SECURITIES EXCHANGE ACT OFof the
☐ Preliminary Proxy Statement | ||||
☐ Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | ||||
☒ Definitive Proxy Statement | ||||
☐ Definitive Additional Materials | ||||
☐ Soliciting Material Pursuant toSection |
SOVRAN SELF
☒ | No fee required. |
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☐ | Fee paid previously with preliminary materials. |
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(I) and 0-11. |
6467 Main Street
Williamsville, New York 14221
Fellow Shareholders,
Life Storage experienced another strong year in 2022. We surpassed one billion dollars in annual revenue, added a record 107 stores to our third-party management platform, launched a kiosk pilot and expanded our digital store operations. We also completed more than one billion dollars of acquisitions for the second year in a row, further diversifying and scaling our platform. With a focus on operational excellence, customer service and innovation, we have built Life Storage into an industry leader, generating strong, profitable growth and significant shareholder value.
As always, the credit for our exceptional results and outperformance goes to the more than 2,500 team members who work tirelessly every day to advance our growth strategy and deliver for our customers. We continue to be impressed by the innovation and relentless focus across the team—they are the driving force of our company and the foundation of our success.
Highlights in 2022 include:
|
Average realized rent per square foot growth of 15.1%
• | Net operating income margin improvement of 250 basis points year-over-year (1) |
• | Core FFO per share growth of 28.4% year-over-year; highest amongst self-storage REITs (1) |
Our strong financial performance allowed us to build on our track record of creating significant value for shareholders. Highlights include:
Increased the Life Storage quarterly dividend to $1.08 in the fourth quarter, reflecting 25.6% growth year-over-year
Delivered total shareholder returns of 101% over the past 5 years
(1) | Net operating income (NOI) and Core FFO per share are non-GAAP measures. Refer to pages 25-26 of our 2022 Annual Report on Form 10-K filed on February 24, 2023, for information regarding NOI, including a reconciliation to GAAP net income. Refer to Appendix A for information regarding Core FFO per share, including a reconciliation to GAAP diluted earnings per share. |
Sustainability growth core to our success
Over the last few years, we’ve been implementing an integrative approach to sustainability across our organization, as illustrated by our second annual sustainability report (https://www.lifestorage.com/company/sustainability). A commitment to sustainability is deeply embedded in our company’s overall growth strategy and shapes many of our strategic efforts. Successfully adopting sustainable practices across all areas of our business allows us to create long-term value for our stakeholders.
Source: | Factset as of March 31, 2023 |
Embarking on our next chapter with Extra Space
A commitment to driving value for shareholders is at the heart of everything we do. It was with this objective in mind that, on April 2, 2023, the Life Storage Board unanimously agreed to combine Life Storage with Extra Space Storage in an all-stock transaction. Following a deliberate and comprehensive review, including engaging with several parties regarding potential transactions, the Board determined that the transaction with Extra Space provides shareholders with an immediate premium, and also allows them to benefit from the tremendous upside of the combined company, whereby Life Storage shareholders would have a significant ownership of approximately 35% of the combined company.
By combining with Extra Space, we will be bringing together two industry-leading platforms with complementary portfolios, operating models and strategic visions to create the preeminent storage operator in America. Our diversified geographic footprints, coupled with our innovative third-party management and joint venture platforms, will provide the combined company with a robust pipeline for continued external growth. Extra Space was attracted to us in large part because they recognize our similarities in culture, strength of our team, technological capabilities and our customer-centric focus. We will have a strong financial profile with robust cash flow generation to invest in growth and build upon both companies’ long track records of industry-leading shareholder returns.
Partnering with Life Storage is also a natural next step in Extra Space’s growth journey. Together, we will be able to build on both companies’ strong foundations to win in the marketplace, deliver best-in-class customer service and drive significant, sustainable value to shareholders.
On behalf of the entire Board, I thank you for your investment and support. We respectfully ask you for your voting support on the items contained in the proxy.
Sincerely, | ||||
Mark G. Barberio | ||||
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Non-Executive Chair of the Board |
April 13, 2023
SOVRAN SELF STORAGE, INC.
6467 Main Street
Williamsville, New York 14221
Dear Shareholder:Shareholders:
You are cordially invited to attend the 2016The Notice and Proxy Statement that follow contain details about our 2023 Annual Meeting of Shareholders (the “Annual Meeting”). Your proxy is being solicited by the Board of Sovran Self Storage, Inc. on Wednesday, May 18, 2016 atDirectors of the Company’s headquarters, 6467 Main Street, Williamsville, New York 14221. The 2016 Annual Meeting will begin promptly at 9:00 a.m. (E.D.T.).
The enclosed Notice and Proxy Statement contain details concerning the business to come before the meeting.Company. You will note that the Board of Directors of the Company recommends a vote “FOR” the election of six Directorsthe eight director nominees named in the proxy statement to serve until the 20172024 Annual Meeting of Shareholders, “FOR” the ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for fiscal year 2016, and“FOR”2023, “FOR” the proposal to approve the compensation of the Company’s executive officers, and “FOR” for a frequency of “One Year” for future advisory votes on the compensation of the Company’s executive officers.
This year’s Annual Meeting will be a meeting held exclusively online via live webcast and will not be held at a physical location. You will be able to attend the Annual Meeting, vote your shares electronically, and submit questions in writing during the meeting by visiting www.virtualshareholdermeeting.com/LSI2023 and entering your unique voter identification number. Additional information regarding attending the Annual Meeting and voting your shares can be found in the Proxy Statement. The vote of every Shareholder is important. You may vote your shares via the toll free telephone number or via the Internet (see instructions on the enclosed proxy card) or you may signimportant, and date the accompanying proxy cardwe believe that hosting a virtual meeting will enable more of our Shareholders to attend and return itparticipate in the postage paid envelope provided. Please note thatmeeting since our Shareholders can participate from any location around the toll free telephone number is available only for calls originating in the United States. For calls from other locations, please see the alternate number provided on the enclosed proxy card. Returning your completed proxy card will not prevent you from voting in person at the meeting should you be present and wish to do so or from changing your vote before the meeting. Please take the time to vote. As explained in theworld with Internet access.
This Proxy Statement you may withdraw your proxy at any time before it is actually voted at the meeting.
If you plan to attend the meeting in person, please remember to bring aand form of personal identification with you and, if youproxy are acting as a proxy for another Shareholder, please bring written confirmation from the record owner that you are acting as a proxy. If you will need special assistance at the meeting, please contact Sovran Investor Relations at (716) 633-1850.
The Board of Directors and management look forwardfirst being made available to greeting those Shareholders who are able to attend the Annual Meeting.
Sincerely,
ANDREW J. GREGOIRE
Secretary
on April 6, 2016
SOVRAN SELF STORAGE, INC.
6467 Main Street
Williamsville, New York 1422113, 2023.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS |
When: | Thursday, May 18, 2023 • 9:00 a.m. (E.D.T.) |
TO THE SHAREHOLDERS OF SOVRAN SELF STORAGE, INC.:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of Sovran SelfLife Storage, Inc. (the “Company” or “Life Storage”), which will be an online webcast meeting accessible at www.virtualshareholdermeeting.com/LSI2023, will be held at the Company’s headquarters, 6467 Main Street, Williamsville, New York 14221, on Wednesday,Thursday, May 18, 2016,2023, at 9:00 a.m. (E.D.T.), to consider and take action on the following:
Items of Business:
Meeting Agenda | Board Recommendation | |
1. The election of |
2. The ratification of the appointment |
|
4. A proposal (on a non-binding basis) on the frequency of holding future advisory votes on the compensation of the Company’s executive officers. | One Year | |
5. The transaction of such other business as may properly come before the meeting or any adjournments thereof. |
FURTHER NOTICE IS HEREBY GIVEN that the stock transfer books of the Company will not be closed, but only Shareholders of record at the close of business on March 18, 2016 will be entitled to notice of the meeting and to vote at the meeting.Record Date:
Shareholders who will be unable to attend the Annual Meeting in person may attend the meeting by proxy. Such Shareholders are requested to complete, date, sign and return the proxy card in the envelope enclosed or to vote their shares by telephone or via the Internet as described on the enclosed proxy card.
FURTHER NOTICE IS HEREBY GIVEN that the stock transfer books of the Company will not be closed, but only Shareholders of record at the close of business on April 10, 2023 will be entitled to notice of the meeting and to vote at the meeting. |
Voting:
Even if you plan to attend the Annual Meeting on the webcast, we ask you to please complete, sign and return the enclosed proxy card or vote your shares by telephone or over the Internet. If you will need special assistance at the meeting, please contact Life Storage Investor Relations at (716) 633-1850. Please note that the Annual Meeting will only be held virtually, and there will be no physical meeting. |
By Order of the Board of Directors,
ANDREW J. GREGOIREAlexander E. Gress
Secretary
Williamsville, New York
April 6, 201613, 2023
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on May 18,
The Proxy Statement and Annual Report on Form 10-K for the year ended December 31, |
SOVRAN SELF STORAGE, INC.
6467 Main Street
Williamsville, New York 14221
PROXY STATEMENT SUMMARY
FORThis summary highlights information contained elsewhere in this Proxy Statement and does not contain all the information that you should consider. You should read the entire Proxy Statement carefully before voting. We intend to mail proxy materials to our shareholders on or about April 13, 2023.
2016 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement and the enclosed form of proxy are furnished in connection with the solicitation of proxies on behalf of the Board of Directors (the “Board of Sovran SelfDirectors” or the “Board”) of Life Storage, Inc. (the “Company”) for the 20162023 Annual Meeting of Shareholders (the “Annual Meeting”) to be held virtually over the Internet on Wednesday,Thursday, May 18, 20162023 at 9:00 a.m. (E.D.T.) at the Company’s headquarters, 6467 Main Street, Williamsville, New York 14221,, and at any adjournment thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. No physical meeting will be held. You will be able to attend the Annual Meeting, vote your shares electronically, and submit your questions during the live webcast of the Annual Meeting by visiting www.virtualshareholdermeeting.com/LSI2023 and entering your unique voter identification number. This Proxy Statement and the enclosed form of proxy are first being mailedmade available to Shareholders on or about April 6, 2016.13, 2023.
ShareholdersVoting Matters
Meeting Agenda | Board Recommendation | |
1. Election of Directors | FOR each nominee | |
2. Ratify the Appointment of Ernst & Young LLP as our Independent Registered Public Accounting Firm | FOR | |
3. Advisory Vote to Approve Compensation of the Company’s Executive Officers | FOR | |
4. Advisory Vote on the frequency of holding future votes on the compensation of the Company’s executive officers. | One Year |
Life Storage, Inc. 2023 Proxy Statement
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COMPANY BRIEF
Life Storage Locations as of December 31, 2022
As of 12/31/22
Life Storage, Inc. 2023 Proxy Statement
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OUR DIRECTORS
PROPOSAL 1. ELECTION OF DIRECTORS
WHAT DID WE DO?
Yet again, we posted another banner year in 2022. We accomplished a record may voteperformance across almost all measures, taking advantage of strong storage fundamentals while implementing new technologies. These new heights were driven by (i) attendingour same-store revenue and net operating income which grew 15.2% and 19.4%, respectively, resulting in our core funds from operations per share growing by 28.4%. These technologies pushed our operational efficiencies further as well leading to improved operating margins of 250 basis points year-over-year with a roadmap to further improve margins in the meetingnear future.
As a team, the Board and votingsenior leadership remain focused on investing in person, (ii) usingpeople, process, and technology, in order to continue progressing towards our long-term sustainable growth while adhering to our core values of teamwork, respect, accountability, integrity, and innovation. Our Board’s guiding principles not only govern our business operations and conduct, but also ensure we consistently deliver long-term value to all of our stakeholders, including our employees, customers, communities, and shareholders.
A few highlights of our leadership focus include:
We continue to innovate and implement new technologies that drive efficiencies across all aspects of our business.
We continued our comprehensive enterprise risk management identification and mitigation efforts.
We identified and set comprehensive strategic goals for senior leadership to continue to enhance our review and governance on executive compensation while ensuring our goals align the toll-free telephone number shownCompany’s progress to long-term sustainable growth.
We ensured robust focus on cybersecurity strategy and measures were in place to protect against unwanted network intrusions.
We reinforced emphasis on Environmental, Social and Governance objectives, including fostering diversity of people and ideas, both among our Board and within the proxy card, (iii) voting viaCompany as we continue to execute on our diversity, equity, and inclusion initiatives.
We continue to focus on our own governance, including succession planning for our Board with a commitment to ensure our Board has diverse representation and perspective when considering candidates. We ensure we maintain an appropriate and comprehensive mix of skills and diversity on our Board.
We continued to expand and evolve our human capital management practices, including those designed to create and maintain a diverse and inclusive work environment. Our diversity, equity and inclusion program helps us cast a wide net to attract diverse and creative talent and create an environment where their differences become our strengths.
Life Storage, Inc. 2023 Proxy Statement
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We remain focused on sustainable, efficient power generation through solar arrays and utilizing energy efficient standards throughout our self-storage facilities. This is an example of aligning ourselves with investors who both want to create value and make the Internet at the address shownworld a better place.
We continue to oversee progress on the proxy card, or (iv) marking, dating, signing and returning the enclosed proxy card. Returning your completed proxy will not preventcompensation plans that have consistently drawn more than 94% shareholder support.
With this background we encourage you from voting in person at the meeting should you be present and wish to do so. The proxy may be revoked at any time before it is voted by deliveringreview our individual bios to get a fuller picture of what each of us brings to the Secretaryboardroom to serve you, Life Storage’s shareholders.
WHO WE ARE
Nominees for Election to the Board of the Company a written revocation or a duly executed proxy (including a telephone or Internet vote) as of a later date, or by attending the Annual Meeting and voting in person. Attendance at the Annual Meeting alone will not act to revoke a prior proxy.Directors
The entire costnumber of preparing, assembling and mailing the proxy material willdirectors to be borne by the Company. The Company will reimburse brokerage firms, banks and other securities custodians for their expenses in forwarding proxy materials to their principals. Solicitations other than by mail may be made by officers or by employees of the Company without additional compensation.
Only Shareholders of record at the close of business on March 18, 2016 are entitled to notice of and to vote at the Annual Meeting and at all adjournments thereof. At the close of business on March 18, 2016, there were issued and outstanding 39,399,691 shares of the Company’s common stock (“Common Stock”). Each share of Common Stock has one vote. A majority of shares entitled to voteelected at the Annual Meeting will constitutebe eight.
As reflected in the skills and demographics matrix and accompanying charts below, the nominees for election to the Board of Directors listed below bring a quorum. Ifdiverse array of attributes, skills and experiences to Life Storage that we believe are important and that led to the conclusion that such nominee should serve as a share is represented for any purpose at the meeting, it is deemed to be present for all other purposes. Abstentions and shares held of record by a broker or its nominee (“Broker Shares”) that are voted on any matter are included in determining whether a quorum is present. Broker Shares that are not voted on any matter at the Annual Meeting will not be included in determining whether a quorum is present.
Note to Beneficial Owners. Under the rulesmember of the New York Stock Exchange (“NYSE”), brokers orBoard of Directors. Among our eight nominees havefor election to the authority to vote shares held for a beneficial owner on “routine” matters, suchBoard, two are female, and two self-identify as the ratificationindividuals from an underrepresented community.1 All nominees are presently members of the selectionBoard of Company’s independent registered public accounting firm, without instructions fromDirectors.
While not an exhaustive listing of vast qualifications of nominees for election to the beneficial ownerBoard of those shares. The electionDirectors, the following are key knowledge, skill and experience qualifications that we believe are essential to the composition of directors and the non-binding vote on the compensationour Board of the Company’s executive officers are considered “non-routine” matters. As a result, if a broker or nominee does not receive voting instructions from the beneficial owner of shares held by such broker or nominee, those shares will not be voted and will be considered broker non-votes with respect to those “non-routine” matters. Therefore, it is very important for beneficial owners holding shares in this manner to provide voting instructions to their broker or other nominee.
The Company has enclosed with this Proxy Statement a copy of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2015, including the financial statements and schedules thereto.Directors:
✓ | Operational Strategy Development and Risk Management |
o | With the ever evolving business environment, it is important for Directors to have extensive experience making strategic operational decisions and identifying and addressing key business risks. This allows our Board of Directors to work closely with executive management in developing and evolving the strategic path for the Company and to identify and adequately respond to key risks, including cybersecurity risks, that arise along that path. |
✓ | Real Estate and Self-Storage Experience |
o | Industry experience is essential to a highly functioning Board of Directors. The real estate industry presents unique operational opportunities, challenges and risks, with the self-storage sector having its own nuance within the industry. Directors with applicable industry experience provide needed oversight and foresight to address specific industry concerns. |
✓ | Financial Literacy |
o | The ability of a Board of Directors to understand and assess financial reports, results and metrics is critical to assessing decisions and the |
Life Storage, Inc. 2023 Proxy Statement
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results that stem from those decisions. Financial literacy is exceedingly important for those members of the Audit and Risk Management Committee who frequently review financial results with an eye toward compliance. |
✓ | Finance and Capital Markets |
o | The Company frequently accesses capital markets to fund growth and expansion. Directors with experience with and insight into capital markets guide management in working toward an optimal capital strategy, while understanding and monitoring the capital market risks involved. |
✓ | Corporate Governance and Compensation |
o | Board members with experience in corporate governance and executive compensation analysis help to assure that the Company is appropriately governed and that the Company’s executive compensation package is competitive and in line with shareholder value creation. |
✓ | Public Company Experience |
o | Public companies are subject to an array of unique regulations and requirements. Directors with public company experience monitor compliance with these regulations, thus protecting shareholder value. |
Life Storage, Inc. 2023 Proxy Statement
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Knowledge, Skills and Experience2 | Mark G. Barberio | Joseph V. Saffire | Stephen R. Rusmisel | Arthur L. Havener, Jr. | Dana Hamilton | Edward J. Pettinella | David L. Rogers | Susan Harnett | ||||||||||||||||||||||||
Operational Strategy Development and Risk Management | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||
Real Estate | X | X | X | X | X | X | X | |||||||||||||||||||||||||
Self-Storage | X | X | X | X | ||||||||||||||||||||||||||||
Financial Literacy | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||
Finance and Capital Markets | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||
Corporate Governance and Compensation | X | X | X | X | X | X | ||||||||||||||||||||||||||
Public Company Executive | X | X | X | X | X | X | ||||||||||||||||||||||||||
Public Company Board* | X | X | X | X | X | |||||||||||||||||||||||||||
Demographics | ||||||||||||||||||||||||||||||||
Underrepresented Communities | ||||||||||||||||||||||||||||||||
Black/African American | ||||||||||||||||||||||||||||||||
Asian/Pacific- Islander | ||||||||||||||||||||||||||||||||
White/Caucasian | X | X | X | X | X | X | ||||||||||||||||||||||||||
Hispanic/Latino | ||||||||||||||||||||||||||||||||
Native American/ Alaska Native | X | |||||||||||||||||||||||||||||||
Middle Eastern/ North African | X | |||||||||||||||||||||||||||||||
Gender | ||||||||||||||||||||||||||||||||
Male | X | X | X | X | X | X | ||||||||||||||||||||||||||
Female | X | X | ||||||||||||||||||||||||||||||
LGTBQ+ | ||||||||||||||||||||||||||||||||
Board Tenure | ||||||||||||||||||||||||||||||||
Years | 8 | 4 | 11 | 8 | 5 | 5 | 5 | 2 |
* | Other than the Company. |
1 | Life Storage’s definition of “underrepresented communities” follows guidance from a number of governmental and investor organizations on this topic – defining race/ethnic diversity at the BOD level – including the Office of Management and Budget (OMB), SEC, Nasdaq, and investor advisory firms Glass Lewis and Institutional Shareholder Services. |
2 | Each listed area of knowledge is important to the Company’s business strategy as they relate to the sector in which the Company operates (real estate, self-storage), the overall business environment (operational strategy development and risk management, public company executive or board), capital procurement and allocation (financial literacy, finance and capital markets), or the high-level functioning of a company (corporate governance and compensation). |
Life Storage, Inc. 2023 Proxy Statement
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DIRECTOR TENURE | DIRECTOR AGE | |
|
INDEPENDENT DIRECTORS | DIVERSITY* | |
1
* | Diversity includes females and self-identification as a member of an underrepresented community as defined above. |
PROPOSAL 1. ELECTION OF DIRECTORS
ItThe Board of Directors is soliciting proxies herein and it is intended that thesuch proxies solicited by the Board of Directors will, unless otherwise directed, be voted to elect the nominees for director named below. Our bylaws requireprovide that in an uncontested election, the affirmative vote of a majority of the total of votes cast for or against or withheld as to, a nominee at a meeting at which a quorum is present is necessary for the election of a director. For purposes of the election of directors, abstentions and broker non-votes, if any, will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum. The nominees proposed are all presently members of the Board of Directors.
Nominees for Election to the Board of Directors
The nominees named herein will, if elected, hold office until the next succeeding Annual Meeting of Shareholders and until their successors are duly elected and qualified. In the event any nominee becomes unavailable to stand for election, it is intended that the persons named in the proxy may vote for a substitute who will be recommended by the Nominating, Governance and Corporate Responsibility Committee of the Board of Directors subject to Board approval. Alternatively, the Board may reduce the size of the Board or may determine to leave the vacancy unfilled. The Board of Directors has no reason to believe that any of the nominees will be unable to serve as directors.
Set forth below is
Life Storage, Inc. 2023 Proxy Statement
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Mark G. Barberio Age: 60 Chair of the Board Independent: Yes Director Since: 2015 |
Experience:
Principal, Markapital, LLC, a brief descriptionbusiness and M&A consulting firm (2013 – present)
• | Co-Chief Executive Officer, Mark IV, LLC (now Dayco, LLC), a global diversified manufacturing company (2009 – 2013); Chief Financial Officer (2004 – 2013); joined 1985 |
Other Boards:
Gibraltar Industries, Inc., a publicly listed leading manufacturer and distributor of building products (present)
• | Endo International plc, a publicly listed pharmaceutical company; non-executive Chair (present) |
Rochester Institute of Technology Board of Trustees (present)
Exide Technologies, a privately held global battery manufacturer and distributor (2015 – 2020)
Paragon Offshore Limited, an oil and gas drilling company (2017 – 2018)
Qualification Experience:
Operational strategy development
Finance and capital markets
Real estate
Financial literacy
Corporate Governance and compensation
Public company executive and board experience including experience with investor relations
Joseph V. Saffire Age: 53 CEO and Director Independent: No Director Since: 2019 |
Experience:
Chief Executive Officer of the businessCompany (March 1, 2019 – present); Chief Investment Officer of the Company (November 2017 – February 2019)
Executive Vice President and Head of Commercial Banking, First Niagara Bank (2014 – 2016)
Executive Vice President and Head of Global Banking for Europe, the Middle East and Africa, Wells Fargo Bank (2012 – 2014)
Chief Operating Officer and Head of International Corporate and Commercial Banking in Germany, HSBC Bank plc (2010 to 2012); Executive Vice President and Regional President – Corporate and Commercial Banking in the United States (2007 – 2010); joined 1992
Qualification Experience:
Operational strategy development
Finance and capital markets
Real estate and self-storage
Financial literacy
Public company executive including experience duringwith investor relations
Life Storage, Inc. 2023 Proxy Statement
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Stephen R. Rusmisel Age: 77 Director Independent: Yes Director Since: 2012 |
Experience
Founder and principal, V1 Funding LP, a consulting and private investment firm (2019 – present)
Partner, Pillsbury, Winthrop, Shaw, Pittman LLC (and its predecessor firm, Winthrop, Stimson, Putnam & Roberts) (1980 – 2016)
Lead Independent Director of the last five years of each of our nominees for election as directors. This description also includes the principal occupation of, and directorships held, by each director for at least the past fiveCompany (2014 – 2018)
During his more than 45 years as well as the specific experience, qualifications, attributesan attorney, counseled clients in general corporate, securities, and skills that ledbusiness matters, with an emphasis on M&A, provided advice to the conclusion that each director should serve as a memberaudit committees of public companies, and made numerous presentations to boards of directors regarding board fiduciary duties, corporate governance matters, risk management and transactional matters
Lectured and published numerous articles on corporate governance and transactional issues
Other Boards:
Church of the Blessed Sacrament Board of Directors.Trustees; finance counsel chair (present)
The Swedish American Chamber of Commerce of New York, Inc. (2006 – 2011)
Qualification Experience:
Name | Age | Director Since | Independent | Business Experience | ||||
Robert J. Attea | 74 | 1995 | No | Chairman of the Board and Director of the Company since 1995 and Chief Executive Officer of the Company from March 1997 to February 29, 2012. Mr. Attea is one of the founders of the Company and has more than 40 years of experience in the commercial real estate industry and more than 30 years in the self-storage industry. He brings to the Board of Directors extensive experience in the acquisition, disposition and development of commercial real estate. He also is a key contributor in the development and execution of the Company’s business strategy and provides invaluable expertise related to the self-storage industry. This industry experience coupled with his intimate knowledge of the Company enables him to make invaluable contributions to the Board of Directors and the Company’s success. Mr. Attea is the brother-in-law of Edward F. Killeen, Chief Operating Officer of the Company. | ||||
Kenneth F. Myszka | 67 | 1995 | No | President of the Company since March 1997 and Chief Operating Officer of the Company from March 1997 to January 19, 2015. Mr. Myszka is one of the founders of the Company and has more than 30 years of experience in the self-storage industry. He is a certified public accountant and a graduate of the University of Buffalo Law School. He brings to the Board extensive experience in systems development, marketing and product innovations. Also, his legal and accounting background and in-depth experience in |
Corporate governance and compensation
Operational strategy development
Risk Management
Real estate and self-storage
Financial literacy
Finance and capital markets
Arthur L. Havener, Jr. Age: 56 Director Independent: Yes Director Since: 2015 |
Experience:
Principal, Stampede Capital LLC, a real estate advisory and investment firm (2007 – present)
Vice President and head of real estate, A.G. Edwards and Sons Inc. –(2002 – 2007)
Graduate Director Education Program – Institute of Corporate Directors
Other Boards:
Nobility Homes, Inc., a builder and retailer of manufactured homes (present)
Boardwalk REIT, a public Canadian Real Estate Investment Trust, Lead Trustee (2007 – 2022)
MDC North American Real Estate Fund I, a private real estate equity fund (2007 – 2009)
Alderman and Chair of the Finance Committee in the municipality of Sunset Hills, Missouri (formerly)
Qualification Experience:
Real estate and self-storage, including REIT strategy
Corporate governance and compensation
Operational strategy development
Finance and capital markets, including private equity experience
Financial literacy
Public company board
2
Name | Age | Director Since | Independent | Business Experience | ||||
human relations provides the Board of Directors with valuable perspectives in the development and execution of the Company’s business strategies and otherwise. In addition, he has an intimate knowledge of the Company’s day-to-day operations, which gives him a detailed understanding of the Company’s business strategy and operations. | ||||||||
Charles E. Lannon | 68 | 1995 | Yes | Mr. Lannon is and has been the President of Strategic Advisory, Inc. (formerly known as Strategic Capital, Inc.), a consulting firm, since 1995. Through Strategic Advisory, Inc., Mr. Lannon has provided consulting and advisory services to many companies seeking capital, transactional and financial guidance. Also, since 1995 he has served as an executive officer and on the board of several non-public companies. In addition, in 2013 he joined the board of Royal Oak Realty Trust Inc., a private REIT, were he currently is the lead independent director and serves on the audit, governance, and compensation committees. Prior to 1995, Mr. Lannon was involved in the self-storage industry for over 10 years. Such collected experience allows him to provide the Board of Directors with significant assistance related to investor relations, strategic and transactional matters. He also has an excellent understanding of corporate governance trends and the role of the Board of Directors which enables him to well serve the Company as chair of its Governance Committee and as a member of the Audit Committee. | ||||
Stephen R. Rusmisel | 70 | 2012 | Yes | Mr. Rusmisel was a partner of the law firm of Pillsbury, Winthrop, Shaw, Pittman LLC (and its predecessor firm, Winthrop, Stimson, Putnam & Roberts) from January 1, 1980 to January 31, 2016. He received his J.D. degree from the University of Virginia School of Law in 1971 and his A.B degree from Yale University in 1968. During his more than 40 years as an attorney, he counseled clients in general corporate, securities and business matters with an emphasis on mergers and acquisitions. He also provided advice to audit committees of public companies, and he has made numerous presentations to the Boards of Directors of public companies regarding board fiduciary duties, corporate governance matters and transactional matters. He has frequently lectured and published numerous articles on corporate governance and transactional issues. As a result of Mr. Rusmisel’s experience, he brings to the Company well grounded experience in corporate governance, accounting, finance and enterprise risk management. |
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Dana Hamilton Age: 54 Director Independent: Yes Director Since: 2018 |
Experience:
• | Senior advisor, Pretium Partners, LLC, a specialized investment manager (2022 – present). Previously, senior managing director and co-head of real estate (2017 – 2022) |
• | Co-founder, Ameriton LLC, a real estate company, serving as President (2014 – present) |
President and Chief Executive Officer, and trustee, Borderplex Community Trust (2013 – 2014)
Spent 20 years at Archstone, one of the largest apartment companies in the US and Europe, where she held roles as President – Europe and Executive Vice-President – National Operations (1994 – 2013)
Other Boards:
FelCor Lodging Trust Incorporated, a publicly listed real estate investment trust (2016 – 2017, when the company was merged with RLJ Lodging Trust)
Qualification Experience:
Operational strategy development, including transactional matters
Finance and capital markets
Real estate
Financial literacy
Corporate Governance and compensation
Public company executive and board experience
Edward J. Pettinella Age: 71 Director Independent: Yes Director Since: 2018 |
Experience:
Chief Executive Officer and director, Home Properties Inc., a publicly traded REIT (2003 – 2015); Executive Vice President (2001 – 2003)
President, Charter One Bank of New York; Executive Vice President of Charter One Financial, Inc. (1997 – 2001)
Served in several managerial capacities for Rochester Community Savings Bank (1980 – 1997)
Other Boards:
Manning & Napier, Inc., a publicly traded investment management firm (present)
Royal Oak Realty Trust Inc., a private REIT (present)
Syracuse University Board of Trustees; Vice Chair (present)
Board of Governors of the National Association of Real Estate Investment Trusts (formerly)
Urban Land Institute (formerly)
National Multi Housing Council (formerly)
Qualification Experience:
Operational strategy development
Finance and capital markets
Real estate, including REIT strategy
Financial literacy
Corporate Governance and compensation
Public company executive and board experience
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Name | Age | Director Since | Independent | Business Experience | ||||
Arthur L. Havener, Jr. | 49 | 2015 | Yes | Mr. Havener is and has been since 2007 principal of Stampede Capital LLC, which provides real estate consulting support to publicly traded real estate investment trusts and institutional investors. Prior to forming Stampede Capital LLC, he was a Vice President of A.G. Edwards and Sons Inc., and Head of Real Estate Research from 2002 to 2007. Mr. Havener also serves on the Board of Trustees of Boardwalk REIT, a Canadian Real Estate Investment Trust traded on the Toronto Stock Exchange. As a result of Mr. Havener’s experience, he brings to the Board significant experience in real estate investment, corporate governance, securities and REIT matters. | ||||
Mark G. Barberio | 53 | 2015 | Yes | Mr. Barberio is and has been principal of Markapital, LLC since 2013. Markapital, LLC is a business and M&A consulting firm. Prior to forming Markapital, LLC, Mr. Barberio was employed by Mark IV, LLC (now Dayco, LLC) a global diversified manufacturing company from 1985 to 2013. He served in a variety of positions at Mark IV, including as Co-Chief Executive Officer from 2009 to 2013 and Chief Financial Officer from 2004 to 2013. Mr. Barberio also serves on the board of directors of Exide Technologies, a privately held global battery manufacturer and distributor for transportation and industrial applications. As a result of Mr. Barberio’s experience, he brings to the Board well-grounded experience in accounting, corporate governance, operational oversight, business strategy and investor relations. His accounting and other experience also allows him to provide leadership as the Chair of the Company’s Audit Committee. |
David L. Rogers Age: 67 Director Independent: No Director Since: 2018 |
Experience:
• | Co-founder of the Company; Chief Executive Officer (March 2012 – February 28, 2019); Chief Financial Officer and Secretary (1995 – February 2012); Vice President of Finance of the Company’s predecessor (1988 – 1995); Controller and Due Diligence Officer of such predecessor (1984 – 1988) |
Spent seven years as an accountant and systems analyst in both the public and private sectors
Regular presenter at national and regional meetings of the Self Storage Association
Other Boards:
• | Catholic Health Systems and other not-for-profit entities (present) |
Board of Advisors of the National Association of Real Estate Trusts (NAREIT) (former)
Qualification Experience:
Operational strategy development, including extensive company knowledge
Finance and capital markets
Real estate and self-storage
Financial literacy
Public company executive
Susan Harnett Age: 66 Director Independent: Yes Director Since: 2021 |
Experience:
Mentor to digital startups and at the FinTech Innovation Lab, sponsored by Partnership Fund for New York City and Accenture (2015 – present)
Limited Partner – How Women Invest
• | Co-Founder of startup Juntos |
National Association of Corporate Directors – Certified Director (2021).
DCRO Qualified Risk Director (2021).
COO, North America, QBE Insurance Group Limited, one of the top insurers and reinsurers worldwide (2012 – 2015)
Various senior level executive roles at Citi (2001 – 2012)
Other Boards:
OFG Bancorp, a financial holding company based in San Juan, Puerto Rico (present)
GoalSetter (present)
American Enterprise Group (present)
Sphere 3D (present)
First Niagara Financial Group, a publicly traded bank (2015-until its acquisition by KeyCorp in 2016)
QBE Insurance, Citifinancial, CitGermany Management Board, Visa Canada (all former)
Qualification Experience:
Operational strategy development
Finance and capital markets
Financial literacy
Corporate Governance and compensation
Public company executive and board experience
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE ELECTION OF EACH OF THE NOMINEES NAMED ABOVE.
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HOW NOMINEES ARE SELECTED AND ELECTED
In identifying and evaluating the individual director nominees that it recommends to the Board of Directors, the Nominating, Governance and Corporate Responsibility Committee of the Board of Directors:
(i) | reviews the qualifications of any candidates who have been properly recommended or nominated by a Shareholder, by management, by individual members of the Board of Directors or, a search firm; |
(ii) | evaluates the performance and qualifications of individual members of the Board of Directors eligible for re-election; |
(iii) | considers the suitability of each candidate, including the current members of the Board of Directors, in light of the current size and composition of the Board of Directors; |
(iv) | considers each candidate in the context of the needs of the Board of Directors, as a whole; and |
(v) | seeks assurances from each candidate that such candidate will be readily available and timely respond to Board matters. |
After such review and consideration, the Nominating, Governance and Corporate Responsibility Committee recommends that the Board of Directors select the slate of director nominees.
The Nominating, Governance and Corporate Responsibility Committee does not have an express policy with regard to consideration of director candidates recommended by Shareholders, but it will consider director candidates proposed by Shareholders in the same manner as it considers other candidates. The Board of Directors and the Nominating, Governance and Corporate Responsibility Committee believe that candidates must be highly qualified, exhibiting the experience and expertise required of the Board of Directors’ own pool of candidates and interest in the Company’s business, and the ability to attend and prepare for Board of Directors, committee and Shareholder meetings. Candidates should represent the interests of all Shareholders and not those of a special interest group. A Shareholder wishing to nominate a candidate should do so in accordance with the guidelines set forth below under the caption “Proposals of Shareholders for the 2024 Annual Meeting.”
The Nominating, Governance and Corporate Responsibility Committee is committed to incorporating diversity in all its forms including diversity of attributes, skills, experiences, backgrounds, and demographics, including race, ethnicity, and gender, all with a view to identify candidates that can assist the Board of Directors with its decision making. The Nominating, Governance and Corporate Responsibility Committee places primary emphasis on (i) judgment, character, expertise, skills and knowledge useful to the oversight of the Company’s business; (ii) diversity of perspectives, backgrounds, experiences and other demographics; (iii) business or other relevant experience; and (iv) the extent to which the interplay of the nominee’s expertise, skills, knowledge and experience with that of other members of the Board of Directors will build a board that is
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active, collegial and responsive to the needs of the Company. In addition, the Nominating, Governance and Corporate Responsibility Committee recognizes the importance of diversity of race, ethnicity and gender on the Board of Directors consistent with its fiduciary duties. The Board has taken this into consideration in establishing the list of nominees and will continue to do so in the future as part of the normal succession planning process.
The Company does not have a mandatory retirement age for directors as the Company believes that the composition of the Board should include not only appropriate experience and expertise, but also take into account the need for differing perspectives. As a result, the composition of the Board has evolved over time. The nominees for the Board, as a whole, reflect this balance. Seven of the eight nominees have served on the Board for ten years or less, with five of the eight nominees serving on the Board for five years or less.
Director Independence
The Board of Directors has reviewed all transactions or relationships between each director, director nominee, or any member of his or her immediate family and the Company, its senior management and its independent registered public accounting firm. There were no transactions, relationships or arrangements with any non-employee director or director nominee that were required to be disclosed pursuant to Item 404(a) of Regulation S-K under the Securities and Exchange Act of 1934 that the Board of Directors considered as part of such review. In determining independence of Charles E. Lannon, the Board of Directors did consider a facilities services agreement between the Company and a business owned by Mr. Lannon involving payments of approximately $6,000 per year, which the Board of Directors did not regard as affecting Mr. Lannon’s independence. Based on this review and as required by the independence standards of the New York Stock Exchange (“NYSE”), the Board of Directors has affirmatively determined that all directors, other than Messrs. Lannon, Rusmisel, HavenerRogers and BarberioSaffire, are independent from management and its independent registered public accounting firm within the meaning of the NYSE listing standards and as defined in the rules and regulations of the Securities and Exchange Commission (“SEC”). There were no transactions, relationships or arrangements with any director or director nominee determined to be independent that were required to be disclosed pursuant to Item 404(a) of Regulation S-K under the Securities and Exchange Act of 1934 that the Board of Directors considered as part of such review.
Meetings Of Board Orientation, Education and Self-Assessment.
Each independent director, upon initial election to the Board, undergoes a rigorous orientation wherein such director meets all of the members of senior management, and attends presentations concerning the Company’s core disciplines, including marketing, sales, revenue management, acquisition and due diligence procedures, security and controls.
In addition to new director orientation, our directors regularly participate in continuing education to maintain the skills necessary to perform their duties and responsibilities and to keep abreast of industry trends, legal and regulatory developments and corporate governance practices. These include participation in NAREIT and other conferences, various presentations by outside advisors and consultants at board meetings and retreats, regular discussions with management and the opportunity to attend various external board education programs and membership in the National Association of Corporate Directors.
The Board Ofof Directors Andperforms an evaluation of its performance at least annually to determine whether it is functioning effectively. Each Board committee also performs an annual evaluation of its performance.
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HOW WE ARE ORGANIZED
Board Leadership Structure.
Mark G. Barberio serves as the Company’s non-executive Chair of the Board. Mr. Barberio’s extensive qualifications include responsibility for strategy, executive management, operations, finance, real estate, investor relations and business development. He has experience as a director, chief executive officer, chief financial officer, and as a board committee chair with other large companies. The Company believes that having a Chair of the Board who is not an executive officer of the Company is the appropriate leadership structure for the Company at this time as it allows the Executive Officers of the Company to focus on day-to-day business while allowing the Chair of the Board to lead the Board in its fundamental role of providing advice to and independent oversight of management.
Meetings of the Board of Directors and Board Committees
Board of Directors Committee Memberships.
Assuming election of all the nominees to the Board, the structure of the Audit and Risk Management Committee, Compensation and Human Capital Committee, and Nominating, Governance and Corporate Responsibility Committee will continue to be as follows:
Audit and Risk Management | Compensation and Human Capital | Nominating, Governance | ||||
Mark G. Barberio | X | X | ||||
Stephen R. Rusmisel | X | C | X | |||
Arthur L. Havener, Jr. | C | X | ||||
Dana Hamilton | X | X | ||||
Edward J. Pettinella | X | C | ||||
Susan Harnett | X | X | ||||
C = Committee Chair X = Committee Member |
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2022 Attendance at Board and Committee Meetings.
The chart below sets forth director attendance at Board and Committee Meetings in 2022 based upon each director’s term on the Board and each Committee.
Board Meetings | Committee Meetings | Total Rate of Attendance | ||||||||||||
Name | Regular | Special | Audit | Comp & | Nom, | Board | Committee | |||||||
Mark G. Barberio | 5/5 | 1/1 | n/a | 5/5 | 2/2 | 100% | 100% | |||||||
Joseph V. Saffire | 5/5 | 1/1 | n/a | n/a | n/a | 100% | n/a | |||||||
Stephen R. Rusmisel | 5/5 | 1/1 | 4/4 | 5/5 | 2/2 | 100% | 100% | |||||||
Arthur L. Havener, Jr. | 5/5 | 1/1 | 4/4 | n/a | 2/2 | 100% | 100% | |||||||
Dana Hamilton | 5/5 | 1/1 | 4/4 | 5/5 | n/a | 100% | 100% | |||||||
Edward J. Pettinella | 5/5 | 1/1 | 4/4 | n/a | 2/2 | 100% | 100% | |||||||
David L. Rogers | 5/5 | 1/1 | n/a | n/a | n/a | 100% | n/a | |||||||
Susan Harnett | 5/5 | 1/1 | 4/4 | 5/5 | n/a | 100% | 100% |
Board of Directors.
The Board of Directors held ninesix meetings during the fiscal year ended December 31, 2015.2022. Each director attended at least 75%100% of the aggregate total number of meetings held by the Board of Directors andDirectors. Additionally, each director attended 100% of the meetings held by all committees on which he or she served. Our independentnon-employee directors being all of the members of our Board of Directors other than Messrs. Attea and Myszka, meet in executive session in conjunction with regularly scheduled meetings of the Board of Directors at least twice per year and on other occasions, as necessary, in accordance with the Company’s Corporate Governance Principles. TheMark G. Barberio serves as Chair of the Board of Directorsand he has designated Stephen R. Rusmisel as lead independent director and as lead independent director he presidespresided at executive sessionsmeetings of the Company’s independent directors and has the additional duties described below. directors.
The Company’s policy is that all directors should attend the Annual Meeting of Shareholders, absent a good reason. All sixeight directors attended the 20152022 Annual Meeting of Shareholders.Shareholders (the “2022 Annual Meeting”).
The Board of Directors has three committees with the principal functions described below. The charter of each committee is posted on the Company’s website atwww.sovranss.comwww.lifestorage.com. A copy of each charter is available in print to any shareholderShareholder upon request to the Company at 6467 Main Street, Williamsville, New York 14221, attention Andrew J. Gregoire,Alexander E. Gress, Secretary, or by telephone (716) 633-1850.
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Audit Committee. and Risk Management Committee.
The Audit and Risk Management Committee is composed of Messrs. Lannon,Havener, Rusmisel, Havener and Barberio.Pettinella, and Mses. Hamilton and Harnett. Mr. Barberio currentlyHavener serves as Chair. The Audit and Risk Management Committee is established to overseeoversees the accounting and financial reporting processes and audits of the financial statements of the Company.Company, along with the strategic, compliance and operational risk, including environmental, social, and governance (“ESG”) risk, based on the Company’s enterprise risk management assessment. The Audit and Risk Management Committee has generally led the Board’s oversight of enterprise risk management, with the assistance of other Board committees. The Audit and Risk Management Committee assists the Board of Directors in oversight of the quality and integrity of the Company’s financial reports,statements, the Company’s compliance with legalfinancial reporting process, the systems of internal accounting and regulatory requirements, the assessment of independent registered public accounting firm’s qualifications and independence andfinancial controls, the performance of the Company’s internal audit function as well as accounting and reporting processes.internal auditors, the independent auditor’s qualifications and independence, the Company’s risk management practices, and compliance with ethics policies and legal and regulatory requirements, including data privacy and cybersecurity.
The Audit and Risk Management Committee is composed entirely of independent directors within the meaning of applicable NYSE listing standards and rules and regulations of the SEC. Each member must be “financially literate” under NYSE listing standards or become financially literate within a reasonable period of time after appointment. The SEC has adopted rules to implement certain requirements of the Sarbanes-Oxley Act of 2002 pertaining to public company audit committees. One of the rules adopted by the SEC requires a company to disclose whether it has an “Audit Committee Financial Expert” serving on its audit committee. The Board of Directors has determined that all members of the Audit and Risk Management Committee are financially literate. The Board of Directors has also determined that Audit Committee Chair Mark G. BarberioMr. Havener meets the definition of a “financial expert.an “Audit Committee Financial Expert.”
The Audit and Risk Management Committee’s duties are set forth in its charter, which can be found on the Company’s web site atwww.sovranss.comwww.lifestorage.com. Additional information regarding the Audit and Risk Management Committee and the Company’s independent
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registered public accounting firm is disclosed in the Report of the Audit and Risk Management Committee below. The Audit and Risk Management Committee held fivefour meetings during the fiscal year ended December 31, 2015.2022. The Audit and Risk Management Committee meets regularly in private session with the Company’s independent registered public accounting firm.
Compensation Committee. and Human Capital Committee.
The Compensation and Human Capital Committee is composed of Messrs. Rusmisel Havener and Barberio, and Mses. Hamilton and Harnett, each of whom is independent within the meaning of applicable NYSE listing standards. Mr. Rusmisel serves as Chair. The Compensation and Human Capital Committee makes decisions with respect to compensation of the executive officers of the Company (the “Executive Officers”), reviews and recommends to the full Board of Directors director compensation levels and programs, and administers the Company’s Award and Option Plans. The Compensation and Human Capital Committee also generally oversees the Company’s management of its human resource policies and practices, including company-wide compensation plans and other human capital matters such as diversity, equity and inclusion, workplace environment and culture, and talent development, wellness, safety and retention.
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The Compensation and Human Capital Committee met threefive times during 2015.2022. Compensation and Human Capital Committee agendas are established by the Committee Chair, and the Compensation and Human Capital Committee meetsdeliberates and takes action only in executive session only.session. The Compensation and Human Capital Committee’s charter does not permit delegation of its responsibilities or authority to others. Pursuant to its charter, the Compensation and Human Capital Committee has the authority to engage advisors, including compensation consultants,consultants. The Compensation and the CompensationHuman Capital Committee has engaged NFP Compensation Consultants, formerly Longnecker & Associates (“NFP” or “Independent Consultant”) as an independent consultant to assist in evaluating compensation for the Executive Officers and executive compensation programs generally. The consultant reports directly to the Compensation and Human Capital Committee and does not perform services for management. However, on
On occasion, at the request and direction of the Compensation and Human Capital Committee, the consultant will review compensation levels recommended by the Executive Officers for other senior managers. The consultant advises the Compensation and Human Capital Committee with respect to compensation trends and best practices, plan design, reasonableness of individual compensation awards and general comparability with other publicly traded companies and companies in the real estate investment trust (“REIT”) industry. In accordance with the Compensation and Human Capital Committee’s policy on assessing advisor independence, the Compensation and Human Capital Committee has determined that there were no conflicts of interest or issues related to independence during 2022 that would impact the advice to the Compensation and Human Capital Committee from Longnecker & AssociatesNFP and the representatives of Longnecker & AssociatesNFP who advise the Compensation and Human Capital Committee.
The Executive Officers do not participate in deliberations of the Compensation and Human Capital Committee. The Executive Officers, at the Compensation and Human Capital Committee’s request, prepare performance and operational data and financial and other information to assist the Compensation and Human Capital Committee in reaching its compensation determinations.
The Compensation Committee’s charter does not permit delegation of its responsibilities or authority to others. Accordingly, the Compensation Committee has not delegated any of its responsibilities.
The functions of the Compensation and Human Capital Committee are further described below under the caption “Executive Compensation”“OUR PAY” and in its charter, which can be found on the Company’s web site atwww.sovranss.comwww.lifestorage.com.
Nominating, Governance and Corporate Responsibility Committee.
The Nominating, Governance and Corporate Responsibility Committee of the Board of Directors serves as the Company’s nominating committee. The Nominating, Governance and Corporate Responsibility Committee is composed of Messrs. Lannon,Havener, Barberio, Pettinella, and Rusmisel, Havener and Barberio, each of whom is independent within the meaning of applicable NYSE listing standards. Mr. LannonPettinella serves as Chair.Chair of the Nominating, Governance and Corporate Responsibility Committee. The Nominating, Governance and Corporate Responsibility Committee’s functions are set forth in its charter, which can be found on the Company’s website atwww.sovranss.comwww.lifestorage.com, and include assisting the Board of Directors by identifying individuals qualified to become Board members, with a commitment to seek candidates with diversity in experience and background, including race, ethnicity, and gender, and recommending director nominees for the annual meetingAnnual Meeting of shareholders,Shareholders, recommending to the Board the Corporate Governance Principles
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applicable to the Company, leading the Board of Directors in its annual review of the Board’s performance, and recommending the Board of Directors’ director nominees for each committee.committee as further described in “HOW NOMINEES ARE SELECTED AND ELECTED”. In addition, the Nominating, Governance and Corporate Responsibility Committee oversees and reviews the Company’s strategies, activities and policies regarding ESG matters. The Nominating, Governance and Corporate Responsibility Committee must annually review the adequacy of its charter and its own performance. The Nominating, Governance and Corporate Responsibility Committee does not have an express policy with regard to consideration of director candidates recommended by shareholders, but it will consider director candidates proposed by shareholders in the same manner as it considers other candidates. The Board of Directors does not believe that it is necessary to have a policy regarding the consideration of director candidates recommended by shareholders due to the infrequency of such recommendations. The Board of Directors and the Governance Committee believe that candidates must be highly qualified, exhibiting the experience and expertise required of the Board of Directors’ own pool of candidates and interest in the Company’s businesses, and also the ability to attend and prepare for Board of Directors, committee and shareholder meetings. Any candidate must
HOW WE GOVERN AND ARE GOVERNED
6
state in advance his or her willingness and interest in serving on the Board of Directors. Candidates should represent the interests of all shareholders and not those of a special interest group. A shareholder wishing to nominate a candidate should do so in accordance with the guidelines set forth below under the caption “Proposals of Shareholders for the 2017 Annual Meeting.” Two meetings of the Governance Committee were held during 2015.
In identifying and evaluating the individual director nominees that it recommends to the Board of Directors, the Governance Committee utilizes the following process: (i) the Governance Committee reviews the qualifications of any candidates who have been properly recommended or nominated by the shareholders, as well as those candidates who have been identified by management, individual members of the Board of Directors or, if the Governance Committee determines, a search firm; (ii) the Governance Committee evaluates the performance and qualifications of individual members of the Board of Directors eligible for re-election; (iii) the Governance Committee considers the suitability of each candidate, including the current members of the Board of Directors, in light of the current size and composition of the Board of Directors; and (iv) the Governance Committee considers each individual candidate in the context of the current perceived needs of the Board of Directors as a whole. After such review and consideration, the Governance Committee recommends that the Board of Directors select the slate of director nominees. No third party fee was paid to assist in identifying or evaluating nominees during 2015.
While the Governance Committee does not have a written policy regarding diversity in identifying director candidates, the Governance Committee considers diversity in its search for the best candidates to serve on the Board of Directors. The Governance Committee looks to incorporate diversity into the Board of Directors through a number of demographics, skills, experiences (including operational experience), and perspectives, all with a view to identify candidates that can assist the Board of Directors with its decision making. The Governance Committee places primary emphasis on (i) judgment, character, expertise, skills and knowledge useful to the oversight of the Company’s business; (ii) diversity of perspectives, backgrounds, experiences and other demographics; (iii) business or other relevant experience; and (iv) the extent to which the interplay of the nominee’s expertise, skills, knowledge and experience with that of other members of the Board of Directors will build a board that is active, collegial and responsive to the needs of the Company. Nominees are not discriminated against on the basis of gender, race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.
Corporate Governance
Corporate Governance Guidelines.
The Board of Directors has adopted Corporate Governance Principles which comply with NYSE listing standards. These principlescan be found on the Company’s website at www.lifestorage.com or which can be mailed to any Shareholder upon request either to the Company at 6467 Main Street, Williamsville, New York 14221, or requested by telephone (716) 633-1850.
Our Corporate Governance Principles require, among other things, that a majority of directors on the Board of Directors meet the criteria for independence defined by the NYSE. The Company meets this independence standard. From timeOur governance structure includes, in addition, provisions for majority voting, annual director elections, one-share, one-vote and special meeting voting rights. We believe our corporate governance provisions, our approach to time, the Board governance and our management of Directors may revise the Corporate Governance PrinciplesESG and compensation issues collectively put us in responsea strong position to changing regulatory requirements, evolving best practices and the concerns of the Company’sdeliver sustainable returns to shareholders and other constituencies. The Corporate Governance Principles are published on the Company’s website atwww.sovranss.com. A printed copy of the Corporate Governance Principles will be provided to any shareholder upon request to the Company at 6467 Main Street, Williamsville, New York 14221, or by telephone (716) 633-1850.while supporting our many stakeholder constituents.
Code of Ethics and Code of Ethics for Senior Financial Officers.Officers and Directors.
All of the Company’s directors and employees, including the Company’s Executive Officers, are required to comply with the Company’s Code of Ethics to help ensure that the Company’s business is conducted in accordance with the highest standards of moral and ethical behavior. The Company also has a Code of Ethics for Senior Financial Officers applicable to the Company’s principal executive officer, principal financial officer, principal accounting officer and controller, each of whom is also bound by the provisions set forth in the Code of Ethics relating to ethical conduct, conflicts of interest and compliance with the law. The Code of Ethics and Code of Ethics for Senior Financial Officers are published on the Company’s web site atwww.sovranss.comwww.lifestorage.com. The Company intends to disclose any changes in or
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waivers of its Code of Ethics and Code of Ethics for Senior Financial Officers by posting such information on the Company’s website. A printed copy of the Code of Ethics and the Code of Ethics for Senior Financial Officers will be provided to any shareholderShareholder upon request to the Company at 6467 Main Street, Williamsville, New York 14221, or by telephone (716) 633-1850.
Policies Andand Procedures Regarding Related Party Transactions.
The Company has established written conflict of interest policies, which are included in the Company’s Code of Ethics, to which all directors, Executive Officers and key employees are subject. TheyThese persons are required to disclose to the Company’s Chief Compliance Officer (or, in the event such person with the conflict is a director or
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Executive Officer, to the Chair of the Audit and Risk Management Committee) in writing each outside relationship, activity and interest that creates a potential conflict of interest, including transactions or arrangements potentially disclosable pursuant to applicable rules of the SEC. The Audit and Risk Management Committee will review any transaction involving a director or officer that may create a conflict of interest and either approve or reject the transaction or refer the transaction to the full Board or other appropriate committee in its discretion. All directors, Executive Officers and other key employees are required to disclose in writing each year whether they are personally in compliance with such policy. In addition, each director and Executive Officer is required to complete an annual questionnaire which calls for disclosure of any transactions in which the Company is or is to be a participant, on the one hand, and in which such director or Executive Officer or any member of his or her family has a direct or indirect material interest, on the other. The Board of Directors is of the opinion that these procedures are sufficient to allow for the review, approval or ratification of any transactions with related persons that would be required to be disclosed under applicable SEC rules.
Complaint Procedure; Communications with Directors. The Sarbanes-Oxley Act of 2002 requires public companies to maintain procedures to receive, retain and respond to complaints received regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters. The Company currently has such procedures in place. Any employee of the Company may report concerns regarding these matters in the manner specified in the Company’s Employee Complaint Procedures for Accounting and Auditing Matters, which is published on the Company’s web site atwww.sovranss.com. A printed copy of the Company’s Employee Complaint Procedures for Accounting and Auditing Matters will be provided to any shareholder upon request to the Company at 6467 Main Street, Williamsville, New York 14221, or by telephone (716) 633-1850.
The Board of Directors has also established a process for shareholders or other interested parties to send communications to the Company’s independent directors. Shareholders or other interested parties may communicate with the Board of Directors by calling (716) 633-1850 ext. 6144 or by writing to the Company’s Secretary. Communications sent to the Company addressed to the Board of Directors by these methods will be screened by the Secretary for appropriateness before either forwarding or notifying the independent directors of receipt of a communication.
Board Leadership Structure. Robert J. Attea serves as the Company’s Chairman of the Board and serves as an executive officer of the Company. He is also one of the founders of the Company and has over 40 years of experience in the commercial real estate business. The Company believes that having Mr. Attea serve as both an executive officer and as Chairman demonstrates to the Company’s employees and other stakeholders that the Board of Directors is under strong leadership, with a single person setting the tone and having primary responsibility for leading the Board of Directors. The Company believes this unity of leadership eliminates the potential for confusion or duplication of efforts, and provides clear leadership for the Company. In addition, the Board of Directors recognizes that, given Mr. Attea’s familiarity with the Company and his long standing experience with the Company, it is valuable to have him lead board discussions.
This board leadership structure is further enhanced by independent director oversight and involvement. The independent directors provide strong independent perspective in strategy development and oversight and actively lead and assist in developing board agendas.
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To provide for an additional independent leadership role, the Board of Directors has designated Stephen R. Rusmisel, as lead independent director. The lead independent director’s responsibilities include: presiding at meetings of the Board of Directors at which the Chairman is not present, including executive sessions of the independent directors; serving as liaison between the Chairman and the independent directors; convening meetings of the independent directors; approving information sent to the Board of Directors, meeting agendas for the Board of Directors and meeting schedules; consulting with the Chairman on matters relating to Board of Director performance and corporate governance; and, if required by major shareholders, ensuring that he is available for consultation and direct communication.
Each independent director, upon initial election to the Board, undergoes a rigorous orientation wherein such director meets all of the members of senior management, and attends presentations concerning the Company’s core disciplines, including marketing, sales, revenue management, acquisition and due diligence procedures, security and controls. Traditionally, all of the Company’s independent directors serve on the Audit Committee.
The Company believes its leadership structure is the most effective leadership structure for the Board of Directors at this time. However, the Board of Directors recognizes that no single leadership model is appropriate for a board at all times. Accordingly, the Board of Directors may in the future consider a different leadership structure, including a structure providing for a Chairman of the Board who is not an executive officer of the Company.
The Role of the Board of Directors in the Company’s Risk Oversight Process. Process.
The Company’s Board of Directors is primarily responsible for overseeing the Company’s risk management processes and enterprise risk management. Certain areas of this responsibility have been delegated by the Board of Directors to the Audit and Risk Management Committee, the Compensation and Human Capital Committee and the Nominating, Governance and Corporate Responsibility Committee, each with respect to the assessment of the Company’s risks and risk management in its respective areas of oversight. The Audit and Risk Management Committee oversees risks related to internal controls and procedures, cybersecurity, and oversees risks related to conflicts of interest and code of ethics matters. The Compensation and Human Capital Committee oversees risks related to compensation practices. TheseThe Nominating, Governance and Corporate Responsibility Committee oversees risks related to governance matters. The full Board of Directors has primary responsibility for evaluating strategic and operational risk management, and succession planning. The Board receives regular updates from management on operational and other risks facing the Company. The Board committees and the full Board of Directors focus on the most significant risks facing the Company and the Company’s general risk management strategy, and also ensure that risks undertaken by the Company are consistent with the Board of Directors’ objectives. While the Board of Directors oversees the Company’s risk management, Company management is responsible for day-to-day risk management processes. The Company believes this division of responsibilities is the most effective approach for addressing the risks facing the Company.
Compensation Risk Assessment. Assessment.
With respect to compensation risk, the Compensation and Human Capital Committee has considered the Company’s compensation policies and practices and has concluded that they are not reasonably likely to have a material adverse effect on the Company.
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HOW TO COMMUNICATE WITH US
Complaint Procedure; Communications with Directors.
The Board of Directors believes it can be valuable to cast a wide net for information and input to inform its discussions and decisions. It has therefore established numerous practices to enable it to do so. These practices include, but are not limited to:
Inviting external parties to make presentations to the Board or its committees at their periodic meetings
Conducting Board meetings and informal events connected to Board meetings to encourage individual communication with employees and other stakeholders at many levels
Receiving reports from management – for example, on human capital data and practices
Being available for engagement meetings with Shareholders
Listening to quarterly reporting calls, investor days or other industry or Company events
Participating in director education and similar events
Having access to reporting mechanisms such as those described in this section and the Company’s Whistleblower “hotline”
Receiving written communications such as via the channel described in this section
The Board of Directors has established a process for Shareholders or other interested parties to send communications to the Company’s independent directors. Shareholders or other interested parties may communicate with the Board of Directors by calling (716) 295-6833 or by writing to the Company’s Secretary. Communications sent to the Company addressed to the Board of Directors by these methods will be screened by the Secretary for appropriateness before either forwarding or notifying the independent directors of receipt of communication.
The Sarbanes-Oxley Act of 2002 requires public companies to maintain procedures to receive, retain and respond to complaints received regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters. The Company has such procedures in place. Any employee of the Company may report concerns regarding these matters in the manner specified in the Company’s Whistleblower Policy & Procedures, which is published on the Company’s web site at www.lifestorage.com. A printed copy of the Company’s Whistleblower Policy & Procedures will be provided to any Shareholder upon request sent to the Company at 6467 Main Street, Williamsville, New York 14221, or requested by telephone (716) 633-1850.
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HOW WE ARE PAID
Director Compensation
The table below summarizes the compensation paid by the Company to directors who are not officers or employees of the Company (“Outside DirectorsDirectors”) for the year ended December 31, 2015. Messrs. Havener and Barberio were elected to the Board on January 19, 2015 and thus were2022. Directors who are not Outside Directors are not paid a prorated fee from that date through May 21, 2015 of $14,000,any compensation for their service as well as the annual fee upon election on May 21, 2015.directors.
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | All Other Compensation ($)(4) | Total ($) | Fees Earned
| Stock Awards
| Option
| All Other
| Total
| ||||||||||||||||||||||||||||||
Charles E. Lannon | $ | 59,000 | $ | 32,000 | $ | 19,800 | $ | 1,225 | $ | 112,025 | ||||||||||||||||||||||||||||||
Mark G. Barberio | $178,500 | $110,000 | - | $18,002 | $306,502 | |||||||||||||||||||||||||||||||||||
Stephen R. Rusmisel | $ | 67,500 | $ | 32,000 | $ | 19,800 | $ | 1,225 | $ | 120,525 | $113,500 | $110,000 | - | $18,002 | $241,502 | |||||||||||||||||||||||||
Arthur L. Havener, Jr, | $ | 70,000 | $ | 32,000 | $ | 34,650 | $ | 593 | $ | 137,243 | ||||||||||||||||||||||||||||||
Mark G. Barberio | $ | 78,500 | $ | 32,000 | $ | 34,650 | $ | 593 | $ | 145,743 | ||||||||||||||||||||||||||||||
Arthur L. Havener, Jr. | $108,500 | $110,000 | - | $18,285 | $236,785 | |||||||||||||||||||||||||||||||||||
Dana Hamilton (4) | $98,500 | $110,000 | - | $18,320 | $226,820 | |||||||||||||||||||||||||||||||||||
Edward J. Pettinella | $106,000 | $110,000 | - | $18,320 | $234,320 | |||||||||||||||||||||||||||||||||||
David L. Rogers | $81,000 | $110,000 | - | $18,002 | $209,002 | |||||||||||||||||||||||||||||||||||
Susan Harnett | $98,500 | $110,000 | - | $18,002 | $226,502 |
(1) |
|
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|
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(2) |
|
Name | Grant Date | Expiration Date | Number of | |||||||||||
Stephen R. Rusmisel |
5/22/2013 | 5/ | ||||||||||||
| 3,000 | |||||||||||||
5/22/2014 | 5/ | 3,000 | ||||||||||||
5/21/2015 | 5/ | 3,000 | ||||||||||||
Arthur L. Havener, Jr. | 5/21/2015 | 5/21/2025 | 5,250 | |||||||||||
Mark G. Barberio | 5/21/2015 | 5/21/2025 | 5,250 |
(3) | Represents the portion of health insurance premiums paid by the Company and amounts paid to certain directors in lieu of such premiums. |
(4) |
|
The Company has paid its directors who are not also officers or employeespays annual directors’ fees quarterly. The base annual director’s fee to each Outside Director is $80,000 ($20,000 quarterly) which will be increased to $85,000 ($21,250 quarterly) following the 2023 Annual Meeting. An annual fee is payable to the non-executive Chair of the Company (an “Outside Director”) anBoard, which fee was $85,000 ($21,250 quarterly) in 2022. An annual fee of $40,000. Also, $7,500 has been paid to each member of the Audit Committee, $3,000 has been paid to each member of the Compensation Committee, and $2,500 has been paid to each member of the Governance Committee. In addition, $15,000 has been paid$20,000 ($5,000 quarterly) is payable to the chair of the Audit and Risk Management Committee $7,500 has been paidand an annual fee of $10,000 ($2,500 quarterly) is payable to each of the other members of such committee; an annual fee of $15,000 ($3,750 quarterly) is payable to the chair of the Compensation and Human Capital Committee and $7,500 ($1,875 quarterly) is payable to each of the Compensation and Governance Committees and $5,000 has been paidother members of such committee which will be increased to $10,000 ($2,500 quarterly) following the 2023 Annual Meeting; an annual fee of $15,000 ($3,750 quarterly) is payable to the lead independent director.chair of the Nominating, Governance and Corporate Responsibility Committee and an annual fee of $7,500 ($1,875 quarterly) is payable to each of the other members of such committee. Outside Directors are also paid a meeting fee of $1,000 for each special meeting of the Board of Directors attended. Such special meeting fee will no longer apply after the 2023 Annual Meeting. Meeting fees are not paid for regular meetings and committee meetings. In addition, the Company will reimburse all directors for reasonable expenses incurred in attending meetings. Also, certain Outside Directors are provided health insurance coverage on the same terms and conditions as home office employees of the Company. Those Outside Directors who are not provided such health insurance coverage are provided a cash payment in lieu of health insurance coverage.
Under the Company’s Deferred Compensation Plan for Directors, an Outside Director may elect to have all or part of his or her director fees credited to a deferred compensation account in the form of units equivalent to shares of the Company’s Common Stock (“Units”). The number of Units credited is equal to the number of shares of Common Stock that could have been purchased using the closing price of Common Stock on the
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day immediately preceding the date on which the fees were payable. When the Company declares cash dividends on its Common Stock, additional Units are credited to the deferred compensation accounts based on the reinvestment of the dividend on the dividend record dates. Amounts credited to the deferred compensation accounts will be paid to directors in the form of shares of Common Stock, the number of which shares will equal the number of Units credited to the accounts.
UnderIn May 2020, the Company’s 2020 Outside Directors’ Stock Award Plan (the “2020 Directors’ Plan”) was voted on and approved at the Company’s 2020 annual Shareholders’ meeting. The Company’s 2020 Directors’ Plan replaced the Company’s Amended and Restated 2009 Outside Directors’ Stock Option and Award Plan (the “Directors’ Plan”), each Outside Director has been granted, effective as of the Outside Director’s initial election or appointment, an option to acquire 3,500 shares of Common Stock at the fair market value of the Common Stockwhich expired on the date of grant. In addition, as of the close of each annual shareholders’ meeting after initial appointment or election, each Outside Director has been granted an option to acquire 2,000 shares of Common Stock at the fair market value of the Common Stock on the date of grant.May 21, 2020. The initial options for 3,500 shares of Common Stock are exercisable
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one year from the date of grant subject to continued service; the Outside2020 Directors’ options awarded annually thereafter are exercisable immediately. The exercise price is payable in cash or by delivery of shares of Common Stock owned by the Outside Director, or a combination of cash and shares. All options must be exercised within ten years from the date of grant. One Outside Director exercised options for 2,000 shares of Common Stock during 2015. Mr. Havener and Mr. Barberio were issued initial options for 3,500 shares upon election to the Board at the 2015 annual shareholders’ meeting.
The Directors’ Plan also provides that at the close of each annual shareholders’Shareholders’ meeting, each Outside Director ismay be granted a number of shares of restricted stock equal to the base annual fee paid to such Outside Director multiplied by 0.8 and dividedas determined by the fair market value of a share of Common Stock on the date of grant.Board in its discretion. Any restricted stock granted under this plan vests one year following the date of grant based on continued service.
The annual retainer fees paid toif the applicable Outside Directors have not changed since 2010 andDirector is a member of the Compensation Committee has worked with the Company’s compensation consultant, Longnecker & Associates to revise the Board compensation structure so that it is fair, reasonable and competitive. The Compensation Committee and Board of Directors approved compensation increases to become effective foras of the vesting date; provided, however, that the restricted stock immediately vests upon either (i) the Outside Director’s death or disability while serving on the Board terms commencing May 18, 2016. The annual retainer fee will be $65,000 per year (currently $40,000). The fee paidof Directors, or (ii) a Significant Corporate Event as defined in the 2020 Directors’ Plan.
In 2022, the value of the awards awarded to each memberOutside Director under the 2020 Directors’ Plan was $110,000, with the number of shares awarded being such amount divided by the fair market value of the Audit Committee willCompany’s stock on the date of grant.
The Board has elected to increase from $7,500the annual fee payable to $10,000,each non-employee director to $85,000, and the annual fee paid to each member of the Compensation and Human Capital Committee will increase from $3,000 to $7,500 and$10,000. In addition, the Board has elected to eliminate the $1,000 fee paid to each memberall directors for attendance at special meetings. Such changes will become effective after the Company’s 2023 Annual Meeting. The Board elected to leave all other forms of the Governance Committee will increasedirector compensation unchanged from $2,500 to $5,000. The fees paidthose in effect subsequent to the Chairs of the Audit Committee, Compensation Committee, Governance Committee and to the lead independent director will be $17,500, $10,000, $10,000 and $7,500, respectively, which reflects a $2,500 increase for each such position.Company’s 2022 Annual Meeting.
The Board of Directors, upon advice of the Compensation Consultant, has amended the Directors’ Plan effective in 2016 to eliminate stock option grants as a component of Board compensation. The Board also amended the Director’s Plan to provide that shares covered by unexercised options as well as shares of restricted stock that have not vested may not be reissued thereunder.
Stock Ownership Guidelines for Directors
The Company has adopted stock ownership guidelines for its Outside Directors which require each of the Company’s Outside Directors to hold shares of Company common stockCommon Stock and deferred compensation units having an aggregate market value equal to threefive times the base annual fee paid to the Outside Directors. Directors have five years to meet this goal. The Company adopted these stock ownership guidelines as a means of requiring directors to hold equity and tie their interests to shareholders’Shareholders’ interests. All directors other than Messrs. Havener and BarberioOutside Directors have either met these guidelines. Messrs. Havener and Barberio have four years remainingguidelines or are still within the five-year period allowed to meet these guidelines.
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Life Storage, Inc. 2023 Proxy Statement
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Stock Ownership Byby Directors Andand Executive Officers
The following table sets forth for each current director, and each of the Named Executive Officers as set forth in the Summary Compensation Table and for all directors and Named Executive Officers as a group, information concerning beneficial ownership of Common Stock as of March 18, 2016.April 10, 2023 for each current director, each of our named executive officers and for all current directors and Executive Officers as a group. Percentages are based on 85,087,900 shares of Common Stock outstanding as of April 10, 2023. Unless otherwise noted, to the best of the Company’s knowledge, each person has sole voting and investment power with respect to the shares listed.
Name | Shares of Common Stock Beneficially Owned at March 18, 2016 (1)(2)(3)(4) | Percent of Common Stock Owned | ||||||
Robert J. Attea | 228,314 | * | ||||||
Kenneth F. Myszka | 220,026 | * | ||||||
Charles E. Lannon | 135,733 | * | ||||||
Stephen R. Rusmisel | 12,546 | * | ||||||
Mark G. Barberio | 1,349 | * | ||||||
Arthur L. Havener, Jr. | 627 | * | ||||||
David L. Rogers | 170,085 | * | ||||||
Andrew J. Gregoire | 45,237 | * | ||||||
Paul T. Powell | 42,160 | * | ||||||
Edward F. Killeen | 33,517 | * | ||||||
|
| |||||||
Directors and Executive Officers As a Group (ten persons) | 889,594 | 2.3 | % |
Name
|
|
Shares of Common
|
|
| Percent of Common Stock Owned
|
| ||||||
David L. Rogers | 141,967 | * | ||||||||||
Stephen R. Rusmisel | 25,931 | * | ||||||||||
Mark G. Barberio | 22,811 | * | ||||||||||
Edward J. Pettinella | 21,816 | * | ||||||||||
Arthur L. Havener, Jr | 19,992 | * | ||||||||||
Dana Hamilton | 8,320 | * | ||||||||||
Susan Harnett | 2,329 | * | ||||||||||
Joseph V. Saffire | 88,816 | * | ||||||||||
Alexander E. Gress | 6,291 | * | ||||||||||
David P. Dodman | 20,316 | * | ||||||||||
Directors and Executive Officers | 358,589 | 0.4% |
* | Represents beneficial ownership of less than 1% of outstanding Common Stock on |
(1) | Includes |
(2) | Includes |
(3) | Includes |
|
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Equity Compensation Plan Information
The following table sets forth certain information as of December 31, 2022 (except as set forth in footnote 1 below), with respect to equity compensation plans under which shares of the Company’s Common Stock may be issued.
Plan Category
| Number of
| Weighted
| Number of
| |||||||||
Equity compensation plans approved by Shareholders: | ||||||||||||
2015 Award and Option Plan (1) | 228,994 | $--- | 71,337 | |||||||||
2009 Outside Directors’ Stock Option and Award Plan (2) | 19,500 | $ | 57.24 | --- | ||||||||
2020 Outside Directors’ Stock Award Plan | 5,955 | --- | 125,041 | |||||||||
Deferred Compensation Plan for Directors (3) | 29,535 | N/A | 25,196 | |||||||||
Equity compensation plans not approved by Shareholders: | N/A | N/A | N/A |
(1) Includes the actual number of shares issued in February 2023 (50,884) related to performance-based awards issued on December 19, 2019 and the maximum number of shares (178,110) that could be issued as part of the performance-based awards issued in 2020, 2021, and 2022. The actual number of shares to be issued as part of the performance-based awards issued in 2020, 2021 and 2022 will be determined at the end of the three-year performance periods in 2023, 2024 and 2025, respectively. See Note 9 to the Company’s consolidated financial statements included in the 2022 Annual Report.
(2) The 2009 Outside Directors’ Stock Option and Award Plan expired on May 21, 2020 and was replaced by the 2020 Outside Directors’ Stock Award Plan. Therefore, no securities are available for future issuance under the 2009 Outside Directors’ Stock Option and Award Plan at December 31, 2022.
(3) Under the Deferred Compensation Plan for Directors, non-employee Directors may defer all or part of their Directors’ fees that are otherwise payable in cash. Directors’ fees that are deferred under the Plan will be credited to each Directors’ account under the Plan in the form of Units. The number of Units credited is determined by dividing the amount of Directors’ fees deferred by the closing price of the Company’s Common Stock on the New York Stock Exchange on the day immediately preceding the day upon which Directors’ fees otherwise would be paid by the Company. A Director is credited with additional Units for dividends on the shares of Common Stock represented by Units in such Directors’ account. A Director may elect to receive the shares in a lump sum on a date specified by the Director or in quarterly or annual installments over a specified period and commencing on a specified date.
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Security Ownership Ofof Certain Beneficial Owners
The following table sets forth information as to all persons or groups known to the Company to be beneficial owners of more than five percent of the outstanding Common Stock of the Company as of March 18, 2016.April 10, 2023 based on 85,087,900 shares of Common Stock outstanding as of such date.
Title of Class | Name and Address of Beneficial Owners | Amount of Stock | Percent of Common Stock | |||||||
Common | The Vanguard Group, Inc.(1) 100 Vanguard Boulevard Malvern, PA 19355 | 5,462,229 | 13.9 | % | ||||||
Common | BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10055 | 4,045,641 | 10.3 | % |
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Title of Class
| Name and Address of Beneficial Owners
|
Amount of Common
| Percent of Common Stock
| |||||||||
Common | The Vanguard Group, Inc. (1) 100 Vanguard Boulevard Malvern, PA 19355 | 12,792,584 | 15.0% | |||||||||
Common | BlackRock, Inc. (2) 55 East 52nd Street New York, NY 10055 | 9,673,399 | 11.4% | |||||||||
Common | State Street Corporation (3) 1 Lincoln Street Boston, MA 02111 | 4,675,767 | 5.5% | |||||||||
Common | Wellington Management Group LLP Wellington Group Holdings LLP Wellington Investment Advisors Holdings LLP Wellington Management Company LLP (4) c/o Wellington Management Company LLP 280 Congress Street Boston, MA 02210 | 3,492,809 | 4.1% |
(1) | All information relating to The Vanguard Group, Inc. (“Vanguard”) is as of December 31, |
(2) | All information relating to BlackRock, Inc. (“BlackRock”) is as of December 31, |
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BlackRock has the sole power to vote or direct the vote with respect to |
Section 16(a) Beneficial Ownership Reporting Compliance
(3) | All information relating to State Street Corporation (“State Street”) is as of December 31, 2022 and is derived from Schedule 13G filed by it and other entities on January 31, 2023. According to State Street, of the 4,675,767 shares of the Company’s Common Stock owned by State Street, State Street shares the voting power with respect to 3,485,508 shares and does not have the sole voting power with respect to any other shares. State Street shares disposition power with respect to all 4,675,767 shares of the Company’s Common Stock owned by State Street. The Company has not independently verified this information. |
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC and the NYSE. Directors, officers and greater-than-10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports they file. Based solely on review of information furnished to the Company and reports filed through the Company, the Company believes that all Section 16(a) filing requirements applicable to its Directors, officers and greater-than-10% beneficial owners were complied with during 2015.
(4) | All information relating to Wellington Management Group LLP, Wellington Group Holdings LLP, and Wellington Investment Advisors Holdings LLP (“Wellington”) is as of December 31, 2022 and is derived from Schedule 13G/A filed by it and other entities on February 6, 2023. According to Wellington, of the 3,492,809 shares of the Company’s Common Stock owned by Wellington, Wellington shares the voting power with respect to 3,053,390 shares and does not have the sole voting power with respect to any other shares. Wellington shares disposition power with respect to all 3,492,809 shares of the Company’s Common Stock owned by Wellington. The Company has not independently verified this information. |
13Life Storage, Inc. 2023 Proxy Statement
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OUR AUDITORS
PROPOSAL 2. APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Subject to ratification by the Shareholders and basedBased upon the recommendation of the Audit and Risk Management Committee, the Board of Directors has reappointed Ernst & Young LLP as its independent registered public accounting firm to audit the financial statements of the Company for the current fiscal year. year ending December 31, 2023. At the Annual Meeting, Shareholders will be asked to ratify this appointment. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting (via webcast), will have the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions.
Fees billed to the Company for fiscal years 20152022 and 20142021 by Ernst & Young LLP were as follows:
2015 | 2014 | |||||||
Audit Fees | $ | 683,927 | $ | 548,757 | ||||
Audit-Related Fees | 12,900 | 12,300 | ||||||
Tax Fees | 320,070 | 237,435 | ||||||
All Other Fees | — | — | ||||||
|
|
|
| |||||
TOTAL FEES | $ | 1,016,897 | $ | 798,492 |
2022
| 2021
| |||||||||
Audit Fees | $ | 1,061,515 | $ | 1,667,151 | ||||||
Audit-Related Fees | – | – | ||||||||
Tax Fees | 692,610 | 539,989 | ||||||||
All Other Fees | – | 2,175 | ||||||||
TOTAL FEES | $ | 1,754,125 | $ | 2,209,315 |
Audit fees include fees for the audit of the Company’s consolidated financial statements, interim reviews of the Company’s quarterly financial statements, and the audit of the Company’s internal controls over financial reporting. Included in audit fees for 20152022 and 20142021 are $130,671$89,000 and $95,505,$475,000, respectively, related to the Company’s public bond offering and common stock offerings. Audit-related fees include the audit of the Company’s 401(k) plan. Tax fees include fees for services relating to tax return preparation, tax compliance, transaction tax due diligence, tax planning and tax advice. All other fees relate to technology access.
The Audit and Risk Management Committee has adopted a policy that requires its advance approval of the Audit Committee for all audit, audit-related, tax services, and other services to be provided by the independent registered public accounting firm to the Company. The Audit and Risk Management Committee has delegated to its ChairmanChair authority to approve permitted services, provided that the ChairmanChair reports any decisions to the Audit and Risk Management Committee at its next scheduled meeting. During 2015,2022, all fees for audit services, all fees for audit-related services and all fees for tax services were approved under this policy.
Representatives of the firm of Ernst & Young LLP are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Ratification of the appointment of the independent registered public accounting firm requires the affirmative vote of a majority of the votes cast, provided a quorum is present at the meeting. For purposes of the vote on this proposal, abstentions and brokers non-votes will not be counted as votes cast and will have no effect on the results of the vote, although they will be considered present for the purpose of determining the presence of a quorum. Although shareholderShareholder approval is not required, the Company
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desires to obtain from its shareholdersShareholders an indication of their approval of the Audit and Risk Management Committee’s selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2016.2023. Even if the appointment of Ernst & Young LLP is ratified, the Audit and Risk Management Committee may, in its discretion, change the appointment at any time during the year should it determine that such a change would be in the best interests of the Company and its shareholders’ best interests.Shareholders. If the Company’s shareholdersShareholders do not ratify this appointment, the Audit and Risk Management Committee may consider the appointment of another independent registered public accounting firm but will not be required to appoint a different firm.
THE AUDIT AND RISK MANAGEMENT COMMITTEE AND THE BOARD OF DIRECTORS RECOMMEND A VOTE “FOR” THE PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
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REPORT OF THE AUDIT AND RISK MANAGEMENT COMMITTEE
Management has the primary responsibility for the integrity of the Company’s financial information and the financial reporting process, including the system of internal control over financial reporting. Ernst & Young LLP,
14
the Company’s independent registered public accounting firm, is responsible for conducting independent audits of the Company’s financial statements and the effectiveness of internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and expressing an opinion on the financial statements and the effectiveness of internal controls over financial reporting based upon those audits. The Audit and Risk Management Committee is responsible for overseeing the conduct of these activities by management and Ernst & Young LLP.
As part of its oversight responsibility, the Audit and Risk Management Committee has reviewed and discussed the audited financial statements, the adequacy of internal controls and the effectiveness of the Company’s internal controls over financial reporting with management and Ernst & Young LLP. The Audit and Risk Management Committee also has discussed with Ernst & Young LLP the matters required to be discussed by Statement on Auditing Standards No. 61, as amended(AICPA Professional Standards, Vol. 1. AU Section 380) and as adopted bythe applicable requirements of the Public Company Accounting Oversight Board in Rule 3200T.Board. The Audit and Risk Management Committee met with Ernst & Young LLP, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Audit and Risk Management Committee has also discussed with Ernst & Young LLP matters required to be discussed by applicable auditing standards. The Audit and Risk Management Committee has received and reviewed the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit and Risk Management Committee concerning independence and has discussed with Ernst & Young LLP that firm’s independence.
Based upon these reviews and discussions, the Audit and Risk Management Committee recommended to the Board of Directors that the audited financial statements be included in Sovran Self Storage, Inc.’s Annual Report on Form 10-K for the year ended December 31, 20152022 be included in Life Storage Inc.’s 2022 Annual Report for filing with the Securities and Exchange Commission.
Members of the Audit and Risk
Management Committee
MARK G. BARBERIO,ARTHUR L. HAVENER, JR., CHAIR
CHARLES E. LANNON
STEPHEN R. RUSMISEL
ARTHUR L. HAVENER, JR.DANA HAMILTON
EDWARD J. PETTINELLA
SUSAN HARNETT
THE FOREGOING REPORT SHALL NOT BE DEEMED TO BE “SOLICITING MATERIAL” OR TO BE “FILED” WITH THE SECURITIES AND EXCHANGE COMMISSION AND SHOULD NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
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Life Storage, Inc. 2023 Proxy Statement
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NAMED OUR COMPANY
EXECUTIVE OFFICERS OF THE COMPANY
The Company’s corporate responsibility is deeply rooted in our core values: teamwork, respect, accountability, integrity and innovation. The Company approaches initiatives, programs, practices and policies with a view toward risk management and with consideration of the impact on its customers, team members, communities and shareholders. We therefore share with you in this section some information about our leadership and our management of the human capital, environmental, safety, customer and other stakeholder matters that we believe support our long-term sustainability financially and more generally.
The following named persons are the namedcurrent executive officers of the Company (the “Named Executive Officers”):Company:
Name | Age | Title and experience | ||||
| ||||||
| ||||||
| Chief Executive Officer since March 1, | |||||
Alexander E. Gress | 49 | Chief Financial Officer and Secretary since January 2, 2023. Vice President of Finance, Corporate Planning and Investor Relations of the Company from | ||||
David P. Dodman | 49 | Chief Operating Officer since January 1, 2022. Senior Vice President, Strategic Planning and Investor Relations of the Company from June 2018 to December 31, 2021. |
Andrew J. Gregoire retired from his position as Chief Financial Officer of the Company effective on January 2, 2023. Subsequent to his retirement, Mr. Gregoire has continued to assist the Company as a financial advisor in order to provide for a smooth transition.
Life Storage’s Mission: Rooted in Sustainability
At Life Storage, we believe that sustainability and success are one in the same: in order to do well as a business, we must do good for our world. Our integrative approach to sustainability helps move us toward our vision of becoming the best self-storage company in the world.
We follow a four-pillar growth strategy that consolidates our efforts into strategic, high- impact areas: Expand Our Footprint, Digitize the Enterprise, Invest in Talent & Culture, and Drive Profitable Growth. Sustainability is deeply embedded in this growth strategy and is the impetus for many of the strategic efforts that fall into each pillar.
Company Accolades
Named one of America’s Best Midsize Employers by Forbes magazine in 2022 and 2023
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• | Named a Sustainalytics ESG Regional Top-Rated Company in 2022 and 2023 |
• | 2022 GRESB 3-star rating |
Received Newsweek’s America’s Best Customer Service Award every year since 2019
CEO Action for Diversity & Inclusion signatory
Member of the Western New York Sustainable Business Roundtable
In 2022, received silver level recognition from Western New York Sustainable Business Roundtable for achieving significant sustainability milestones and improving organizational performance
US Green Building Council (USGBC) member
A+ Rating on Better Business Bureau
• | Top-rated storage company on Trust Pilot |
Environmental Highlights
Life Storage owns or operates more than 1,150 self-storage facilities encompassing approximately 88 million square feet in 37 states and the District of Columbia. As a REIT and a facility owner and operator, we are responsible for monitoring and minimizing our environmental impact.
Energy Efficiency Measures
Self-storage facilities are inherently resilient and have low environmental impacts relative to other industries and asset classes due to low energy and water utilization and minimal customer and employee traffic. Despite this, we still strive to further reduce the environmental impact that we do have by establishing energy efficiency measures that are implemented and maintained across our portfolio.
A key part of our strategy to reduce our carbon footprint is integrating energy efficiency into our buildings from the ground up. All Life Storage facilities must meet internally established energy efficiency standards that are that are implemented during building design, construction and facility operations and maintenance.
Roofing
All Life Storage roofing projects use cool roof technologies that reduce energy consumption.
In 2022, we completed over 70 cool roofing projects covering over 1.1 million square feet.
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Heating & Cooling
All new central air conditioning and heating units are required to be high efficiency models.
In 2022, we replaced over 270 HVAC units with high-efficiency models.
Lighting
LED lights are used for all new buildings and light fixture replacements.
All storage areas are equipped with motion sensors to conserve energy.
In 2022, we upgraded more than 33,500 light fixtures to LED.
We are undergoing a portfolio-wide effort to upgrade all light fixtures at our wholly-owned facilities to LED. While many of our facilities are already outfitted with high-efficiency bulbs, proactively upgrading all fixtures to LED will result in significant environmental and operational benefits.
Water Consumption
Despite the fact that self-storage facilities typically have low rates of water consumption and wastewater production, our Landscaping and Irrigation Policy outlines the steps we take to further minimize the impact of our facilities on biodiversity and water consumption.
We proactively seek out opportunities to conserve water at our properties through our Outdoor Water Conservation Program. We selectively implement innovative water conservation strategies that are tailored to address the regulatory environment, regional climate, and irrigation needs of each property. In 2022, we installed 20 smart irrigation systems at facilities across our portfolio and expect this number to increase in 2023.
Waste
Life Storage team members at every level must follow our Waste Management Policy, which encourages recycling whenever possible and seeks to reduce our overall waste generation.
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Renewable Energy Program
In 2020, we significantly increased our investment in renewable energy with an ambitious 5-year solar development initiative. As of December 31, 2022, 43 Life Storage wholly owned facilities were equipped with more than 50 solar arrays. As of the end of 2022, our renewable energy program has generated over 23 GWh of energy.
As a result of this initiative, we have set aggressive targets to reduce our energy consumption and increase our renewable energy generation capacity:
• | 12.5% reduction (like-for-like) in energy consumption by 2025 from our 2020 baseline |
• | 7.5 MW capacity increase (absolute) by 2025 from our 2020 baseline |
Climate Change
Life Storage understands the importance of monitoring and mitigating climate change-related risks to our business and our assets. In addition to implementing measures across our portfolio to reduce our environmental impact, we have enhanced our efforts to identify and manage the physical and transitional risks associated with climate change. We believe that the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”) provide the best framework with which to assess and understand material climate-related business risks and opportunities. As such, we approach climate-related risk management efforts in line with the four core elements identified by TCFD – Governance, Strategy, Risk Management, and Metrics & Targets.
Governance
Ultimate oversight for sustainability and climate-related topics lies with our Board of Directors. Specifically, the Board’s Nominating, Governance and Corporate Responsibility Committee oversees the Company’s strategic ESG priorities, while the Board’s Audit and Risk Management Committee oversees material enterprise-level risks. These committees work in coordination with each other to maintain oversight of climate strategy, as this
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matter falls within the scope of each committee’s responsibilities. At the management level, our climate strategy is dictated primarily by our TCFD Committee. Chaired by our Chief Financial Officer, this committee consists of our Chief Executive Officer, Chief Operating Officer, and other members of leadership whose areas of expertise lend themselves to climate-related strategy and risk management. The TCFD Committee is responsible for designing, implementing, and monitoring our efforts to align our operations with TCFD recommendations. The committee is also charged with conducting climate-related enterprise risk management exercises as part of our overall cadence in risk management.
Sustainable Operations
We make a concerted effort to integrate sustainability into the day-to-day operations of our business as a whole.
Our ESG and TCFD Committees meet regularly to discuss environmental sustainability initiatives and climate-related risks and opportunities.
• | In 2021, we implemented an ISO-aligned Environmental Management System to monitor and minimize our environmental impact. |
Partnership with third-party ESG data manager to improve ESG data reporting quality and scope.
In addition to compliance with our Vendor Code of Conduct, evaluation of potential vendors and suppliers considers sustainable practices and product offerings.
• | Extensive, cloud-based 99-point check of all utility bills to identify damaged and underperforming HVAC units, assess the integrity and energy performance of our exterior building shell, and other leaks or energy wastes. |
Regular assessment of our portfolio’s vulnerability to climate-related risks:
o | As of March 31, 2022, none of our wholly-owned stores are below sea level. |
• | Availability of low-impact packing materials. |
o | We offer boxes made from ~53% recycled content, certified by the Sustainable Forestry Initiative. |
Green Buildings
Life Storage is a silver member of the U.S. Green Building Council (USGBC®).
The Life Storage wholly owned portfolio includes certified-sustainable buildings in Deer Park, NY (USGBC Certified LEED Silver) and Chamblee, GA (Green Globe Certified One Green Globe). We expect to add more green buildings as our mandated improvements affect our portfolio.
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Social Highlights
With approximately 2,500 team members and more than 690,000 customers in hundreds of markets across 37 states and the District of Columbia, treating everyone with dignity and respect is at the core of our business and is essential to our ability to create value for all of our stakeholders.
Our Teammates
We strive to attract and retain the highest quality team members with competitive compensation and benefits, opportunities for personal growth and development, safe working conditions and a culture that emphasizes fair and equitable treatment.
Robust safety, training and professional development programs:
All team members have access to comprehensive online training tools and informational resources covering everything from job specific skills to leadership, productivity, team building, and communication skills.
Each year, all team members must complete a diversity, equity and inclusion training program that reflects our commitment to a diverse and inclusive work environment.
• | Team members receive formal, bi-annual performance assessments, and participate in goal-setting exercises and feedback sessions. |
Cross-functional internal Safety Committee responsible for developing policies, procedures and training in order to minimize workplace injuries, stay compliant with federal and state safety regulations, and instill a culture of safety.
Rigorous safety training curriculum required for all store team members.
Employee Engagement:
We conduct annual, anonymous surveys of all employees to identify and act on areas for improvement and gain insight into the sentiments of our team members.
Our most recent comprehensive engagement survey in June 2021 showed a 72% engagement score and a 73% response rate.
Following each engagement survey, our Human Resources team identifies and analyzes the most commonly noted areas for improvement, breaks down the results by department, and works with company leaders to develop specific action plans based on the survey results that are executed at the team and company levels.
Life Storage was named one of America’s Best Midsize Employers by Forbes magazine in 2022 and 2023.
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Our Social Impact Programs
Life Storage strives to make a positive impact on society by creating a work environment where all of our team members can thrive and by giving back to our communities in meaningful and socially conscious ways.
Diversity, Equity, and Inclusion
Life Storage is committed to fostering a diverse and inclusive work environment in which every employee is treated equally, feels empowered to succeed and is equipped with the tools to do so. The Life Storage Diversity, Equity, and Inclusion (DEI) program is focused on creating and maintaining a diverse and inclusive work environment that exemplifies our company values: teamwork, respect, accountability, integrity, and innovation. Our strategic objectives include: celebrating diversity, promoting inclusion, engaging our team members, ensuring accountability, and improving representation of women, minorities, persons with disabilities and Veterans.
Some of our program highlights from 2022 include:
• | Diversity Training Program: Our diversity training program helps each Life Storage team member understand their role in ensuring that Life Storage remains a great place to work for all. All employees receive quarterly training on relevant diversity-related topics such as unconscious bias, microaggressions, and more. |
• | Diversity Awareness: Through our internal and external communications and community engagement program, we ensure we are driving awareness about diversity focused issues, needs and events that are important to both our team members and customers. In addition, we take the opportunity to celebrate the diversity of our employees through employee spotlights, recognition and volunteer events. |
• | CEO Action for Diversity & Inclusion: In 2022, we became official signatories of the CEO Action Pledge for Diversity & Inclusion. Participation in the pledge furthers our commitment to creating a supportive work environment for all individuals and allows us to collaborate with other signatories regarding successful best practices. |
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Life in Our Communities
At Life Storage, we believe that giving back to our communities will contribute to the betterment of the communities in which we do business and where our employees live. We aim to make meaningful and lasting impacts on our communities through volunteer efforts, charitable giving, and community-centric employee engagement.
Our Focus: Supporting Underserved and Underprivileged Communities
We believe there is no cause more worthy of support than ensuring all members of our communities have access to the basic essentials needed for health, safety, and personal stability. Marginalized populations have disproportionately limited access to these basic essentials. The Life in Our Communities Program is strategically focused on supporting underserved and underprivileged communities to combat this distressing reality as much as possible.
The Life in Our Communities Program formalizes and optimizes our efforts to give back to our communities by focusing on the following strategic objectives:
Synchronize Our Efforts: Ensure company-wide alignment of all community engagement efforts.
Maintain Strategic Focus: Maximize impact by adhering to the core focus areas of the Life in Our Communities program.
Encourage Accountability: Govern and assess the execution and impact of the Life in Our Communities program.
Our Customers
Customer Satisfaction
We have a robust, multi-step process to ensure customer satisfaction:
All customers receive satisfaction surveys following initial rental, at three-month follow up, and when they vacate.
Customers are encouraged to provide feedback via online survey forms, social media, and in person; all reported issues are filed and investigated if appropriate.
Thorough internal mechanisms and store visit reports designed to track store operational performance and deliver feedback and guidance to store teams.
This has resulted in:
Newsweek’s “America’s Best Customer Service” award in 2019, 2020, 2021, 2022, and 2023
A+ Rating on Better Business Bureau
• | Top-rated storage company on Trust Pilot |
Customer satisfaction average score of more than 91% in 2022
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Governance Highlights
Our diverse Board of Directors is younger and shorter tenured than average. Our average board tenure is six years with one new Director appointed in the last three years. Our average age is 63 years old with three Directors under 60 years old.
We have a strong governance foundation with good governance practices, including an independent chairperson; annual director elections; majority voting; simple majority voting standard for bylaw amendments; special meeting rights; no poison pill; clawback, anti-hedging, anti-short-sale and anti-pledging provisions; stock ownership requirements for executives and Directors; external and internal pay parity; regular executive sessions of independent Directors; and annual Board and Committee self-evaluations.
We have formalized board oversight for our ESG program as part of our committee responsibilities under the Compensation and Human Capital Committee, Audit and Risk Management Committee, and the Nominating, Governance and Corporate Responsibility Committee.
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OUR PAY
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation and Human Capital Committee of our Board oversees our compensation programs for executive officers and other employees. This Compensation Discussion and Analysis (“CD&A”) explains the Compensation and Human Capital Committee’s compensation philosophy, summarizes our executive compensation program, and describes compensation decisions for Life Storage’s named executive officers (the “Named Executive Officers”) during 2022. All share, per share, and performance-based award amounts in this “Compensation Discussion and Analysis” section, including all tables in this section, have been adjusted to reflect the impact of the three-for-two distribution of common stock announced by the Company on January 4, 2021 and distributed on January 27, 2021 to shareholders of record on January 15, 2021.
Our Named Executive Officers
The Company’s Named Executive Officers for 2022, known as the “NEOs,” are:
Name | Title | |||||
Joseph V. Saffire | Chief Executive Officer | |||||
Andrew J. Gregoire | Chief Financial Officer | |||||
| Chief Operating Officer |
2023 Leadership Transition
On January 2, 2023, Andrew J. Gregoire retired as Chief Financial Officer of the Company and in connection therewith, the Company and Mr. Gregoire entered into a retirement agreement. The retirement agreement provided that Mr. Gregoire vested in certain restricted shares and shares under previously issued performance awards as of his retirement date. Subsequent to his retirement, Mr. Gregoire has continued to assist the Company as a financial advisor in order to provide for a smooth transition.
The Company appointed Alexander E. Gress as Chief Financial Officer of the Company effective January 2, 2023.
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Fiscal 2022 in Review
| Life Storage delivered strong performance. Life Storage achieved total shareholder return (“TSR”) of 101% for the five-year period ending December 31, 2022, which outpaced the Company’s self-storage peers. | 2022 5-year TSR 101% 2022 WHOLLY $1.4 BILLION CORE FFO/ SHARE $6.51 CORE FFO PER SHARE GROWTH 28.4% 2022 SAME STORE REVENUE GROWTH 15.2% 2022 SAME STORE NOI1 GROWTH 19.4% | |||
Robust acquisition volume. Life Storage continued to accelerate growth throughout 2022 closing on $1.0 billion in wholly owned acquisitions and over $400 million of joint venture acquisitions. 2022’s robust year of acquisitions also pushed us near the 1,200-store threshold, finishing the year at 1,198 self-storage locations across 37 states and the District of Columbia. | |||||
Strong Core Funds from Operations1 (“FFO”) growth. Life Storage achieved 19.9% core FFO per share growth for 4Q 2022 and 28.4% for full year 2022, leading the peer group both in the quarter and full year. | |||||
Compensation program is performance oriented and shareholder aligned. Our CEO received 64% of his 2022 compensation through equity awards, and 48% of his 2022 compensation was performance- conditioned. | |||||
Annual incentives paid at 180% of base salary for each Named Executive | |||||
Long-term incentives, based on relative TSR, paid at 183% of target. In December 2019, the Company |
EXECUTIVE COMPENSATION
(1) | Net operating income (NOI) and Core FFO per share are non-GAAP measures. Refer to pages 25-26 of our 2022 Annual Report on Form 10-K filed on February 24, 2023, for information regarding NOI, including a reconciliation to GAAP net income. Refer to Appendix A for information regarding Core FFO per share, including a reconciliation to GAAP diluted earnings per share. |
Compensation Discussion
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Our Company
Life Storage, Inc. is a fully integrated, self-administered and Analysisself-managed REIT that acquires and manages self-storage properties throughout the United States. Headquartered in Buffalo, New York, the Company employs over 2,500 people and operates over 1,150 self-storage facilities encompassing over 88 million square feet in 37 states and the District of Columbia.
This Compensation Discussion and Analysis describes the material elements of compensation earned by or awarded or paid to each of the Company’s Named Executive Officers during 2015.
Compensation Objectives and Philosophy. As a real estate investment and management company, the Company’s long-term success depends on its ability to acquire, improve, operate, manage and finance self-storageself- storage properties in a manner that will enhance shareholder value, market presence, and operational efficiency. Competitive and marketplace pressures require constant improvements to productivity, innovation in providing customer service, and optimal allocation of capital resources. To achieve these goals, it is critical that the Company be able to attract, motivate, and retain highly talented individuals at all levels of the organization with appropriate skill sets who are committed to the Company’s core values of teamwork, respect, accountability, innovation, and integrity.
Fiscal 2022 Financial and Strategic Performance Highlights
Life Storage delivered strong performance in 2022. The Company’s 2022 achievements include:
Generated net income attributable to common shareholders of $358.1 million, or $4.22 per fully diluted common share.
Achieved core FFO per fully diluted common share of $6.51, a 28.4% increase over the same period in 2021.
Increased same store revenue by 15.2% and same store net operating income by 19.4%, year-over-year.
Acquired 49 wholly owned stores for $974.0 million and one consolidated joint venture store for $29.0 million of which the Company’s net investment is $24.1 million. Eleven of these stores were added from the Company’s third-party management platform.
With our joint venture partners, acquired 25 stores for a total cost of approximately $446.1 million, of which the Company invested $89.3 million.
Added 107 stores (73 stores net) to the Company’s third-party management platform; the Company grew its third-party management portfolio 20% in 2022 despite acquiring 11 previously managed stores. Of the 107 stores, 32 were transitioned from our REIT peers.
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Compensation Philosophy
The Company’s compensation philosophy is to provide compensation programs that reward its executive officers for improving operating results and profitability and align management’s interests with those of shareholders. Compensation is designed to reward achievement of short-termshort- term goals and motivate the executive officers and other employees to create long-term shareholder value and increase total shareholder return. The Company’s incentive compensation program also promotes growth through selective acquisitions and improvements and enhancements to existing properties, obtaining a low cost of funds, and improving operating efficiencies through technical innovation.
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The Compensation Committee of the Board of Directors has oversight responsibilityOur key goal in administering the Company’sdesigning our executive compensation programs determinesis to incentivize decisions and behavior that build long-term shareholder value. The following principles help guide us in designing our pay programs:
Principle | How we achieve this | |
Pay should be linked to performance | ✓ Reward performance that correlates to long-term shareholder value over time by shifting the majority of compensation to long-term incentive awards ✓ Differentiate individual compensation based on current and prospective contributions and demonstrated leadership behaviors | |
Incentivize behaviors and performance that support our strategic objectives | ✓ Short- and long-term incentives tied to the achievement of performance objectives that support progress toward our long-range business objectives ✓ Utilize financial and operational quantitative metrics that are transparent and easily understood | |
Compensation programs aligns with best governance practices | ✓ Encourage initiatives and results consistent with our governing principles, including DEI and ESG ✓ Promote responsible risk taking in line with balance sheet and core value drivers | |
Compensation opportunities competitive with the market | ✓ Reference competitive market compensation information to appropriately compensate executives based on experience, skills and performance. |
Components of the executive officers on an annual basis, and provides guidance over the Company’s overall executive compensation programs.Compensation
The Compensation Committee historically has approached its determination of the compensation of the three senior Named Executive Officers of the Company, Messrs. Attea, Myszka and Rogers, in the same fashion. The Compensation Committee essentially treats these three officers as a team with complementary skill sets and, despite their different roles, expects them to work as a team to achieve Company objectives. Accordingly, compensation of these three executives has been substantially the same until 2015. In 2015, as part of the Company’s succession plan, Mr. Attea did not participate in the Company’s long-term incentive compensation and annual bonus plans. The Compensation Committee uses a similar team approach with Messrs. Gregoire, Powell and Killeen.
The CompensationHuman Capital Committee believes the Company’s compensation programs provide an effective blend of components necessary to reward the achievement of short-term goals and to create long-term shareholder value. The program includes objective performance metrics based primarily upon funds from operations (“FFO”),FFO, one of the key drivers in the real estate investment trust industry, long-term incentives through the use of restricted shares with reasonably long vesting periods, long-term performance basedperformance-based awards, and a subjective
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an individual performance element which provides the Compensation and Human Capital Committee with flexibility to meet changing needs and demands.demands while accounting for cyclicality in the Company’s core business. In addition to rewarding current returns, the programs incentivize long-term growth, emphasizing a strong balance sheet and investment grade credit rating.ratings. The Compensation and Human Capital Committee adjusts the compensation policies from time to time to meet the changing conditions as is evidenced by its recent adoption of a revised Annual Incentive Compensation Plan and its recent revision of its long-term incentive awards.
conditions. Over the last several years, the Company’s compensation programs for the Named Executive OfficersNEOs have been modified to more directly reflect pay for performance. Two-thirds of the potential annual incentive bonus for the Named Executive OfficersNEOs is based upon targeted FFO per share and comparative FFO, and one-third of such bonus is based upon otheron individual performance factors. The bonus is subject to a clawback in certain cases. Also, recent long-termlong- term incentive compensation grants have beenare made in a manner that directly links executive payouts with relative total shareholder return. InTSR.
Our compensation program consists of three basic elements: base salary, annual cash incentive (bonus), and long-term incentive awards as summarized below:
Compensation Element (CEO/Other NEOs Allocation at Target) | Structure/Attributes | |
Base Salary (13% CEO / 22% Other NEOs) Provides a competitively benchmarked fixed level of compensation | • Competitively benchmarked | |
• Increases consider individual and Company’s performance | ||
Annual Cash Incentive (23% CEO / 40% Other NEOs) Based on absolute and relative funds from operations and individual performance evaluation | • Based on corporate and individual performance results, comprised of: | |
• 1/3 based on Funds from Operations | ||
• 1/3 based on Relative Funds from Operations | ||
• 1/3 based on Individual Performance Evaluation | ||
• Payouts are capped at 180% of base salary | ||
Long-Term Incentives (64% CEO / 38% Other NEOs) Designed to align with shareholder value creation and to support retention | • Delivered in a 50/50 mix of performance awards and time-based restricted shares | |
• Performance awards vest over a three- year performance period based on achievement of relative TSR goals | ||
• Time-based restricted shares vest in annual equal installments over a five- year vesting period |
Note that the chart above excludes the compensation of Mr. Gregoire who did not receive any long-term incentive awards in 2022 as a result of the announcement of his planned retirement from the Company.
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Independent Pay Governance
Role of the Compensation Committee’s judgment,and Human Capital Committee
The Compensation and Human Capital Committee has oversight responsibility over the Company’s executive compensation programs, are directly relateddetermines compensation of the executive officers on an annual basis, and provides guidance regarding the Company’s overall executive compensation programs.
The Compensation and Human Capital Committee uses a consistent approach to determine the compensation of each NEO. Despite their different roles, the Compensation and Human Capital Committee considers the NEOs to be a team with complementary skill sets and expects them to work together to achieve Company objectives. Accordingly, the Company uses the same suite of compensation components for each of the NEOs in order to maintain executive alignment amongst the executive team. In making decisions on the individual compensation for each officer, the Compensation and Human Capital Committee also considers, among other items, specific job responsibility, title, performance and contributions made to the Company, competitive conditions and relationship of compensation to other officers. Overall, the executive compensation approach reflects the Compensation and Human Capital Committee’s team approach and reflects the Compensation and Human Capital Committee’s desire to have the NEOs work together to achieve common goals.
Role of the Independent Compensation Consultant
Under its charter, the Compensation and Human Capital Committee has the authority, in its sole discretion, to retain or obtain the advice of a compensation consultant. Such committee determined to retain NFP as its independent compensation consultant in 2022. The Compensation and Human Capital Committee did not engage any other consultants to provide executive compensation consulting services on its behalf during the 2022 fiscal year.
NFP assists the Compensation and Human Capital Committee in developing a competitive total compensation program that is consistent with our philosophy of goal-oriented pay for performance and that allows us to attract, retain and motivate talented executives. For 2022, NFP’s services included providing an annual analysis of the compensation of our officers and directors and their counterparts at peer companies. The analysis compares each element of compensation and total direct compensation awarded by executives.Life Storage and by our peers to our respective executive officers and directors. In addition, for 2022, NFP helped the Compensation and Human Capital Committee consider the allocation between annual incentive pay and long- term equity-based compensation and between the types of long-term equity-based incentive awards. NFP reports exclusively to the Compensation and Human Capital Committee. The Compensation and Human Capital Committee reviews NFP’s independence on an annual basis. In 2022, as in previous years, the Compensation and Human Capital Committee determined that there were no conflicts of interest involving NFP as a result of any current, historical, or pending engagement. Specifically, the Compensation and Human Capital Committee determined that NFP was an independent adviser based on the following considerations:
NFP supplies no services to Life Storage other than those as advisor to the Compensation and Human Capital Committee.
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• | NFP has implemented a stock trading policy to prevent its consultants from trading client stock inside of client black-out trading periods. Additionally, if any consultants purchase Life Storage stock, the owners of NFP must be notified as well as Life Storage. |
Neither NFP nor its representatives to Life Storage maintains any business or personal relationship with any Life Storage executive officer or Compensation and Human Capital Committee member that would adversely impact NFP’s independence or that would create any conflict of interest.
Neither NFP nor its representatives to Life Storage (including their immediate family members) owns any Life Storage stock.
Life Storage’s fees to NFP in 2022 amounted to less than 1% of NFP’s total 2022 annual revenue.
The Compensation and Human Capital Committee continues to monitor the independence of its compensation consultant on a periodic basis.
2022 Say-on-Pay Vote
At the Company’s 2015 annual meeting,2022 Annual Meeting, the Company held a non-binding shareholder Shareholder advisory vote on executive compensation (“say-on-pay”). The Company’s shareholdersShareholders approved the compensation of the Company’s executive officers with approximately 97%94% of voted shares cast in favor of the say-on-pay resolution. As part of its executive compensation discussions, the Compensation and Human Capital Committee has reviewed the results of the 2015 2022 say-on-pay vote and considered it to be supportive of the Company’s compensation practices. In light of such strong shareholderShareholder support and recent modifications the Compensation and Human Capital Committee made in compensation programs to directly reflect pay for performance, the Compensation and Human Capital Committee determined that fundamental changes in the Company’s compensation policies were not necessary in 2015.2022. The Company has held an advisory vote on executive compensation every year since 2011. At the Company’s 2011 annual meeting,2017 Annual Meeting, the Company’s shareholdersShareholders expressed a preference that advisory votes on executive compensation continue to occur every year. Consistent with this preference, the Board of Directors has determined to implementcontinue the practice of having such an advisory vote on executive compensation every year untilyear. The Board has recommended that such practice continue as set forth in the next required voteproposal on the frequency of shareholder votes on the compensation of executive officers.
in this proxy statement. The Company does not plan to time, and has not timed, its release of material non-public information for the purpose of affecting the value of executive compensation.
Components ofProcess for Determining Executive Compensation. For 2015,
The Compensation and Human Capital Committee generally reviews and makes its decisions regarding the annual compensation of our NEOs at its regular meetings. These decisions include determining annual incentive plan award payouts for the Named Executive Officers consisted ofprior year’s performance and adjustments to base salary, establishing incentive opportunities and applicable performance objectives for the following components generally used in prior years: (i) base salary; (ii)current year’s annual incentive plan awards and granting long-term equity-based incentive awards for the current year. The Compensation and Human Capital Committee also adjusts compensation as necessary at other times during the year, such as in the case of promotions, other changes in employment status,
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significant corporate events, or for competitive purposes. The Compensation and Human Capital Committee assesses each NEO’s impact during the year and overall value to Life Storage, specifically considering:
The NEO’s leadership skills;
Recommendations from our CEO (discussed in the following paragraphs) and the independent compensation consultant;
Impact on strategic initiatives;
Performance in the NEO’s primary area of responsibility;
The NEO’s role and trajectory in succession planning and development; and
Other intangible qualities that contribute to corporate and individual success.
Annually, our CEO provides the Compensation and Human Capital Committee with an evaluation of his own performance payablethat is based, in cash, orlarge part, upon the Company’s performance, as otherwisewell as his broad leadership roles as CEO and our lead representative to the investment community. The Compensation and Human Capital Committee evaluates our CEO on these and other criteria, and his total compensation package is determined entirely by the Compensation Committee; (iii) long-term incentiveand Human Capital Committee, based on its evaluation and input from the compensation payable in stock options, restricted stock and/consultant, and reflects his performance, Life Storage’s performance and competitive industry practices. Each year, our CEO evaluates each of the other NEOs and makes compensation recommendations to the Compensation and Human Capital Committee. In developing his recommendations, the CEO considers input from internal compensation experts, as well as performance against the Company’s performance metrics and each NEO’s performance against his or performance-based awards;her individualized goals. The compensation consultant reviews and
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(iv) other benefits2022 Compensation Peer Group
The Compensation and Human Capital Committee refers to data regarding compensation awarded to similarly situated officers by companies in the Compensation Peer Group (as defined below) to ensure that our NEOs’ base salaries, target annual incentive award opportunities and equity grants are competitive and reasonably aligned to the external market. This Peer Group is intended to reflect North American based REITs that compete with Life Storage for executive talent and have comparable activity/scope of operations (the “Compensation Peer Group”). This group was developed taking into consideration metrics including perquisites.revenue, market capitalization, enterprise value, investment strategy, earnings before interest, taxes, depreciation and amortization (“EBITDA”), comparability of asset portfolio, optical perspectives and the availability of compensation data. The Named Executive Officers are also entitled to receive severance benefits in accordance with their employment agreements, although no such benefits were paid in 2015.
Following is a discussioncomposition of the Compensation Committee’s considerationsPeer Group is reviewed annually to ensure competitive alignment and comparability. For 2022, in establishingorder for Life Storage to rank at or close to the components of compensation for the Named Executive Officers for 2015.
Base Salary. Base salary is the guaranteed elementmedian of the Named Executive Officers’ annual cash compensation. The valueCompensation Peer Group with respect to the key metrics of base salary generally reflects the executive’s position, actual performance, skill set and the market value of that skill set. A competitive salary structure is the most fundamental component of executive compensation used by the Compensation Committee to assist in attracting and retaining qualified executives.
In setting base salaries, the Compensation Committee has historically considered recommendations of its compensation consultant, Longnecker & Associates, and comparisons to executive officers of public real estate companies withrevenue, market capitalization and enterprise value, similar to that of the Company, such as EastGroup Properties Inc., Lexington Realty Trust, PS Business Parks, Inc., CubeSmart, Extra Space Storage, Inc., and Cousins Properties Inc. The Compensation Committee has used this data to test for reasonableness and competitiveness of base salaries but has not specifically targeted or “benchmarked” a certain level of base salary within such comparative group. Each year based upon such advice and the executive officers’ performance, the Compensation and Human Capital Committee, determinesin consultation with its independent compensation consultant, made adjustments to the salaries of the Named Executive Officers.2021 Compensation Peer Group is as follows:
Company | 2021 Peer Group | 2022 Peer Group | ||
American Campus Communities, Inc. | ● | |||
Brandywine Realty Trust | ● | ● | ||
Camden Property Trust | ● | ● | ||
Cousins Properties Incorporated | ● | ● | ||
CubeSmart | ● | ● | ||
CyrusOne Inc. | ● | |||
EastGroup Properties, Inc. | ● | ● | ||
Extra Space Storage Inc. | ● | ● | ||
Highwoods Properties, Inc. | ● | |||
Lexington Realty Trust | ● | |||
National Storage Affiliates Trust | ● | ● | ||
PS Business Parks, Inc. | ● | |||
STAG Industrial, Inc. | ● | ● |
In 2015,December 2022, the Compensation Consultant again provided the Compensation Committee with advice and information based upon the same comparisons as historically provided. Based upon such comparison and the performance of each of the executive officers, the Compensation Committee established the base salaries of each of Messrs. Attea, Myszka, and Rogers at $548,000 for 2015, and base salaries for each of Messrs. Gregoire, Powell, and Killeen, at $304,500 for 2015. In addition to individual performance and other factors, the Compensation Committee determined that such increases were appropriate to make the salaries more competitive with the salaries of the comparative companies. For 2015, the base salaries of Messrs. Attea, Myszka, and Rogers were in approximately the 50th percentile as compared to the comparative companies.
In 2016, Longnecker & Associates again provided the Compensation Committee with advice and information based upon the same comparisons as historically provided. Based upon such advice and the performance of each of the Executive Officers, the Compensation Committee established the base salaries for 2016 for each of Messrs. Attea, Myszka and Rogers at $570,000 and for each of Messrs. Gregoire, Powell, and Killeen at $320,000.
Annual Incentive Awards. In addition to annual base salary, the Company has generally paid annual bonuses to the Named Executive Officers based upon annual bonus guidelines. These bonus guidelines have been established in order to align the Named Executive Officers’ goals with the Company’s sales and earnings growth objectives for the year, and have been modified from time to time by the CompensationHuman Capital Committee, with the assistance of its independent compensation consultant, approved the peer group for fiscal 2023. Two companies, American Campus Communities, Inc. and CyrusOne Inc., were removed due to acquisition. Two companies, Kilroy Realty Corporation and UDR, Inc., were added due to financial similarity.
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2022 Compensation Components
Our executive compensation program consists of three main components: base salary, annual cash incentive (bonus), and long-term incentive awards which include both time- based and performance-based equity awards. The Compensation and Human Capital Committee has also adopted guidelines for the structure and administration of these programs. Below are the components of our compensation program along with the relative weight of each component for our CEO:
Base Salary
The Compensation and Human Capital Committee annually reviews executive officer base salary levels, typically at the beginning of the year, with a goal of providing competitive, fixed cash compensation. The Compensation and Human Capital Committee generally seeks to maintain executive base salaries near the median level of salaries for comparable positions in the Compensation Committee’s compensation consultant,Peer Group (as defined below). Due to best respondLife Storage’s continuing strong operating results, the comparison to changesexternal and internal pay levels, expected increases in industry conditions. Thus,base pay of executives at the Compensation Committee, consistent with historical practicesPeer Group companies and what it believes are compensation best practices, has regularly reviewed the metricsrate of pay increases for our non-executive officers, the guidelines2021 and 2022 base salaries for our NEOs serving as of December 31, 2022 were as follows:
Name | 2021 Base Salary | 2022 Base Salary | Difference | % Difference | ||||||||||||
Joseph V. Saffire | $ | 680,000 | $ | 740,000 | $ | 60,000 | 8.8 | % | ||||||||
Andrew J. Gregoire | $ | 450,000 | $ | 465,750 | $ | 15,750 | 3.5 | % | ||||||||
David P. Dodman | $ | 258,750 | (1) | $ | 350,000 | $ | 91,250 | 35.3 | % |
(1) | Mr. Dodman’s 2021 base salary reflects his salary as the Company’s Senior Vice President, Strategic Planning and Investor Relations. |
Annual Incentive Award
For 2022, our NEOs were eligible to ensure theearn annual incentive awards are appropriately motivating key employees and rewarding such key employees for Company performance. Based upon this review, the Board of Directors has adopted the Sovran Self Storage, Inc.under Life Storage’s Annual Incentive Compensation Plan for Executive Officers (the “Plan”). These annual awards are primarily based upon the level of achievement across a defined set of Company performance
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measures aligned with shareholder value creation and advancement of strategic goals, with a portion of individual awards modified based on the NEO’s individual performance.
Under the Plan, the Named Executive OfficersNEOs are entitled to annual bonuses based upon certain performance metrics set by the Compensation and Human Capital Committee. The three performance metrics under the Plan are based upon (i) achieving a percentage growth in “targeted” FFO (the “FFO Award Percentage”); (ii) achieving percentage increases in FFO per share that compare favorably to the growth achieved by publicly traded competitors of the Company (Public Storage, Extra Space Storage, Inc., and CubeSmart) (the “Peer Companies Award Percentage”); and (iii) the participant’s overall performance for the year based upon factors determined
1/3 FFO Award Percentage | + | 1/3 Relative FFO Increase | + | 1/3 Individual Performance | = | Annual Incentive Opportunity |
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by the Compensation Committee (the “Performance Award Percentage”). The maximum bonus that can be earned under each of the three components is 60% of salary for an aggregate maximum bonus of 180% of salary.
The Plan embodies performance metrics that the Compensation Committee has found most effective over the years in measuring successful performance and focusing executives on key measures of company performance. Two-thirds of the maximum potential bonus awards are based upon metrics related to FFO per share. FFO is computed in accordance with the National Association of Real Estate Investment Trusts (“NAREIT”) guidelines and is used by industry analysts and investors as a supplemental operating performance measure of an equity REIT. FFO excludes historical cost depreciation, among other items, from net income determined in accordance with generally accepted accounting principles, or GAAP. The most comparable GAAP measure is net income (loss). income. Under the Plan, the Compensation and Human Capital Committee may make adjustments to FFO to eliminate the impact of unusual and unforeseen factors.
For an explanation of how the Company calculates FFO, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015,2022, filed with the SEC. The Compensation Committee believes FFO per share is an extremely important measurement of successful performance and that rewarding FFO per share growth aligns the interests of management and shareholders. The Performance Award Percentage portion of the award enables the Board to reward conduct that may not be reflected in the year’s annual metrics but contributes substantially to the long-term success of the Company.Securities Exchange Commission (“SEC”).
As described below, the bonuses paid to the Named Executive Officers pursuant to the Plan for 2015 equaled 140% of base salary. The performance metrics under the Plan and the awards for 2015 are further described below:
FFO Award Percentage.
The first metric pursuant to the Plan allows each Named Executive OfficerNEO to earn a bonus of up to 60% of base salary based upon the FFO per share for the Company for the bonus year compared to the FFO Target for the Company for such year. The FFO Target for a bonus year is the midpoint of the FFO per share range initially publicly announced by the Company as its earnings guidance for such year. No bonus is earned unless at least 97.5% of the FFO Target is achieved and, in order for the maximum bonus to be earned, 102.5% of the FFO Target must be achieved. The award percentage for each level of FFO per share is as follows:
Company’s FFO per Share | Award Percentage | |||
Less than 97.5% of FFO Target | ||||
97.5% or more but less than 98.75% of FFO Target | ||||
98.75% or more but less than 100% of FFO Target | ||||
100% of FFO Target | ||||
More than 100% but less than 101.125% of FFO Target | ||||
101.125% or more but less than 102.5% of FFO Target | ||||
102.5% or more of FFO Target |
The Company’s actual adjusted FFO per share in 2015 as defined in the Plan was $4.94 or 103.1% of the FFO Target established at the beginning of $4.79. Accordingly, the Named Executive Officers were paid2022 was $5.98 per share. Actual achievement was 108.9% of target, yielding a bonuspayout on this award of 60% of theireach NEO’s respective base salaries with respect to this metric.salary.
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Peer Companies Award Percentage. (Relative FFO Increase)
The second metric pursuant to the Plan allows each Named Executive OfficerNEO to earn a bonus of up to 60% of base salary based upon the percentage increase of FFO per share for the Company for the 12-months ending September 30 of the current year over the FFO per share for the Company for the same period of the previous year as compared with that of certain publicly-tradedmost closely related publicly traded competitors (Public Storage, Extra Space Storage Inc., and CubeSmart). Under this metric, if the Company’sfollowing award percentages are earned based on the number of peer companies’ FFO growthGrowth per share does not exceed any of these companies, no bonus is earned; ifexceeded by the Company’sCompany:
Number of Peer Companies’ FFO Growth per Share Exceeded by the Company | Award Percentage | |||
Zero | 0% | |||
One | 20% | |||
Two | 40% | |||
Three | 60% |
In 2022, our FFO growthGrowth per share exceeds one of these companies, a bonus of 20% of base salary is earned; if the Company’s FFO growth per share exceeds two of these companies, a bonus of 40% of base salary is earned; and if the Company’s FFO growth per share exceeds allShare exceeded three of the peer companies, the maximum bonusour peers’ FFO Growth per Share; therefore, each NEO received a payout on this award of 60% of each NEO’s respective base salary is earned. The Company’s FFO growth per share from 2014 to 2015 as defined by the Plan was approximately 12.2% and this percentage
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exceeded the FFO growth per share of one of the peer companies. Accordingly, the Named Executive Officers were paid a bonus of 20% of their base salaries with respect to this metric.
Individual Performance Award Percentages. Percentage
The third metric pursuant to the Plan allows each Named Executive OfficerNEO to earn a bonus of up to 60% of base salary based upon the Compensation and Human Capital Committee’s review of the participant’s overall performance for athe year based upon factors determined by the Compensation and Human Capital Committee in its discretion. These factors, which are not subject to pre-determined targets or measures, include considerations based upon the participant’s performance related to improvements in same store revenues, expenses and net operating income,income; results of expansions and enhancements,enhancements; marketing innovations,innovations; monitoring and improving enterprise risk management and legal compliance programs,programs; the use of funds from property dispositions,dispositions; maintenance of cost control programs,programs; financing growth including joint venture initiatives and improvements to shortshort- and long-term debt structures,structures; succession planning,planning; results related to acquisition and disposition of propertiesproperties; achievement of human capital and ESG objectives; and such other matters as the Compensation and Human Capital Committee deems appropriate.
For 2015,2022, the Compensation and Human Capital Committee evaluated and assessed each NEO’s performance during the year against the following strategic initiatives:
Continue to expand our footprint by adding stores and square footage to our portfolio in key markets through wholly owned acquisitions, expansion of our third- party management platform and strategic joint venture relationships.
Leverage the use of technology and data to continue to optimize our operating model, drive enhanced operational efficiencies and support informed business decisions.
• | Continue to invest in talent and culture by providing an excellent employee experience that allows us to attract and retain a best-in-class workforce consistent with our ESG initiatives. |
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Maintain keen focus on investor survey performance and expanded ESG governance resulting in multiple ESG/social-related awards.
Utilize balance sheet strength to strategically deploy capital and support profitable growth.
For 2022, the Compensation and Human Capital Committee awarded a bonus of 60% of base salary under this metric to the Named Executive Officers.each NEO. This award was based on a number of factors and accomplishments, including wholly owned and joint venture acquisitions completed by the Company in 2022, the expansion of the Company’s total shareholder return,third-party management business in 2022, the significant increaseincreases in same store sales and net operating income, and progress on our ESG initiatives.
2022 Compensation Program Outcomes
For 2022, Mr. Saffire received a cash bonus of $1,332,000, Mr. Gregoire received a cash bonus of $838,350, and Mr. Dodman received a cash bonus of $630,000. Such bonuses are comprised of:
Each of Messrs. Saffire, Gregoire and Dodman were paid a bonus equal to 60% of their base salaries with respect to the successFFO metric based upon the Company’s actual core FFO per share of $6.51 in 2022 compared to the FFO Target established in February 2022.
The Company’s FFO growth per share from 2021 to 2022 as defined by the Plan was approximately 32.0% which exceeded the FFO growth per share of all three of the Peer Companies as defined in the Plan. Accordingly, the NEOs were each paid a bonus of 60% of their respective base salaries.
Based on performance against the Board’s goals for the NEOs, the Compensation and Human Capital Committee awarded Messrs. Saffire, Gregoire and Dodman a bonus of 60% of their respective base salaries for reasons further discussed above.
The following table shows the annual incentive bonus, including the respective formulaic and individual components, paid to each NEO serving as of December 31, 2022:
Name | Base Salary |
Formulaic | Individual Component | Total Cash Compensation | ||||||||||||
Joseph V. Saffire | $ | 740,000 | $ | 888,000 | $ | 444,000 | $ | 2,072,000 | ||||||||
Andrew J. Gregoire | $ | 465,750 | $ | 558,900 | $ | 279,450 | $ | 1,304,100 | ||||||||
David P. Dodman | $ | 350,000 | $ | 420,000 | $ | 210,000 | $ | 980,000 |
Long-Term Incentive Award
Each year, we grant our NEOs long-term equity-based incentive awards. The Compensation and Human Capital Committee determines the amount of these awards, as well as the mix of time- and performance-based awards. When considering the total long- term equity-based incentive award amount granted to each NEO, the Compensation and
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Human Capital Committee generally reviews the comparison to the Compensation Peer Group, the relative value of each compensation element, the expense of such awards, and the impact on dilution. The Compensation and Human Capital Committee intends that long-term equity-based incentive award amounts approximate the median total direct compensation of the 2022 Compensation Peer Group if Life Storage’s performance falls at the median of its peers, with the ability to achieve above-median pay for superior performance.
Accordingly, for 2022, the Compensation and Human Capital Committee evaluated competitive compensation data, Life Storage’s recent performance, and the role of each NEO in achieving Company objectives for long-term equity-based incentive award amounts for the other NEOs. Based on its evaluations and considering the market 50th percentile, the Compensation and Human Capital Committee approved the following time- based restricted stock and performance-based awards for the NEOs serving as of December 31, 2022:
Name | Restricted Stock # | Target Performance- Based # | Annual Award Value Approved | |||||||||
Joseph V. Saffire | 16,746 | 16,746 | $ | 3,645,433 | ||||||||
David P. Dodman | 2,791 | 2,791 | $ | 607,606 |
Mr. Gregoire was not granted any restricted stock or performance-based awards in 2022 due to his retirement effective January 2, 2023.
The following illustrates Life Storage’s 2022 long-term incentive award structure:
Award Type | Weighting | Purpose | Key Features | |||
Performance Awards | • Incentivize long-term performance and continued employment • Aligns pay with shareholder value creation • Relative TSR reflects all elements of a company’s performance | • Actual number of performance awards is earned based on our relative TSR compared to our “Performance Peer Group” • Awards cliff-vest at the end of the 3-year performance period • The number of earned shares may range from 0% to 200% of target | ||||
Time-based Restricted Stock Awards | • Incentivize retention • Align interests of our executives with those of our shareholders | • 5-year ratable vesting to promote long-term retention |
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Performance Peer Group
For the 2022 awards, the Performance Peer Group changed slightly from the 2021 awards at the advice of NFP. American Campus Communities, Inc. and CyrusOne Inc. are no longer included in the Performance Peer Group while Kilroy Realty Corporation and UDR, Inc. were added to the Performance Peer Group. The 2022 Performance Peer Group includes Life Storage and the following companies:
Brandywine Realty Trust | EastGroup Properties, Inc. | National Storage Affiliates Trust | ||
Camden Property Trust | Extra Space Storage Inc. | STAG Industrial, Inc. | ||
Cousins Properties Incorporated | Highwoods Properties, Inc. | UDR, Inc. | ||
Cube Smart | Kilroy Realty Corporation |
The 2022 performance-based awards will be determined based on the TSR of each company in the 2022 Performance Peer Group as outlined above for the performance period beginning December 15, 2022, and ending December 14, 2025, with a single award opportunity at the end of the performance period. Specifically, payment of awards will be made in shares of Life Storage stock based on Life Storage’s relative TSR rank for the performance period ending December 14, 2025, as follows:
Payout Level | Performance Percentile Rank | Payout Factor | ||||||
Maximum | 100 | % | 200 | % | ||||
91 | % | 183 | % | |||||
83 | % | 166 | % | |||||
75 | % | 150 | % | |||||
66 | % | 133 | % | |||||
58 | % | 116 | % | |||||
Target | 50 | % | 100 | % | ||||
41 | % | 75 | % | |||||
33 | % | 50 | % | |||||
Threshold | 25 | % | 25 | % | ||||
<25 | % | 0 | % |
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Outcome of 2019 Long-term Performance Awards
In February 2023, the Compensation and Human Capital Committee determined the outcome of the long-term performance-based awards made to the NEOs on December 19, 2019 under the Company’s 2015 Award and Option Plan. These awards had a measurement period beginning on December 20, 2019 and ending on December 19, 2022, utilizing relative TSR as the performance criterion. Based on Life Storage’s performance rank of 92nd percentile relative to the performance peer group described in the awards, Life Storage earned a performance factor of 183%. As such, Mr. Saffire received 32,479 shares of the Company’s follow-on common stock offering and the acquisitionMr. Gregoire received 11,043 shares of $281.2 million of storage facilities for the Company’s account.
Form of Payment. The Plan provides that bonuses shall be paid in such form as determined by the Compensation Committee. For 2015, the Compensation Committee determined that the annual bonus earned by the Named Executive Officers was to be paid entirely in cash. Thus, Messrs. Myszka, Rogers, Gregoire, Powell, and Killeen received cash bonuses of $767,200, $767,200, $426,300, $426,300, and $426,300, respectively. Mr. Attea is no longer eligible for this bonus planstock as a result of these awards. The following table illustrates Life Storage’s relative ranking and performance payout for the amendmentsDecember 2019 long-term performance-based awards:
Named Executive Officer | 2019 Target Performance Shares | Payout Factor | Total Performance Shares Earned | |||
Joseph V. Saffire | 17,748 | 183% | 32,479 | |||
Andrew J. Gregoire | 6,035 | 183% | 11,043 |
2023 Compensation Components
Base Salary
The Compensation and Human Capital Committee, with advice from NFP, determined that individualized merit-based increases to his employment agreement entered intothe base salary rates for 2023 of our Executive Officers as partof January 1, 2023 were warranted. In determining the amount of the Company’s succession plan.
“Clawback”. The Plan provides that bonuses, to the extent resulting from restated financial statements of the Company due a recipient’s misconduct shall, asbase salary increases for 2023, the Compensation and Human Capital Committee deems appropriate, be returnedconsidered the current 2023 organizational outlook, the relative nature of internal and external pay levels, and expected increases in base pay of executives within the 2022 Compensation Peer Group companies in order to determine 2023 levels. The following outlines the Company. Similarly,approved base salary levels for Life Storage’s Executive Officers for 2023:
Name | 2022 Base Salary | 2023 Base Salary | Difference | % Difference | ||||||||||||
Joseph V. Saffire | $ | 740,000 | $ | 775,000 | $ | 35,000 | 4.7 | % | ||||||||
Alexander E. Gress(1) | $ | 250,000 | $ | 375,000 | $ | 125,000 | 50.0 | % | ||||||||
David P. Dodman | $ | 350,000 | $ | 400,000 | $ | 50,000 | 14.3 | % |
(1) | Mr. Gress’s 2022 base salary reflects his salary as the Company’s Vice President, Finance, Corporate Planning and Investor Relations. |
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Executive Compensation Policies and Practices
What We Do: | ||
✓Alignment with Shareholders. Long-term incentive awards vest over periods of several years to reward sustained Company performance over time. | ||
✓ Mix of Awards. Our executive compensation program contains both cash and equity components and is weighted heavily toward long-term equity-based incentives, with a mix of these incentives among performance-based stock awards and restricted stock or restricted stock awards. | ||
✓Share Ownership Guidelines. Our NEOs must hold equity of a value equivalent to five times their respective base salaries. | ||
✓Clawbacks. If we restate our financial statements, other than as a result of changes to accounting rules or regulations, we may recover incentive compensation that was paid or granted in the three-year period prior to the restatement, regardless of whether misconduct caused the restatement. In addition, if an officer commits a significant legal or compliance violation, including the Company’s Code of ethics, we may seek recovery of incentive compensation awarded for the performance period in which the violation occurred. The policy covers executive officers subject to Section 16 of the Securities Exchange Act of 1934. | ||
✓Double-Trigger Severance. Cash severance in connection with a change in control is paid only if an actual or constructive termination of employment also occurs. | ||
✓Annual Risk Assessments. The Compensation Committee analyzes risk in setting executive compensation each year. | ||
✓Peer Group Comparison. With the help of independent compensation consultants, we annually analyze executive compensation relative to peer companies and published survey data for peer companies. | ||
✓Decisions by Independent Compensation Committee. Executive compensation is determined by committee of the Board comprised solely of independent directors. | ||
✓Independent Compensation Consultant. The Compensation Committee retains its own independent consultant to advise on compensation matters. | ||
What We Do Not Do: | ||
×No Automatic Base Salary Increases. Our NEOs’ base salaries are reviewed annually and the decisions are based on market data provided by our independent compensation consultants. | ||
×No Hedging and Pledging Company Stock. Our policies prohibit the pledging and hedging of our stock by our executives and directors. | ||
×No Repricing of Stock Options. We do not permit the repricing of stock options without shareholder approval. |
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Policies and Practices Related to Risk Management
The Compensation and Human Capital Committee has discussed and analyzed the concept of risk as it relates to our compensation programs and believes that our compensation programs do not encourage excessive and unnecessary risk-taking. The Compensation and Human Capital Committee, may make adjustments in bonuses to the extent they were affected by misstatements in the audited financial statements of other companies.
Long-Term Incentive Awards. In 2015, the Compensation Committee again reviewed, with the assistance of Longnecker & Associates, its long termNFP, arrived at this conclusion for the following reasons:
Although the majority of the compensation provided to our executives is variable and linked to performance, we believe an appropriate portion of their total compensation is fixed. The fixed (salary) portion provides a steady income regardless of Life Storage’s stock performance and allows executives to focus on our business without an excessive emphasis on our stock price performance.
Our annual incentive award practiceplan awards are determined based on Company and individual performance measures, both operational and strategic, which mitigates excessive risk-taking that could produce unsustainable gains in orderone area of performance at the expense of our overall long-term interests. The Company goals are designed to continue to align the interest of management with shareholders,ensure a proper balance between stock performance, operational measures and provide retention incentives. After such review, in December 2015,strategic goals. In addition, the Compensation and Human Capital Committee awarded a blendsets performance goals that it believes are reasonable in light of (i)our past performance, then-current business projections, and market conditions. Moreover, our annual incentive plan awards are subject to maximum payout caps that limit the amount an executive may earn for certain of the operational measures.
A portion of our long-term equity-based incentive awards consists of time-based restricted stock awards, which vest over five years and (ii)retain value even in a depressed market, so executives are less likely to take unreasonable risks. Another portion (50% of the total award value in the case of our NEOs for 2022) consists of performance-based awards that measure our TSR over a specified period relative to the TSR performance based-awardsof certain peer companies over the same period, which encourages a longer-term focus.
Our stock ownership guidelines reduce the likelihood of unnecessary risk-taking because our executive officers are required to own a meaningful amount of Life Storage stock.
In light of the above, the Compensation and Human Capital Committee believes the various elements of our executive compensation programs sufficiently motivate our executives to act in the interests of Life Storage’s sustained long-term growth and performance.
Stock Ownership Guidelines
The Compensation and Human Capital Committee believes that meaningful stock ownership by our officers is important in aligning management’s interests with the interests of our Shareholders. We have implemented stock ownership guidelines that require NEOs to maintain consistent ownership of Life Storage stock based on five times the executive’s annual base salary. New executive officers have five years to meet this goal. Each NEO as of December 31, 2022, has met these guidelines and/or is within the five year period provided to meet these guidelines.
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Benefits and Perquisites
In addition to the components of total direct compensation described above, our executive compensation program includes other elements of compensation that are earned based upondesigned primarily to attract, motivate and retain executives critical to our long-term success and to provide a competitive compensation structure.
Clawbacks to Recoup Compensation
We have a Policy Regarding the Company’s relative total shareholder return, withRecoupment of Certain Compensation Payments that covers all executive officers that are subject to Section 16 of the award having a targeted value based upon 200%Securities Exchange Act of base salary for Messrs. Myszka and Rogers, and 220% of base salary for Messrs. Gregoire, Powell and Killeen. Such values were consistent with the recommendations of Longnecker & Associates. Mr. Attea was not granted an award1934, as amended. If we restate our financial statements, other than as a result of changes to accounting rules or regulations, we may recover incentive compensation that was paid or granted in the amendmentsthree-year period prior to his employment agreement entered into as partthe restatement, regardless of whether misconduct caused the restatement.
In April 2022, the Board of Directors amended the policy by unanimous consent to add that the Company may recover some or all of the incentive compensation awarded if an executive officer commits a material legal or compliance violation, including a violation of the Company’s succession plan. The specificsCode of the 2015 awards are further described below:
Long Term Incentive Restricted Stock Awards. The long term incentive restricted stock awards vest over a three year period, with one-third of such shares vesting each year.
Performance-Based Awards. The performance-based awards are earned based upon the Company’s relative total shareholder return over a three year period as compared to the following peer group: EastGroup Properties Inc., Lexington Realty Trust, PS Business Parks, Inc., CubeSmart, Extra Space Storage, Inc., Cousins Properties, Incorporated, National Retail Properties, Inc., Washington Real Estate Investment Trust, Glimcher Realty Trust, Public Storage, Pennsylvania Real Estate Investment Trust, Equity One, Inc., Mid-America Apartment Communities, Inc., First Industrial Realty Trust, Inc., Acadia Realty Trust, Highwoods Properties Inc. and the Dow Jones Equity REIT Index. For purposes of the awards, total shareholder return is determinedEthics, for the Company and the peer group, by dividing (a) the sum of common stock price appreciation and dividends of the respective company during the performance period by (b)in which the common stock price of such company atviolation occurred. In determining whether to seek recovery for legal and compliance violations, the beginningCompensation and Human Capital Committee may take into account any factors it deems relevant and how much incentive compensation to recoup, e.g., the seriousness of the performance period.
Severance Benefits
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At the endThe Company has entered into employment agreements with each of the three year period, the performance-based awards are earned based upon the Company’s position in a ranking of the peer group based upon respective total shareholder return over the three year period (“Performance Rank”). No shares will be earned if threshold performance is not achieved. Provided threshold performance is achieved, an applicable percentage of the shares between 50% and 200% will be earned, with 50% of the shares earned if threshold performance is achieved, 100% earned if target performance is achieved and 200% earned if maximum performance is achieved. The table below sets forth the applicable percentage of shares which will be earned based upon the Company’s applicable Performance Rank over the three year period:
Performance Rank | Applicable Percentage of Target Number | |
1 | 200% (Maximum Performance) | |
2 | 188% | |
3 | 176% | |
4 | 165% | |
5 | 153% | |
6 | 140% | |
7 | 125% | |
8 | 110% | |
9 | 100%(Target Performance) | |
10 | 90% | |
11 | 80% | |
12 | 70% | |
13 | 60% | |
14 | 50% (Threshold Performance) | |
15 | 0% | |
16 | 0% | |
17 | 0% | |
18 | 0% |
Target Value. The Compensation Committee determined the number of shares to be awarded based upon a target value of 200% of the base salary for Messrs. Myszka and Rogers and 220% of base salary for Messrs. Gregoire, Powell and Killeen, with 50% of such value awarded in long-term incentive restricted stock and 50% of such value awarded in performance-based awards (based upon target performance). The actual number of shares and awards was computed based upon the fair market value of the Company’s common stock on the day of the grant (i.e. $105.46) and reflects that the performance-based awards could vest at two times their target value in the event maximum performance is achieved. Thus, the long-term incentive restricted stock awards to each of Messrs. Myszka, and Rogers were for 5,196 shares. The long-term incentive restricted stock awards to each of Messrs. Gregoire, Powell, and Killeen were for 3,176 shares. The performance-based awards to each of Messrs. Myszka, and Rogers will be 5,196 shares if target performance is achieved. The performance-based awards to each of Messrs. Gregoire, Powell, and Killeen will be 3,176 shares if target performance is achieved. These awards were made under the 2015 Award and Option Plan previously approved by shareholders.
Severance Benefits. Each of the Named Executive Officers is a party to an employment agreementNEOs with severance benefits. A description of the terms of the agreements can be found under the heading “Employment Agreements” beginning on page 29 ofwithin this Proxy Statement. In entering into these agreements, the Compensation and Human Capital Committee desired to assure that the Company would have the continued dedication of the Named Executive Officers,NEOs, notwithstanding the possibility of a change in control, and to retain such Named Executive OfficersNEOs in ourits employ. The Compensation and Human Capital Committee believes that, should the possibility of a change in control arise, the Company should be able to receive and rely upon the Named Executive Officers’NEOs’ advice as to the best interests of ourthe Company and without the concern that such Named Executive OfficerNEO might be distracted by the personal uncertainties and risks created by a potential change in control. The actual benefits and payments to be made to the Named Executive Officers,NEO, as set forth in the employment agreements, were determined based on the
21
Compensation and Human Capital Committee’s business judgment, advice received by the Compensation and Human Capital Committee from its compensation consultant, and negotiations with each officer at the time of entering into the agreements.
Other Benefits. The Named Executive Officers also receive benefits offered to all full time employees of the Company, including medical insurance coverage, disability insurance, life insurance and matching contributions to the Company’s 401(k) Plan. Under the terms of the applicable welfare benefit plans, the cost of these employee benefits is partially borne by the employee, including each Named Executive Officer. These plans are nondiscriminatory except that Messrs. Attea, Myszka, and Rogers may be reimbursed for medical expenditures not covered by the Company’s standard plan. In 2015, Messrs. Attea and Myszka received reimbursements of $2,367 and $7,379, respectively. The benefits paid to the Named Executive Officers in 2015 are included in the
Life Storage, Inc. 2023 Proxy Statement
- 58 -
Summary Compensation Table below.
Perquisites. In addition, Messrs. Attea, Myszka, and Rogers each receive $15,600 per year to be applied to automobile allowance, club memberships and miscellaneous expenses. The dollar value of perquisites is not significant relative to the other components of executive compensation. These amounts are included in the Summary Compensation Table below.
Tax Deductibility of Compensation. Section 162(m) of the Internal Revenue Code limits to $1 million a publicly held corporation’s tax deduction each year for compensation to any “covered employee”, except for certain qualifying “performance-based compensation”. Because the Company qualifies as a REIT under the Internal Revenue Code, it is not subject to Federal income taxes to the extent it distributes 100% of its taxable income. Thus the payment of compensation subject to any limitations on deductibility imposed by Section 162(m) does not have a material adverse consequence to the Company, provided the Company continues to qualify as a REIT. A larger portion of shareholder distributions may be subject to Federal income tax as dividend income, rather than a return of capital, and any such compensation allocated to the Company’s taxable REIT subsidiaries whose income is subject to Federal income tax would result in an increase in income taxes due to the inability to deduct such compensation. Although the Company will be mindful of the limits imposed by Section 162(m), the Company nevertheless reserves the right to structure the compensation packages and awards in a manner that may exceed any limitation on deduction imposed by Section 162(m).
Stock Ownership Guidelines. The Company has established share ownership guidelines for the Company’s Named Executive Officers since the Company believes that such officers should maintain a material personal financial stake in the Company to promote strong alignment between the interests of management and shareholders. Under these guidelines, each Named Executive Officer is expected to acquire and maintain ownership in Company common shares having a market value equal to three times annual base salary. Each Named Executive Officer has met these guidelines.
Compensation Consultant Independence. The Company has determined that no conflicts of interest exist between the Company and its compensation consultant, Longnecker & Associates (or any individuals working on the Company’s account on Longnecker & Associates behalf), and Longnecker & Associates was deemed an independent advisor on matters of executive compensation pursuant to Item 407(e)(3)(iv) of Regulation S-K.
22
Summary Compensation Table
Name and Principal Position (a) | Year (b) | Salary ($) (c) | Bonus ($) (d) | Stock Awards ($)(1)(6) (e) | Option Awards ($) (f) | Non-Equity Incentive Plan Compensation ($)(2)(3)(4) (g) | Change in Pension Value and Nonquali- fied Deferred Compensation Earnings ($) (h) | All Other Compensations ($)(5) (i) | Total ($)(6) (j) | |||||||||||||||||||||||||||
Robert J. Attea | 2015 | $ | 548,000 | — | — | — | — | — | $ | 130,701 | $ | 678,701 | ||||||||||||||||||||||||
Executive Chairman of the Board | 2014 | $ | 508,200 | — | $ | 1,208,153 | — | $ | 609,840 | — | $ | 139,654 | $ | 2,465,847 | ||||||||||||||||||||||
2013 | $ | 484,000 | — | $ | 2,135,612 | — | $ | 580,800 | — | $ | 118,134 | $ | 3,318,546 | |||||||||||||||||||||||
Kenneth F. Myszka | 2015 | $ | 548,000 | — | $ | 1,075,000 | — | $ | 767,200 | — | $ | 134,556 | $ | 2,524,756 | ||||||||||||||||||||||
President | 2014 | $ | 508,200 | — | $ | 1,208,153 | — | $ | 609,840 | — | $ | 145,264 | $ | 2,471,457 | ||||||||||||||||||||||
2013 | $ | 484,000 | — | $ | 2,135,612 | — | $ | 580,800 | — | $ | 117,955 | $ | 3,318,367 | |||||||||||||||||||||||
David L. Rogers | 2015 | $ | 548,000 | — | $ | 1,075,000 | — | $ | 767,200 | — | $ | 135,221 | $ | 2,525,421 | ||||||||||||||||||||||
Chief Executive Officer | 2014 | $ | 508,200 | — | $ | 1,208,153 | — | $ | 609,840 | — | $ | 115,405 | $ | 2,441,598 | ||||||||||||||||||||||
2013 | $ | 484,000 | — | $ | 2,135,612 | — | $ | 580,800 | — | $ | 116,233 | $ | 3,316,645 | |||||||||||||||||||||||
Andrew J. Gregoire | 2015 | $ | 304,500 | — | $ | 657,083 | — | $ | 426,300 | — | $ | 44,958 | $ | 1,432,841 | ||||||||||||||||||||||
Chief Financial Officer and Secretary | 2014 | $ | 262,500 | — | $ | 542,885 | — | $ | 315,000 | — | $ | 46,325 | $ | 1,166,710 | ||||||||||||||||||||||
2013 | $ | 250,000 | — | $ | 1,091,378 | — | $ | 300,000 | — | $ | 21,905 | $ | 1,663,283 | |||||||||||||||||||||||
Paul T. Powell | 2015 | $ | 304,500 | — | $ | 657,083 | — | $ | 426,300 | — | $ | 44,955 | $ | 1,432,838 | ||||||||||||||||||||||
Chief Investment Officer | 2014 | $ | 262,500 | — | $ | 542,885 | — | $ | 315,000 | — | $ | 46,362 | $ | 1,166,747 | ||||||||||||||||||||||
2013 | $ | 250,000 | — | $ | 1,091,378 | — | $ | 300,000 | — | $ | 21,869 | $ | 1,663,247 | |||||||||||||||||||||||
Edward F. Killeen | 2015 | $ | 304,500 | — | $ | 657,083 | — | $ | 426,300 | — | $ | 44,955 | $ | 1,432,838 | ||||||||||||||||||||||
Chief Operating Officer | 2014 | $ | 262,500 | — | $ | 542,885 | — | $ | 315,000 | — | $ | 46,333 | $ | 1,166,718 | ||||||||||||||||||||||
2013 | $ | 250,000 | — | $ | 1,091,378 | — | $ | 300,000 | — | $ | 21,869 | $ | 1,663,247 |
Name and Principal Position
| Year
| Salary ($)
| Bonus ($)
| Stock Awards ($)(1)
| Non-Equity Incentive Plan Compensation ($)(2)
| All Other Compensation ($)(3)
| Total ($)
| |||||||||||||||||||
Joseph V. Saffire | 2022 | $740,000 | - | $3,645,433 | $1,332,000 | $5,033 | $5,722,466 | |||||||||||||||||||
Chief Executive Officer | 2021 | $680,000 | - | $3,395,906 | $1,088,000 | $4,785 | $5,168,691 | |||||||||||||||||||
2020 | $600,000 | - | $2,877,751 | $960,000 | $4,703 | $4,442,454 | ||||||||||||||||||||
Andrew J. Gregoire | 2022 | $465,750 | - | - | $838,350 | $5,033 | $1,309,133 | |||||||||||||||||||
Chief Financial Officer and Secretary | 2021 | $450,000 | - | $1,044,858 | $720,000 | $4,785 | $2,219,643 | |||||||||||||||||||
2020 | $435,000 | - | $893,079 | $696,000 | $4,703 | $2,028,782 | ||||||||||||||||||||
David P. Dodman (4) | 2022 | $350,000 | - | $607,606 | $630,000 | $5,033 | $1,592,639 | |||||||||||||||||||
Chief Operating Officer | ||||||||||||||||||||||||||
(1) | The amounts disclosed in the “Stock Awards” column represent the aggregate grant date fair value of all shares or awards granted to the named executive officers for the applicable fiscal year, calculated in accordance with FASB ASC Topic 718. |
The amounts shown in this column for 2015 relate to (i) a long-term incentive award of 5,196 restricted shares awarded to each Messrs. Myszka, and Rogers and 3,176 restricted shares awarded to each Messrs. Gregoire, Powell, and Killeen on December 17, 2015 and (ii) the target award of 5,196 of performance-based awards issued to each Messrs. Myszka, and Rogers and the target award of 3,176 performance-based awards issued to each Messrs. Gregoire, Powell, and Killeen on December 17, 2015.
The amounts shown in this column for 2022 relate to (i) a long-term incentive award of 16,746 restricted shares awarded to Mr. Saffire and a long-term incentive award of 2,791 restricted shares awarded to Mr. Dodman on December 14, 2022, and (ii) the target award of 16,746 performance-based awards issued to Mr. Saffire and the target award of 2,791 performance-based awards issued to Mr. Dodman on December 14, 2022. Mr. Gregoire did not receive any restricted shares or performance-based awards in 2022 as a result of his retirement from the Company effective January 2, 2023. |
The amounts shown in this column for 2021 relate to (i) a long-term incentive award of 11,236 restricted shares awarded to Mr. Saffire and a long-term incentive award of 3,457 restricted shares awarded to Mr. Gregoire and (ii) the target award of 11,236 performance-based awards issued to Mr. Saffire and the target award of 3,457 performance-based awards issued to Mr. Gregoire. |
The amounts shown in this column for 2020 relate to (i) a long-term incentive award of 18,305 restricted shares awarded to Mr. Saffire and a long-term incentive award of 5,681 restricted shares awarded to Mr. Gregoire on December 18, 2020 and (ii) the target award of 18,305 performance-based awards issued to Mr. Saffire and the target award of 5,681 performance-based awards issued to Mr. Gregoire on December 18, 2020. |
For more information on these awards, see “Compensation Discussion and Analysis-2022 Compensation Components” and the “Grants of Plan-Based Awards for 2022” table below. The assumptions used to compute the grant date fair value |
The amounts shown in this column for 2014 relate to (i) a long-term incentive award of 6,647 restricted shares awarded to each Messrs. Attea, Myszka, and Rogers and 2,986 restricted shares awarded to each Messrs. Gregoire, Powell, and Killeen on December 24, 2014 and (ii) 13,294 performance-based restricted shares issued to each Messrs. Attea, Myszka, and Rogers and 5,972 performance-based restricted shares issued to each Messrs. Gregoire, Powell, and Killeen on December 24, 2014.
The amounts shown in this column for 2013 relate to (i) a long-term incentive award of 14,506 restricted shares awarded to each Messrs. Attea, Myszka, and Rogers and 7,324 restricted shares to each Messrs. Gregoire, Powell, and Killeen on August 6, 2013, (ii) a long-term incentive award of 8,191 restricted shares awarded to each Messrs. Attea, Myszka, and Rogers and 4,231 restricted shares to each Messrs. Gregoire, Powell, and Killeen on December 18, 2013 and (iii) performance-based restricted shares of 16,382 to each Messrs. Attea, Myszka, and Rogers and 8,462 restricted shares to each Messrs. Gregoire, Powell, and Killeen on December 18, 2013.Life Storage, Inc. 2023 Proxy Statement
For more information on these awards, see the “Compensation Discussion and Analysis-Components of Executive Compensation” and the Grants of Plan-Based Awards Table below. The assumptions used to compute the grant date fair value of these awards for each named executive officer are set forth in Notes 2 and 10 to our 2015 consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2015.
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of these awards for each named executive officer are set forth in Notes 2 and 9 to our 2022 consolidated financial statements contained in our 2022 Annual Report. The value of the performance-based awards to each of the executive officers at the grant date assuming that the highest level of performance will be achieved is as follows: Mr. Saffire—$3,700,866, Mr. Dodman—$616,811. The value of the performance-based awards issued in 2021 to each of the executive officers at the grant date assuming that the highest level of performance will be achieved is as follows: Mr. Saffire—$3,541,812, Mr. Gregoire—$1,089,716. The value of the performance-based awards issued in 2020 to each of the executive officers at the grant date assuming that the highest level of performance will be achieved is as follows: Mr. Saffire—$2,855,502, Mr. Gregoire—$886,158. The value of the performance-based awards
|
(2) | The amounts disclosed in the |
(3) |
|
(4) |
|
|
Name | Allowances* | 401(k) Match | Supplemental Health Coverage | Dividends on Restricted Stock | Total “All Other Compensation” | |||||||||||||||||||
Robert J. Attea | 2015 | $ | 15,600 | $ | 2,120 | $ | 2,367 | $ | 110,614 | $ | 130,701 | |||||||||||||
2014 | $ | 15,600 | $ | 2,120 | $ | 3,077 | $ | 118,857 | $ | 139,654 | ||||||||||||||
2013 | $ | 15,600 | $ | 1,104 | $ | 2,535 | $ | 98,895 | $ | 118,134 | ||||||||||||||
Kenneth F. Myszka | 2015 | $ | 15,600 | $ | 2,120 | $ | 7,379 | $ | 109,457 | $ | 134,556 | |||||||||||||
2014 | $ | 15,600 | $ | 2,120 | $ | 10,300 | $ | 117,244 | $ | 145,264 | ||||||||||||||
2013 | $ | 15,600 | $ | 1,104 | $ | 4,698 | $ | 96,553 | $ | 117,955 | ||||||||||||||
David L. Rogers | 2015 | $ | 15,600 | $ | 2,120 | — | $ | 117,501 | $ | 135,221 | ||||||||||||||
2014 | $ | 15,600 | $ | 2,120 | — | $ | 97,685 | $ | 115,405 | |||||||||||||||
2013 | $ | 15,600 | $ | 1,104 | — | $ | 99,529 | $ | 116,233 | |||||||||||||||
Andrew J. Gregoire | 2015 | — | $ | 2,120 | — | $ | 42,838 | $ | 44,958 | |||||||||||||||
2014 | — | $ | 2,064 | — | $ | 44,261 | $ | 46,325 | ||||||||||||||||
2013 | — | $ | 1,020 | — | $ | 20,885 | $ | 21,905 | ||||||||||||||||
Paul T. Powell | 2015 | — | $ | 2,120 | — | $ | 42,835 | $ | 44,955 | |||||||||||||||
2014 | — | $ | 2,120 | — | $ | 44,242 | $ | 46,362 | ||||||||||||||||
2013 | — | $ | 1,020 | — | $ | 20,849 | $ | 21,869 | ||||||||||||||||
Edward F. Killeen | 2015 | — | $ | 2,120 | — | $ | 42,835 | $ | 44,955 | |||||||||||||||
2014 | — | $ | 2,091 | — | $ | 44,242 | $ | 46,333 | ||||||||||||||||
2013 | — | $ | 1,020 | — | $ | 20,849 | $ | 21,869 |
|
24- 60 -
|
Name | Year | Total Compensation | ||||||
Robert J. Attea | 2013 | $ | 2,293,546 | |||||
Kenneth F. Myszka | 2013 | $ | 2,293,367 | |||||
David L. Rogers | 2013 | $ | 2,291,645 | |||||
Andrew J. Gregoire | 2013 | $ | 1,145,783 | |||||
Paul T. Powell | 2013 | $ | 1,145,747 | |||||
Edward F. Killeen | 2013 | $ | 1,145,747 |
Grant Ofof Plan-Based Awards For 2015for 2022
Name (a) | Grant Date (b) |
Estimated Possible Payouts |
Estimated Future Payouts Plan Awards | All Other Stock Awards: Units (#)(2) (i) | All Other Option Awards: Number of Securities Underlying Options (#) (j) | Exercise or base Price of Option Awards ($/sh) (k) | Grant Date Fair Value of Stock and Option Awards ($)(5) (l) | |||||||||||||||||||||||||||||||||||||
Threshold ($) (c) | Target ($) (d) | Maximum ($)(1) (e) | Threshold (#) (f) | Target (#) (g) | Maximum (#) (h) | |||||||||||||||||||||||||||||||||||||||
Kenneth F. Myszka | 12/17/15 | — | — | — | — | — | — | 5,196 | (3) | — | — | $ | 547,970 | |||||||||||||||||||||||||||||||
12/17/15 | (4) | — | — | — | 2,598 | 5,196 | 10,392 | — | — | — | $ | 527,030 | ||||||||||||||||||||||||||||||||
N/A | — | — | $ | 986,400 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
David L. Rogers | 12/17/15 | — | — | — | — | — | — | 5,196 | (3) | — | — | $ | 547,970 | |||||||||||||||||||||||||||||||
12/17/15 | (4) | — | — | — | 2,598 | 5,196 | 10,392 | — | — | — | $ | 527,030 | ||||||||||||||||||||||||||||||||
N/A | — | — | $ | 986,400 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Andrew J. Gregoire | 12/17/15 | — | — | — | — | — | — | 3,176 | (3) | — | — | $ | 334,941 | |||||||||||||||||||||||||||||||
12/17/15 | — | — | — | 1,588 | 3,176 | 6,352 | — | — | — | $ | 322,142 | |||||||||||||||||||||||||||||||||
N/A | — | — | $ | 548,100 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Paul T. Powell | 12/17/15 | — | — | — | — | — | — | 3,176 | (3) | — | — | $ | 334,941 | |||||||||||||||||||||||||||||||
12/17/15 | (4) | — | — | — | 1,588 | 3,176 | 6,352 | — | — | — | $ | 322,142 | ||||||||||||||||||||||||||||||||
N/A | — | — | $ | 548,100 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Edward F. Killeen | 12/17/15 | — | — | — | — | — | — | 3,176 | (3) | — | — | $ | 334,941 | |||||||||||||||||||||||||||||||
12/17/15 | (4) | — | — | — | 1,588 | 3,176 | 6,352 | — | — | — | $ | 322,142 | ||||||||||||||||||||||||||||||||
N/A | — | — | $ | 548,100 | — | — | — | — | — | — | — |
Name
| Grant Date
|
Estimated Future Payouts
|
Estimated Future Payouts
| All Other
| Grant Date Fair
| |||||||||||||||||||||||||||||||
Threshold ($)
| Target ($)
| Maximum ($)(1)
| Threshold (#)
| Target (#)
| Maximum (#)
| |||||||||||||||||||||||||||||||
Joseph V. Saffire | 12/14/22 | - | - | - | - | - | - | 16,746 (3) | $ | 1,795,000 | ||||||||||||||||||||||||||
12/14/22 (4) | - | - | - | 4,187 | 16,746 | 33,492 | - | $ | 1,850,433 | |||||||||||||||||||||||||||
N/A | - | - | $1,332,000 | - | - | - | - | - | ||||||||||||||||||||||||||||
Andrew J. Gregoire | N/A | - | - | $838,350 | - | - | - | - | - | |||||||||||||||||||||||||||
David P. Dodman | 12/14/22 | - | - | - | - | - | - | 2,791 (3) | $ | 299,200 | ||||||||||||||||||||||||||
12/14/22 (4) | - | - | - | 698 | 2,791 | 5,582 | - | $ | 308,406 | |||||||||||||||||||||||||||
N/A | - | - | $630,000 | - | - | - | - | - |
(1) | This is not necessarily the amount earned but is the maximum amount that could have been earned under the Annual Incentive Compensation Plan based upon |
(2) | Holders of restricted shares are entitled to the same dividend and voting rights as are holders of the Company’s Common Stock. |
(3) | Restricted shares issued in December |
(4) | Performance-based awards issued in December |
25
No shares will be earned if threshold performance is not achieved. Provided threshold performance is achieved, an applicable percentage of the shares between |
(5) | Amount represents full grant date fair value of awards granted in |
26Life Storage, Inc. 2023 Proxy Statement
- 61 -
Outstanding Equity Awards Atat December 31, 20152022
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name (a) | Number of Securities Underlying Unexercised Options (#) Exercisable (b) | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) (c) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d) | Option Exercise Price ($) (e) | Option Expiration Date (f) | Number of Shares or Units of Stock That Have Not Vested (#) (g) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) (h) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i) | Equity Incentive Plan Awards: Market Value or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) (j) | |||||||||||||||||||||||||||
Robert J. Attea | 20,760 | 6,919 | — | $ | 43.75 | 6/17/2018 | — | — | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 782 | $ | 83,916 | (4) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 3,528 | $ | 378,590 | (5) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 6,366 | $ | 683,135 | (6) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 4,836 | $ | 518,951 | (7) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 2,731 | $ | 293,064 | (8) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 16,382 | $ | 1,757,952 | (9) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 4,431 | $ | 475,491 | (10) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 13,294 | $ | 1,426,579 | (11) | — | — | ||||||||||||||||||||||||||
Kenneth F. Myszka | 8,740 | 6,736 | — | $ | 43.75 | 6/17/2018 | — | — | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 759 | $ | 81,448 | (12) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 3,444 | $ | 369,576 | (13) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 6,197 | $ | 665,000 | (14) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 4,836 | $ | 518,951 | (7) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 2,731 | $ | 293,064 | (8) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 16,382 | $ | 1,757,952 | (9) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 4,431 | $ | 475,491 | (10) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 13,294 | $ | 1,426,579 | (11) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 5,196 | $ | 557,583 | (15) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | — | — | (16) | 10,392 | $ | 1,115,166 | ||||||||||||||||||||||||||
David L. Rogers | 20,215 | 6,736 | — | $ | 43.75 | 6/17/2018 | — | — | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 759 | $ | 81,448 | (12) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 3,444 | $ | 369,576 | (13) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 6,197 | $ | 665,000 | (14) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 8,704 | $ | 934,026 | (17) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 2,731 | $ | 293,064 | (8) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 16,382 | $ | 1,757,952 | (9) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 4,431 | $ | 475,491 | (10) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 13,294 | $ | 1,426,579 | (11) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 5,196 | $ | 557,583 | (15) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | — | — | (16) | 10,392 | $ | 1,115,166 | ||||||||||||||||||||||||||
Andrew J. Gregoire | — | — | — | — | — | 4,394 | $ | 471,520 | (18) | — | — | |||||||||||||||||||||||||
— | — | — | — | — | 1,411 | $ | 151,414 | (19) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 8,462 | $ | 908,057 | (9) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 1,991 | $ | 213,654 | (20) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 5,972 | $ | 640,855 | (11) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 3,176 | $ | 340,817 | (21) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | — | — | (16) | 6,352 | $ | 681,633 | ||||||||||||||||||||||||||
Paul T. Powell | — | — | — | — | — | 4,394 | $ | 471,520 | (18) | — | — | |||||||||||||||||||||||||
— | — | — | — | — | 1,411 | $ | 151,414 | (19) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 8,462 | $ | 908,057 | (9) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 1,991 | $ | 213,654 | (20) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 5,972 | $ | 640,855 | (11) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 3,176 | $ | 340,817 | (21) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | — | — | (16) | 6,352 | $ | 681,633 | ||||||||||||||||||||||||||
Edward F. Killeen | — | — | — | — | — | 4,394 | $ | 471,520 | (18) | — | — | |||||||||||||||||||||||||
— | — | — | — | — | 1,411 | $ | 151,414 | (19) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 8,462 | $ | 908,057 | (9) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 1,991 | $ | 213,654 | (20) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 5,972 | $ | 640,855 | (11) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | 3,176 | $ | 340,817 | (21) | — | — | ||||||||||||||||||||||||||
— | — | — | — | — | — | — | (16) | 6,352 | $ | 681,633 |
27
Stock Awards | ||||||||||||||||||||
Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (1) | Equity Incentive Plan Have Not Vested | Equity Incentive Plan Awards: Market Value or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (2) | ||||||||||||||||
Joseph V. Saffire | 7,101 | $ | 699,449 | (3 | ) | - | - | |||||||||||||
- | - | (4 | ) | 35,496 | $ | 3,496,356 | ||||||||||||||
| - |
|
| - |
|
| (5 | ) |
| 36,609 |
| $ | 3,605,987 |
| ||||||
| 10,984 |
| $ | 1,081,924 |
|
| (6 | ) |
| - |
|
| - |
| ||||||
| - |
|
| - |
|
| (7 | ) |
| 22,472 |
| $ | 2,213,492 |
| ||||||
| 8,989 |
| $ | 885,397 |
|
| (8 | ) |
| - |
|
| - |
| ||||||
| - |
|
| - |
|
| (9 | ) |
| 33,492 |
| $ | 3,298,962 |
| ||||||
| 16,746 |
| $ | 1,649,481 |
|
| (10 | ) |
| - |
|
| - |
| ||||||
Andrew J. Gregoire |
| 2,413 |
| $ | 237,681 |
|
| (11 | ) |
| - |
|
| - |
| |||||
| - |
|
| - |
|
| (4 | ) |
| 12,069 |
| $ | 1,188,797 |
| ||||||
| 3,410 |
| $ | 335,836 |
|
| (12 | ) |
| - |
|
| - |
| ||||||
| - |
|
| - |
|
| (5 | ) |
| 11,361 |
| $ | 1,119,059 |
| ||||||
| 2,766 |
| $ | 272,412 |
|
| (13 | ) |
| - |
|
| - |
| ||||||
| - |
|
| - |
|
| (7 | ) |
| 6,914 |
| $ | 681,029 |
| ||||||
David P. Dodman |
| 1,500 |
| $ | 147,750 |
|
| (14 | ) |
| - |
|
| - |
| |||||
| 858 |
| $ | 84,464 |
|
| (15 | ) |
| - |
|
| - |
| ||||||
| 2,569 |
| $ | 253,047 |
|
| (16 | ) |
| - |
|
| - |
| ||||||
| 2,520 |
| $ | 248,220 |
|
| (17 | ) |
| - |
|
| - |
| ||||||
| - |
|
| - |
|
| (7 | ) |
| 4,148 |
| $ | 408,578 |
| ||||||
| 1,660 |
| $ | 163,530 |
|
| (18 | ) |
| - |
|
| - |
| ||||||
| 2,791 |
| $ | 274,914 |
|
| (19 | ) |
| - |
|
| - |
| ||||||
| - |
|
| - |
|
| (9 | ) |
| 5,582 |
| $ | 549,827 |
| ||||||
| (20 | ) |
| 3,528 |
| $ | 347,508 |
| ||||||||||||
| (21 | ) |
| 6,300 |
| $ | 620,550 |
|
(1) |
|
Market value of unvested shares is based on the Company’s closing stock price of $98.50 on December 31, |
Market value assuming maximum performance award is earned and is based on the Company’s closing stock price of $98.50 on December 31, |
Life Storage, Inc. 2023 Proxy Statement
- 62 -
Restricted shares vest at a rate of |
|
|
|
|
|
|
|
|
|
|
|
Performance-based awards issued in |
(5) | Performance-based awards issued in December 2020. The performance-based awards are earned based upon the Company’s relative total shareholder return over a three-year period as compared to a defined peer group. No shares will be earned if threshold performance is not achieved. Provided threshold performance is achieved, an applicable percentage of the shares between 25% and 200% will be earned, with 25% of the shares earned if threshold performance is achieved, 100% earned if target performance is achieved and 200% earned if maximum performance is achieved. |
(6) | Restricted shares vest at a rate of 3,660 shares per year through 2025. |
(7) | Performance-based awards issued in December 2021. The performance-based awards are earned based upon the Company’s relative total shareholder return over a three-year period as compared to a defined peer group. No shares will be earned if threshold performance is not achieved. Provided threshold performance is achieved, an applicable percentage of the shares between 25% and 200% will be earned, with 25% of the shares earned if threshold performance is achieved, 100% earned if target performance is achieved and 200% earned if maximum performance is achieved. |
(8) | Restricted shares vest at a rate of 2,247 shares per year through 2026. |
(9) | Performance-based awards issued in December 2022. The performance-based awards are earned based upon the Company’s relative total shareholder return over a three-year period as compared to a defined peer group. No shares will be earned if threshold performance is not achieved. Provided threshold performance is achieved, an applicable percentage of the shares between 25% and 200% will be earned, with 25% of the shares earned if threshold performance is achieved, 100% earned if target performance is achieved and 200% earned if maximum performance is achieved. Mr. Gregoire did not receive any performance-based awards in 2022 as a result of his retirement from the Company effective January 2, 2023. |
(10) | Restricted shares vest at a rate of 3,349 shares per year through 2027. |
(11) | Restricted shares vest at a rate of 1,207 shares per year through 2024. Mr. Gregoire vested in all remaining unvested restricted shares upon his retirement effective January 2, 2023. |
Life Storage, Inc. 2023 Proxy Statement
- 63 -
(12) | Restricted shares vest at a rate of 1,136 shares per year through 2025. Mr. Gregoire vested in all remaining unvested restricted shares upon his retirement effective January 2, 2023. |
(13) | Restricted shares vest at a rate of 691 shares per year through 2026. Mr. Gregoire vested in all remaining unvested restricted shares upon his retirement effective January 2, 2023. |
(14) | Restricted shares vest at a rate of 750 shares per year through 2024. |
(15) | Restricted shares vest at a rate of 214 shares per year through 2026. |
(16) | Restricted shares vest at a rate of 856 shares per year through 2025. |
(17) | Restricted shares vest at a rate of |
(18) | Restricted shares vest at a rate of |
(19) | Restricted shares vest at a rate of |
(20) |
|
(21) |
|
28
Option Exercises and Stock Vested In 2015in 2022
Option Awards | Stock Awards | |||||||||||||||
Name (a) | Number of Shares Acquired on Exercise (#) (b) | Value Realized on Exercise ($) (c) | Number of Shares Acquired on Vesting (#) (d) | Value Realized on Vesting ($)(1) (e) | ||||||||||||
Robert J. Attea | — | — | 15,192 | $ | 1,474,540 | |||||||||||
Kenneth F. Myszka | — | — | 15,056 | $ | 1,462,221 | |||||||||||
David L. Rogers | — | — | 13,403 | $ | 1,305,181 | |||||||||||
Andrew J. Gregoire | — | — | 6,535 | $ | 644,893 | |||||||||||
Paul T. Powell | — | — | 6,527 | $ | 644,158 | |||||||||||
Edward F. Killeen | — | — | 6,527 | $ | 644,158 |
Option Awards | Stock Awards | |||||||||||||||
Name
|
Number of
| Value
|
Number of
| Value Realized on
| ||||||||||||
Joseph V. Saffire | - | - | 9,831 | $ | 992,914 | |||||||||||
Andrew J. Gregoire | - | - | 3,575 | $ | 373,472 | |||||||||||
David P. Dodman | - | - | 2,863 | $ | 337,273 |
(1) | Amounts reflect the market value of the Common Stock on the day the Common Stock vested. |
Life Storage, Inc. 2023 Proxy Statement
- 64 -
Year | Summary compensation table total for PEO – Saffire | Compensation actually paid to PEO – Saffire (1) | Average summary compensation table total for non-PEO NEOs (2) | Average compensation actually paid to non-PEO NEOs (1) | Value of initial fixed $100 investment based on total shareholder return | Value of initial fixed $100 investment based on peer group total shareholder return (3) | GAAP Net income | Core Funds from Operations (“Core FFO”) per share (4) | ||||||||||||||||||||||||
2022 | $ | 5,722,466 | $ | 179,076 | $ | 1,450,886 | $ | 298,631 | $ | 184.18 | $ | 99.67 | $ | 366,462,000 | $ | 6.51 | ||||||||||||||||
2021 | $ | 5,168,691 | $ | 15,972,420 | $ | 1,697,214 | $ | 5,498,912 | $ | 276.84 | $ | 131.78 | $ | 252,175,000 | $ | 5.07 | ||||||||||||||||
2020 | $ | 4,442,454 | $ | 6,640,403 | $ | 2,028,782 | $ | 2,871,613 | $ | 114.90 | $ | 92.00 | $ | 152,360,000 | $ | 3.97 |
(1) | Compensation Actually Paid is defined by the SEC and is computed in accordance with SEC rules by subtracting the amounts in the “Stock Awards” column from the “Total” column of the Summary Compensation Table each year and then: (i) adding the fair value as of the end of the reported year of all awards granted during the reporting year that are outstanding and unvested as of the end of the reporting year; (ii) adding the amount equal to the change as of the end for the reporting year (from the end of the prior year) in fair value (whether positive or negative) of any awards granted in any prior year that are outstanding and unvested as of the end of the reporting year; (iii) adding, for awards that are granted and vest in the reporting year, the fair value as of the vesting date; (iv) adding the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value (whether positive or negative) of any awards granted in any prior year for which all applicable vesting conditions were satisfied at the end of or during the reporting year; (v) subtracting, for any awards granted in any prior year that are forfeited during the reporting year, the amount equal to the fair value at the end of the prior year; and (vi) adding the value of any dividends (or dividend equivalents) paid in the reporting year on unvested equity awards. The following tables reflect the adjustments made to the Summary Compensation Table total compensation to compute compensation actually paid for the PEO and average compensation actually paid fornon-PEO NEOs: |
Year | Summary compensation table total pay | Less: Summary Compensation Table Stock Awards | Plus: Value of New Unvested Awards as of 12/31 | Plus: Annual Change in Value of Prior Years Awards that Remain Unvested | Plus: Value of New Vested Awards | Plus: Change in Value of Prior Years Awards that Vested During Year | Less: Value of Forfeited Prior Years Awards | Plus: Dividends on Unvested Awards/ Accrued Dividends | Compensation Actually Paid | ||||||||||||||||||||||||||||||||||||
2022 | $ | 5,722,466 | $ | 3,645,433 | $ | 4,948,443 | ($ | 4,710,944 | ) | - | ($ | 2,288,981 | ) | - | $ | 153,525 | $ | 179,076 | |||||||||||||||||||||||||||
2021 | $ | 5,168,691 | $ | 3,395,906 | $ | 5,136,425 | $ | 7,195,262 | - | $ | 1,754,822 | - | $ | 113,126 | $ | 15,972,420 | |||||||||||||||||||||||||||||
2020 | $ | 4,442,454 | $ | 2,877,751 | $ | 4,370,605 | $ | 519,435 | - | $ | 109,015 | - | $ | 76,645 | $ | 6,640,403 |
Year | Summary compensation table total pay | Less: Summary Compensation Table Stock Awards | Plus: Value of New Unvested Awards as of 12/31 | Plus: Annual Change in Value of Prior Years Awards that Remain Unvested | Plus: Value of New Vested Awards | Plus: Change in Value of Prior Years Awards that Vested During Year | Less: Value of Forfeited Prior Years Awards | Plus: Dividends on Unvested Awards/ Accrued Dividends | Compensation Actually Paid | ||||||||||||||||||||||||||||||||||||
2022 | $ | 1,450,886 | $ | 303,803 | $ | 412,370 | ($ | 867,564 | ) | - | ($ | 439,683 | ) | - | $ | 46,425 | $ | 298,631 | |||||||||||||||||||||||||||
2021 | $ | 1,697,214 | $ | 522,429 | $ | 794,315 | $ | 2,044,588 | - | $ | 1,444,308 | - | $ | 40,916 | $ | 5,498,912 | |||||||||||||||||||||||||||||
2020 | $ | 2,028,782 | $ | 893,079 | $ | 1,356,373 | $ | 242,102 | - | $ | 98,747 | - | $ | 38,688 | $ | 2,871,613 |
(2) | Non-PEO NEOs for each year consist of Mr. Andrew Gregoire (2020-2022), Mr. David Dodman (2022), and Mr. Ed Killeen (2020-2021). |
(3) | The peer group utilized is the National Association of Real Estate Investment Trusts (NAREIT) Equity Index, assuming a $100 investment at the closing price on December 31, 2019 with dividends reinvested. |
(4) | Refer to Appendix A |
Significant Financial Performance Measures |
Core FFO Per Share Growth (versus projections) |
Core FFO Per Share Growth (versus the Company’s Self-Storage REIT Competitors) |
TSR Performance (versus the Company’s peers as identified by the Compensation and Human Capital Committee) |
Employment Agreements
In 1999, theThe Company has entered into employment agreements with each of Messrs. Attea, Myszka, Rogers,Saffire, Gregoire, Powell,Gress, and Killeen. These agreements wereDodman. Mr. Saffire’s employment agreement was initially entered into on November 1, 2017 at the time of his commencement of employment with the Company. Mr. Gress’s agreement was initially entered into on October 18, 2021 at the time of his commencement of employment with the Company and was amended and restated on January 2, 2023 upon his appointment as Chief Financial Officer of the Company. Mr. Dodman’s employment agreement was initially entered into on June 20, 2018 at the time of his commencement of employment with the Company and amended and restated effective January 1, 2009. Except2022 upon his appointment as provided inChief Operating Officer of the Amendments described below with respect toCompany. The employment agreements of Messrs. AtteaSaffire, Gress and Myszka, eachDodman were all further amended and restated effective March 17, 2023. Mr. Gregoire’s employment under his employment agreement hasterminated upon his retirement on January 2, 2023 and therefore the terms of such agreement, including the payments upon termination from the Company discussed below, do not apply to Mr. Gregoire subsequent to January 2, 2023.
The employment agreements of Messrs. Saffire, Gregoire, Gress, and Dodman each have an indefinite term but can be terminated by the Company (a) in the event of the executive’s disability, (b) for “cause,” or (c) upon 30 daysdays’ prior written notice to the executive. Each executive may terminate his employment agreement (a) for “good reason,” or (b) by providing 60 daysdays’ prior written notice to the Company (30 days written notice for Messrs. Gregoire, Powell, and Killeen).Company. Each employment agreement may also be terminated by agreement of the Company and the executive. Each employment agreement prohibits the executive, during employment and during the one-year period following termination of employment, from engaging in the self-storage business as an employee, consultant or owner.
On January 19, 2015, the Company entered into Amendments to the existing employment agreements between the Company, and each of Robert J. Attea, Kenneth F. Myszka and David L. Rogers (the “Amendments”). These Amendments were entered into as part of a succession plan for senior management of the Company. The Amendments with respect to Messrs. Attea and Myszka, among other matters, provide for a term end date of December 31, 2017 and December 31, 2018, respectively, provide for a description of their duties during the term, provide that Messrs. Attea and Myszka will no longer participate in the Company’s incentive compensation and bonus plans after January 1, 2015 and January 1, 2016, respectively, and provide that the provisions in their employment agreements regarding gross-up payments are deleted. The Amendment with respect to Mr. Rogers provides that the provision in his employment agreement regarding gross-up payments is deleted.
Employment Agreements of Messrs. Attea, Myszka and Rogers.
The employment agreements (as amended and restated effective March 17, 2023) of Messrs. Attea, Myszka,Saffire, Gress, and RogersDodman each provide for severance payments in the event the executive’s employment is terminated by the Company without “cause” or he resigns for “good reason.”reason” without a change of control of the Company. Such severance payments would be made in 3630 monthly payments following the termination of the executive’s employment, and each monthly payment would be an amount equal to one-twelfth1/30th of the aggregate amount equal to two (2) times the sum of (a) the highest (i)executive’s annual base salary in effect immediately prior to the date of the executive’s separation from service (not taking into account any reduction to the Executive’s base salary that formed a basis for Good Reason as defined in the respective executive’s employment agreement), and (b) the bonus earned by such executive during anywith respect to the calendar year (ii)immediately prior to the date of the executive’s separation from service (in the case of Mr. Gress, the bonus and other incentive compensationdeemed earned by such executive during anyfor the 2022 calendar year and (iii) value of any restricted stock awards during any calendar year to such executive.paid in 2023 shall be $675,000). The first six monthly payments will be made in a single sum to the executive within 30 days following his separation from service. The remaining 3024 payments will be made over a 30 month24-month period beginning seven months after the separation from service. No severance benefits are payable if the executive’s employment is terminated for “cause” or if the executive retires or voluntarily terminates his employment without “good reason.” The employment agreements also provide that certain employee welfare
29
benefits shall be continued for a period of 36 months after termination of employment in the event the executive’s employment is terminated by the Company without “cause” or the executive resigns for “good reason”.
In addition,However, if the Company undergoes a “change inof control” while severance is being paid to Messrs. Attea, Myszka, and Rogers, the remaining severance payment would be transferred to a rabbi trust and monthly payments would continue to be made from that trust unless the “change in control” alsowhich qualifies as a “change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation” within the meaning of Section 409A of the Internal Revenue Code in which caseoccurs while the remainingCompany is making severance payment wouldpayments, then the payments/remaining
Life Storage, Inc. 2023 Proxy Statement
- 69 -
payments will be paid to the executivemade in a lumpsingle sum within 30 days afterfollowing the “change in control.” If the “change in control” occurs. Similarly, ifdoes not so qualify under Section 409A, then the executive is terminated within 2 years following a “change in control” of the Company, the severancepayments/ remaining payments would be transferred to a rabbi trust and monthly payments would be made from that trust unless the “change in control” qualifies under Section 409A of the Code, in which case the severance payments would be paid to the executive in a lump sum within 30 days of his termination of employment. In addition, the Company must reimburse the executive for his legal fees in connection with any good faith claim for severance payments under the employment agreement. Each employment agreement provides that the severance payments will not be offset or mitigated by any income from another source during the severance period.trust.
The employment agreements for Messrs. Attea, Myszka,(as amended and Rogers also provide for payments in the event of termination by reason of the executive’s death or disability during the term of his employment agreement. The payments will be in an amount equal to two times the executive’s thenrestated effective per annum rate of salary plus a pro rata portion of the incentive compensation for the calendar year in which the death or disability occurs. In the event of death, such payments will be paid in eight quarterly installments following the date of the executive’s death. In the case of the executive’s disability, such payments will be made in 24 monthly installments, with the first 6 installments paid in a lump sum within 30 days following the executive’s separation from service, and the remaining 18 installments made over 18 months beginning with the seventh month after the executive’s separation from service. The disability payments to the executive would be reduced by any amounts paid to the executive in connection with the Company’s disability insurance contracts.
Pursuant to the employment agreements with Messrs. Attea, Myszka, and Rogers and the Company’s award and option plan all stock options held by such parties will vest in the event of their termination without “cause”, for “good reason” or death or disability or in the event of a “change in control”.
For purposes of the employment agreements described above, the terms have the meanings set forth below:
“change in control” generally includes:
(i) the acquisition by any person of 20% or more of the outstanding stock of the Company;
(ii) approval by the shareholders of the Company of a consolidation, merger or other business combination involving the Company in which the Company is not the surviving entity, other than a transaction in which the holders of the Company’s Common Stock immediately prior to the transaction have substantially the same proportionate ownership of Common Stock of the surviving corporation after the transaction;
(iii) approval by the shareholders of the Company of any consolidation, merger or other business combination in which the Company is the continuing or surviving corporation but in which the common shareholders of the Company immediately prior to the transaction do not own at least a majority of the outstanding Common Stock of the continuing or surviving corporation;
(iv) approval by the shareholders of the Company of any sale, lease or exchange of substantially all of the assets of the Company and its subsidiaries;
(v) a change in the majority of the members of the Board of Directors within a 24-month period, unless the election or nomination for election by the Company’s shareholders of each new director was approved
30
by the vote of 2/3 of the directors then still in office who were in office at the beginning of the 24-month period; or
(vi) more than 50% of the assets of the Company and its subsidiaries are sold, transferred or otherwise disposed of, other than in the usual and ordinary course of its business.
“cause” generally means a material breach of the executive’s duties under his employment agreement, or the fraudulent, illegal or other gross misconduct which is materially damaging or detrimental to the Company.
“good reason” generally means:
(i) a material change in the executive’s duties and responsibilities or a change in his title or position without his consent;
(ii) there arises a requirement that the services required to be performed by the executive would necessitate the executive to move his residence at least 50 miles from the Buffalo, NY area;
(iii) a material reduction by the Company in the executive’s compensation or benefits;
(iv) a material breach of the employment agreement by the Company;
(v) in the caseMarch 17, 2023) of Messrs. AtteaSaffire, Gress, and Myszka, the failure of the executive to be elected a director at any annual shareholders meeting; or
(vi) the failure of any successor to the Company to specifically assume responsibility for the employment agreement.
Potential Payments and BenefitsDodman also each provide that upon Death or Disability or upon Termination of Employment With No Change in Control of the Company. The tables below reflect the amount of compensation to each of Messrs. Attea, Myszka, and Rogers in the event of termination of such executive’s employment described below. The amounts shown assume that such termination was effective as of December 31, 2015 and uses the closing market price of the Company stock on such date, and thus includes amounts earned through such time and are estimates of the amounts that would be paid to such executives upon their termination. The actual amounts to be paid can only be determined at the time of such executive’s separation from the Company.
31
The first column of each table below sets forth the payments to which the executive would be entitled, other than accrued but unpaid base salary and any benefits payable or provided under broad-based employee benefit plans and programs, in the event of a termination of the executive’s employment for any reason other than for “cause” by the Company or by the executive without “good reason,” and assuming such termination occurred prior to, or did not otherwise arise in connection with, a “change in control” of the Company. The second column of each table reflects payments that would be due in the event of the executive’s termination of employment due to death or disability prior to a change in control of the Company. No benefits are paid, other than earned but unpaid compensation, upon a termination of employment by the Company for “cause” or for termination by the executive upon retirement or without “good reason.”
Termination by Company without “Cause” or Termination by Executive for “Good Reason” | Death or Disability | |||||||
Robert J. Attea | ||||||||
Cash Severance1 | $ | 7,570,059 | $ | 1,096,000 | ||||
Continued Employee Welfare Benefits | 54,009 | 0 | ||||||
Acceleration of Equity Awards2 | 0 | 2,433,147 | ||||||
|
|
|
| |||||
Total | $ | 7,624,068 | $ | 3,529,147 | ||||
|
|
|
| |||||
Kenneth F. Myszka | ||||||||
Cash Severance1 | $ | 7,570,059 | $ | 1,096,000 | ||||
Continued Employee Welfare Benefits | 69,045 | 0 | ||||||
Acceleration of Equity Awards2 | 0 | 2,961,112 | ||||||
|
|
|
| |||||
Total | $7,639,104 | $4,057,112 | ||||||
|
|
|
| |||||
David L. Rogers | ||||||||
Cash Severance1 | $ | 7,570,059 | $ | 1,096,000 | ||||
Continued Employee Welfare Benefits | 46,908 | 0 | ||||||
Acceleration of Equity Awards2 | 0 | 3,376,187 | ||||||
|
|
|
| |||||
Total | $7,616,967 | $4,472,187 | ||||||
|
|
|
|
|
|
32
Potential Payments and Benefits Following, or in Connection With a Change In Control of the Company. Upon a termination of the employment of Messrs. Attea, Myszka, or Rogerssuch executive without “cause” or a termination by such executive for “good reason” within twenty-four (24) months following a “change in control” qualifying under Section 409A of the Internal Revenue Code or a Non-Section 409A change in control” such of the Company, the executive is entitledshall be paid a severance equal to receive the following benefits:
Robert J. Attea | ||||
Cash Severance | $ | 7,570,059 | ||
Acceleration of Equity Awards | 5,617,679 | |||
Continued Employee Welfare Benefits | 54,009 | |||
|
| |||
Total | $ | 13,241,747 | ||
|
| |||
Kenneth F. Myszka | ||||
Cash Severance | $ | 7,570,059 | ||
Acceleration of Equity Awards | 6,145,644 | |||
Continued Employee Welfare Benefits | 69,045 | |||
|
| |||
Total | $ | 13,784,748 | ||
|
| |||
David L. Rogers | ||||
Cash Severance | $ | 7,570,059 | ||
Acceleration of Equity Awards | 6,560,719 | |||
Continued Employee Welfare Benefits | 46,908 | |||
|
| |||
Total | $ | 14,177,686 | ||
|
|
(1) | two and one-half (2.5) times the sum of: |
Cash
(a) | the greater of: |
i. | the executive’s annual base salary in effect immediately prior to the change in control of the Company, or |
ii. | The Executive’s annual base salary in effect immediately prior to the date of the executive’s separation from service (not taking into account any reduction to the executive’s base salary that formed a basis for Good Reason as defined in the respective executive’s employment agreement; plus |
(b) | The greater of: |
i. | the bonus earned with respect to the calendar year immediately prior to the change in control of the Company that has been paid or would have been paid in the year of the change in control of the Company, as applicable (in the case of Mr. Gress, the bonus deemed earned for the 2022 calendar year and paid in 2023 shall be $675,000), or |
ii. | the bonus earned with respect to the calendar year immediately prior to the date of the executive’s separation from service that has been paid or would have otherwise been paid for the year of the executive’s separation from service had the executive’s employment not been terminated (such greater amount pursuant to (b), the “Bonus Amount”); and |
(2) | an amount equal to (a) the Bonus Amount, multiplied by (b) a fraction, the numerator of which is the number of days the executive was employed by the Company from the first day of the calendar year in which the separation from service occurred, and the denominator of which is the number of total days in the calendar year. |
In the event of a Section 409A “change in control”, such severance for Messrs. Attea, Myszka, and Rogers isshall be paid in 36a lump sum. If the “change in control” does not so qualify under Section 409A, then the payments/ remaining payments would be transferred to a rabbi trust within 30 days after the non-Section 409A change in control and payments made from the trust with payments made consistent with those discussed above when a change in control does not occur.
The employment agreement of Mr. Gregoire and the employment agreements (as in effect as of December 31, 2022) of Messrs. Saffire and Dodman provided for severance payments in the event the executive’s employment is terminated by the Company without “cause” or he resigns for “good reason” without a change of control of the Company. Such
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severance payments would be made in 30 monthly payments following the termination of the executive’s employment, withand each monthly payment would be an amount equal to 1/30th of the aggregate amount equal to two (2) times the salary and bonus paid to such executive in the prior calendar year. The first six monthly payments beingwill be made in a single sum to the executive within 30 days following his separation from service and theservice. The remaining 3024 payments will be made over a 30 month24-month period beginning seven months after the separation from service. No severance benefits are payable if the executive’s employment is terminated for “cause” or if the executive retires or voluntarily terminates his employment without “good reason.” However, if a “change of control” occurs while the Company is making severance payments or if the executive is terminated within 2 years following a “change in control” of the Company, and if such “change in control” alsowhich qualifies as a “change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation” within the meaning of Section 409A of the Internal Revenue Code occurs while the Company is making severance payments, then the payments/remaining payments will be made in a single sum within 30 days following the “change in control” or separation from service.control.” If the “change in control” does not so qualify under Section 409A, then the payments/remaining payments would be transferred to a rabbi trust and payments made from the trust. Cash severance on account
The employment agreement of death will be paid in eight quarterly installments. Cash severance on account of disability will be paid in 24 monthly installments with the first 6 months of severance paid in a single sum within 30 days following separation from serviceMr. Gregoire and the remaining payments madeemployment agreements (as in 18 monthly installments beginning with the seventh month after the executive’s separation from service. Accelerated equity awards are paid upon the terminationeffect as of employment, death or disability of the executive.
Employment AgreementsDecember 31, 2022) of Messrs. Gregoire, PowellSaffire and Killeen.
Potential Payments and Benefits Following, or in Connection With a Change In Control of the Company. The employment agreements of Messrs. Gregoire, Powell, and Killeen each provideDodman also provided that upon a termination of the employment of such executive without “cause” or a termination by such executive for “good reason” within twenty -fourtwenty-four (24) months following a “change in control” qualifying under Section 409A of the Internal Revenue Code, suchthe executive is entitled towould be paid a severance. The amount of the severance payable to Messrs. Gregoire, Powell, and Killeen in a lump sum is equal to two and one-half (2.5) times the salary and bonus paid to these individualssuch executive in the prior calendar year. In addition,Such severance would be paid in a lump sum.
The employment agreements also provide that certain employee health insuranceand welfare benefits wouldshall be continued for a period of 30 months after termination of employment upon substantially the same terms as of immediately prior to such executive’s termination of employment in the event the executive’s employment is terminated by the Company without “cause” or the executive resigns for “good reason.” Under the employment agreements (as amended and restated effective March 17, 2023) of Messrs. Saffire, Gress, and Dodman, in the event that the executive’s (or the executive’s eligible dependents’) participation in any such employee health and welfare benefits is not possible after the date of termination.termination under the general terms and provisions of such employee health and welfare benefits or would give rise to penalties, the Company will arrange to provide the executive (and the executive’s eligible dependents) with benefits substantially similar to those which the executive (and the executive’s eligible dependents) is entitled to receive under such employee health and welfare benefits or, alternatively, pay a lump sum amount equal to the reasonable value of such substantially similar benefits.
Upon any termination of employment, Messrs. Saffire, Gress, and Dodman would also be entitled to accrued but unpaid base salary and any benefits payable or provided under broad-based employee benefit plans and programs. No severance benefits are payable, upon a termination of employment by the Company for “cause” or for termination by the executive upon retirement or without “good reason.”
The tables below reflect the amount of compensation to each of Messrs. Saffire, Gregoire and Dodman in the event of termination of such executive’s employment described below. The amounts shown assume that such termination was effective as of December 31, 2022, and as a result, the amounts payable are pursuant to the terms of the employment
33
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agreements as in effect as of December 31, 2022 (not, for Messrs. Saffire and Dodman, pursuant to the terms of the employment agreements, as amended and restated effective March 17, 2023).
Potential Payments and Benefits upon Termination of Employment Without Change in Control of the Company.
Upon a termination of the employment of Messrs. Saffire, Gregoire Powell, or Killeen following suchDodman without a “change inof control,” (presumed to occur as of December 31, 2022), such executive iswill be entitled to receive the following benefits:benefits (note that Mr. Gregoire is no longer subject to such payments upon his retirement from the Company on January 2, 2023):
Andrew J. Gregoire1 | ||||||||
Joseph V. Saffire 1 | ||||||||
Cash Severance | $ | 1,827,000 | $ | 3,656,000 | ||||
Acceleration of Equity Awards | 2,726,318 | |||||||
Acceleration of Equity Awards 2 | 0 | |||||||
Continued Employee Welfare Benefits | 39,090 | 49,202 | ||||||
|
| |||||||
Total | $ | 4,592,408 | $ | 3,705,202 | ||||
|
| |||||||
Paul T. Powell1 | ||||||||
Andrew J. Gregoire 3 | ||||||||
Cash Severance | $ | 1,827,000 | $ | 2,371,500 | ||||
Acceleration of Equity Awards | 2,726,318 | |||||||
Acceleration of Equity Awards 2 | 0 | |||||||
Continued Employee Welfare Benefits | 39,090 | 49,202 | ||||||
|
| |||||||
Total | $ | 4,592,408 | $ | 2,420,702 | ||||
|
| |||||||
Edward. F. Killeen1 | ||||||||
David P. Dodman 1 | ||||||||
Cash Severance | $ | 1,827,000 | $ | 1,346,876 | ||||
Acceleration of Equity Awards | 2,726,318 | |||||||
Acceleration of Equity Awards 2 | 0 | |||||||
Continued Employee Welfare Benefits | 11,100 | 40,785 | ||||||
|
| |||||||
Total | $ | 4,564,418 | $ | 1,387,661 | ||||
|
|
1 | The amounts set forth in the table are estimates based upon the salary in effect on December 31, 2022 and bonus paid to each executive in 2022. The actual amounts to be paid can only be determined at the time of such executive’s separation from the Company. |
2 | After termination by the Company without “cause,” or termination by the executive for “good reason,” each of Messrs. Saffire, Gregoire and Dodman will also be entitled to a pro rata portion of performance-based awards issued to such executive based upon the number of months of employment during the applicable performance periods and the Company’s performance through the end of the applicable performance period. Each of Messrs. Saffire and Dodman were issued performance-based awards on December 14, 2022 with the performance period ending December 14, 2025. Each of Messrs. Saffire, Gregoire and Dodman were issued performance-based awards on December 17, 2021 with the performance period ending December 17, 2024. Mr. Dodman was issued performance-based awards on January 4, 2021 with the performance period ending January 4, 2024. Each of Messrs. Saffire and Gregoire were issued performance-based awards on December 18, 2020 with the performance period ending December 18, 2023. |
3 | The amounts set forth in the table are estimates based upon the salary and bonus paid to Mr. Gregoire in 2022. The actual amounts to be paid can only be determined at the time of Mr. Gregoire’s separation from the Company. Effective upon his retirement on January 2, 2023, Mr. Gregoire is no longer entitled to receive these termination benefits. |
Life Storage, Inc. 2023 Proxy Statement
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PotentialPaymentsandBenefitsuponTerminationofEmploymentwithChange in Control of the Company.
Upon a termination of the employment of Messrs. Saffire or Dodman within 24 months following a “change in control” (presumed to occur as of December 31, 2022), such executive is entitled to receive the following benefits (note that Mr. Gregoire is no longer subject to such payments upon his retirement from the Company on January 2, 2023):
Joseph V. Saffire 1 | ||||
Cash Severance | $ | 4,570,000 | ||
Acceleration of Equity Awards 2 | 4,316,250 | |||
Continued Employee Welfare Benefits | 61,503 | |||
|
| |||
Total | $ | 8,947,753 | ||
|
| |||
Andrew J. Gregoire 3 | ||||
Cash Severance | $ | 2,964,375 | ||
Acceleration of Equity Awards 2 | 845,928 | |||
Continued Employee Welfare Benefits | 61,503 | |||
|
| |||
Total | $ | 3,871,806 | ||
|
| |||
David P. Dodman 1 | ||||
Cash Severance | $ | 1,683,595 | ||
Acceleration of Equity Awards 2 | 1,171,923 | |||
Continued Employee Welfare Benefits | 50,981 | |||
|
| |||
Total | $ | 2,906,499 | ||
|
|
1 | The amounts set forth in the table are estimates based upon the salary in effect on December 31, 2022 and bonus paid to each executive |
2 | Upon a “change in control,” each of Messrs. Saffire and Dodman will also be entitled to receive performance-based awards determined as if the date that the “change in control” occurs were the last day of the performance periods of the awards. Each of Messrs. Saffire and Dodman were issued performance-based awards on December 14, 2022 with the performance period ending December 14, 2025. Each of Messrs. Saffire, Gregoire and Dodman were issued performance-based awards on December 17, 2021 with the performance period ending December 17, 2024. Mr. Dodman was issued performance-based awards on January 4, 2021 with the performance period ending January 4, 2024. Each of Messrs. Saffire and Gregoire were issued performance-based awards on December 18, 2020 with the performance period ending December 18, 2023. |
3 | The amounts set forth in the table are estimates based upon the salary and bonus paid to Mr. Gregoire in 2022. Equity awards are valued based upon the closing market price of the Company’s common stock as of December 31, 2022. The actual amounts to be paid can only be determined at the time of Mr. Gregoire’s separation from the Company. The amount of severance payable to the executive shall be reduced to the |
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extent necessary to avoid imposition of any tax on excess parachute payments under Section 4999 of the Internal Revenue Code. Effective upon his retirement on January 2, 2023, Mr. Gregoire is no longer entitled to receive these termination benefits. |
Certain Definitions
For purposes of all the employment agreements of Messrs. Gregoire, Powell, and Killeen also provide for severance paymentsdescribed above, the following terms have the meanings set forth below:
“cause” generally means:
(i) | the executive’s fraud, commission of a felony, commission of an act or series of acts of dishonesty which are materially inimical to the best interests of the Company, or the executive’s willful and substantial failure to perform his duties under the employment agreement; |
(ii) | the executive’s material breach of any material provision of the employment agreement; or |
(iii) | the executive’s commission of an act of moral turpitude, dishonesty or fraud which would in the good faith determination of the Board of Directors render his continued employment materially damaging or detrimental to the Company. |
“change in control” generally includes:
(i) | the acquisition by any person of 20% or more of the outstanding stock of the Company; |
(ii) | approval by the Shareholders of the Company of a consolidation, merger or other business combination involving the Company in which the Company is not the surviving entity, other than a transaction in which the holders of the Company’s Common Stock immediately prior to the transaction have substantially the same proportionate ownership of Common Stock of the surviving corporation after the transaction; |
(iii) | approval by the Shareholders of the Company of any consolidation, merger or other business combination in which the Company is the continuing or surviving corporation but in which the common Shareholders of the Company immediately prior to the transaction do not own at least a majority of the outstanding Common Stock of the continuing or surviving corporation; |
(iv) | approval by the Shareholders of the Company of any sale, lease or exchange of substantially all of the assets of the Company and its subsidiaries; |
(v) | a change in the majority of the members of the Board of Directors within a 24-month period, unless the election or nomination for election by the Company’s Shareholders of each new director was approved by the vote of 2/3 of the directors then still in office who were in office at the beginning of the 24-month period; or |
(vi) | more than 50% of the assets of the Company and its subsidiaries are sold, transferred or otherwise disposed of, other than in the usual and ordinary course of its business. |
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“good reason” generally means, without the event the executive is terminated without “cause” or a termination by such executive for “good reason” priorexecutive’s consent:
(i) | a material change in the executive’s duties and responsibilities or a change in the executive’s title or position; |
(ii) | the executive’s place of employment or the principal executive offices of the Company are located more than fifty (50) miles from the geographical center of Williamsville, New York; |
(iii) | a material reduction by the Company in the executive’s compensation or benefits; |
(iv) | a material breach of the employment agreement by the Company; or |
(v) | the failure of any successor to the Company to specifically assume responsibility for the employment agreement. |
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Pay Ratio Disclosure
In August 2015, pursuant to a qualifying “changemandate of control”. In such event, the Company will pay such employee severance benefits based uponDodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission (the “SEC”) adopted a rule requiring annual disclosure of the ratio of the Company’s severance policy then in effect for all employees.
Compensation Committee Interlocks and Insider Participation
No membermedian employee’s total annual compensation to the total annual compensation of the Compensation Committee is or has been anCompany’s principal executive officer or(“PEO”), Joseph Saffire, CEO.
To determine the median employee, we reviewed a list of all employees of the Company or anyand its subsidiaries as of its subsidiaries. In addition, no memberDecember 31, 2022 and examined total cash compensation paid to each such employee during 2022 including cash paid for employer 401(k) match and cash paid by the Company for health insurance premiums as is consistent with the calculation of compensation for the Named Executive Officers of the Company. Cash compensation was annualized for those employees as of December 31, 2022 who were not employed for the full year. We believe that the use of total cash compensation for all employees is a consistently applied compensation measure because we do not widely grant equity awards to employees.
After identifying the median employee using total cash compensation, we calculated the annual total compensation of such employee using the same methodology we use for our Named Executive Officers as set forth in the Summary Compensation Committee had any relationships withTable for 2022 included in this Proxy Statement. The ratio of annual total compensation of the Company’s PEO to the median annual total compensation of all Company or any other entity that require disclosure underemployees (excluding the proxy rules and regulations promulgated by the SEC.PEO) is as follows:
Median employee’s annual total compensation | $37,165 | |||
Annual total compensation of Mr. Joseph Saffire, our PEO | $5,722,466 | |||
Ratio of Mr. Joseph Saffire’s annual total compensation to the median employee’s annual total compensation | 154 to 1 |
34Life Storage, Inc. 2023 Proxy Statement
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Compensation and Human Capital Committee Report
The Compensation and Human Capital Committee evaluates and establishes compensation for Named Executive Officers and oversees the Company’s stock plans, and other management incentive, benefit and perquisite programs. Management has the primary responsibility for the Company’s financial statements and reporting process, including the disclosure of executive compensation. With this in mind, the Compensation and Human Capital Committee reviewed and discussed with management the disclosure appearing under the heading “Compensation Discussion and Analysis” of this Proxy Statement. The Compensation and Human Capital Committee is satisfied that the Compensation Discussion and Analysis fairly and completely represents the philosophy, intent, and actions of the Company with regard to executive compensation. Based upon this review and discussion with management, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statementProxy Statement for filing with the Securities and Exchange Commission, and incorporated by reference into the 2022 Annual Report on Form 10-K for the year ended December 31, 2015.Report.
Compensation and Human Capital Committee
STEPHENSTEPHEN R. RUSMISEL, CHAIRRUSMISEL, CHAIR
ARTHUR L. HAVENER, JR.MARK G. BARBERIO
MARK G. BARBERIODANA HAMILTON
SUSAN HARNETT
THE FOREGOING REPORT SHALL NOT BE DEEMED TO BE “SOLICITING MATERIAL” OR TO BE “FILED” WITH THE SECURITIES AND EXCHANGE COMMISSION AND SHOULD NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE “EXCHANGE ACT”), EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
35
Life Storage, Inc. 2023 Proxy Statement
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PROPOSAL 3. PROPOSAL TO APPROVE THE COMPENSATION OF THE COMPANY’S EXECUTIVE OFFICERS
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), we are asking our shareholdersShareholders to vote to approve, on an advisory (non-binding) basis, the compensation of the Company’s Named Executive Officers as described in detail in the “Compensation Discussion and Analysis” and the accompanying tables in the Executive Compensation section beginning on page 16.above. This vote is commonly known as “say-on-pay.“say-on-pay.” The Company is currently conducting “say-on-pay”“say-on-pay” votes every year and expects to hold the next “say-on-pay” vote in connection with its 2017 Annual Meeting of Shareholders. Shareholders should review the Compensation Discussion and Analysis section of this proxy for the details of the Company’s executive compensation program.year.
As described in greater detail in the Compensation“Compensation Discussion and AnalysisAnalysis” section,we seek to closely align the interests of the Named Executive Officers with the interests of our shareholders.Shareholders. Our compensation programs are designed to reward our Named Executive Officers for the achievement of short-term goals and the achievement of increased total shareholder return, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking. A substantial part of our compensation for Named Executive Officers is performance based and the Company has used performance-based awardsvesting restricted stock as part of the long-term incentive program.
In order to promote the short and long-term interest of our shareholders,Shareholders, the Company’s compensation programs have evolved as necessary over the years. During the last several years, the Compensation and Human Capital Committee has initiated a number of changes to better align management and shareholderShareholder interests. Recent Compensation and Human Capital Committee actions include the following:
In 2012, the Compensation Committee elected a new Chair and the Compensation Committee commenced undertaking a review of the overall compensation practices of the Company for the Named Executive Officers. As a result, long-term incentive compensation awards were not made to the Named Executive Officers in 2012 with the expectation that such omission would be taken into consideration after the completion of the Compensation Committee’s review. In 2013, the Compensation Committee continued its past practice of making long-term incentive restricted stock awards and in making such awards in 2013 took into consideration that long-term awards were not made in 2012. Thus, special awards were made in August 2013. As described in note 6 to the Summary Compensation Table, the substantial disparity in total compensation of the Named Executive Officers between 2013 and 2014 resulted from such decision. In 2014 and 2015, the Compensation Committee continued its past practice of making long-term incentive awards.
Since 2010, the Company has had in effect a performance based Annual Incentive Compensation Plan for Executive Officers. This Plan for annual incentive awards is two-thirds based upon objective metrics that relate to “targeted” FFO and annual FFO growth relative to publicly-traded competitors of the Company. One-third of the potential annual bonus award is subject to the Compensation Committee’s evaluation of a number of other metrics which can be changed by the Compensation Committee as it deems appropriate to promote specific goals. The Plan also provides that bonuses shall be returned, as the Compensation Committee deems appropriate, to the extent resulting from restated financial statements of the Company due a recipient’s misconduct, and that the Compensation Committee may make adjustments in bonuses to the extent they were affected by misstatements in the audited financial statements of other companies.
• | Since 2010, the Company has had in effect a performance-based Annual Incentive Compensation Plan for Executive Officers. This plan for annual incentive awards is two-thirds based upon objective metrics that relate to “targeted” FFO and annual FFO growth relative to publicly traded competitors of the Company. One-third of the potential annual bonus award is subject to the Compensation and Human Capital Committee’s evaluation of a number of other metrics which can be changed by the Compensation and Human Capital Committee as it deems appropriate to promote specific goals. The Plan also provides that bonuses shall be returned, to the extent that the Compensation and Human Capital Committee deems appropriate, if they result from restated financial statements of the Company due to a recipient’s misconduct, and that the Compensation and Human Capital Committee may make adjustments in bonuses to the extent they were affected by misstatements in the audited financial statements of other companies. The Company recently amended its clawback policy such that if an officer commits a material legal or compliance violation, including a violation of the Company’s Code of Ethics, the Company may seek recovery of incentive compensation awarded for the performance period in which the violation occurred. |
The Compensation and Human Capital Committee has revised long-term incentive awards in a manner to provide a direct linkage between payouts to executive officers and total return to shareholders. A portion of such awards in 2013, 2014 and 2015 were made in the form of performance-based awards which are earned based upon the Company’s relative total shareholder return compared to certain peer companies.
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officers and total return to Shareholders. A portion of such awards since 2011 have been made in the form of performance-based awards which are earned based upon the Company’s relative total shareholder return compared to certain peer companies. |
Formal minimum share ownership requirements were recentlyhave been adopted for Named Executive Officers and members of the Board of Directors of the Company. While the Named Executive Officers and Board members have substantial holdings, thisSuch minimum share ownership requirements were recently amended from three times to five times base fees or salaries. This amended requirement reflects the Compensation and Human Capital Committee’s commitment to insureensure alignment of management and shareholderShareholder interests.
36
In January 2015, the Company entered into Amendments to the existing employment agreements between the Company and each of Robert J. Attea, Kenneth F. Myszka and David L. Rogers. These amendments were entered into as part of a succession plan for senior management of the Company. Among other matters, these amendments provide for a term end date for Messrs. Attea and Myszka. Also, the amendments for each of Messrs. Attea, Myszka and Rogers also delete provisions in each of such agreements regarding gross-up payments in connection with certain severance obligations. No other employment agreements of the Company include gross-up provisions in connection with severance obligations.
We believe that the information provided in this Proxy Statement demonstrates that the Company’s executive compensation program is designed appropriately to attract and retain talented executives and to align the executives’ interests with shareholders’Shareholders’ interests. Accordingly, the Board of Directors recommends that shareholdersShareholders approve the compensation of the Company’s Named Executive Officers by approving the following say-on-pay resolution:
RESOLVED, that the shareholdersShareholders of Sovran SelfLife Storage, Inc. approve, on an advisory basis, the compensation of the executive officers identified in the “Summary Compensation Table,” as disclosed in the Sovran SelfLife Storage, Inc. 20162023 Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and the accompanying footnotes and narratives.
Say-on-pay votes under the Dodd-Frank Act are advisory. Although the results of the say-on-pay vote do not bind the Company, the Board of Directors will review the results very carefully. The Board of Directors views the vote as providing important information regarding investor sentiment about the Company’s executive compensation philosophy, policies and practice.
The affirmative vote of a majority of the votes cast is required for approval of the advisory resolution above. For purposes of the vote on this proposal, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE PROPOSAL TO APPROVE THE COMPENSATION OF THE COMPANY’S EXECUTIVE OFFICERS.
37
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CERTAIN TRANSACTIONSPROPOSAL 4. PROPOSAL ON THE FREQUENCY OF HOLDING FUTURE ADVISORY VOTES ON THE COMPENSATION OF THE COMPANY’S EXECUTIVE OFFICERS
We are asking our shareholders to provide an advisory (non-binding) vote on how frequently shareholders should have an opportunity to vote on say-on-pay. Under the Dodd-Frank Act, shareholders may vote to have the advisory vote on say-on-pay every three years, every two years, every year or may abstain. We are recommending a frequency period of every “ONE YEAR” (every year) for future votes on say-on-pay.
The Company currently submits an advisory vote on say-on-pay every year and the Board of Directors continues to believe that submitting advisory say-on-pay resolutions every year is preferable. The Board of Directors believes that holding a say-on-pay vote every “ONE YEAR” will permit the Company’s shareholders to continue to provide direct input on the Company’s executive compensation philosophy, policies and practices as disclosed in the Company’s proxy statement each year, which is consistent with the Company’s efforts to engage in an ongoing dialogue with its shareholders on executive compensation and corporate governance matters.
The option of one year, two years or three years that receives the most votes cast at a meeting at which a quorum is present will be the frequency for the advisory vote on executive compensation that has engaged Locke Acquisition Group, LLCbeen recommended by our shareholders. For purposes of this advisory vote, abstentions and broker non-voters will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a broker to purchase and sell real property. During 2015quorum. It is possible that no option will receive a majority of the votes cast. In either case, votes on the frequency for say-on-pay votes under the Dodd-Frank Act are advisory. Although your vote on this say-on-pay resolution does not bind the Company, paid Locke Acquisition Group LLC $2,016,711 in commissions. Jonathan Attea,the Board of Directors will review the results of the say-on-pay vote very carefully and will continue to review the advantages and disadvantages for each of the frequencies on say-on-pay votes regardless of the outcome of the vote. Please note that you are being asked to vote on one of the choices specified above, and not on the recommendation of the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” A FREQUENCY OF “ONE YEAR” FOR FUTURE NON-BINDING SHAREHOLDER VOTES ON THE COMPENSATION OF THE COMPANY’S EXECUTIVE OFFICERS.
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CERTAIN TRANSACTIONS
Michael Rogers and John Rogers, brothers of Mr. David L. Rogers, and Christopher Rogers, son of Robert J. Attea, is an employee of Locke Acquisition Group, however, he does not hold any equity in that company nor is he an officer or director.
Frederick G. Attea, brother of Robert J. Attea, is a partnerMr. David L. Rogers, are employees of the law firmCompany. In 2022, Michael Rogers was paid a base salary and bonus of Phillips Lytle LLP,approximately $725,000. Additionally, in 2022, Michael Rogers was granted 3,000 shares of restricted stock which vest ratably over a period of five years and performance-based awards with a maximum potential award of 6,000 shares of Company stock based on the Company’s total shareholder return over a three-year period as compared to its peer group. His 2023 salary is approximately $344,000. Additionally, in January 2023, Michael Rogers was granted 2,500 shares of restricted stock which vest ratably over a period of five years and performance-based awards with a maximum potential award of 5,000 shares of Company stock based on the Company’s total shareholder return over a three-year period as compared to its peer group. In 2022, John Rogers was paid a base salary and bonus of approximately $184,000. His 2023 salary is approximately $191,000. Additionally, in April 2023, John Rogers was granted 500 shares of restricted stock which vest ratably over a period of five years. In 2022, Christopher Rogers was paid a base salary and bonus of approximately $120,000. His 2023 salary is approximately $125,000. Additionally, in April 2023, Christopher Rogers was granted 1,000 shares of restricted stock which vest ratably over a period of five years. The Company has representedentered into agreements with Michael Rogers and John Rogers which provide for a severance payment by the Company since its inceptionin the event they are terminated from employment after a change of control of the Company. The severance payment is equal to two times their salary and is currently representingbonus for the Company, Sovran HHF Storage Holdings LLC a joint venture in whichprior calendar year. Such agreements are consistent with agreements with similarly situated employees of the Company has a 20% ownership interest, and Sovran HHF Storage Holdings II LLC a joint venture in which the Company has a 15% ownership interest. Phillips Lytle LLP’s legal fees for services rendered to the Company for 2015 totaled $2,130,124, legal fees for services rendered to Sovran HHF Storage Holdings LLC totaled $5,068.Company.
The transactions and arrangements above were reviewed and disclosed under the Company’s policies and procedures regarding related partyrelated-party transactions.
PROPOSALS OF SHAREHOLDERS FOR THE 2017
2024 ANNUAL MEETING
To be considered for inclusion in the proxy materials for the 20172024 Annual Meeting of Shareholders, shareholderShareholder proposals must be received by the Secretary of the Company, 6467 Main Street, Williamsville, New York 14221, no later than December 7, 2016.15, 2023.
The Company’s By-Laws set forth the procedure to be followed by a shareholderShareholder who wishes to recommend one or more persons for nomination to the Board of Directors or present a proposal at an Annual Meeting.annual meeting. Only a shareholderShareholder of record entitled to vote at an Annual Meetingannual meeting may present a proposal and must give timely written notice thereof to the Secretary of the Company at the address noted above. Generally, to be timely, a shareholder’sShareholder’s notice shall set forth all information required under the By-laws and shall be delivered to the Secretary not earlier than the 150th day (i.e. November 15, 2023) nor later than the 120th day (i.e. December 15, 2023) prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting. However, 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, to be timely, notice by a shareholderShareholder must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 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.
38Life Storage, Inc. 2023 Proxy Statement
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In addition to satisfying the foregoing requirements under the Company’s By-laws, shareholders who intend to solicit proxies in support of director nominees other than the Company’s director nominees in compliance with the universal proxy rules under the Exchange Act must provide notice that sets forth the information required in Rule 14a-19 under the Exchange Act no later than March 19, 2024.
Life Storage, Inc. 2023 Proxy Statement
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VOTING AND VIRTUAL MEETING INFORMATION
This Proxy Statement and the form of proxy are furnished in connection with the solicitation of proxies on behalf of the Board of Directors of the Company for the Annual Meeting to be held virtually over the Internet on Thursday, May 18, 2023 at 9:00 a.m. (E.D.T.), and at any adjournment thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. No physical meeting will be held. This Proxy Statement and form of proxy are first being made available to Shareholders on April 13, 2023.
Shareholders of record may vote by (i) using the toll-free telephone number shown on the proxy card, (ii) voting via the Internet at the address shown on the proxy card, or (iii) marking, dating, signing and returning a paper proxy card. Returning your completed proxy will not prevent you from voting these shares at the Annual Meeting should you wish to do so. The proxy may be revoked at any time before it is voted by delivering to the Secretary of the Company a written revocation or a duly executed proxy (including a telephone or Internet vote) as of a later date.
If you are a beneficial owner of shares held in street name and wish to vote in person at the Annual Meeting, you must obtain a “legal proxy” from the organization that holds your shares. A legal proxy is a written document that authorizes you to vote your shares held in street name at the Annual Meeting. Please contact the organization that holds your shares for instructions regarding obtaining a legal proxy. Even if you plan to attend the Annual Meeting over the Internet, we recommend that you submit your proxy card or voting instructions, or that you vote your shares by telephone or through the Internet, so that your vote will be counted if you later decide not to attend the Annual Meeting.
We have designed our virtual meeting such that shareholders have equivalent rights to participate and ask and hear management’s responses to appropriate questions as they had at our prior in-person meetings. You will be able to attend the Annual Meeting, vote your shares electronically, and submit questions in writing during the meeting by visiting www.virtualshareholdermeeting.com/LSI2023 and entering your unique voter identification number. As was the case at our prior in-person meetings, to ensure the meeting is conducted in a manner that is fair to all shareholders, the Chair (or such other person designated by our Board) may exercise broad discretion in recognizing shareholders who wish to participate, the order in which questions are asked and the amount of time devoted to any one question. We also reserve the right to edit or reject questions we deem personal, profane or otherwise inappropriate. Instructions for submitting written questions during the meeting are available at www.virtualshareholdermeeting.com/LSI2023.
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number at 844-986-0822 (US) or 303-562-9302 (International).
We are providing these materials on behalf of the Board to ask for your vote and to solicit your proxies for use at the Annual Meeting, or any adjournments or postponements thereof.
Life Storage, Inc. 2023 Proxy Statement
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We have delivered printed versions of these materials to you by mail, because you were a Shareholder as of April 10, 2023, the record date fixed by the Board, and are therefore entitled to receive Notice of the Annual Meeting and to vote on matters presented at the meeting.
Our Annual Report to Shareholders (the “2022 Annual Report”) includes a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on February 24, 2023, excluding exhibits. On or about April 13, 2023, we mailed you a printed copy of this Proxy Statement and our 2022 Annual Report and instruction on how to vote over the Internet.
All Shareholders receiving this Proxy Statement should have also received a paper copy of the 2022 Annual Report, which includes our Annual Report on Form 10-K for the year ended December 31, 2022. Shareholders may request a free copy of our 2022 Annual Report on Form 10-K, including financial statements and schedules, by sending a written request to: Life Storage, 6467 Main Street, Williamsville, NY 14221, Attention: Investor Services. Alternatively, Shareholders can access the 2022 Annual Report on Form 10-K and other financial information on Life Storage’s “Investor Relations” section of its website at lifestorage.com.
The entire cost of preparing, assembling and mailing the proxy material will be borne by the Company. The Company will reimburse brokerage firms, banks and other securities custodians for their expenses in forwarding proxy materials to their principals. Solicitations other than by mail may be made by officers or by employees of the Company without additional compensation.
Only Shareholders of record at the close of business on April 10, 2023 are entitled to notice of, to vote at, and to participate in the Annual Meeting and at all adjournments thereof. At the close of business on April 10, 2023, there were 85,087,900 shares of the Company’s common stock (“Common Stock”) issued and outstanding. Each share of Common Stock has one vote. A majority of shares entitled to vote at the Annual Meeting will constitute a quorum. If a share is represented for any purpose at the meeting, it is deemed to be present for all other purposes. Abstentions and shares held of record by a broker or its nominee (“Broker Shares”) that are voted on any matter are included in determining whether a quorum is present. Broker Shares that are not voted on any matter at the Annual Meeting will not be included in determining whether a quorum is present.
Note to Beneficial Owners
Under the rules of the New York Stock Exchange (“NYSE”), brokers or nominees have the authority to vote shares held for a beneficial owner on “routine” matters, such as the ratification of the selection of the Company’s independent registered public accounting firm, without instructions from the beneficial owner of those shares. The election of directors and the non-binding votes on the compensation of the Company’s executive officers and the frequency of such non-binding votes on the compensation of the Company’s executive officers are considered “non-routine” matters. As a result, if a broker or nominee does not receive voting instructions from the beneficial owner of shares held by such broker or nominee, those shares will not be voted and will be considered broker non-votes with respect to those “non-routine” matters. Therefore, it is
Life Storage, Inc. 2023 Proxy Statement
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very important for beneficial owners holding shares in this manner to provide voting instructions to their broker or other nominee.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on May 18, 2023 The Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2022 are available at www.proxyvote.com. |
Life Storage, Inc. 2023 Proxy Statement
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OTHER MATTERS
At the time of the preparation of this Proxy Statement, the Board of Directors of the Company did not contemplate or expect that any business other than that pertaining to the subjects referred to in this Proxy Statement would be brought up for action at the meeting, but in the event that other business calling for a Shareholders’ vote does properly come before the meeting, the Proxies will vote thereon according to their best judgment in the interest of the Company.
A COPY OF SOVRAN SELFLIFE STORAGE, INC.’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 20152022 (the “2022 10-K”) FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE WITHOUT CHARGE TO THOSE SHAREHOLDERS WHO WOULD LIKE MORE DETAILED INFORMATION CONCERNING THE COMPANY. TO OBTAIN A COPY, PLEASE WRITE TO: ANDREW J. GREGOIRE,ALEXANDER E. GRESS, SECRETARY, SOVRAN SELFLIFE STORAGE, INC., 6467 MAIN STREET, WILLIAMSVILLE, NEW YORK, 14221. THE 2022 10-K IS ALSO AVAILABLE ON THE COMPANY’S WEBSITE (www.sovranss.comwww.lifestorage.com).
By Order of the Board of Directors,
ANDREW J. GREGOIREAlexander E. Gress
Secretary
April 6, 2016
39
ANNUAL MEETING OF SHAREHOLDERS OFLife Storage, Inc. 2023 Proxy Statement
SOVRAN SELF
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APPENDIX A – Non-GAAP Measures
Core FFO per Share
We present “Core FFO per share,” a non-GAAP measure that represents diluted earnings per share excluding the impact of depreciation expense, gains on the sale of non-real estate assets and investments in joint ventures, uninsured damages related to natural disasters, costs related to officer’s retirement, income and FFO attributable to noncontrolling interests, and acquisition fees. We review Core FFO per share to evaluate our ongoing operating performance, and we believe investors and REIT analysts use it in a similar manner. However, Core FFO per share is not a substitute for net income per share. Because other REITS may not compute Core FFO per share in the same manner as we do, may not use the same terminology, or may not present such a measure, Core FFO per share may not be comparable among REITs.
The table below reconciles from diluted earnings per share to Core FFO per share.
2022 | ||||
Diluted earnings per share | $ | 4.22 | ||
Noncontrolling common interests in the Operating Partnership | 0.05 | |||
Noncontrolling preferred interests in the Operating Partnership during conversion period | 0.02 | |||
Depreciation of real estate and amortization of intangible assets exclusive of debt issuance costs | 2.25 | |||
Depreciation and amortization from unconsolidated joint ventures | 0.11 | |||
Gain on sale of investments in joint ventures | (0.02 | ) | ||
Funds from operations allocable to noncontrolling interest in Operating Partnership | (0.08 | ) | ||
Gain on sale of non-real estate assets | (0.07 | ) | ||
Uninsured damages related to natural disasters | 0.03 | |||
Acquisition fee | (0.02 | ) | ||
Costs related to officer’s retirement | 0.02 | |||
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Core FFO per share | $ | 6.51 |
Life Storage, Inc. 2023 Proxy Statement
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LIFE STORAGE, INC.
May 18, 20166467 MAIN ST.
GO GREENWILLIAMSVILLE, NY 14221
e-Consent makes it easyVOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above
Use the Internet to go paperless. With e-Consent, you can quickly accesstransmit your proxy
material, statementsvoting instructions and other eligible documents online, while reducing costs, clutter and
paper waste. Enroll today via www.amstock.com to enjoy online access.
Important Notice Regardingfor electronic delivery of information up until 11:59 p.m. Eastern Time the Availability of Proxy Materials
forday before the Shareholder Meeting to be held on May 18, 2016:
The Proxy Statement, Form 10-K for the year ended December 31, 2015
and the Annual Report to Shareholders
are available at www.sovranss.com/2016annualmeeting
Please sign,cut-off date and mail
or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting - Go to www.virtualshareholdermeeting.com/LSI2023
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided as soonor return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
as possible.TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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1. Election of directors: | ||||||||||||||||||||
Nominees | For | Against | Abstain | |||||||||||||||||
1a. Mark G. Barberio | ☐ | ☐ | ☐ | For | Against | Abstain | ||||||||||||||
1b. Joseph V. Saffire | ☐ | ☐ | ☐ | 3. Proposal to approve the compensation of the Company’s executive officers. | ☐ | ☐ | ☐ | |||||||||||||
1c. Stephen R. Rusmisel | ☐ | ☐ | ☐ | |||||||||||||||||
| ☐ | ☐ | The Board of Directors recommends you vote FOR a frequency of 1 YEAR on the following proposal: | 1 year | 2 years | 3 years | Abstain | |||||||||||||
1e. Dana Hamilton | ☐ | ☐ | ☐ | 4. Proposal on the frequency of holding future advisory votes on the compensation of the Company’s executive officers. | ☐ | ☐ | ☐ | ☐ | ||||||||||||
1f. Edward J. Pettinella | ☐ | ☐ | ☐ | |||||||||||||||||
1g. David L. Rogers | ☐ | ☐ | ☐ | NOTE: In their discretion, the proxies are authorized to vote upon any matters of business which may properly come before the meeting, or any adjournment(s) thereof. | ||||||||||||||||
1h. Susan Harnett | ☐ | ☐ | ☐ | |||||||||||||||||
The Board of Directors recommends you vote FOR the following proposals: | For | Against | Abstain | |||||||||||||||||
2. Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2023. | ☐ | ☐ | ☐ | |||||||||||||||||
Please |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature |
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SOVRAN SELF
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
LIFE STORAGE, INC.
SOLICITED BY THE BOARD OF DIRECTORS
for the Annual Meeting of Shareholders –
May 18, 20162023 9:00 AM
Robert J. Attea, Kenneth F. MyszkaThis proxy is solicited by the Board of Directors
Joseph V. Saffire, Alexander Gress and David L. Rogers,P. Dodman, and each of them with full power of substitution, are hereby appointed proxies to vote all shares (unless a lesser number is specified on the other side) of the stock of Sovran SelfLife Storage, Inc. that are held of record by the undersigned on March 18, 2016April 10, 2023 at the Annual Meeting of Shareholders of Sovran SelfLife Storage, Inc., to be held virtually via live webcast at the Company’s headquarters, 6467 Main Street, Williamsville, New York 14221,www.virtualshareholdermeeting.com/LSI2023, on May 18, 20162023 at 9:00 a.m., local time, and any adjournments thereof, with all powers the undersigned would possess if personally present, for the election of directors, on each of the other matters described in the Proxy Statement and otherwise in their discretion.
The shares represented by this Proxy will be voted as directed by the shareholders. If no direction is given, such shares will be voted for election of all nominees for directors listed in Proposal 1, for Proposal 2, for Proposal 3, and for a frequency of one year on Proposal 3.4.
Please return this proxy card promptly using the enclosed envelope.
(ToContinued and to be Signedsigned on Reverse Side)
COMMENTS:reverse side
ANNUAL MEETING OF SHAREHOLDERS OF
SOVRAN SELF STORAGE, INC.
May 18, 2016
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INTERNET- Access “www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page.
TELEPHONE - Call toll-free1-800-PROXIES(1-800-776-9437) in the United States or1-718-921-8500from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call.
Vote online/phone until 11:59 PM EDT the day before the meeting.
MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible.
IN PERSON -You may vote your shares in person by attending the Annual Meeting.
GO GREEN - e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access.
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