Compensation Committee, or the Committee, for each of our Named Executive Officers for 2015.Base Salary
Named Executive Officer | Base Salary (1) | Annual Cash Incentive Award (2) | Performance- Based Restricted Stock Unit Award (3) | Restricted Stock Award (4) | 2015 Total Annual Compensation (5) | |||||||||||||||
Steven P. Grimes | $ | 850,000 | $ | 2,375,000 | $ | 1,237,500 | $ | 412,500 | $ | 4,875,000 | ||||||||||
Heath R. Fear | 440,000 | 656,000 | 345,000 | 115,000 | 1,556,000 | |||||||||||||||
Shane C. Garrison | 590,000 | 912,000 | 562,500 | 187,500 | 2,252,000 | |||||||||||||||
Dennis K. Holland | 425,000 | 477,000 | 300,000 | 100,000 | 1,302,000 |
The foregoing table more accurately reflects the decisions of the Committee with respect to our Named Executive Officers’ annual compensation for 2015 than the Summary Compensation Table below. Due to the rules governing the presentation of the Summary Compensation Table, we are required to report all incentive compensation awarded to our Named Executive Officers for both 2014 and 2015 as compensation for 2015 in the Summary Compensation Table. This primarily results from the fact that: (i) prior to 2015, all of our Named Executive Officers’ incentive compensation was paid in the form of equity awards granted in the following year and (ii) beginning in 2015, we changed our executive compensation program to include incentive compensation paid in cash and incentive compensation paid in equity granted during the year, 75% of which is subject to vesting based on the achievement of performance-based hurdles and continued employment and the remaining 25% of which is subject to vesting based on continued employment. Due to the rules governing the presentation of the Summary Compensation Table, compensation of our Named Executive Officers for 2015 is required to include (i) the grant date fair value of the equity awards granted as incentive compensation for 2014, which were granted in 2015, (ii) the incentive cash compensation earned for 2015 and (iii) the grant date fair value of the equity awards granted as long-term equity incentive compensation for 2015, which were granted in 2015. Accordingly, we believe the foregoing table more accurately reflects our Named Executive Officers’ annual compensation for 2015. The foregoing table also does not include the equity award granted to Mr. Fear in connection with his appointment as Chief Financial Officer and Treasurer as of August 17, 2015, as this was a one-time award in connection with his hiring.
Base Salary
We pay our Named Executive Officers a base salary, which we review and determine annually. We believe that a competitive base salary is a necessary component of any compensation program that is designed to attract and retain talented and experienced executives. We also believe that base salaries can motivate and reward executives for their overall performance.
The following table sets forth the 2019 and 2018 annual base salaries for our Named Executive Officers for 2015 and 2014:Officers:
Named Executive Officer | 2015 Base Salary | 2014 Base Salary | Percentage Change |
| 2019 Base Salary |
| 2018 Base Salary |
| Percentage |
| ||||||||||||||
Steven P. Grimes | $ | 850,000 | $ | 825,000 | 3.0 | % |
| $ | 850,000 |
|
| $ | 850,000 |
|
| — |
|
| ||||||
Heath R. Fear | 440,000 | — | — | |||||||||||||||||||||
Shane C. Garrison | 590,000 | 545,000 | 8.3 | % |
|
| 650,000 |
|
|
| 650,000 |
|
| — |
|
| ||||||||
Dennis K. Holland | 425,000 | 375,000 | 13.3 | % | ||||||||||||||||||||
Julie M. Swinehart |
|
| 475,000 |
|
|
| 475,000 | (1) |
| — |
|
|
For 2015, the Committee reviewed competitive market compensation data and decided to increase the
(1) | Ms. Swinehart’s 2018 base salary was adjusted to $475,000 per annum, effective February 6, 2018, in connection with her appointment as our Executive Vice President, Chief Financial Officer and Treasurer, and has been annualized based on such increased amount. |
The base salarysalaries for each of Messrs. Grimes and Garrison and Holland primarilyMs. Swinehart did not change in order to maintain target total compensation for these executives at or near2019 from 2018.
In determining base salaries and whether they are appropriate, the median level of our 2015 peer group for each of their comparable positions. The Committee also consideredECC considers a number of factors on a subjective basis, including, but not limited to, (i) the scope of the Named Executive Officer’s responsibilities within the Company; (ii) the experience of the Named Executive Officer within our industry and at the Company; (iii) the performance of the Named Executive Officer and his or her contributions to the Company; (iv) the peer benchmarking of the Named Executive Officer’s position, (v) a review of historical compensation information for the individualeach Named Executive Officer; (v)(vi) a subjective determination of
the compensation needed to motivate and retain that individual, including determinations made with respect to Mr. Fear in connection with his hiring;individual; and (vi)(vii) the recommendations of the Chief Executive Officer when determining base salary for the other Named Executive Officers.
Incentive Compensation
We award our Named Executive Officers incentive compensation based on pre-established performance goals and target values, which we review and determine annually, as well as continued service to us.annually. We believe that incentive compensation is an essential component of our executive compensation program and it is designed to (i) motivate and direct the performance of management with clearly-definedclearly defined company and individual goals and measures of achievement,achievement; (ii) further align the interests of our Named Executive Officers with our stockholders over the longer term,term; (iii) support the objectivesobjective of long-term value creation,creation; (iv) reward management based on our relative performance compared to our peers,peers; and (v) serve as a retention tool for our Named Executive Officers. Beginning in 2013, the Committee exclusively used restricted stock awards to encourage ownership in us and build better alignment with our stockholders’ interests as prior to 2013 the Committee had not used equity grants as a component of our executive compensation program. For 2015, however, after a review of the number of outstanding and previously granted restricted stock awards, the Committee determined to use a more typical incentive compensation mix of cash, performance-based restricted stock units and time-based restricted stock to achieve the objectives of incentive compensation outlined above.
Under our incentive compensation program for 2015,2019, each of our Named Executive Officers (i) was eligible to receive a cash award up to a specified dollar value based on the achievement of pre-established company and individual goals, (ii) received a grant of performance-based restricted stock units which are earned based on the achievement of relative total stockholder return performance compared to members of the NAREIT Shopping Center Index over a three-year period, and (iii) received a grant of restricted stock subject to vesting over a three-year period based on continued employment with us over a three-year or four-year period.
20152019 Target Incentive Compensation
The following table sets forth a summary of the target dollar values of our annual cash incentive compensation and long-term equity incentive compensation for each Named Executive Officer for 2015:2019:
2015 Target Cash Incentive Compensation | 2015 Target Long-Term Equity Incentive Compensation |
|
|
| 2019 Target Long-Term Equity Incentive Compensation |
| |||||||||||||||||||
Named Executive Officer | Performance-Based Restricted Stock Units | Time-Based Restricted Stock |
| 2019 Target Cash Incentive Compensation |
| Performance- Based Restricted Stock Units |
| Time-Based Restricted Stock |
| ||||||||||||||||
Steven P. Grimes | $ | 1,250,000 | $ | 1,237,500 | $ | 412,500 |
| $ | 1,250,000 |
|
| $ | 2,306,250 |
|
| $ | 768,750 |
|
| ||||||
Heath R. Fear | 410,000 | 345,000 | 115,000 | ||||||||||||||||||||||
Shane C. Garrison | 510,000 | 562,500 | 187,500 |
|
| 585,000 |
|
| 1,192,500 |
|
|
| 397,500 |
|
| ||||||||||
Dennis K. Holland | 310,000 | 300,000 | 100,000 | ||||||||||||||||||||||
Julie M. Swinehart |
|
| 350,000 |
|
| 693,750 |
|
|
| 231,250 |
|
|
For 2015, we continued to increase the percentage of each Named Executive Officer’s
In 2019, target incentive compensation as a percentagerepresented greater than 80% of histhe total potentialtarget compensation with target incentive compensation representing 60% or more of each of our Named Executive Officer’s total potential compensation and, in the case offor our Chief Executive Officer, representing moreMr. Grimes, and greater than 75% of his total potential compensation. For 2015, we also increased the amount70% of the total target incentive compensation for each Named Executive Officer as we completedof Mr. Garrison and Ms. Swinehart.
For 2019, based on a review of competitive market data presented by Frederic W. Cook & Co., Inc. (“FW Cook”) and our three-year migration towarddesire to compensate near the median of our 20152019 peer group, the 2019 long-term equity incentive compensation for Mr. Grimes and Ms. Swinehart increased by approximately 8.8% and 48.0%, respectively. The increase in Ms. Swinehart’s 2019 long-term equity incentive compensation is due to the continued migration of her total compensation over a three-year period towards the median of our peer group for totalchief financial officers subsequent to her appointment as our Executive Vice President, Chief Financial Officer and Treasurer in 2018. Further, based on Mr. Garrison’s performance during 2019 and his contributions to the Company as well as our desire to continue to incentivize and retain Mr. Garrison, his 2019 long-term equity incentive compensation was increased by approximately 6.7%. The target cash incentive compensation for each of their comparable positionsMessrs. Grimes and transitioned our incentive compensation to a more typical mix of cash awardsGarrison and equity grants after a review of the number of outstanding and previously granted restricted stock awards.Ms. Swinehart did not change in 2019 from 2018.
Annual Cash Incentive Compensation
For 2015,2019, each of our Named Executive Officers was eligible to earn cash incentive compensation if and to the extent that pre-established company and individual goals were achieved. The following
summarizes the structure of our cash incentive compensation program for 20152019 for our Named Executive Officers and the amounts earned by each of our Named Executive Officers pursuant to this program.
2015
2019 Company and Individual Goals
For 2015,2019, 75% of the target value of our Chief Executive Officer’s annual cash incentive compensation opportunity was based on company goals and 60%goals. For 2019, 70% of the target value for each of our other Named Executive OfficersOfficer’s annual cash incentive compensation opportunity was based on the achievement of company goals, an increase from 60% in 2018 in order to more closely align with the median of our peer group and market practice in this regard. The remainder of the cash incentive compensation opportunity is based on the achievement of individual goals. The following table sets forth the percentage of the target value of our cash incentive compensation for 20152019 based on company and individual goals, respectively, for each Named Executive Officer:
Company Goals |
| Company Goals |
|
|
| ||||||||||||||||||||
Named Executive Officer | Same Store EBITDA Growth | Operating FFO | Net Debt to Adjusted EBITDA | Individual Goals |
| Same Store EBITDAre Growth |
| Operating FFO per Diluted Share |
| Net Debt to Adjusted EBITDAre |
| Individual Goals |
| ||||||||||||
Steven P. Grimes | 45.00 | % | 15.00 | % | 15.00 | % | 25.00 | % |
| 45.0% |
| 22.5% |
| 7.5% |
| 25.0% |
| ||||||||
Heath R. Fear | 36.00 | % | 12.00 | % | 12.00 | % | 40.00 | % | |||||||||||||||||
Shane C. Garrison | 36.00 | % | 12.00 | % | 12.00 | % | 40.00 | % |
| 42.0% |
| 21.0% |
| 7.0% |
| 30.0% |
| ||||||||
Dennis K. Holland | 36.00 | % | 12.00 | % | 12.00 | % | 40.00 | % | |||||||||||||||||
Julie M. Swinehart |
| 42.0% |
| 21.0% |
| 7.0% |
| 30.0% |
|
For 2015,2019, the company goals were based on (i) growth in our same store EBITDAre, (ii) our Operating FFO attributable to common shareholders per diluted share, and (iii) our Net Debt to Adjusted EBITDAre ratio. We selected these specific company goals because (i) growth in our same store EBITDAre is the financial metric that we believe most accurately reflects the progress of our operational strategy, as we continue to execute on our broader asset repositioning objectives,
while also prudently managingincluding the prudent management of corporate level expenses, (ii) our Operating FFO attributable to common shareholders per diluted share is one of the most significant financial measures that we report to investorsshareholders and use to evaluate our ongoing performance, and (iii) our Net Debt to Adjusted EBITDAre ratio is a key financial metric measuring the health of our balance sheet. As each Named Executive Officer’s performance contributes to these metrics, we believe that they provide a fair and objective basis on which to evaluate each Named Executive Officer’s performance and to determine the majority of each Named Executive Officer’s cash incentive compensation.
For each of these company goals, the CommitteeECC established three different levels of performance, “threshold,” “target” and “maximum,” pursuantbased on an assessment of the operating landscape for 2019, including consideration of portfolio size and expected leasing activity, which may result in variations in these established levels from year to whichyear. The performance levels established for the Same Store EBITDAre and Operating FFO per diluted share goals were generally more difficult to achieve than those established for 2018, with the performance levels for Net Debt to Adjusted EBITDAre slightly higher than those established for 2018, reflecting our expected increase in capital expenditures due to the launch of new development projects. Pursuant to these levels of performance, our Named Executive Officers could earn 50%, 100% or 200%, respectively, of the target amount of the portion of the cash incentive compensation attributable to that company goal. If performance for a company goal did not equal or exceed the threshold level established, then our Named Executive Officers were not entitled to receive any of the cash incentive compensation attributable to that company goal. To the extent performance fell between two of the established levels of performance, the percentage earned was to be determined based on straight linestraight-line interpolation between the percentages that would have been earned for the established levels of performance. Further, to the extent that performance exceeds the target level, the amount earned above target is capped at the lesser of (i) 20% of the amount by which the Operating FFO per diluted share company goal is earned in excess of the target level, on an aggregated basis for the Company, or (ii) the maximum level of performance amount. The table below sets forth the goals established at each level of performance, actual performance for 20152019 and the percentage of target earned for each company goal:
Company Goal | Threshold (50%) | Target (100%) | Maximum (200%) | 2015 Actual | Earned % | |||||||||||||||
Same Store EBITDA Growth (1) | 0 | % | 0.50 | % | 2.00 | % | 2.85 | % | 200 | % | ||||||||||
Operating FFO per share (2) | $ | 0.96 | $ | 0.98 | $ | 1.07 | $ 1.07 | (4) | 200 | % | ||||||||||
Net Debt to Adjusted EBITDA Ratio (3) | 7.0x | 6.5x | 6.0x | 5.8x | 200 | % |
Same Store EBITDAre(1) | Threshold (50%) | 1.75% |
Target (100%) | 2.40% | |
Maximum (200%) | 3.99% | |
2019 Actual | 3.53% | |
Earned % | 171.3% | |
Operating FFO per Diluted Share(2) | Threshold (50%) | $1.04 |
Target (100%) | $1.06 | |
Maximum (200%) | $1.17 | |
2019 Actual | $1.08 | |
Earned % | 118.2% | |
Net Debt to Adjusted EBITDAre Ratio(3) | Threshold (50%) | 6.0x |
Target (100%) | 5.7x | |
Maximum (200%) | 5.2x | |
2019 Actual | 5.4x | |
Earned % | 160.0% |
(1) | Same store EBITDAre is calculated by reducing our publicly reported same store net operating income (NOI) by general and administrative expenses, adjusted to exclude |
(2) | Operating FFO attributable to common shareholders represents funds from operations attributable to common shareholders, or FFO, for the year ended December 31, |
(3) | Net Debt to Adjusted EBITDAre ratio represents (i) the total principal amount of our |
For 2015,2019, the CommitteeECC established the following individual goals for our Named Executive Officers:
Named Executive | Individual Goals | |
Steven P. Grimes | Goals relating to the | |
investor communication.
| ||
Shane C. Garrison | Goals relating to the |
Named Executive Officer | Individual Goals | |
| Goals relating to management and oversight of certain internal departments and functions; securing appropriate financing to support our strategic plan; expanded, targeted investor outreach; career development, including furthering relationships across peer network and the |
For the individual goals, the CommitteeECC established three different levels of performance, “meets expectations,” “exceeds expectations” and “exceptional,” pursuant to which our Named Executive Officers could earn 80%, 100% or 200%, respectively, of the target amount of the portion of the cash incentive compensation attributable to the individual goals. If a Named Executive Officer’s performance for the individual goals did not meet expectations, then such Named Executive Officer was not entitled to receive any of the cash incentive compensation attributable to the individual goals. To the extent performance with respect to the individual goals fell between two of the established levels of performance, the percentage earned was to be determined based on straight linestraight-line interpolation between the percentages that would have been earned for the established levels of performance. In determining the component of cash incentive compensation awarded to each Named Executive Officer based on individual goals, the CommitteeECC assessed the performance of each Named Executive Officer against his or her individual goals and then made a subjective determination regarding the level of performance achieved upon which the payout for each Named Executive Officer was based, with the exception of Mr. Fear.based. The CommitteeECC determined that each of Messrs. Grimes and Garrison hadand Ms. Swinehart each performed above thebetween “exceeds expectations” level and that Mr. Holland had performed above the “meets expectations” level. For Mr. Fear, the Committee determined that he performed at the “meets expectations” level, however, his offer letter guaranteed his receipt“exceptional” with respect to their 2019 individual performance against their established individual goals and, accordingly, Messrs. Grimes and Garrison and Ms. Swinehart earned 140%, 130% and 120%, respectively, of at least the target amount of histhe portion of the cash incentive compensation award based onattributable to their respective individual performance and, as a result, he was awarded the target amount for this component of his cash incentive compensation.
20152019 Cash Incentive Award Amounts
The following table sets forth the cash incentive award amounts that wewere paid to each of our Named Executive Officers for 20152019 based on the achievement of company and individual goals as described above.
2015 Cash Incentive Award Amounts | ||||||||||||||||
Named Executive Officer | Company Goals | Individual Goals | Total |
| 2019 Cash Incentive Award Amount ($)(1) | |||||||||||
Steven P. Grimes | $ | 1,875,000 | $ | 500,000 | $ | 2,375,000 |
| $ | 1,823,000 |
| ||||||
Heath R. Fear | 492,000 | 164,000 | 656,000 | |||||||||||||
Shane C. Garrison | 612,000 | 300,000 | 912,000 |
|
| 833,000 |
| |||||||||
Dennis K. Holland | 372,000 | 105,000 | 477,000 | |||||||||||||
Julie M. Swinehart |
|
| 488,000 |
|
(1) | Cash incentive award amounts were limited by $102,000, pro rata based on company goals earned, due to the 20% limitation of Operating FFO per diluted share discussed above. |
Long-Term Equity Incentive Compensation
For 2015,2019, other than as set forth below, each of our Named Executive Officers received long-term equity incentive compensation awards comprised of performance-based restricted stock units and time-based restricted stock awards with target values as set forth above under “— 20152019 Target Incentive Compensation.”
We designed these awards primarily to (i) further align the interests of our executives with our stockholders over the longer term, (ii) support the objectivesobjective of long-term value creation and reward managementour executives based on our relative performance compared to our peers, and (iii) serve as a retention tool for our executives. The following table sets forth the type of awards we granted, weighting (based on percentage of target value) allocated to each award type for each of our Named Executive Officers and vesting terms for our long-term equity incentive compensation for 2015:2019:
Award Type for Named Executive Officers | Weighting | Vesting Terms | ||||
| 75% | Earned based on our relative total stockholder return compared to that of the peer companies in the NAREIT Shopping Center Index over the three-year performance period ending December 31, | ||||
Time-Based Restricted Stock | ||||||
| 25% | Vest in three equal annual installments |
Performance-Based Restricted Stock Unit Awards
We granted performance-based restricted stock units to our Named Executive Officers in 20152019 for 75% of their long-term equity incentive compensation awards. The performance-based restricted stock units may be earned by our Named Executive Officers based on our relative total stockholder return compared to that of the peer companies in the NAREIT Shopping Center Index over a three-year performance period from January 1, 20152019 to December 31, 2017.2021. The number of units that will be earned, as a percentage of the target number of units granted, will be based on the percentile ranking of our total stockholder return over the performance period as compared to the total stockholder return of each of the peer companies that were in the NAREIT Shopping Center Index during the entire performance period, as set forth in the table below. If our total stockholder return performance does not equal or exceed the threshold level established, then our Named Executive Officers will not be entitled to earn any shares pursuant to these performance-based restricted stock units. To the extent
our performance falls between two of the established levels of performance, the percentage earned will be determined based on straight linestraight-line interpolation between the percentages that would have been earned for the established levels of performance.
Performance Level | Relative | Percentage of | ||||
Maximum | 90th Percentile | |||||
Target | Median | |||||
Threshold | 25th Percentile |
The performance-based restricted stock units that are earned will be settled in shares of our common stock shortly after the end of the performance period, with one-third of the shares earned being vested upon issuance and the remaining two-thirds of the shares earned being subject to vesting based on continued employment through December 31, 2018.2022. Upon settlement of the performance-based restricted stock units, additional shares of common stock will also be issued in an amount equal to the accumulated value of the dividends that would have been paid during the performance period on the shares of our common stock that are earned awards pursuant to the performance-based restricted stock units divided by the then-current market price of our common stock.
The following table sets forth the target dollar values of the performance-based restricted stock units granted to each of our Named Executive Officers for 20152019 and the target number of units represented by each award:
2015 Target Amounts | 2019 Target Amounts | |||||||||||
Named Executive Officer | ($) | (# of units) | ($) | (# of Units)(1) | ||||||||
Steven P. Grimes | $ | 1,237,500 | 87,766 | $ 2,306,250 | 210,041 | |||||||
Heath R. Fear | 345,000 | 23,277 | ||||||||||
Shane C. Garrison | 562,500 | 39,894 | 1,192,500 | 108,607 | ||||||||
Dennis K. Holland | 300,000 | 21,277 | ||||||||||
Julie M. Swinehart | 693,750 | 63,184 |
The target number of units granted to each of our Named Executive Officers was determined based on a target dollar value approved by the Committee divided by the estimated grant date fair value per unit using a third-party valuation.
(1) | The target number of units granted to each of our Named Executive Officers was determined based on the target dollar value divided by the estimated grant date fair value per unit using a third-party valuation. |
Time-Based Restricted Stock Awards
We also granted restricted stock awards to our Named Executive Officers in 2015 for 2019. These awards comprise 25% of their long-term equity incentive compensation awards. These awards and vest in three equal annual installments over three years, or four years for Mr. Fear’s award, commencing on January 4, 2016,2020, subject to continued employment through such dates. The following table sets forth the target dollar values of the restricted stock awards granted to each of our Named Executive Officers for 2015.2019.
2015 Target Amounts | 2019 Restricted Stock Awards | |||||||||||
Named Executive Officer | ($) | (# of shares) | ($) | (# of Shares)(1) | ||||||||
Steven P. Grimes | $ | 412,500 | 27,500 | $ 768,750 | 70,399 | |||||||
Heath R. Fear | 115,000 | 7,527 | ||||||||||
Shane C. Garrison | 187,500 | 12,500 | 397,500 | 36,402 | ||||||||
Dennis K. Holland | 100,000 | 6,667 | ||||||||||
Julie M. Swinehart | 231,250 | 21,177 |
The number of shares granted to each of our Named Executive Officers was determined based on a target dollar value approved by the Committee divided by the closing price of our common stock on the grant date, or the day immediately preceding the grant date, for the shares of restricted stock.
(1) | The number of shares granted to each of our Named Executive Officers was determined based on dividing the dollar value by the closing price of our common stock on the grant date. |
Appointment Award
In addition to the annual long-term equity incentive awards described above, in 2015, the Committee also awarded Mr. Fear a one-time restricted stock award, with a value of $500,000, in connection with his appointment as Chief Financial Officer and Treasurer in August 2015. The amount of the award was negotiated with Mr. Fear in connection with his hiring and was informed by the Committee’s recent review of competitive market compensation data. This award was granted in order to attract and retain Mr. Fear and further align his interests with our stockholders over a multi-year period. The number of shares granted was based on the closing price of our common stock on the day immediately preceding the grant date of the award. The shares of restricted stock vest one-third on each of August 18, 2016, 2017 and 2018, subject to continued employment with us through such dates.
Retention Agreements
We have retention agreements with each of our Named Executive Officers, with the exception of Mr. Fear, and we had retention agreements with each of Ms. Aman and Mr. Byrne prior their departures. Each retention agreement was automatically renewed for a subsequent two-year term on February 19, 2015, and was amended as of the same date in order to better align certain severance payments made under the retention agreements with the structure of our incentive compensation programs. The agreements, among other things, provide for severance payments generally equal to a multiple of base salary and target incentive award value plus continuation of healthcare benefits for a period of time to the applicable Named Executive Officer if his or her employment is terminated by us without cause or by our Named Executive Officer for good reason. Each of these agreements also provides for full acceleration of vesting of unvested, time-based equity awards upon a change-in-control or a Named Executive Officer’s termination by us without cause or as a result of death or disability or by such Named Executive Officer for good reason. The retention agreements also require our Named Executive Officers to comply with employee non-solicitation obligations for one year following termination and non-disparagement obligations and require our Named Executive Officers to execute a general release of claims for our benefit at the time of termination in order to be eligible to receive the cash severance payments and continuation of healthcare benefits described above.
We realize that consideration of an acquisition by another company or other change-in-control transaction as well as the possibility of an involuntary termination or reduction in responsibility can be a distraction to executives and can cause them to consider alternative employment opportunities. Accordingly, we believe that establishing pre-negotiated severance benefits for our Named Executive Officers helps encourage thetheir continued dedication of our Named Executive Officers and further aligns the interests of oursuch Named Executive Officers and our stockholders in the event of a potentially attractive proposed change-in-control transaction following which one or more of oursuch Named Executive Officers may be expected to be terminated. In addition, we believe thesethat retention agreements, bywhich specifically settingset forth severance terms and conditions that are agreed upon in advance with our Named Executive Officers, make it easier for us to make changes in our senior executive team, if desired, without the need for protracted negotiations over severance.
We have retention agreements with Messrs. Grimes and Garrison and Ms. Swinehart. The current term of each of these retention agreements is for approximately three years, beginning on July 30, 2018 for Ms. Swinehart and July 29, 2019 for Messrs. Grimes and Garrison, each with automatic two-year renewals thereafter unless written notice of termination is provided by either party. These agreements, among other things, provide for severance payments and benefits to the applicable Named Executive Officer if his or her employment is terminated by us without cause or by the Named Executive Officer for good reason. These agreements also provide for the measurement of performance-based vesting conditions of any outstanding equity awards granted on or after the date of the retention agreements upon the occurrence of a change-in-control, but they do not include single-trigger acceleration of vesting of time-based equity awards in connection with a change-in-control. See “Executive Compensation — Retention Agreements” below for a summary of the retention agreements we entered into with our Named Executive Officers.
On May 7, 2015, Angela M. Aman departed as our Executive Vice President, Chief Financial Officer and Treasurer. Pursuant to a separation agreement we entered into with Ms. Aman, Ms. Aman received cash payments totaling $1,750,000, acceleration of vesting with respect to 133,966 shares of unvested restricted stock and continued health insurance benefits for up to 18 months in connection with her departure. Pursuant to the separation agreement, Ms. Aman acknowledged that she would continue to be subject to the restrictive covenants under her retention agreement, including non-solicitation, non-disparagement and confidentiality provisions, and also provided us with a general release of claims. The cash severance, acceleration of vesting and other benefits
that Ms. Aman received in connection with her departure matched what she would have been entitled to receive under her retention agreement in connection with a termination of her employment by us without cause or by Ms. Aman for good reason. Ms. Aman’s annual base salary during 2015 was $540,000 and her target cash incentive compensation was $460,000, which was structured in the same manner as the cash incentive compensation awards made to our Named Executive Officers. In addition, prior to Ms. Aman’s departure, the Committee established a target value of $750,000 for her long-term equity incentive compensation awards, which would have been structured in the same manner as the awards received by our Named Executive Officers had Ms. Aman’s departure not occurred prior to the date the Committee granted such awards. Ms. Aman’s base salary and target cash incentive compensation for 2015 were determined based on the same considerations as those for the same type of compensation received by our Named Executive Officers for 2015.
Separation Agreement with Mr. Byrne and Other 2015 Compensation
On October 7, 2015, Niall J. Byrne departed as our Executive Vice President and President of Property Management. Pursuant to a separation agreement we entered into with Mr. Byrne, Mr. Byrne received cash payments totaling $677,083, acceleration of vesting with respect to 60,280 shares of unvested restricted stock and continued health insurance benefits (or payments in lieu of such continued benefits) for up to 18 months in connection with his departure. Pursuant to the separation agreement, Mr. Byrne acknowledged that he would continue to be subject to the restrictive covenants under his retention agreement, including non-solicitation, non-disparagement and confidentiality provisions, and also provided us with a general release of claims. The cash severance, acceleration of vesting and other benefits that Mr. Byrne received in connection with his departure matched what he would have been entitled to receive under his retention agreement in connection with a termination of his employment by us without cause or by Mr. Byrne for good reason. Mr. Byrne’s annual base salary during 2015 was $325,000 and his target cash incentive compensation was $175,000, which was structured in the same manner as the cash incentive compensation awards made to our Named Executive Officers. In addition, prior to his departure, Mr. Byrne received long-term equity incentive compensation awards with a target value of $150,000, which were comprised of performance-based restricted stock units (with respect to 75% of the target value) and restricted stock (with respect to 25% of the target value) structured in the same manner as the awards received by our Named Executive Officers. Mr. Byrne’s base salary, target cash incentive compensation and target long-term equity incentive compensation for 2015 were determined based on the same considerations as those for the same type of compensation received by our Named Executive Officers for 2015.
Retirement of Mr. Holland
On December 16, 2015, Mr. Holland notified us that he will be retiring on June 30, 2016. In connection with Mr. Holland’s retirement, the Committee approved the removal of the requirement that Mr. Holland remain employed in order to vest his outstanding shares of restricted stock that would not otherwise automatically vest, subject to his continued employment through June 30, 2016.
Broad-Based Benefits
In addition to the compensation programs described above, each of our Named Executive Officers was eligible to participate in the same benefits programs available to all of our employees: healthemployees, including medical, dental and dentalvision insurance; group term life insurance; short-term and long-term disability coverage and accidental death and dismemberment coverage; and a tax-qualified 401(k) plan; and a pre-tax Section 125 cafeteria plan.
Stock Ownership Guidelines
In order to complement our equity incentive compensation program and further align the interests of our Named Executive Officers with those of our stockholders, our Board of Directors adopted stock ownership guidelines that apply to our executives.Board of Directors and our Named Executive Officers. See “Director and Officer Stock Ownership Guidelines” below for a summary of these guidelines.
Anti-Hedging and Anti-Pledging Policy
None of our Named Executive Officers has engaged in any hedging transactions with respect to our common stock or pledged any of his or her shares of common stock in us.the Company. Additionally, we have a formal anti-hedging and anti-pledging policiespolicy that generally prohibitprohibits all of our executive officers and directors, including our Named Executive Officers, from engaging in any hedging transactions or pledging any shares of our common stock. ExceptionsSee “Corporate Governance and Board Matters—Corporate Governance Profile—Anti-Hedging and Anti-Pledging Policy.”
Clawback Policy
We have a clawback policy that allows the Company to this policy can only be made withrecoup cash and equity incentive compensation paid to, earned by or granted to our executive officers during the prior approvalthree-year period preceding a restatement of the Audit Committee.Company’s financial statements if the financial results that are the subject of a restatement had been materially misstated due to fraud, intentional misconduct or gross negligence by any of our executive officers. In such circumstances, the Company may recoup the amount of cash and equity incentive compensation that was paid, earned or granted as a result of the incorrectly reported financial results of the Company that were the subject of the restatement that would not have been paid, earned or granted, as applicable, if determined based on the financial results of the Company set forth or reflected in the Company’s restated financial statements. Our clawback policy applies to all cash and equity performance-based incentive compensation with a performance period beginning on or after January 1, 2017.
Compensation Consultant Report and Benchmarking
In connection with the review by the CommitteeECC of our executive compensation programs and levels for 2015,2019, the CommitteeECC retained compensation consultant Steven Hall & Partners or (“SH&P. In&P”) in the beginning of 2018 and then in July 2014,2018, the ECC engaged FW Cook as a new compensation consultant to replace SH&P and finalize the analysis as a result of staffing moves from SH&P to FW Cook. Accordingly, in July 2018, SH&P prepared, and FW Cook finalized and presented, a written report for the CommitteeECC providing a thorough analysis of our executive compensation programs, including (i) a marketplace review of compensation levels for our Named Executive Officers, (ii) an internal analysis which involved review of the documents governingthen named executive officers relative to our current executive compensation levels and programs and an external analysis which involved review of our 13-company12-company peer group, and (iii) SH&P’s(ii) recommendations regarding the overall design of our executive compensation program for 2015.2019.
In connection with its analysis, SH&P also developed a
Our peer group, comprised of 13 retail REITs to be used, along with other market data, in benchmarking our executive compensation programs and levels. The companies selected for the peer group represent similar businesses and have annual revenue and market capitalization comparable to ours. This peer group used for benchmarking our executive compensation program for fiscal 2015, or our 2015year 2019 was adjusted from the peer group for 2018 in order to better represent companies with similar businesses, annual revenues and market capitalization comparable to ours, as well as consolidation within the industry, and included the following companies:
§Acadia Realty Trust | §Regency Centers Corporation | |||
§Brixmor Property Group, Inc. | §Retail Opportunity Investments Corp. |
§Federal Realty Investment Trust | § Taubman Centers, Inc. | |||
§ Kimco Realty Corporation | § Urban Edge Properties | |||
§ The Macerich Company | § Weingarten Realty Investors | |||
§Pennsylvania Real Estate Investment Trust | ||||
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The 20152019 peer group data presented to the CommitteeECC included information regarding base salary, bonus amounts,annual cash incentives, total annual compensation and long-term equity and incentive compensation. For each of these categories, SH&PFW Cook presented information comparing our compensation to the compensation paid by these companies at the 25th, 50th and 75th percentiles for comparable positions. Additionally, SH&P reviewed and provided analysis regarding
In addition to the annual and long-term incentive plan designs utilized byfinalization of the companies inwritten report discussed above, FW Cook was also engaged to benchmark the compensation of our Board relative to a peer group identifying trends inand to advise the structuring of executive compensation.Company on its long-term equity compensation plan.
2015
2019 Advisory Resolution
At our 20152019 annual meeting of stockholders, an advisory resolution approving the compensation paid to our named executive officers for 2014,2018, as disclosed in our proxy statement for the 20152019 annual meeting of stockholders, including the Compensation Discussion and Analysis, compensation tables and narrative discussions, was approved by our stockholders, with approximately 92% of the votes cast on the proposal being voted in favor of the proposal to approve such resolution. The CommitteeECC has considered the results of this vote and as a result of the high percentage of votes cast in favor of this proposal, the Committeeit viewed these results as an indication of stockholders’ overall satisfaction with the manner in whichway we compensated our named executive officers for 2014 and2018. Accordingly, in 2019 the changes that we made to our executive compensation programs for 2014 and thereafter that were described in our proxy statement for the 2015 annual meeting of stockholders. Accordingly, the CommitteeECC did not implement significant changes to our executive compensation programs as a result of the stockholder advisory vote.
Executive Compensation Process
For more information regarding our processes and procedures for considering and determining the compensation of our executives, including the role of any executive officers, is described below undersee “Executive Compensation — Executive and Director Compensation Process.”
The following table sets forth information with respect to all compensation paid or earned for services rendered to usthe Company by our Named Executive Officers for the years ended December 31, 2015, 20142019, 2018 and 20132017 presented in accordance with SEC rules. The amounts set forth below are not representative of the compensation earned for the years set forth below due to the fact that equity awards are required to be presented as compensation for the year in which they were granted (which may differ from the year for which they were granted) whereas incentive cash compensation is required to be presented as compensation for the year for which it is earned regardless of when it is paid. For 2012, 2013 and 2014, all of our Named Executive Officers’ incentive compensation was paid in the form of equity awards granted in the following year, which resulted in the amounts in the “Stock Awards” column below for 2013, 2014 and 2015 including the grant date fair value of equity awards that were granted based on performance for the prior year. As described above in “— Compensation Discussion and Analysis,” we changed our executive compensation program in 2015 to include incentive cash compensation and equity awards granted during the year, 75% of which were subject to vesting based on the achievement of performance-based hurdles and continued employment and the remaining 25% of which were subject to vesting based solely on continued employment. As a result, amounts set forth in the “Stock Awards” column and, therefore, the “Total” column in the table below for Messrs. Grimes, Garrison, Holland and Byrne for 2015 are not representative of the amounts they actually received for 2015, as these amounts include all incentive compensation awarded for both of 2014 and 2015.
Summary Compensation Table | ||||||||||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | All Other Compensation ($) | Total ($) (1) | |||||||||||||||||||||||||||||
Steven P. Grimes | 2015 | 850,000 | — | 5,550,000 | (3) | 2,375,000 | 2,154 | (6) | 8,777,154 | |||||||||||||||||||||||||||
President and Chief Executive Officer | 2014 | 825,000 | — | 1,425,000 | (4) | — | 47,965 | 2,297,965 | ||||||||||||||||||||||||||||
2013 | 700,000 | — | 262,500 | (5) | — | 2,196 | 964,696 | |||||||||||||||||||||||||||||
Heath R. Fear (7) | 2015 | 160,769 | 25,912 | 960,000 | (3) | 630,088 | — | 1,776,769 | ||||||||||||||||||||||||||||
Executive Vice President, Chief Financial Officer and Treasurer | ||||||||||||||||||||||||||||||||||||
Shane C. Garrison | 2015 | 590,000 | — | 2,560,000 | (3 | ) | 912,000 | 2,154 | (6 | ) | 4,064,154 | |||||||||||||||||||||||||
Executive Vice President, | 2014 | 545,000 | — | 725,000 | (4 | ) | — | 38,734 | 1,308,734 | |||||||||||||||||||||||||||
Chief Operating Officer and Chief Investment Officer | 2013 | 475,000 | — | 96,250 | (5 | ) | — | 2,196 | 573,446 | |||||||||||||||||||||||||||
Dennis K. Holland | 2015 | 425,000 | — | 1,470,000 | (3 | ) | 477,000 | 4,173 | (6 | ) | 2,376,173 | |||||||||||||||||||||||||
Executive Vice President, | 2014 | 375,000 | — | 435,000 | (4 | ) | — | 29,557 | 839,557 | |||||||||||||||||||||||||||
General Counsel and Secretary | 2013 | 375,000 | — | 83,750 | (5 | ) | — | 2,153 | 460,903 | |||||||||||||||||||||||||||
Angela M. Aman | 2015 | 261,692 | — | 1,720,000 | (3 | ) | — | 1,842,265 | (6 | ) | 3,823,957 | |||||||||||||||||||||||||
Former Executive Vice | 2014 | 490,000 | — | 675,000 | (4 | ) | — | 21,811 | 1,186,811 | |||||||||||||||||||||||||||
President, Chief Financial Officer and Treasurer | 2013 | 425,000 | — | 96,250 | (5 | ) | — | 2,196 | 523,446 | |||||||||||||||||||||||||||
Niall J. Byrne | 2015 | 266,250 | — | 800,000 | (3 | ) | — | 708,252 | (6 | ) | 1,774,502 | |||||||||||||||||||||||||
Former Executive Vice | 2014 | 325,000 | — | 325,000 | (4 | ) | — | 25,816 | 675,816 | |||||||||||||||||||||||||||
President and President of Property Management | 2013 | 325,000 | — | 75,000 | (5 | ) | — | 2,066 | 402,066 |
Summary Compensation Table | |||||||
Name and | Year | Salary ($) | Stock | Non-Equity | All Other | Total ($) | |
Steven P. Grimes Chief Executive Officer | 2019 | 850,000 | 3,075,007(3) | 1,823,000 | 15,965 | 5,763,972 | |
2018 | 850,000 | 2,825,011(4) | 1,651,000 | 11,406 | 5,337,417 | ||
2017 | 850,000 | 2,425,010(5) | 1,488,000 | 15,430 | 4,778,440 | ||
Julie M. Swinehart Executive Vice President, Chief Financial Officer and Treasurer | 2019 | 475,000 | 925,013(3) | 488,000 | 22,125 | 1,910,138 | |
2018 | 456,500(6) | 625,018(4) | 454,000 | 23,303 | 1,558,821 | ||
2017 | 275,000 | 304,027(5)(7) | 186,000 | 22,989 | 788,016 | ||
Shane C. Garrison President and Chief Operating Officer
| 2019 | 650,000 | 1,590,015(3) | 833,000 | 22,125 | 3,095,140 | |
2018 | 650,000 | 1,490,019(4) | 712,000 | 26,773 | 2,878,792 | ||
2017 | 650,000 | 1,290,009(5) | 741,000 | 22,005 | 2,703,014 |
(1) |
|
Name | 2015 Total Compensation ($) | 2015 Stock Awards Granted for 2014 ($) | Adjusted 2015 Total Compensation ($) | |||||||||
Steven P. Grimes | 8,777,154 | (3,900,000 | ) | 4,877,154 | ||||||||
Shane C. Garrison | 4,064,154 | (1,810,000 | ) | 2,254,154 | ||||||||
Dennis K. Holland | 2,376,173 | (1,070,000 | ) | 1,306,173 | ||||||||
Angela M. Aman | 3,823,957 | (1,720,000 | ) | 2,103,957 | ||||||||
Niall J. Byrne | 1,774,502 | (650,000 | ) | 1,124,502 |
The following sets forth for Messrs. Grimes, Garrison, Holland and Byrne and Ms. Aman adjusted total compensation amounts for 2013, 2014 and 2015 making adjustments to the reported amounts for each year to include the grant date fair value of the equity awards that were granted for performance in such year regardless of when granted:
Adjusted Total Compensation ($) | ||||||||||||
Name | 2013 | 2014 | 2015 | |||||||||
Steven P. Grimes | 2,127,196 | 4,772,965 | 4,877,154 | |||||||||
Shane C. Garrison | 1,202,196 | 2,393,734 | 2,254,154 | |||||||||
Dennis K. Holland | 812,153 | 1,474,557 | 1,306,173 | |||||||||
Angela M. Aman | 1,102,196 | 2,231,811 | 2,103,957 | |||||||||
Niall J. Byrne | 652,066 | 1,000,816 | 1,124,502 |
Amounts reported |
(2) | The amounts shown in this column for 2019 include the following: |
Name | Company Contribution to Health Savings Account ($) | Executive Wellness | Health | Company | Group Disability and Term Life Insurance Premiums(a) ($) | Total ($) | ||||||
Steven P. Grimes | 500 | 4,470 | 6,725 | 3,000 | 1,270 | 15,965 | ||||||
Julie M. Swinehart | 1,000 | — | 16,855 | 3,000 | 1,270 | 22,125 | ||||||
Shane C. Garrison | 1,000 | — | 16,855 | 3,000 | 1,270 | 22,125 |
(a) | Amounts shown are the premiums for group disability and life insurance policies. |
(3) | Amounts reported in |
(4) |
(5) | Amounts reported in 2017 include the aggregate grant date fair value of performance-based restricted stock units and restricted stock awards granted during the year ended December 31, 2017, each calculated in accordance with FASB ASC Topic 718. The assumptions made when calculating the grant date fair value of the performance-based restricted stock units are found in Note 5 (Equity Compensation Plans) to our Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2017. The grant date fair value of the restricted stock awards granted during the year ended December 31, 2017 was calculated as the closing price of our common stock on the NYSE on the applicable date of grant multiplied by the number of shares granted. |
(7) | Amount includes a restricted stock |
Name | Company Match to 401(k) Plan ($) | Accrued Vacation Payout ($) | Group Term Life Insurance Premiums ($) | Post- Termination Benefit Continuation ($) | Severance ($) | Total ($) | ||||||||||||||||||
Steven P. Grimes | 1,500 | — | 654 | — | — | 2,154 | ||||||||||||||||||
Shane C. Garrison | 1,500 | — | 654 | — | — | 2,154 | ||||||||||||||||||
Dennis K. Holland | 1,500 | — | 2,673 | — | — | 4,173 | ||||||||||||||||||
Angela M. Aman | 1,500 | 51,923 | 189 | 38,653 | (a) | 1,750,000 | 1,842,265 | |||||||||||||||||
Niall J. Byrne | 1,500 | 15,000 | 1,201 | 13,468 | (a) | 677,083 | 708,252 |
The following table sets forth certain information with respect to grants of plan-based awards to our Named Executive Officers for the year ended December 31, 2015.2019.
2015 Grants of Plan-Based Awards | ||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Date of Approval | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($)(6) | ||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||
Steven P. Grimes | — | — | 718,750 | 1,250,000 | 2,500,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
2/20/15 | 2/10/15 | — | — | — | — | — | — | 243,447 | (3 | ) | 3,900,000 | |||||||||||||||||||||||||||||||||
5/29/15 | 5/21/15 | — | — | — | — | — | — | 27,500 | (4 | ) | 412,500 | |||||||||||||||||||||||||||||||||
5/29/15 | 5/21/15 | — | — | — | 43,883 | 87,766 | 175,532 | — | 1,237,500 | |||||||||||||||||||||||||||||||||||
Heath R. Fear | — | — | 254,200 | 410,000 | 820,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
8/18/15 | 7/28/15 | — | — | — | — | — | — | 7,527 | (4 | ) | 115,000 | |||||||||||||||||||||||||||||||||
8/18/15 | 7/28/15 | — | — | — | — | — | — | 32,723 | (5 | ) | 500,000 | |||||||||||||||||||||||||||||||||
8/18/15 | 7/28/15 | — | — | — | 11,639 | 23,277 | 46,554 | — | 345,000 | |||||||||||||||||||||||||||||||||||
Shane C. Garrison | — | — | 316,200 | 510,000 | 1,020,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
2/20/15 | 2/10/15 | — | — | — | — | — | — | 112,985 | (3 | ) | 1,810,000 | |||||||||||||||||||||||||||||||||
5/29/15 | 5/21/15 | — | — | — | — | — | 12,500 | (4 | ) | 187,500 | ||||||||||||||||||||||||||||||||||
5/29/15 | 5/21/15 | — | — | — | 19,947 | 39,894 | 79,788 | — | 562,500 | |||||||||||||||||||||||||||||||||||
Dennis K. Holland | — | — | 192,200 | 310,000 | 620,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
2/20/15 | 2/10/15 | — | — | — | — | — | — | 66,792 | (3 | ) | 1,070,000 | |||||||||||||||||||||||||||||||||
5/29/15 | 5/21/15 | — | — | — | — | — | — | 6,667 | (4 | ) | 100,000 | |||||||||||||||||||||||||||||||||
5/29/15 | 5/21/15 | — | — | — | 10,639 | 21,277 | 42,554 | — | 300,000 | |||||||||||||||||||||||||||||||||||
Angela M. Aman | — | — | 285,200 | 460,000 | 920,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
2/20/15 | 2/10/15 | — | — | — | — | — | — | 107,367 | (3 | ) | 1,720,000 | |||||||||||||||||||||||||||||||||
Niall J. Byrne | — | — | 108,500 | 175,000 | 350,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
2/20/15 | 2/10/15 | — | — | — | — | — | — | 40,575 | (3 | ) | 650,000 | |||||||||||||||||||||||||||||||||
5/29/15 | 5/21/15 | — | — | — | — | — | — | 2,500 | (4 | ) | 37,500 | |||||||||||||||||||||||||||||||||
5/29/15 | 5/21/15 | — | — | — | 3,990 | 7,979 | 15,958 | — | 112,500 |
2019 Grants of Plan-Based Awards Name Grant Date Date of Approval Estimated Possible Estimated Future Payouts Under All Other Stock Awards: Number of Shares of Stock or Units Grant Date Fair Value of Stock And Option Awards ($)(3) Threshold ($) Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#)
Payouts Under Non-Equity
Incentive Plan Awards(1)
Equity Incentive Plan Awards(2) Steven P. Grimes 718,750 1,250,000 2,500,000 1/4/19 7/24/18 70,399(4) 768,757 1/4/19 7/24/18 105,021 210,041 420,082 — 2,306,250 Julie M. Swinehart 206,500 350,000 700,000 1/4/19 7/24/18 21,177(4) 231,253 1/4/19 7/24/18 31,592 63,184 126,368 — 693,760 Shane C. Garrison 345,150 585,000 1,170,000 1/4/19 7/24/18 36,402(4) 397,510 1/4/19 7/24/18 54,304 108,607 217,214 — 1,192,505
(1) | Reflects the possible payouts of annual cash incentive compensation. “Threshold” amounts represent amounts that would be earned at the threshold level, which represents 50% of the target amounts for the portion of annual cash incentive compensation that was based on company goals and 80% of the target amounts for the portion of annual cash incentive compensation that was based on individual goals. The actual amounts that were paid are set forth in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table” above. See also, “— Compensation Discussion and Analysis — Incentive Compensation — Annual Cash Incentive Compensation.” |
(2) | Reflects performance-based restricted stock units granted during |
(3) |
Amounts disclosed in this column for equity awards are computed in accordance with FASB ASC Topic 718. |
(4) | Represents shares of restricted stock granted as incentive compensation for 2019. The shares granted to Messrs. Grimes and Garrison and Ms. Swinehart are subject to vesting in equal installments on each of January 4, 2020, 2021 and 2022, subject to continued employment through such dates. |
Discussion of Summary Compensation and Grants of Plan-Based Awards Tables
Our executive compensation policies and practices, pursuant to which the compensation set forth in the Summary Compensation Table and the 20152019 Grants of Plan-Based Awards tableTable was paid or awarded, are described above under “—Compensation Discussion and Analysis.”
In 2015,2019, we granted restricted stock awards and performance-based restricted stock units to each of our Named Executive Officers, pursuant to our 2014 Long-Term Equity Compensation Plan, as described in the 20152019 Grants of Plan-Based Awards table. The vesting of each award is subject to acceleration in connection with a change-in-control or certain termination triggering events as described below under “—Potential Payments Upon Termination or Change-in-Control.” Generally, we pay dividends to holders of all shares of restricted stock, whether vested or not, at the same rate per share as dividends per share paid to our common stockholders. In connection with the performance-based restricted stock units, if and when earned, additional shares of common stock will also be issued in an amount equal to the accumulated value of the dividends that would have been paid during the performance period on the shares of common stock and restricted sharesearned awards issued at the end of the performance period divided by the then-current market price of our common stock.
The terms of the retention agreements that we have entered into with our Named Executive Officers are described below under “—Potential Payments Upon Termination or Change-in-Control.”
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information with respect to outstanding equity awards at December 31, 2015,2019, with respect to our Named Executive Officers.
Outstanding Equity Awards at Fiscal Year-End 2015 | ||||||||||||||||
Stock Awards | ||||||||||||||||
Name | Number of Shares or Units of Stock That Have Not Vested (#) (1) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (2) | ||||||||||||
Steven P. Grimes | 352,587 | 5,207,710 | 43,883 | 648,152 | ||||||||||||
Heath R. Fear | 40,250 | 594,493 | 11,639 | 171,908 | ||||||||||||
Shane C. Garrison | 157,886 | 2,331,976 | 19,947 | 294,617 | ||||||||||||
Dennis K. Holland | 93,349 | 1,378,765 | 10,639 | 157,138 | ||||||||||||
Angela M. Aman | — | — | — | — | ||||||||||||
Niall J. Byrne | — | — | 1,108 | 16,365 |
Outstanding Equity Awards at Fiscal Year-End 2019 | ||||||||
Stock Awards | ||||||||
Name | Number of | Market Value | Equity Incentive | Equity Incentive | ||||
Steven P. Grimes | 239,074 | 3,203,592 | 719,976 | 9,647,678 | ||||
Julie M. Swinehart | 38,892 | 521,153 | 183,064 | 2,453,058 | ||||
Shane C. Garrison | 125,852 | 1,686,417 | 375,390 | 5,030,226 |
(1) | For Messrs. Grimes |
Name | 2015 Award (a) | CFO Award (b) | 2015 Award (c) | 2014 Award (d) | 2014 Award (e) | 2013 Award (f) | 2012 Award (g) | 2011 Award (h) | 2010 Award (i) | Total | ||||||||||||||||||||||||||||||
Steven P. Grimes | — | — | 27,500 | 182,585 | 60,862 | 51,970 | 18,831 | 7,554 | 3,285 | 352,587 | ||||||||||||||||||||||||||||||
Heath R. Fear | 7,527 | 32,723 | — | — | — | — | — | — | — | 40,250 | ||||||||||||||||||||||||||||||
Shane C. Garrison | — | — | 12,500 | 67,791 | 45,194 | 21,153 | 6,905 | 2,518 | 1,825 | 157,886 | ||||||||||||||||||||||||||||||
Dennis K. Holland | — | — | 6,667 | 33,396 | 33,396 | 10,577 | 6,008 | 2,338 | 967 | 93,349 |
2019 Award(a) | Earned 2017 Performance-Based Restricted Stock Unit Award(b) | 2018 | 2017 | 2016 CAO | 2016 | Total | |||||||
Steven P. Grimes | 70,399 | 111,329 | 35,296 | 13,174 | 8,876 | 239,074 | |||||||
Julie M. Swinehart | 21,177 | 4,592 | 8,122 | 1,630 | 3,371 | 38,892 | |||||||
Shane C. Garrison | 36,402 | 59,223 | 18,616 | 7,008 | 4,603 | 125,852 |
(a) | Represents unvested portion of restricted stock |
(b) | Represents unvested restricted stock |
(c) | Represents unvested portion of restricted stock awards granted for 2018, with one-third having vested on January 4, 2019 and one-third scheduled to vest on each of January 4, 2020 and 2021, subject to continued employment through such dates. |
(d) | Represents unvested portion of restricted stock awards granted for 2017, with one-third having vested on each of January 4, 2018 and 2019 and one-third scheduled to vest on January 4, 2020, subject to continued employment through such date. |
(e) | Represents unvested portion of restricted stock award granted for 2016, with one-third having vested on each of March 1, 2018 and 2019 and one-third scheduled to vest on March 1, 2020, subject to continued employment through such date. |
(f) | Represents unvested portion of restricted stock awards granted for 2016, with one-fourth having vested on each of January 4, 2017, 2018 and 2019 and one-fourth scheduled to vest on January 4, 2020, subject to continued employment through such date. |
(2) | Market value is based on a price of $13.40 per share, which was the closing price of our common stock on the NYSE on December 31, 2019. |
(3) | Reflects performance-based restricted stock units that were outstanding and for which the performance period had not ended as of December 31, 2019. The number of these performance-based restricted stock units held by each of Messrs. Grimes and Garrison and Ms. Swinehart that were outstanding as of December 31, 2019, which equals the target amount that could be earned, is set forth in the table below. In accordance with SEC rules, the number of units set forth in the table above includes the maximum amount of the 2019 and 2018 performance-based restricted stock units (i.e., 200% of the target amount). |
2019 Performance-Based Restricted Stock | 2018 Performance-Based Restricted Stock | |||
Steven P. Grimes | 210,041 | 149,947 | ||
Julie M. Swinehart | 63,184 | 28,348 | ||
Shane C. Garrison | 108,607 | 79,088 |
(a) | Represents performance-based restricted stock units granted in 2019 (the “2019 Awards”). Each 2019 Award provides our Named Executive Officers the ability to earn and receive shares of common stock equal to between 50% and 200% of the number of restricted stock units subject to the award after the end of the three-year performance period that began on January 1, 2019 through December 31, 2021 based on our total stockholder return over the performance period compared to peers listed in the NAREIT Shopping Center Index, with one-third of the amount earned to be issued in shares of common stock and two-thirds to be issued in restricted shares of common stock that will vest |
(b) | Represents performance-based restricted stock units granted in 2018 (the “2018 Awards”). Each 2018 Award provides our Named Executive Officers the ability to earn and receive shares of common stock equal to between 50% and 200% of the number of restricted stock units subject to the award after the end of the three-year performance period that began on January 1, 2018 through December 31, 2020 based on our total stockholder return over the performance period compared to peers listed in the NAREIT Shopping Center Index, with one-third of the amount earned to be issued in shares of common stock and two-thirds to be issued in restricted shares of common stock that will vest one year later, subject to continued employment through such date. Assuming our relative performance for the three-year performance period applicable to the 2018 Awards continues to be the same as we experienced from the beginning of the performance period through December 31, 2019, the 2018 Awards would |
Option Exercises and Stock Vested
The following table sets forth the aggregate number of shares of restricted stock that vested in 2015.2019. The value realized on vesting is the product of (1)(i) the closing price per share of our common stock on the NYSE on the vesting date or the date immediately preceding the vesting date (or, if there were no reported sales on such date, the most recent previous date on which sales were reported), multiplied by (2)(ii) the number of shares vesting.
2015 Option Exercises and Stock Vested | ||||||||
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||
Steven P. Grimes | 59,524 | 953,463 | ||||||
Heath R. Fear | — | — | ||||||
Shane C. Garrison | 34,247 | 549,176 | ||||||
Dennis K. Holland | 23,491 | 376,494 | ||||||
Angela M. Aman (1) | 163,507 | 2,462,484 | ||||||
Niall J. Byrne (1) | 76,484 | 1,113,145 |
2019 Option Exercises and Stock Vested | ||||
Name | Number of | Value Realized | ||
Steven P. Grimes | 177,434 | 2,235,195 | ||
Julie M. Swinehart | 15,078 | 179,459 | ||
Shane C. Garrison | 93,086 | 1,172,083 |
Potential Payments Upon Termination or Change-in-Control
Equity Plan and Award Agreements
As of December 31, 2015, pursuant
Pursuant to the terms of our Amended and Restated 2014 Long-Term Equity Compensation Plan and the applicable award agreements entered into during 2016, all outstanding unvested shares of restricted stock held by each of our Named Executive Officers will fully vest upon the occurrence of a change-in-control or in the event that ourthe Named Executive Officer’s employment is terminated by us without cause or as a result of his or her death or disability. In
addition, pursuant to the applicable award agreements for restricted stock, granted on or after May 2015, all outstanding unvested shares of such restricted stock held by each of ourthe Named Executive Officers will fully vest in the event that ourthe Named Executive Officer’s employment is terminated as a result of his or her retirement. In 2017, we modified our award agreements for the grants of restricted stock made to our Named Executive Officers to eliminate acceleration of vesting upon a change-in-control. As a result, acceleration of vesting for these awards will only occur upon termination of employment, as described above, whether before or after a change-in-control.
With respect to the performance-based restricted stock units that we granted to our Named Executive Officers in 2017, 2018 and 2019, pursuant to the terms of the applicable award agreements, in the event of a change-in-control prior to the end of the performance period, we will determine the award earned by
the Named Executive Officers based on our relative performance through the day prior to the consummation of the change-in-control, provided that the amount earned will be pro-rated based upon the portion of the performance period that elapsed from the first day of such period through the date of the change-in-control. The amount earned will be settled immediately prior to the consummation of the change-in-control in shares of our common stock and restricted stock. The shares of restricted stock immediately prior to the consummation(i.e., two-thirds of the change-in-control, which shareseach award) will remain subject to vesting based on the applicable Named Executive Officer’s continued employment in the same manner as would have applied in the absence of a change-in-control (i.e., one-third is issued in common stock and the remaining two-thirds will be issued in restricted stock, which is subject to vesting based on continued employment through December 31, 2018).change-in-control. Additional shares of common stock will also be issued in an amount equal to the accumulated value of the dividends that would have been paid during the performance period through the date of the change-in-control on the shares of common stock and restricted stockearned awards that are issued divided by the then-current market price of our common stock.
Additionally, in
In the event of a qualified termination by us of a Named Executive Officer prior to the end of any applicable performance period for outstanding performance-based restricted stock units, the Named Executive Officer will be entitled to retain his or her units subject to the same performance-based vesting conditions; provided that the number of units earned will be prorated based upon the period in which such Named Executive Officer was employed during the performance period and all of the shares issued upon settlement of the units earned will be issued in common stock. In the event of a qualified termination by us of a Named Executive Officer after the end of the performance period or after or in connection with a change-in-control, any shares of restricted stock earned by such Named Executive Officer pursuant to the applicable award agreement will fully vest. The term qualified termination is defined in the performance-based restricted stock unit award agreements to mean the termination of employment with us as a result of a Named Executive Officer’s death, disability, retirement, termination by us without cause or such Named Executive Officer’s resignation for good reason.
The terms cause, good reason, retirement and change-in-control are specifically defined in the applicable documents. Theaward agreements. For award agreements entered into during 2016, the term change-in-control is defined in such award agreements to mean (i) any person or group acquiring ownership of more than 50% of our voting stock, (ii) any person or group acquiring 30% or more of our voting stock in any 12-month period, (iii) a change in a majority of the members of the Board during any 12-month period if the new members were not nominated by a majority of the incumbent directors, or (iv) a consummation of any sale, lease, exchange or other transfer of all or substantially all of our assets.
For award agreements entered into in 2017 and thereafter, we modified the definition of change-in-control to be consistent with the definition in our retention agreements, as described below under “Retention Agreements.”
Retention Agreements
We have retention agreements with each of our Named Executive Officers, with the exception of Mr. Fear.Messrs. Grimes and Garrison and Ms. Swinehart. The currentretention agreements are each for a term of each agreement is for twoapproximately three years beginning on February 19, 2015,July 29, 2019, except for Ms. Swinehart’s agreement the term of which began on July 30, 2018, with automatic two-year renewals commencing on each anniversary datethereafter unless written notice of termination is given at least 90 days prior to such date by either party.the Company. Additionally, if a change-in-control occurs or the Company enters into a definitive agreement for a change-in-control during the term, then the term of the agreement will be automatically extended for two years after such date. Generally, under the retention agreements, if any of ourthe applicable Named Executive OfficersOfficer is terminated for any reason, under the retention agreements, he or she will be subject to the following continuing obligations after termination: (i) non-solicitation of our employees for one year and (ii) non-disparagement obligations.
Each
The retention agreement, as amended, providesagreements provide for the following payments and benefits to the applicable Named Executive Officer in connection with the termination of his or her employment by us without cause or by such Named Executive Officer for good reason:
reason, provided that such Named Executive Officer enters into a cash payment equal to one times (or, if the termination occursgeneral release of claims for our benefit in connection with or within two years after a change-in-control, two times) the sum of (i) such Named Executive Officer’s
§ | For Mr. Grimes, a cash payment equal to two times (or, if the termination occurs in connection with or within two years after a change-in-control, three times) the sum of (i) Mr. Grimes’ annual base salary at the rate then in effect, without giving effect to any reduction in the base salary rate amounting to good reason and (ii) an amount equal to the |
§ | For our other Named Executive Officers, a cash payment equal to one and one-half times (or, if the termination occurs in connection with or within two years after a change-in-control, two times) the sum of (i) such Named Executive Officer’s annual base salary at the rate then in effect, without giving effect to any reduction in the base salary rate amounting to good reason and (ii) an amount equal to the greater of (a) such Named Executive Officer’s target annual cash bonus |
§ | all unpaid annual bonus amounts earned during the year prior to the year in which the termination occurs and |
all unpaid annual bonus amounts earned during the year in which the termination occurs through the most recently completed fiscal quarter prior to the date of termination; and
§ | acceleration of vesting of unvested equity awards that are only subject to vesting conditions based on continued employment; |
§ | retention of outstanding equity awards that remain subject to performance-based vesting conditions, with the earning of such awards to be based on achievement of the original performance-based vesting conditions in the same manner as if such termination had not occurred; provided that the portion of each such equity award that is earned will be prorated based on the portion of the performance period that elapsed through the date of termination unless such termination occurred in connection with a change-in-control; and |
continuation of healthcare benefits, or cash payments equal to the premiums for healthcare benefits, for up to 18 months after termination;
§ | continuation of healthcare benefits, or cash payments equal to the premiums for healthcare benefits, for the period of cash severance earned under the retention agreement. |
provided that such Named Executive Officer enters into a general release of claims for our benefit in connection with such termination.
In addition, theThe retention agreements provide that upon a change-in-control or a Named Executive Officer’s termination by us without cause or as a resultdo not include single-trigger acceleration of death or disability or by a Named Executive Officer for good reason, allvesting of such Named Executive Officer’s outstanding unvested equity awards that are only subject to vesting conditions based on continued employment will fully vest. This accelerationin connection with a change-in-control. Each retention agreement provides that upon a change-in-control, the achievement of the performance-based vesting will not apply toconditions of any outstanding equity awards that areremain subject to performance-basedsuch vesting conditions will be measured based on performance through the day prior to the date of the change-in-control and using performance metrics that do not solely relatehave been prorated, to the extent applicable, to reflect the shortened performance period. Vesting conditions for these awards that are based on continued employment.employment will continue to apply unless accelerated due to a termination of employment or otherwise.
Under
Each retention agreement also provides that upon a termination as a result of death or disability, the retention agreements,applicable Named Executive Officer’s outstanding unvested equity awards will be treated in the same manner as they would in the event that any paymentof a termination by us without cause or benefit constitutes an excess “parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended, subject to an excise tax,termination by such Named Executive Officer’s payments and other termination benefits will be reduced to the extent necessary to avoid such excise tax, but only if such a reduction would result in greater after-tax payments and benefits to such Named Executive Officer.Officer for good reason.
The terms cause, resignation for good reason and change-in-control are specifically defined in the retention agreements, with the term change-in-control defined to mean (i) any person or group acquiring more than 50% of our voting stock, (ii) any person or group acquiring 30% or more of our voting stock, in any 12-month period, (iii)(ii) a change in a majority of the members of the Board during any 12-month period if the new members were not nominated by a majority of the incumbent directors, (iii) the consummation of a consolidation or merger resulting in the Company’s voting stock representing less than a majority of total voting power immediately after such consolidation or merger, (iv) athe consummation of any sale, lease or other transfer of all or substantially all of our assets.
The following table sets forth potential payments and benefits that would have been provided to our Named Executive Officers upon the occurrence of a change-in-control or certain termination triggering events, assuming such change-in-control or terminating event occurred on December 31, 2015.2019. The closing market price of our common stock on the NYSE on December 31, 20152019, the last business day of 2019, was $14.77$13.40 per share.
Involuntary Termination Without Cause/For Good Reason (Non-Change- in-Control) ($) | Involuntary Termination Without Cause/For Good Reason (Change-in- Control) ($) | Death or disability ($) | Change-in- Control (No Termination) ($) | |||||||||||||
Steven P. Grimes (1)(2) | ||||||||||||||||
Cash Severance | 3,750,000 | 7,500,000 | — | — | ||||||||||||
Benefits Continuation (3) | 28,512 | 28,512 | — | — | ||||||||||||
Unvested Restricted Stock (4) | 5,207,710 | 5,207,710 | 5,207,710 | 5,207,710 | ||||||||||||
Unvested 2015 RSUs | — | (5) | — | (6) | — | (5) | — | (6) | ||||||||
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Total | 8,986,222 | 12,736,222 | 5,207,710 | 5,207,710 | ||||||||||||
Heath R. Fear (1) | ||||||||||||||||
Cash Severance | — | — | — | — | ||||||||||||
Benefits Continuation (3) | — | — | — | — | ||||||||||||
Unvested Restricted Stock (4) | 594,493 | 594,493 | 594,493 | 594,493 | ||||||||||||
Unvested 2015 RSUs | — | (5) | — | (6) | — | (5) | — | (6) | ||||||||
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Total | 594,493 | 594,493 | 594,493 | 594,493 | ||||||||||||
Shane C. Garrison (1)(2) | ||||||||||||||||
Cash Severance | 1,850,000 | 3,700,000 | — | — | ||||||||||||
Benefits Continuation (3) | 28,512 | 28,512 | — | — | ||||||||||||
Unvested Restricted Stock (4) | 2,331,976 | 2,331,976 | 2,331,976 | 2,331,976 | ||||||||||||
Unvested 2015 RSUs | — | (5) | — | (6) | — | (5) | — | (6) | ||||||||
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Total | 4,210,488 | 6,060,488 | 2,331,976 | 2,331,976 | ||||||||||||
Dennis K. Holland (1)(2) | ||||||||||||||||
Cash Severance | 1,135,000 | 2,270,000 | — | — | ||||||||||||
Benefits Continuation (3) | 28,512 | 28,512 | — | — | ||||||||||||
Unvested Restricted Stock (4) | 1,378,765 | 1,378,765 | 1,378,765 | 1,378,765 | ||||||||||||
Unvested 2015 RSUs | — | (5) | — | (6) | — | (5) | — | (6) | ||||||||
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Total | 2,542,277 | 3,677,277 | 1,378,765 | 1,378,765 |
Involuntary | Involuntary | Death or | Change-in- | |||||
Steven P. Grimes(1)(2) | ||||||||
Cash Severance | 6,252,000 | 8,753,000 | — | — | ||||
Benefits Continuation(3) | 16,326 | 24,489 | — | — | ||||
Unvested Restricted Stock(4) | 3,203,592 | 3,203,592 | 3,203,592 | 118,938 | ||||
Unvested RSUs | —(5) | 5,990,411(6) | —(5) | 2,265,408(7) | ||||
Total | 9,471,918 | 17,971,492 | 3,203,592 | 2,384,346 | ||||
Julie M. Swinehart(1)(2) | ||||||||
Cash Severance | 1,743,500 | 2,208,000 | — | — | ||||
Benefits Continuation(3) | 35,143 | 46,857 | — | — | ||||
Unvested Restricted Stock(4) | 521,153 | 521,153 | 521,153 | — | ||||
Unvested RSUs | —(5) | 1,487,388(6) | —(5) | 557,722(7) | ||||
Total | 2,299,796 | 4,263,398 | 521,153 | 557,722 | ||||
Shane C. Garrison(1)(2) | ||||||||
Cash Severance | 2,628,000 | 3,309,000 | — | — | ||||
Benefits Continuation(3) | 35,143 | 46,857 | — | — | ||||
Unvested Restricted Stock(4) | 1,686,417 | 1,686,417 | 1,686,417 | 61,680 | ||||
Unvested RSUs | —(5) | 3,126,678(6) | —(5) | 1,182,866(7) | ||||
Total | 4,349,560 | 8,168,952 | 1,686,417 | 1,244,546 |
(1) | The amounts described do not include payments and benefits to the extent they have been earned prior to the termination of employment or are provided on a non-discriminatory basis to salaried employees upon termination of employment. These include: |
Accrued salary and vacation pay;
Distribution of plan balances under our 401(k) plan;
Life insurance proceeds in the event of death; and
Disability insurance payouts in the event of disability.
§ | Accrued salary and vacation pay; |
§ | Distribution of plan balances under our 401(k) plan; |
§ | Life insurance proceeds in the event of death; and |
§ | Disability insurance payouts in the event of disability. |
(2) | In the event that any payments and benefits to be paid or provided to a Named Executive Officer would be subject to “parachute payment” excise taxes under the Internal Revenue Code of 1986, as amended, such Named Executive Officer’s payments and benefits will be reduced to the extent necessary to avoid such excise taxes, but only if such a reduction of pay or benefits would result in a greater after-tax benefit to such Named Executive Officer. |
(3) | Benefits continuation amounts are based on the actual expense for financial reporting purposes for covering an employee under the medical plan |
(4) | For all Named Executive Officers, for all awards granted prior to 2017, outstanding shares of restricted stock fully vest upon a change-in-control, a Named Executive Officer’s termination upon death or disability or termination by us without cause. In 2017, we modified our form of restricted stock agreement for future awards to eliminate single-trigger vesting in the event of a change-in-control. In addition, pursuant to the retention agreements we have entered into with each of our Named Executive |
(5) | Does not include any amounts because the performance-based restricted stock units will remain subject to the achievement of performance-based vesting conditions through the end of the performance |
(6) | Represents (i) the number of |
of the shares of common stock that would have been issued to pay the accumulated value of dividends that would have been paid during the performance period on the shares earned. |
(7) | Represents (i) the number of performance-based restricted stock units granted in 2018 and 2019 that would have vested multiplied by $13.40, which was the closing price of our common stock on the NYSE on December 31, 2019, plus (ii) the value of the shares of common stock that would have been issued to pay the accumulated value of |
In the event of a change-in-control as of December 31, 2015, Mr. Byrne would not have earned any of his performance-based restricted stock units as performance would have been below the threshold payout level.
On December 16, 2015, Mr. Holland notified us that he will be retiring on June 30, 2016. In connection with Mr. Holland’s retirement, the Committee approved the removal of the requirement that Mr. Holland remain employed in order to vest his outstanding shares of restricted stock that would not otherwise automatically vest, subject to his continued employment through June 30, 2016. As of December 31, 2015, the value of Mr. Holland’s outstanding unvested shares of restricted stock was $1,378,765 based on the closing market price of our common stock on the NYSE on December 31, 2015.
None of the Named Executive Officers other than Mr. Holland were eligible for retirement, as defined in the applicable award agreements, as of December 31, 2015.2019. Retirement is defined to mean resignation from the employment with us on or after the date that (i) the Named Executive Officer is at least 50 years old and the sum of his or her age and his or her years of employment with us is 70 or greater; (ii) the Named Executive Officer provides written notice to us at least 90 days prior to the anticipated resignation date; and (iii) the Named Executive Officer continues to work for us through the anticipated resignation date. If the Named Executive Officers had been eligible for retirement and had retired as of December 31, 2015,2019, each Named Executive Officer would have been entitled to accelerated vesting of the restricted stock awards granted in February, May2016 and Augustthereafter, other than Ms. Swinehart who would have been entitled to accelerated vesting of 2015,the restricted stock awards granted in 2017 and thereafter only, and as of December 31, 2015,2019, based on the $13.40 closing price of our common stock on the NYSE on December 31, 2015 of $14.77,2019, the Named Executive Officers would have received the following amounts: Mr. Grimes — $4,001,887; Mr. Fear$3,203,592; Ms. Swinehart — $594,493;$414,449; and Mr. Garrison — $1,853,413;$1,686,417. Ms. Swinehart’s restricted stock award agreements prior to 2017, including the agreement governing her March 2, 2017 restricted stock award for 2016 performance under the non-executive compensation plan, did not provide for accelerated vesting upon retirement.
Pursuant to a mandate of the “Dodd-Frank Wall Street Reform and Consumer Protection Act,” the SEC adopted a rule requiring annual disclosure of the ratio of a company’s median employee’s total annual compensation to the total annual compensation of a company’s principal executive officer. Our principal executive officer is Mr. Holland — $1,084,989.
As permitted by Item 402(u) of Regulation S-K, the same median employee that was selected in 2018 was used in this year’s calculation, as we believe there has been no change to the employee population or compensation program structure that would result in a significant change to our pay ratio disclosure for 2019. That employee was initially identified using total annual compensation, excluding long-term equity incentives as such compensation is not broadly granted throughout the Company. The total annual compensation of all employees, other than Mr. Grimes, who were employed as of the last pay date of 2018 (whether such employees were employed full-time, part-time or on a seasonal basis) were ranked to identify the median employee.
The CommitteeECC monitors our compensation policies and practices for itsour employees to determine whether they encourage unnecessary or excessive risk-taking. Due to the greater emphasis placed on incentive compensation at higher levels of the organization, and the fact that these individuals are more likely to make decisions that impact corporate performance and could have a material adverse effect on us, the CommitteeECC primarily focuses on our executive compensation policies and practices. We believe that risks arising from our policies and practices for compensating employees are not reasonably likely to have a material adverse effect on usthe Company primarily because of the following reasons:
there are downside risks associated with pursuing poor business/strategic alternatives, including failure to meet goals under our incentive compensation program and decline in value of shares of restricted stock and performance-based restricted stock units previously granted under our incentive compensation program that are subject to various vesting requirements;
§ | there are downside risks associated with pursuing poor business strategies or strategic alternatives, including failure to meet goals under our incentive compensation program and decline in value of shares of restricted stock and performance-based restricted stock units |
our executive compensation program has a significant focus on long-term equity compensation;
previously granted under our incentive compensation program that are subject to various vesting requirements; |
the goals for our incentive compensation program are aligned with long-term performance objectives/metrics, reflect a balanced mix of individual and company goals aligned with our strategic objectives, are both quantitative and qualitative and provide a comprehensive framework for assessing performance;
§ | our executive compensation program has a significant focus on long-term equity compensation; |
incentive compensation opportunities are capped and therefore do not incentivize employees to maximize short-term performance at the expense of long-term performance;
§ | the goals for our incentive compensation program are aligned with long-term performance metrics, reflect a balanced mix of individual and company goals aligned with our strategic objectives, are both quantitative and qualitative and provide a comprehensive framework for assessing performance; |
our compensation levels and opportunities are in keeping with appropriate competitive practice; and
§ | short-term or annual incentive compensation opportunities are capped and therefore do not incentivize employees to maximize short-term performance at the expense of long-term performance; |
§ | our compensation levels and opportunities are in line with appropriate competitive practice; and |
our executives and directors are expected to maintain an ownership interest in us, which aligns their interests with those of our stockholders.
§ | our executives and directors are expected to maintain an ownership interest in the Company, which creates an alignment of their interests with those of our stockholders. |
Executive and Director Compensation Process
Overall, the Executive Compensation CommitteeECC is responsible for determining and approving the compensation of all of our executive officers;officers, provided that all equity awards to be granted are also subject to the approval of the Board. The Board is responsible for approving the compensation of our non-employee directors;directors, provided that the Executive Compensation CommitteeECC may make recommendations to the Board with respect to non-employee director compensation.
The Executive Compensation CommitteeECC typically meets several times each year in connection with the consideration and determination of executive compensation. Historically, most actions of the Executive Compensation CommitteeECC have occurred at regular meetings scheduled well in advance by the Executive Compensation Committee;ECC; however, the Executive Compensation CommitteeECC may hold special meetings or take actions by written consent as they deem appropriate. Specific meeting agendas are prepared by the chair of the Executive Compensation CommitteeECC and our Chief Executive Officer, although they reflect the direction of the full Executive Compensation Committee.ECC. Matters to be acted on by written consent may relate to matters that have been previously discussed and/or are summarized by our Chief Executive Officer, a consultant engaged by the Executive Compensation CommitteeECC or other advisor to us or the Executive Compensation Committee.ECC.
For 2015,2019, our Chief Executive Officer made recommendations to the Executive Compensation CommitteeECC regarding base salaries and the target amounts, structure and goals for our incentive compensation program, provided detailed information to the Executive Compensation CommitteeECC regarding the performance of
our other Named Executive Officers during 20152019 and made recommendations regarding payouts under our incentive compensation program. In addition, our Chief Executive Officer provided the Executive Compensation CommitteeECC with the financial and other information necessary to determine whether the company goals and each Named Executive Officer’s individual goals with respect to annual cash incentive awards had been achieved.
As noted above in “Compensation Discussion and Analysis,” the Executive Compensation CommitteeECC engaged SH&P in the beginning of 2018, and FW Cook in July 2018 to replace SH&P, to assist them in conducting a comprehensive review of our executive compensation programs and levels. In July 2014, SH&P prepared2018, FW Cook presented a written report providing a thorough analysis of our executive compensation programs, including (i) a marketplace review of compensation levels for our Named Executive Officers relative to our 2019 peer group, (ii) an internal analysis which involveda review of the documents governing our current executive compensation levelsshort-term and programslong-term incentive plans and an external analysis which involved review of the 2015program designs at our 2019 peer group, and (iii) SH&P’s recommendations regarding the overall designform and amount of our executive compensation program for 2015. Following the delivery of this written report, the Executive Compensation Committee consulted with SH&P during late 2014 and early 2015 regarding our executive compensation programs.2019. This report and the Executive Compensation Committee’sECC’s consultations with SH&P and FW Cook primarily related to and were used for purposes of structuring 20152019 executive compensation. FW Cook also advised the Company on its long-term equity compensation plan. The Executive Compensation CommitteeECC retained direct responsibility for the appointment, compensation and oversight of the work of each of SH&P and FW Cook and instructed each of SH&P and FW Cook to report directly to the Executive Compensation Committee.ECC. We have concluded that the work of each of SH&P and FW Cook did not raise any conflict of interest.
The Executive Compensation CommitteeECC and, with respect to equity awards, the independent members of the
Board ultimately made all determinations regarding compensation payable to our Named Executive Officers and the terms of their retention agreements, as applicable.Officers.
The Board and Executive Compensation Committeethe ECC review our director compensation on an annual basis. The Board is responsible for approving the compensation of our non-employee directors;directors, provided that the Executive Compensation CommitteeECC may make recommendations to the Board with respect to non-employee director compensation. Additionally, our Chief Executive Officer may also make recommendations or assist the Executive Compensation CommitteeECC in making recommendations regarding director compensation. In 2014,2018, the Executive Compensation CommitteeECC engaged SH&P and FW Cook to perform a comprehensive review of our director compensation, which included benchmarking the compensation of our Board relative to a peer group, and make recommendations for our future director compensation; the results of this review and recommendations were used in determining director compensation for 2015.2019.
Director and Officer Stock Ownership Guidelines
Our
The Board believes it is important to align the interests of the directors, our Chief Executive Officer and senior managementour other Named Executive Officers with those of our stockholders and for the directors, our Chief Executive Officer and senior managementour other Named Executive Officers to hold equity ownership positions in us.the Company. Accordingly, we have established stock ownership guidelines pursuant to which each of the following persons is expected to own an aggregate number of shares of common stock, or phantom sharesincluding restricted stock, in us,the Company, whether vested or not, with the following aggregate market values:
Position | Equity Ownership Guideline | |||
Non-employee director | $ | 375,000 | ||
Chief Executive Officer | 5x annual base salary | |||
Other Named Executive Officers | 3x annual base salary |
Position | Equity | |
Non-employee director | $375,000 | |
Chief Executive Officer | 5x annual base salary | |
Other Named Executive Officers | 3x annual base salary |
Our non-employee directors, Chief Executive Officer and other Named Executive Officers are expected to gain compliance with these ownership guidelines by the later of (1) the end of the fifth full fiscal year following the year in which he or she was initially elected as a director or appointed as a director, the Chief Executive Officer or aother Named Executive Officer or (2) December 31, 2017.Officer. Thereafter, compliance with these ownership guidelines will be measured as ofat the end of each fiscal year thereafter.
For purposes of these ownership guidelines, the value of shares of common stock and phantom sharesrestricted stock shall be the greater of the market price of an equivalent number of shares of our Class A common stock (1) on the date of purchase or grant of such shares or (2) as of the date compliance with these ownership guidelines is measured.
Any director who is prohibited by law or by applicable regulation of his or her employer from owning equity in us shall be exempt from this requirement. For directors who are employed by or are otherwise are affiliated with a stockholder of us,the Company, the shares owned by the affiliated entity are attributed to the director for purposes of these ownership guidelines. OurThe NCG Committee may consider whether exceptions should be made for any director on whom this requirement could impose a financial hardship.
Executive Compensation Committee Report
Our Executive Compensation Committee
The ECC has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Executive Compensation CommitteeECC recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
Submitted by the Executive Compensation Committee
Richard P. Imperiale (Chairman)
Bonnie S. Biumi (Chair)
Frank A. Catalano, Jr.
Gerald M. Gorski
Richard P. Imperiale
Peter L. Lynch
Thomas J. Sargeant
Equity Compensation Plan Information
The following table sets forth information as of December 31, 2015 regarding:2019 regarding the: (i) the number of shares of our common stock to be issued upon the exercise of outstanding options, warrants and rights, (ii) the weighted average exercise price of such options, warrants and rights, and (iii) the number of shares of our common stock remaining available for future issuance under our equity compensation plans other than outstanding options, warrants and rights.
Plan category | Number of Shares of Common Stock to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Shares of Common Stock Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities referenced in Column (a)) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity Compensation Plans Approved by Stockholders | 227,630 | (1) | $ | 19.39 | (1) | 2,833,695 | (2) | |||||
Equity Compensation Plans Not Approved by Stockholders | N/A | N/A | N/A |
Plan Category | Number of | Weighted | Number of Shares referenced |
(a) | (b) | (c) | |
Equity Compensation Plans Approved by Stockholders | 1,692,842(1)(2) | $15.87(3) | 5,885,257(4) |
Equity Compensation Plans not Approved by Stockholders | N/A | N/A | N/A |
(1) | Includes |
(2) | Excludes shares of common stock issuable to pay accrued dividend equivalents on earned performance-based restricted stock units. |
(3) | Because there is no exercise price associated with |
Represents shares of common stock remaining available for issuance under our Amended and Restated 2014 Long-Term Equity Compensation Plan. |
The table above excludes 534,920 shares of restricted stock that the Company had outstanding as of December 31, 2019.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
The Company has a Related Person Transaction Approval and Disclosure Policy for the review, approval or ratification of any related person transaction. This written policy provides that all related person transactions must be reviewed and approved by a majority of the disinterested directors on the Board in advance of us or any of our subsidiaries entering into the transaction; provided that, if we or any of our subsidiaries enter into a transaction without recognizing that such transaction constitutes a related person transaction, the approval requirement will be satisfied if such transaction is ratified by a majority of the disinterested directors on the Board promptly after we recognize that such transaction constituted a related person transaction. Disinterested directors are directors that do not have a personal financial interest in the transaction that is adverse to our financial interest or that of our stockholders. The term “related person transaction” refers to a transaction required to be disclosed by us pursuant to Item 404 of
Regulation S-K (or any successor provision) promulgated by the SEC. This policy is in addition to, and not a substitute of, any other policy of the Company relating to approval of conflict of interest transactions. There were no such related person transactions
During 2019, Mr. Jason Garrison, the brother of Mr. Shane Garrison, our President and Chief Operating Officer, a Named Executive Officer, was employed by the Company in 2015.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of February 29, 2016March 24, 2020 regarding the number and percentage of shares beneficially owned by: (i) each director and nominee; (ii) each Named Executive Officer; (iii) all directors and Named Executive Officersexecutive officers as a group; and (iv) each person known by us to be the beneficial owner of more than 5% of any class of our outstanding common stock. Percentages in the following table are based on 237,346,768214,121,973 shares of common stock outstanding, which was the amountnumber of shares outstanding as of February 29, 2016,March 24, 2020, plus for each person, the number of shares that person has the right to acquire within 60 days after such date. None of the directors or Named Executive Officers own Series A preferred stock except as set forth below:
Total Common Stock | ||||||||
Name and Address of Beneficial Owners (1) | Number of Shares (2) | Percent of Class | ||||||
Directors, Director Nominees and Named Executive Officers | ||||||||
Bonnie S. Biumi | 6,153 | * | ||||||
Gerald M. Gorski (3) | 34,202 | * | ||||||
Frank A. Catalano, Jr. (4) | 34,875 | * | ||||||
Paul R. Gauvreau (4) | 72,138 | * | ||||||
Richard P. Imperiale (5) | 40,546 | * | ||||||
Peter L. Lynch | 11,654 | * | ||||||
Kenneth E. Masick (5) | 42,746 | * | ||||||
Thomas J. Sargeant (6) | 30,536 | * | ||||||
Steven P. Grimes | 375,449 | * | ||||||
Heath R. Fear | 47,630 | * | ||||||
Shane C. Garrison (7) | 174,162 | * | ||||||
Dennis K. Holland | 101,417 | * | ||||||
All directors and Named Executive Officers as a group (12 persons) | 971,508 | * | ||||||
5% Holders | ||||||||
The Vanguard Group, Inc. (8) | 33,509,661 | 14.12 | % | |||||
Cohen & Steers (9) | 26,810,594 | 11.30 | % | |||||
Vanguard Specialized Funds (10) | 17,072,358 | 7.19 | % | |||||
BlackRock, Inc. (11) | 15,705,709 | 6.62 | % | |||||
Daiwa Asset Management Co. Ltd. (12) | 13,410,254 | 5.65 | % |
Total Common Stock | ||||
Name and Address of Beneficial Owners(1) | Number of | Percent of | ||
Directors, Director Nominees and Named Executive Officers | ||||
Gerald M. Gorski(3) | 65,775 | * | ||
Bonnie S. Biumi | 45,460 | * | ||
Frank A. Catalano, Jr.(4) | 67,782 | * | ||
Robert G. Gifford | 35,176 | * | ||
Richard P. Imperiale(4) | 80,553 | * | ||
Peter L. Lynch | 48,961 | * | ||
Thomas J. Sargeant | 71,743 | * | ||
Steven P. Grimes | 769,621 | * | ||
Shane C. Garrison | 398,743 | * | ||
Julie M. Swinehart | 81,504 | * | ||
All directors and executive officers as a group (10 persons) | 1,665,318 | * | ||
5% Holders | ||||
The Vanguard Group, Inc.(5) | 32,025,410 | 14.96% | ||
Blackrock, Inc.(6) | 14,782,715 | 6.90% |
* | Less than 1% of the total shares of common stock outstanding. |
(1) | The address of each of the persons listed below is 2021 Spring Road, Suite 200, Oak Brook, |
(2) | Beneficial ownership includes outstanding shares and shares which are not outstanding that any person has the right to acquire within 60 days after the date of this table. However, any such shares which are not outstanding are not deemed to be outstanding for the purpose of computing the percentage of outstanding shares beneficially owned by any other person. Except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investing power with respect to all shares beneficially owned by them. |
(3) | Includes |
(4) | Includes |
(5) |
Information regarding The Vanguard Group, Inc. |
Information regarding BlackRock, Inc. |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC and the NYSE. Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on our review of the copies of such reports furnished to us and written representations that no other reports were required during the fiscal year ended December 31, 2015, all Section 16(a) filing requirements applicable to our executive officers, directors and greater than 10% beneficial owners were timely satisfied.
PROPOSAL 2 — ADVISORY RESOLUTION ON
EXECUTIVE COMPENSATION
Section 14A(a)(1) of the Exchange Act generally requires each public company to include in its proxy statement an advisory resolution subject to a non-binding stockholder vote to approve the compensation of the Company’s named executive officers, as disclosed in its proxy statement pursuant to Item 402 of Regulation S-K, not less frequently than once every three years.
At our 20112017 annual meeting of stockholders, we asked our stockholders to select the frequency with which to hold future advisory votes on the compensation of our named executive officers. A majority of the votes cast on the frequency proposal selected an annual vote. Accordingly, we currently intend to conduct an annual stockholder advisory vote on executive compensation in accordance with the stockholders’ vote on the frequency of executive compensation until the next required advisory vote on the frequency of holding the non-binding, advisory vote on executive compensation.compensation, which will occur at the Annual Meeting.
Therefore, we ask stockholders to vote “FOR” the following resolution at the Annual Meeting:
RESOLVED, that the compensation paid to the Company’s named executive officers,Named Executive Officers, as disclosed in this proxy statement for the 20162020 Annual Meeting, including the Compensation Discussion and Analysis, compensation tables and narrative discussions, be, and it hereby is, APPROVED.
The Board recommends a vote FOR this resolution.
We urge stockholders to read the section of this proxy statement captioned “Executive Compensation,” including the Compensation Discussion and Analysis, related compensation tables and narrative discussions contained therein, which provide detailed information on the Company’s compensation policies and practices and the compensation of our Named Executive Officers.
The advisory resolution is non-binding on the Board; however, the Board and the Executive Compensation CommitteeECC will review and consider the voting results when evaluating the executive compensation program for 20162020 and future years.
The affirmative vote of a majority of the votes cast is required to approve the advisory resolution on executive compensation. Abstentions and broker non-votes, if any, will have no effect on the outcome of this matter.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL OF THE ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION.
PROPOSAL 3 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
PROPOSAL 3 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Deloitte & Touche LLP, or Deloitte, as our independent registered public accounting firm to perform the audit of our financial statements and our internal control over financial reporting for the calendar year 2016.2020. Deloitte has audited our financial statements since 2009. The Board recommends that the stockholders ratify the Company’s selection of Deloitte as our independent registered public accounting firm. Although ratification by stockholders is not required by law or by our bylaws, the Board believes that the submission of its selection to stockholders is a matter of good corporate governance. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time if the Audit Committee
believes that such a change would be in the best interests of the Company and its stockholders. If the selection is not ratified, the Audit Committee will take that fact into consideration, together with such other factors it deems relevant, in determining its next selection of independent auditors. One or more representatives of Deloitte are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
Principal Accounting Fees and Services
The following table sets forth the fees for professional audit services rendered for the audits of our annual financial statements by Deloitte and fees for other services rendered by them:
2015 | 2014 | 2019 | 2018 | ||||||||||
Audit Fees (1) | $ | 1,406,825 | $ | 1,365,300 | $1,290,575 | $1,271,700 | |||||||
Audit-Related Fees (2) | 115,000 | 119,000 | |||||||||||
Audit-Related Fees | — | — | |||||||||||
All Other Fees | — | — | |||||||||||
Tax Fees | 189,095 | 207,625 | 120,260 | 176,454 | |||||||||
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Total Fees | $ | 1,710,920 | $ | 1,691,925 | $1,410,835 | $1,448,154 |
(1) | Audit fees include the (i) financial statement audit, (ii) audit of internal controls over financial reporting and |
(2) |
Tax fees primarily consist of fees for the review of federal and state income tax returns. |
The Audit Committee reviews and approves in advance the terms of and compensation for both audit and non-audit services. As stated in our Audit Committee charter, the Audit Committee pre-approves all auditing services and the terms thereof (which may include providing comfort letters in connection with securities underwritings) and non-audit services (other than non-audit services prohibited under Section 10A(g) of the Exchange Act or the applicable rules of the SEC or the PCAOB to be provided to the Company by its independent auditors). The pre-approval requirement may be waived with respect to the provision of non-audit services for the Company if the “de minimus” provisions of Section 10A(i)(1)(B) of the Exchange Act are satisfied. This authority to pre-approve all auditing services and the terms thereof and all non-audit services may be delegated to one or more members of the Audit Committee, provided all decisions to pre-approve an activity are required to be presented to the full Audit Committee at its first meeting following such decision.
The Audit Committee approvedpre-approved 100% of the fees described above.above and none of the services described above were approved pursuant to Rule 2-01(c)(7)(i)(c) of Regulation S-X, which relates to circumstances where the Audit Committee pre-approval requirement is waived.
The affirmative vote of a majority of the votes cast is required to ratify the selection of Deloitte as our independent registered public accounting firm. Abstentions and broker non-votes, if any, will have no effect on the outcome of this matter.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE SELECTION OF DELOITTE AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
MISCELLANEOUS AND OTHER MATTERS
MISCELLANEOUS AND OTHER MATTERS |
Stockholder Proposals for the 20172021 Annual Meeting
Any stockholder proposals submitted pursuant to Exchange Act Rule 14a-8 for inclusion in the Company’s proxy statement and form of proxy for its 20172021 annual meeting of stockholders must be received by the Company on or before December 5, 20164, 2020 in order to be considered for inclusion in its
proxy statement and form of proxy. Such proposals must also comply with the requirements as to form and substance established by the SEC if such proposals are to be included in the proxy statement and form of proxy. Any such proposal should be mailed to: Retail Properties of America, Inc., 2021 Spring Road, Suite 200, Oak Brook, ILIllinois 60523, Attn: Secretary.
In order for stockholder proposals to be properly brought before our 20172021 annual meeting of stockholders, other than stockholder proposals submitted pursuant to Exchange Act Rule 14a-8 for inclusion in the proxy statement and form of proxy for its 20172021 annual meeting, the stockholder must give timely notice thereof in writing to our Secretary not earlier than November 5, 20164, 2020 nor later than December 5, 2016,4, 2020, unless the Company’s 20172021 annual meeting of stockholders is scheduled to take place before April 26, 201728, 2021 or after June 25, 2017.27, 2021. A stockholder’s notice will be timely if it sets forth all information under Section 12 of our bylaws and is received in writing at the Company’s principal executive office not earlier than the 150th day nor later than 5:00 p.m. Eastern timeTime on the 120th day prior to the first anniversary of the date of the notice for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m. Eastern timeTime on the later of the 120th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such meeting is first made.
As of the date of this proxy statement, the above are the only matters we are aware of that are to be acted upon at the Annual Meeting. If any other matter should come before the Annual Meeting, the persons appointed by your proxy will vote on those matters in accordance with the recommendation of the Board, or, in the absence of such a recommendation, in accordance with their discretion. The affirmative vote of the holders of a majority of the votes cast on any such other matter will be required for approval.
Oak Brook, Illinois | By the order of the Board of Directors, /s/ Ann M. Sharp Hult | |
April | 3, 2020 |
Secretary |
YOUR VOTE IS IMPORTANT. THE PROMPT RETURN OF YOUR PROXY, INCLUDING THOSE AUTHORIZED VIA THE INTERNET OR VIA TOUCH-TONE TELEPHONE, WILL SAVE US THE EXPENSE OF FURTHER REQUESTS FOR PROXIES. WE ENCOURAGE YOU TO COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE OR AUTHORIZE YOUR PROXY VIA THE INTERNET OR VIA TOUCH-TONE TELEPHONE, BEFORE THE ANNUAL MEETING SO THAT YOUR SHARES WILL BE REPRESENTED AND VOTED AT THE MEETING.
RETAIL PROPERTIES OF AMERICA, INC.
REVOCABLE PROXY FOR ANNUAL MEETING OF STOCKHOLDERS – May 26, 2016
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
The undersigned stockholder of Retail Properties of America, Inc., a Maryland corporation (the “Company”), hereby appoints Dennis K. Holland and Steven P. Grimes, and each of them, as proxies for the undersigned, and each with full power of substitution and re-substitution, to attend the annual meeting of stockholders to be held at 9:00 a.m. Eastern Time at The Westin Buckhead Atlanta, 3391 Peachtree Road, N.E., Atlanta, Georgia, 30326, on May 26, 2016, or any adjournment or postponement thereof to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at such meeting and otherwise to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, and revokes any proxy heretofore given with respect to such meeting.
THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF THIS PROXY IS EXECUTED BUT NO INSTRUCTION IS GIVEN, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST “FOR” EACH OF THE NOMINEES FOR DIRECTOR, “FOR” THE APPROVAL OF AN ADVISORY RESOLUTION ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AND “FOR” THE RATIFICATION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.MEETING.
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Your telephone or internet proxy authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
AUTHORIZE YOUR PROXY BY PHONE: You will be asked to enter a CONTROL NUMBER which is located in the lower right hand corner of this form.
AUTHORIZE YOUR PROXY BY INTERNET: THE WEB ADDRESS ISwww.proxyvoting.com/RPAI
IF YOU AUTHORIZE YOUR PROXY BY PHONE OR INTERNET—DO NOT MAIL THE PROXY CARD.