UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to Rule 14a-12 |
DDRSITE Centers Corp.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Notice of Annual Meeting of Shareholders |
To the Holders of Common Shares of DDRSITE Centers Corp.:
The 20182020 Annual Meeting of Shareholders of DDRSITE Centers Corp. will be held as follows:
WHEN: | • 9:00 a.m. local time, Tuesday, May | |
WHERE: | • Loews Regency Hotel 540 Park Avenue New York, New York 10065 As part of our contingency planning regarding novel coronavirus(COVID-19), we are preparing for the possibility that the date, time or location of the 2020 Annual Meeting of Shareholders may be changed or that the 2020 Annual Meeting of Shareholders may be held by means of remote communication (sometimes referred to as a “virtual” meeting). If we take this step, we will announce the decision to do so in advance through a press release and public filing with the Securities and Exchange Commission, and details will be available at www.sitecenters.com/investors. | |
ITEMS OF BUSINESS: | • Election of eight Directors.
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• Ratification of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm.
• Transact such other business as may properly come before the Annual Meeting. | |
WHO CAN VOTE: | • Shareholders of record at the close of business on March | |
VOTING BY PROXY: | • Shareholders may complete, date and sign the accompanying Proxy Card and return it in the enclosed envelope; or
• Vote their shares by telephone or over the Internet as described in the accompanying Proxy Statement. | |
INTERNET AVAILABILITY OF PROXY MATERIALS: | • The Company’s |
By order of the Board of Directors,
Aaron M. Kitlowski
Secretary
Dated: April 2, 20181, 2020
Important Notice Regarding the Availability of Proxy Materials
for the Shareholder Meeting to be held on May 8, 2018
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on May 12, 2020 |
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ii DDRSITE Centers Corp. ï 20182020 Proxy Statement
This Proxy Summary contains highlights and information that can be found elsewhere in this Proxy Statement as indicated by the applicable page references. This summary does not contain all of the information that you should consider, and therefore you should read the entire Proxy Statement.
MEETING DATE, TIME AND LOCATION
TUESDAY, MAY 8, 201812, 2020 AT 9:00 A.M. LOCAL TIME
Loews Regency Hotel
540 Park Avenue
New York, New York 10065
PROPOSALSAs part of our contingency planning regarding novel coronavirus (COVID-19), we are preparing for the possibility that the date, time or location of the 2020 Annual Meeting of Shareholders (the “Annual Meeting”) may be changed or that the Annual Meeting may be held by means of remote communication (sometimes referred to as a “virtual” meeting). If we take this step, we will announce the decision to do so in advance through a press release and public filing with the Securities and Exchange Commission, and details will be available at www.sitecenters.com/investors.
PROPOSALS
Proposal | Board Recommendation | Page Reference for More Information | ||||||||
1. | Election of eight Directors. |
✓ | “For” all nominees |
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2. | Adoption of an amendment to the Company’s Articles of Incorporation to eliminate the ability of shareholders to exercise cumulative voting in the election of Directors. |
✓ |
“For” |
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3. | Adoption of an amendment to the Company’s Code of Regulations to implement proxy access in connection with annual meetings of shareholders. |
✓ |
“For” |
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4. | Authorization of the Company’s Board of Directors to effect, in its discretion, a reverse stock split of the Company’s common stock and adoption of a corresponding amendment to the Company’s Articles of Incorporation. |
✓ |
“For” |
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5. | Approval, on an advisory basis, of the compensation of the Company’s named executive officers. |
✓ |
“For” |
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6. | Ratification of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm. |
✓ |
“For” |
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Proposal |
| Board Recommendation | Page Reference for More Information | |||||||
1. | Election of eight Directors |
✓ | “For” all nominees |
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2. | Approval, on an advisory basis, of the compensation of the Company’s named executive officers |
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“For” |
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3. | Ratification of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm |
✓ |
“For” |
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VOTING
You may vote if you were a shareholder of record of SITE Centers Corp. (“SITE Centers”, “we”, “us”, “our” or the “Company”) at the close of business on March 14, 2018,20, 2020, the record date for the Annual Meeting. We will begin mailing this Proxy Statement and the accompanying Notice of Annual Meeting of Shareholders, along with the accompanying2019 Annual Report and Proxy Card on or about April 2, 20181, 2020 to all shareholders entitled to vote.
You may vote your shares in person at the Annual Meeting or vote by proxy in any of the following ways:
By Internet | ||||||||
Go to: www.investorvote.com/ or the web address on your Proxy Card
| By Telephone
Call toll free: 1-800-652-8683
| By Mail
Sign the enclosed Proxy Card and return by pre-paid postage envelope
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DDRSITE Centers Corp. ï 20182020 Proxy Statement 1
2. Proposal One: Election of Eight Directors
Proposal Summary and Board Recommendation
At the Annual Meeting, unless you specify otherwise, the common shares represented by your proxy will be voted to elect the eight Director nominees of DDR Corp. (“DDR” or the “Company”).identified below. If any of the nominees is not a candidate when the election occurs for any reason (which is not expected) and the size of the Board remains unchanged, then our Board of Directors (the “Board”) remains unchanged, then our Board intends that proxies will be voted for the election of a substitute Director nominee designated by our Board as recommended by the Nominating and Corporate Governance Committee.
BOARD RECOMMENDATION:
“For” All Eight Director Nominees
Nominees for Election at the Annual Meeting
Our Board has nominated and recommends that shareholders vote “FOR” the election of each of the following Director nominees, each to serve aone-year term until the next annual meeting of shareholders and until a successor has been duly elected and qualified. Upon consummation of our previously announced plan tospin-off a portfolio of 50 properties, comprised of 38 Continental U.S. assets and the entirety of our Puerto Rico portfolio, into a separate, publicly-traded REIT named Retail Value Inc., the Company expects that Messrs. Roulston and Sholem will resign from the Board and join the board of directors of Retail Value Inc. Thisspin-off is expected to be completed during the summer of 2018.
Director Since: 2018 Age: 57 Independent: Yes Committees: • Audit • Nominating and Corporate Governance | LINDA B. ABRAHAM — Managing Director of Crimson Capital (early stage technology company investing and consulting) Background: Since 2014, Ms. Abraham has served as Managing Director of Crimson Capital, which invests in and advises early stage technology companies spanning data/analytics, cybersecurity, machine learning,e-commerce, educational technology and virtual reality. From 1999 to 2013, Ms. Abrahamco-founded and served as Executive Vice President of comScore, a leader in digital measurement and analytics which went public in 2007. Prior toco-founding comScore, Ms. Abrahamco-founded Paragren Technologies, which provided software for customer relationship management systems (today owned by Oracle), and also served in various roles at Procter & Gamble and Information Resources, Inc., where she developed and commercialized a series of data-driven analytical products. Ms. Abraham also serves as the Vice Chair of Upskill, a virtual reality company for large scale manufacturing enterprises. Additionally, she serves on the boards of the Data Science Institute at the University of Virginia, the International Women’s Forum of Northern California and Tiger 21. Ms. Abraham is an active member of the World Economic Forum and is a member of the Selection Committee for the Technology Pioneer program. Ms. Abraham holds a degree in Quantitative Business Analysis from Penn State University. Qualifications:Ms. Abraham’s qualifications to serve on the Board include extensive experience as a technology entrepreneur and as an expert in consumer analytics, a field that is increasingly critical to the Company’s corporate strategy and efforts to understand shopping patterns and merchandise mix. |
2 SITE Centers Corp.ï 2020 Proxy Statement
Director Since: 2000
Age:
Independent: Yes
Committees: • Compensation (Chair)
• Audit • Dividend
| TERRANCE R. AHERN — Chairman of the Board,
Background: Mr. Ahern isCo-Founder, Principal and Chief Executive Officer of The Townsend Group, an institutional real estate advisory and investment management firm formed in 1986. Mr. Ahern also is a member of the firm’s Investment Committee. The Townsend Group serves as adviser to, or invests on behalf of, domestic and offshore public and private pension plans, endowments and foundations, and sovereign wealth funds. Mr. Ahern has also served as an Independent Director of KKR Real Estate Finance Trust since 2017. Mr. Ahern is a past member of the Young Presidents Organization, the Pension Real Estate Association
Qualifications:Mr. Ahern has over 30 years of real estate industry and institutional real estate consulting experience. This experience includes founding and managing a leading institutional real estate advisory and investment firm whose core skill is analyzing real estate firms and investment opportunities. This role and experience provides Mr. Ahern with unique insight into the structure and operations of both public and private real estate companies, and into the real estate environment and capital markets in which we operate. Through his experience, Mr. Ahern has gained an understanding and knowledge of the opportunities, challenges and risks that face real estate companies, as well as the functions of a board of directors. |
2 DDR Corp.ï 2018 Proxy Statement
Director Since: 2017
Age:
Independent: Yes
Committees: •
• • Pricing | JANE E. DEFLORIO — Managing Director (Retired), Deutsche Bank AG Retail/Consumer Sector Investment Banking Coverage (global banking and financial services company)
Background: Ms. DeFlorio was Managing Director, Deutsche Bank AG Retail/Consumer Sector Investment Banking Coverage, a division of a global banking and financial services company, from 2007 to
Qualifications: With over 15 years of experience in investment banking, primarily focusing on the retail sector, as well as her |
SITE Centers Corp.ï 2020 Proxy Statement 3
Director Since: 2009
Age:
Independent: Yes
Committee: • Nominating and Corporate Governance • Dividend Declaration • Pricing | DR. THOMAS FINNE — Managing Director, KG CURA Vermögensverwaltung G.m.b.H. & Co. (commercial real estate company, Hamburg, Germany)
Background: Dr. Finne is the Managing Director of KG CURA Vermögensverwaltung G.m.b.H. & Co., a commercial real estate company located in Hamburg, Germany, that manages assets in North America and Europe. Prior to joining KG CURA Vermögensverwaltung G.m.b.H. & Co. in 1992, Dr. Finne was responsible for controlling, budgeting, accounting and finance for Bernhard Schulte KG, a ship owner and ship manager located in Hamburg, Germany. He
Qualifications:Dr.Finne’s experience in international commercial real estate enables him to contribute an international perspective on the issues impacting a real estate company facing today’s challenges and opportunities. His service on the board of directors of several international real estate companies further provides him with business modeling experience and an appreciable awareness of the most effective and essential functions of a board of directors. |
DDR Corp.ï 2018 Proxy Statement 3
Director Since: 2017
Age:
Independent: No
Committees: • Dividend Declaration
• Pricing | DAVID R. LUKES — President and Chief Executive Officer,
Background: Mr. Lukes was named President and Chief Executive Officer of
Qualifications: Mr. Lukes’ qualifications to serve on the Board include his position as a member of the Company’s senior management, his prior experience as Chief Executive Officer and Director of Equity One, his familiarity with the retail |
4 SITE Centers Corp.ï 2020 Proxy Statement
Director Since: 2002
Age:
Independent: Yes
Committees:
• Nominating and Corporate Governance (Chair) | VICTOR B. MACFARLANE — Chairman and Chief Executive Officer, MacFarlane Partners (real estate investments)
Background: Mr. MacFarlane is Chairman and Chief Executive Officer of MacFarlane Partners, which he founded in 1987 to provide real estate investment management services to institutional investors. Mr. MacFarlane has more than 35 years of real estate investment experience. He sits on the
Qualifications:Mr. MacFarlane brings to our Board three decades of experience as a chief executive officer of a real estate investment and advisory firm and over 35 years of experience in the areas of real estate investment, corporate finance, portfolio management and risk management. His extensive managerial experience as well as his knowledge of the real estate and private capital industries provide our Board with an expansive view on issues impacting the Company and our corporate strategy. |
4 DDR Corp.ï 2018 Proxy Statement
Director Since: 2015
Age:
Independent: Yes
| ALEXANDER OTTO — Chief Executive Officer, ECE Projektmanagement G.m.b.H. & Co. KG (commercial real estate company, Hamburg, Germany)
Background: Mr. Otto has served as the Chief Executive Officer of ECE Projektmanagement G.m.b.H. & Co. KG, a commercial real estate company based in Hamburg, Germany that manages assets in Europe, since 2000. Mr. Otto is a graduate of St. Clare’s, Oxford and studied at Harvard University and Harvard Business School.
Mr. Otto is a member of the boards of directors, or equivalent governing bodies, of publicly traded
Qualifications: Mr. Otto has more than |
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DDRSITE Centers Corp. ï 20182020 Proxy Statement 5
Director Since:
Age:
Independent: Yes
• Audit • Compensation |
Background:
Qualifications: |
6 DDR Corp.ï 2018 Proxy Statement
Transactions with the Otto Family
In 2009, we entered into a stock purchase agreement with Mr. Alexander Otto. Pursuant to this agreement, Mr. Otto and certain members of his family, (including but not limited to Katharina Otto-Bernstein), whom we collectively refer to as the Otto Family, purchased 40,000,000 common shares of the Company, which we refer to as the Purchased Shares. In connection with the sale of the Purchased Shares, we also entered into an investor rights agreement with Mr. Otto under which he has a right to nominate individuals for election to our Board depending on the Otto Family’s level of ownership in the Company. During such time as the Otto Family beneficially owns 17.5% or more of our outstanding common shares, our Board will nominate two persons recommended by the Otto Family who are suitable to us to become members of our Board at each annual election of Directors, and during such time as the Otto Family beneficially owns less than 17.5% but more than 7.5% of our outstanding common shares, our Board will nominate one person recommended by the Otto Family who is suitable to us to become a member of our Board at each annual election of Directors. In accordance with the investor rights agreement, Dr. Finne has been proposed by Mr. Otto and subsequently nominated and elected to our Board annually since 2009. Beginning in 2015, Mr. Otto has designated himself as the second person to be nominated by our Board pursuant to the investor rights agreement.
Our Board has affirmatively determined that all Directors who served during 2017 were2019 (except for Messrs. Otto, Lukes, August, and Dr. Finne),Mr. Lukes) were, and all Directors nominated for election by the Board in 20182020 (except for Mr. Lukes) are, independent within the meaning of the rules of the NYSE and, as applicable, the rules of the SEC,Securities and Exchange Commission (the “SEC”), including with respect to the applicable director’sDirector’s service on the Compensation Committee and/or, excluding Mr. Otto and Dr. Finne, the Audit Committee. Our Corporate Governance Guidelines provide that our Board will be comprised of a majority of independent Directors and that only those Directors or nominees who
6 SITE Centers Corp.ï 2020 Proxy Statement
meet the listing standards of the NYSE will be considered independent. Our Board reviews annually the relationships that each Director or nominee has with us (either directly or indirectly), and only those Directors or nominees whom our Board affirmatively determines have no material relationship with us will be considered independent.
Director Qualifications and Review of Director Nominees
The Nominating and Corporate Governance Committee reviews annually with our Board the composition of our Board as a whole and recommends, if necessary, action to be taken so that our Board reflects the appropriate balance of knowledge, experience, skills, expertise and diversity required for our Board as a whole and contains at least the minimum number of independent Directors required by applicable laws and regulations and our Corporate Governance Guidelines. The Nominating and Corporate Governance Committee is responsible for ensuring that the composition of our Board appropriately reflects the needs of our business and, in furtherance of this goal, proposing the addition of Directors and requesting the resignation of Directors for purposes of ensuring the requisite skill sets and commitment of the Directors to actively participate in Board and committee meetings. Directors should possess such attributes and experience as are necessary to provide a broad range of personal characteristics including diversity, management skills, and real estate and general business experience. Directors should commit the requisite time for preparation and attendance at regularly scheduled Board and committee meetings, as well as participate in other matters necessary to ensure we are well-positioned to engage in best corporate governance practices.
In evaluating a Director candidate, the Nominating and Corporate Governance Committee considers factors that are in the best interests of the Company and its shareholders, including the knowledge, experience, integrity and judgment of each candidate; the potential contribution of each candidate to the diversity of backgrounds, experience and competencies that our Board desires to have represented; each candidate’s ability to devote sufficient time and effort to his or her duties as a Director; independence and willingness to consider all strategic proposals; any other criteria established by our Board and any core competencies or real estate expertise necessary to staff Board committees. In addition, the Nominating and Corporate Governance Committee will consider potential members’ qualifications to be independent under the NYSE listing standards in accordance
DDR Corp.ï 2018 Proxy Statement 7
with our Corporate Governance Guidelines, and will assess whether a candidate possesses the integrity, judgment, knowledge, experience, skills, and expertise that are likely to enhance our Board’s ability to oversee our affairs and business, including, when applicable, to enhance the ability of committees of our Board to fulfill their duties.
The Nominating and Corporate Governance Committee will consider suggestions forwarded by shareholders to our Secretary concerning qualified candidates for election as Directors. To recommend a prospective nomineecandidate for the Nominating and Corporate Governance Committee’s consideration and potential recommendation to the Board for nomination for Director, a shareholder may submit the candidate’s name and qualifications to our Secretary, Aaron M. Kitlowski, at the following address: 3300 Enterprise Parkway, Beachwood, Ohio 44122. The Nominating and Corporate Governance Committee has not established specific minimum qualifications that a candidate must have to be recommended to our Board. However, in determining qualifications for new Directors, the Nominating and Corporate Governance Committee considers those guidelines described above. The Nominating and Corporate Governance Committee will consider a pool of potential Board candidates established from recommendations from shareholders and third parties, including management and current Directors, as well as pursuant to the investor rights agreement described above under the caption “Transactions with the Otto Family.” The Nominating and Corporate Governance Committee may, in its discretion, retain a search consultant to supplement the pool of potential Board candidates considered for nomination.
The Board has submitted a proposal included in thisOur Code of Regulations sets forth the requirements with respect to the nomination of candidates for Director by shareholders.
SITE Centers Corp.ï 2020 Proxy Statement 7
With the support of our shareholders, our Code of Regulations was amended in 2018 to be voted upon by shareholders at the 2018 Annual Meeting to implementprovide proxy access pursuant to which a shareholder or group of up to 20 shareholders satisfying specified eligibility requirements may include Director nominees in connection with futureour proxy materials for annual meetingsmeetings. To be eligible to use proxy access, such shareholders must, among other requirements:
• have owned common shares equal to at least 3% of the aggregate of our issued and outstanding common shares continuously for at least three years; |
• represent that such shares were acquired in the ordinary course of business and not with the intent to change or influence control and that such shareholders do not presently have such intent; and |
• provide a notice requesting the inclusion of Director nominees in our proxy materials and provide other required information to us not more than 150, or less than 120, days prior to the anniversary of the date that we issued our proxy statement for the prior year’s annual meeting of shareholders (unless the date for the upcoming annual meeting of shareholders is more than 30 days before or more than 60 days after the anniversary date of the prior year’s annual meeting in which case the notice must be received not later than the close of business on the later of the 150th calendar day prior to such annual meeting and the tenth calendar day following the day on which public announcement of the date of the annual meeting is first made). |
The maximum number of shareholders. If implemented, such procedures will impactDirector nominees that may be submitted pursuant to these provisions may not exceed 20% of the mannernumber of Directors then in which shareholders may nominate Director candidates for election to the Board.office but in no event shall be less than two.
Consistent with best corporate governance practices, the Company’s Articles of Incorporation provide for a majority vote standard in uncontested elections and a plurality vote standard in contested elections.elections of Directors. An election of Directors is contested when the number of nominees for election as a Director exceeds the number of Directors to be elected. Under a majority vote standard, each vote is specifically counted “for”“For” or “against”“Against” the Director’s election and an affirmative majority of the total number of votes cast “for”“For” or “against”“Against” a Director nominee will be required for election. Shareholders are entitled to abstain with respect to the election of a Director. With respect to the election of Directors, brokernon-votes and abstentions will not be considered votes cast at the Annual Meeting and will be excluded in determining the number of votes cast at the Annual Meeting.
Although the Board has submitted a proposal included in this Proxy Statement to be voted upon by shareholders at the 2018 Annual Meeting to eliminate the ability of shareholders to exercise cumulative voting in future Director elections, shareholders have the right to request cumulative voting for the election of Directors at the 2018 Annual Meeting. If written notice is given by any shareholder to our President, any Vice President or the Secretary at least 48 hours before the 2018 Annual Meeting that the shareholder desires that cumulative voting be used for the election of Directors, and if an announcement of the giving of that notice is made when the Annual Meeting is convened by the Chairman of the Board, the President or the Secretary, or by or on behalf of the shareholder giving that notice, then each shareholder will have the right to cumulate the voting power that the shareholder possesses in the election of Directors. This means that each shareholder will be able to give one candidate a number of votes equal to the number of Directors to be elected multiplied by the number of common shares owned by such shareholder, or to distribute the shareholder’s votes on the same principle among two or more candidates, as the shareholder may elect. If voting for the election of Directors is cumulative, the persons named in the accompanying Proxy Card will vote the common shares represented by proxies given to them in such manner so as to elect as many of the nominees as possible.
8 DDRSITE Centers Corp. ï 20182020 Proxy Statement
Mr. Ahern serves as Chairman of the Board. The position of Chairman of the Board is anon-executive officer position and is expected to be held by anon-employee, independent Director. The Chairman of the Board has the following responsibilities, among others as may be determined by our Board:
• Ensure that our Board fulfills its oversight and governance responsibilities; |
• Consult and advise on any operational matters as requested by our Chief Executive Officer; |
• Coordinate the Board’s self-assessment and evaluation process; |
• Serve as liaison between the Company’s management and thenon-management Directors; |
• Coordinate the Board’s annual review and input to the Company’s strategic plan; |
• Assist the Nominating and Corporate Governance Committee on corporate governance matters, such as the nomination of Board members, committee membership and rotation, and management succession planning; |
• Preside over meetings of our |
• Provide leadership to our Board, set the agenda for, and preside over, Board meetings and executive sessions of the independent andnon-management Directors. |
We believe that an independent Chairman of the Board, separate from our Chief Executive Officer, recognizes the time, effort and commitment that our Chief Executive Officer is required to devote to his position and to fulfill his responsibilities and the independent oversight required by our Chairman of the Board. This structure also enables our Board as a whole to fulfill its responsibility to oversee the risks presented by the Company’s long-term strategy, business plan and model.
During the fiscal year ended December 31, 2017,2019, our Board held eightfive meetings and undertook sevenone written actions. In 2017, allaction. Each of our Directors attended 100%at least 75% of the aggregate of (i) the number of meetings of ourthe Board withwhich were held during the exceptionperiod that such person served on the Board and (ii) the number of a Director who was absent for two meetings.meetings of committees of the Board held during the period that such person served on such committee. As stated in our Corporate Governance Guidelines, all Directors are expected to attend the Annual Meeting. All of our then current Directors nominated for election attended the Annual Meeting of Shareholders in May 2017 with the exception of one Director.2019. Our Board conducts and reviews its operations through a self-assessment process on an annual basis.
Meetings ofNon-Management and Independent Directors
Thenon-management Directors meet in executive session in conjunction with each regularly scheduled Board meeting. These meetings are chaired by the Chairman of the Board. In addition, as required by our Corporate Governance Guidelines, the independent Directors meet at least once per year to the extent our Board includes one or morenon-management Directors who are not independent.
During 2017 and during 2018, prior to our Annual Meeting,2019, our Board had the committees described below. The information regarding our committees set forth below reflects the participation of Mr. Robert H. Gidel, who currently serves as a Director but is not standing forre-election to our Board at the 2018 Annual Meeting. Our Board has approved the written charters of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, which, along with our Corporate Governance Guidelines, are posted on our website atwww.ddr.comwww.sitecenters.com, under “Governance” in the “Investors”“Investor Relations” section. Each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee conducts a self-evaluation and review of its charter annually and reports the results of these evaluations and reviews to our Board. The information contained on or accessible through our website is not incorporated by reference into this Proxy Statement, and you should not consider such information to be part of this Proxy Statement.
DDRSITE Centers Corp. ï 20182020 Proxy Statement 9
AUDIT COMMITTEE | ||
Members:
•
•
•
•
| Responsibilities: The Audit Committee assists our Board in overseeing: the integrity of our financial statements; compliance with legal and regulatory requirements; our independent registered public accounting firm’s qualifications and independence; the performance of our internal audit function and our independent registered public accounting firm;
Independence: All of the members of the Audit Committee are independent as defined in the rules and regulations of the SEC and the NYSE listing standards, including with respect to service on the Audit Committee, in accordance with our Corporate Governance Guidelines. Our Board has determined that each current member of the Audit Committee and each member that served on the Audit Committee in
Meetings: The Audit Committee held eight meetings in |
COMPENSATION COMMITTEE | ||
Members:
• Mr. Ahern (Chair)
•
• | Responsibilities:
Independence: All of the members of the Compensation Committee are independent as defined in the rules and regulations of the SEC and the NYSE listing standards, including with respect to service on the Compensation Committee, in accordance with our Corporate Governance Guidelines.
Meetings: The Compensation Committee held four meetings |
10 DDRSITE Centers Corp. ï 20182020 Proxy Statement
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE | ||
Members: • Mr. MacFarlane (Chair)
•
•
| Responsibilities: The Nominating and Corporate Governance
Independence: All of the members of the Nominating and Corporate Governance Committee are independent as defined in the NYSE listing standards and in accordance with our Corporate Governance Guidelines.
Meetings: The Nominating and Corporate Governance Committee held |
DIVIDEND DECLARATION COMMITTEE | ||
Members: • Mr. Lukes (Chair)
• Mr. Ahern
• Dr. Finne
| Responsibilities: As may be authorized by the Board, the Dividend Declaration Committee determines if and when we should declare dividends on our capital shares and the amount thereof, consistent with the dividend policy adopted by our Board.
Meetings: The Dividend Declaration Committee did not meet during |
PRICING COMMITTEE | ||
Members: • Mr. Lukes (Chair)
•
•
Dr. Finne
| Responsibilities: The Pricing Committee (or duly appointed subcommittee thereof) is authorized to approve the timing, amount, price and terms of offerings of our debt and equity securities.
Meetings: The Pricing Committee |
DDRSITE Centers Corp. ï 20182020 Proxy Statement 11
WithManagement is responsible forthe day-to-day management of risks, while the Board, as a whole and through our Audit Committee, is responsible for overseeing the risk assessment and risk management functions of the Company. The Board comprised ofhas delegated responsibility for reviewing our policies with respect to risk assessment and risk management and independent Directors, members ofto our Audit Committee through its charter. The Board bring a variety of perspectives to address risks facedhas determined that this oversight responsibility can be most efficiently performed by our Company.Audit Committee as part of its overall responsibility for providing independent, objective oversight with respect to our accounting and financial reporting functions, internal and external audit functions, systems of internal controls over financial reporting, security of information technology systems and data, and legal, ethical and regulatory compliance. Our Board’s role in enterprise risk management (ERM) includes receivingAudit Committee regularly reports from members of senior management on areas of material risk to the Company, including operational, financial, strategic and compliance risks. The Company has an ERM Committee, comprised of senior management and chaired by the Chief Executive Officer, which meets periodicallyBoard with respect to identify risks and risk mitigation strategies. The Audit Committee assists our Board in its oversight responsibilities by, among other matters, reviewing reports prepared by the ERM Committee and reporting, on at least an annual basis, to our full Board on the Company’s ERM program. This enables our Board and its committees to coordinate their risk oversight role.of these areas.
Director Compensation Program
During 2017, the2019, ournon-employee Directors were compensated in the form of an annual cash retainer and an annual stock retainer, as shown below, which alignswere intended to align the interests of our Directors and our shareholders. For Directors serving less than the full year, the annual cash retainer and any applicable committee fees paid were prorated based on the dates served.shareholders, as shown below.
Component | Annual Amount | Payable | ||||
Annual Stock Retainer |
| Quarterly in common shares |
| |||
Annual Cash Retainer |
$50,000 | Quarterly in cash or common shares, at the Director’s election |
Beginning in May 2018, in lieu of an annual stock retainer of 8,000 common shares per year,non-employee Directors will receive an annual stock retainer equal in value to approximately $100,000 paid quarterly based on the share price of our common stock at the time of grant.
Non-employee Directors are also paid fees for service on certain committees as set forth below and for service as the Chairman of the Board. The Director who serves as the Chairman of the Board receives an annual fee of $100,000 in addition to the fees paid to allnon-employee Directors. Fees are paid to committee members, the respective committee chairs and the Chairman of the Board in quarterly installments in the form of cash or common shares, at athe Director’s election. Each Director is also reimbursed for expenses incurred in attending meetings because we view meeting attendance as integrally and directly related to the performance of the Directors’ duties.
Annual Fee | ||||||||||||||||||
Annual Fee | ||||||||||||||||||
Committee | Chair ($) | Member ($) | Chair ($) | Other Member ($) | ||||||||||||||
Audit Committee | 40,000 | 25,000 | 40,000 | 25,000 | ||||||||||||||
Compensation Committee | 40,000 �� | 25,000 | 40,000 | 25,000 | ||||||||||||||
Nominating and Corporate Governance Committee | 30,000 | 20,000 | 30,000 | 20,000 | ||||||||||||||
Dividend Declaration Committee | — | — | — | — | ||||||||||||||
Pricing Committee | — | — | — | — |
12 DDRSITE Centers Corp. ï 20182020 Proxy Statement
20172019 Director Compensation
In accordance with the compensation program described above, thenon-employee Directors received the following compensation during 2017:2019:
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(1)(2) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(3) | Total ($) | |||||||||||||||||||
Terrance R. Ahern | 202,109 | 74,640 | 276,749 | 215,000 | 100,021 | 315,021 | |||||||||||||||||||
Jane E. DeFlorio(3) | 62,833 | 74,640 | 137,473 | ||||||||||||||||||||||
Linda B. Abraham | 95,000 | 100,021 | 195,021 | ||||||||||||||||||||||
Jane E. DeFlorio | 115,000 | 100,021 | 215,021 | ||||||||||||||||||||||
Thomas Finne | 50,000 | 74,640 | 124,640 | 70,000 | 100,021 | 170,021 | |||||||||||||||||||
Robert H. Gidel | 105,000 | 74,640 | 179,640 | ||||||||||||||||||||||
Victor B. MacFarlane | 95,019 | 74,640 | 169,659 | 80,000 | 100,021 | 180,021 | |||||||||||||||||||
Alexander Otto | 50,000 | 74,640 | 124,640 | 50,024 | (1) | 100,021 | 150,045 | ||||||||||||||||||
Scott D. Roulston | 90,000 | 74,640 | 164,640 | ||||||||||||||||||||||
Barry A. Sholem | 75,000 | 74,640 | 149,640 | ||||||||||||||||||||||
Dawn M. Sweeney(2) | 100,011 | 100,021 | 200,032 |
(1) | The amount reported in this column for Mr. Otto was paid in common shares. |
(2) | The cash and stock awards listed for |
The amounts reported in this column reflect the aggregate grant date fair value, as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (FASB ASC Topic 718), for stock awards granted |
Directors’ Deferred Compensation Plan
Non-employee Directors have the right to defer the receipt of all or a portion of their fees pursuant to our Directors’ Deferred Compensation Plan. Our Directors’ Deferred Compensation Plan is an unsecured, general obligation of the Company. Participants’ contributions are converted to units, based on the market value of our common shares, so that each unit is the economic equivalent of one common share but without voting rights. Settlement of units is made in cash, common shares or a combination of both (as permitted by the plan administrators) at a date determined by the participant at the time a deferral election is made. Prior to settlement, each unit earns dividend equivalents in an amount equal to any dividends paid on our common shares during the deferral period. We have established a “rabbi” trust, which holds our common shares, to satisfy our payment obligations under the plan. Common shares equal to the number of units credited to participants’ accounts under the plan are contributed to the rabbi trust. In the event of our insolvency, the assets of the rabbi trust are available to general creditors of the Company. During their terms as Directors, Messrs. Ahern and MacFarlane and RoulstonMs. Sweeney have deferred compensation represented by the following number of units as of December 31, 2017:2019:
Name | Number of Units under the Directors’ Deferred Compensation Plan | Value of Units ($)(1) | Number of Units under the Directors’ Deferred Compensation Plan | Value of Units ($)(1) | ||||
Terrance R. Ahern | 258,086 | 2,312,455 | 183,439(2) | 2,571,828 | ||||
Victor B. MacFarlane | 134,837 | 1,208,140 | 51,125 | 716,776 | ||||
Scott D. Roulston | 29,242 | 262,011 | ||||||
Dawn M. Sweeney | 14,697 | 206,059 |
(1) | Based on the closing price of our common shares on December |
(2) | In January 2020, 59,819 of these units were settled in common shares. |
SITE Centers Corp.ï 2020 Proxy Statement 13
Equity Deferred Compensation Plan
During his term as a Director prior to 2006, Mr. Ahern also had the right to defer the vesting of restricted shares pursuant to the Company’s Equity Deferred Compensation Plan. Vested deferred stock units under the Equity
DDR Corp.ï 2018 Proxy Statement 13
Deferred Compensation Plan will not be distributed to him until the end of the deferral period selected. As of December 31, 2017,2019, Mr. Ahern had 1,029514 units deferred under this plan valued at $9,220approximately $7,206 based on the closing price of our common shares on December 29, 2017 (the last trading day31, 2019 (341 of 2017)these units were settled and distributed to Mr. Ahern in common shares in January 2020).
Director Stock Ownership Guidelines
Eachnon-employee Director must own common shares or common share equivalents with an aggregate market value of no less than five times the cash portion of the annual retainer fee paid to a Director.Director (or $250,000 worth of shares). This ownership requirement generally must be met no later than the fifth anniversary of the date restricted shares or common shares comprising a component of the Director’s compensation are first granted to the Director, and on each December 31st thereafter. Our Board established this particular level of stock ownership for ournon-employee Directors because we want to have the interests of ournon-employee Directors aligned with the investment interests of our shareholders. To this end, and unless otherwise approved by the Nominating and Corporate Governance Committee, eachnon-employee Director is required to retain at least 50% of the common shares and common share equivalents received by the Director as compensation until such time as the minimum share ownership requirement has been satisfied. Common share units acquired by Directors under our deferred compensation plans constitute common share equivalents and count toward satisfying the stock ownership guidelines. All Directors were in compliance with the Director stock ownership guidelines as of December 31, 2017.2019.
14 DDRSITE Centers Corp. ï 20182020 Proxy Statement
Security Ownership of Directors and Management
The following table sets forth certain information regarding the beneficial ownership of our common shares as of February 21, 2018,2020, except as otherwise disclosed in the notes below, by (1) our Directors, (2) our named executive officers, and (3) our current executive officers and Directors, as a group. Except as otherwise described in the following notes, the following beneficial owners have sole voting power and sole investment power with respect to all common shares set forth opposite their respective names.
Directors and Management | Amount and Nature of Beneficial Ownership of Common Shares | Percentage Ownership (%) | Amount and Nature of Beneficial Ownership of Common Shares | Percentage Ownership (%)(7) | ||||||||||
David R. Lukes | 230,000(1) | * | 161,788(1) | * | ||||||||||
Linda B. Abraham | 14,457 | * | ||||||||||||
Terrance R. Ahern | 322,031(2)(3) | * | 236,041(2)(3) | * | ||||||||||
Jane E. DeFlorio | 8,000 | * | 19,126 | * | ||||||||||
Conor M. Fennerty | 735 | * | ||||||||||||
Thomas Finne | 66,000 | * | 47,865 | * | ||||||||||
Robert H. Gidel | 62,153(4) | * | ||||||||||||
Victor B. MacFarlane | 83,532(3) | * | 71,619(3) | * | ||||||||||
Michael A. Makinen | 11,325(1) | * | 15,795(1) | * | ||||||||||
Alexander Otto | 40,771,073(4) | 21.0 | ||||||||||||
Dawn M. Sweeney | 3,243(3) | * | ||||||||||||
Christa A. Vesy | 91,501(1)(5) | * | ||||||||||||
Matthew L. Ostrower | 53,000(1) | * | 36,633(6) | * | ||||||||||
Alexander Otto | 63,888,570(5) | 17.3 | ||||||||||||
Scott D. Roulston | 26,841(3) | * | ||||||||||||
Barry A. Sholem | 130,675 | * | ||||||||||||
Christa A. Vesy | 150,944(1)(6) | * | ||||||||||||
Thomas F. August | 105,984(7) | * | ||||||||||||
William T. Ross | 56,755(8) | * | ||||||||||||
Vincent A. Corno | 21,072(9) | * | ||||||||||||
All Current Executive Officers and Directors as a Group (12 persons) | 65,033,071 | 17.6 | ||||||||||||
All Current Executive Officers and Directors as a Group (11 persons) | 41,433,243 | 21.4 |
* | Less than 1% |
(1) | Does not include |
(2) | Does not include |
(3) | Does not include |
(4) |
For information regarding Mr. Otto’s beneficial ownership, see “Corporate Governance and Other Matters — Security Ownership of Certain Beneficial Owners.” |
Includes |
Beneficial ownership information for Mr. |
(7) | Percentages are calculated based on 193,845,629 of our common shares |
DDRSITE Centers Corp. ï 20182020 Proxy Statement 15
Environmental, Social and Governance (“ESG”) Highlights
SITE Centers is a self-administered and self-managed REIT in the business of acquiring, owning, developing, redeveloping, expanding, leasing, financing and managing shopping centers. We aspire to be a good corporate citizen, maintain an exciting workplace for our employees, operate our properties sustainably and engage with the many communities we serve, while driving value creation and favorable returns for our shareholders. Our ESG initiatives are detailed in our annual Corporate Responsibility and Sustainability Report (the “Report”), which was completed in accordance with Global Reporting Initiative (“GRI”) standards and can be found in the “Sustainability” section of our website atwww.sitecenters.com. Below are some of the highlights of this Report along with recognition we have recently received on account of our ESG initiatives.
Recent Recognition
Included in Newsweek’s inaugural list of |
Included in the 2020 Bloomberg Gender-Equality Index (“GEI”) comprised of public companies committed to transparency in gender-data reporting and which have exhibited performance on certain gender-data metrics. |
• | Rated “Green Star” by GRESB (Global Real Estate Sustainability Benchmark) for |
• | Recognized as a Silver Green Lease Leader by the U.S. Department of Energy and |
Environmental
• | Converted old parking lot lighting technology to LED lighting at substantially all of our wholly-owned properties, where feasible, between 2018 and the end of 2019. These installations included over 4,600 LED parking lot fixtures and hundreds of building fixtures. The upgrades created significant energy savings and provided better aesthetics and lighting levels for our tenants and customers. |
• | Installed white reflective roofs as part of our ongoing replacement strategy at our owned and managed properties totaling 950,395 square feet in 2019 and 31.2 million square feet over the lifetime of our program. These reflective membranes allow for sunlight to be reflected back into the atmosphere, thereby reducing the urban heat island effect, decreasing the cooling costs of our tenants and reducing demand on |
• | Operated 214 electric car charging stations across our owned and |
• | Utilized solar panels at 14 owned and managed sites to generate 3.7 megawatts of renewable power in 2019, which reduced our consumption ofnon-renewable energy sources. |
• | Employed water conservation strategies when practical, including xeriscaping, rain water collection,re-use of grey water for chiller systems, drip irrigation installations, native landscaping and smart metering. |
• | Worked with tenants to identify recycling and composting opportunities in order to divert approximately 41% of the waste generated at our owned and managed centers away from landfills. |
• | Instituted a green lease platform where tenants contribute toward the Company’s environmental management plan and which provides for utility usage and data sharing. |
16 DDRSITE Centers Corp. ï 20182020 Proxy Statement
4. Proposal Two: Adoption of an Amendment to the Company’s Articles of Incorporation to Eliminate the Ability of Shareholders to Exercise Cumulative Voting in the Election of Directors
Proposal SummarySocial and Board Recommendation
We are asking our shareholders to adopt an amendment to our Third Amended and Restated Articles of Incorporation to eliminate the ability of shareholders to exercise cumulative voting in Director elections. Under Ohio law, because our Third Amended and Restated Articles of Incorporation currently do not address cumulative voting, our shareholders can cumulate votes in Director elections at any meeting held for that purpose, whether or not the election is contested. Cumulative voting enables a shareholder to cumulate his or her voting power by giving one candidate a number of votes equal to the number of Directors to be elected multiplied by the number of shares held by the shareholder, or distributing those votes among two or more candidates as the shareholder sees fit. Thus, with cumulative voting, a shareholder can cast all of his, her or its votes “for” one candidate or a small group of candidates, instead of voting either “for” or “against” each candidate.
Consequently, a candidate may be elected even if he or she was not supported by the holders of a majority of our shares. For example, because eight Directors are to be elected at the Annual Meeting of Shareholders, a group of shareholders collectively holding approximately 10% of our outstanding common shares, by merely cumulating and casting votes for a single Director candidate, could elect one Director in a contested election, even if the candidate is not supported by approximately 90% of shareholders, based on 369,271,805 common shares outstanding on March 14, 2018 and assuming approximately 89% of the outstanding common shares are voted at the Annual Meeting of Shareholders.
The Board of Directors believes that each Director is accountable to and should represent the interests of all of our shareholders, and not just to a minority shareholder that has cumulatively voted its shares and that may have special interests contrary to those of a majority of our shareholders. Among other things, the election of Directors with little or no support from shareholders, other than a particular minority shareholder, could result in partisanship and discord on the Board of Directors, and may impair the ability of the Directors to act in the best interests of all of our shareholders and the Company. The Board of Directors, therefore, believes that each candidate should be elected only if he or she receives broad support, which may not be the case under a cumulative voting system.
Furthermore, the Board of Directors believes that very few comparable companies have cumulative voting in the election of Directors, and retaining cumulative voting makes our governance practices inconsistent with market standards.
Finally, as described in Proposal Three, we are also asking shareholders to adopt proxy access procedures for Director elections at future annual meetings. The Board of Directors believes that cumulative voting is incompatible with proxy access, which provides substantial shareholders with the means to influence Director elections significantly by directing all or a large percentage of their votes toward just one Director’s seat. Moreover, proxy access is intended to give individuals or small shareholder groups an ability to influence Director elections by including nominees in our proxy materials. Consequently, eliminating cumulative voting will ensure that only those nominees with broad shareholder support will ultimately be elected to the Board of Directors. For these reasons, the Board of Directors believes that eliminating cumulative voting when implementing proxy access procedures strikes an appropriate balance.Human Capital Management
• | Promote employee health and well-being by providing access to a competitive and comprehensive benefits program, astate-of-the-art fitness center located at our Beachwood, Ohio office staffed by a certified fitness and yoga instructor, our Make It Happen wellness program, flex time and summer hours, and scholarship opportunities for employees’ families. |
DDR
• | Promote a diverse and inclusive culture through the organization’s Women of Influence program, which nurtures the development of women across the Company through mentoring programs, cross-function relationship building, networking and speaker events, and charitable giving initiatives. At the end of 2019, women represented 60.5% of our workforce and 42.6% of our managers. |
• | Support communities in which we live through our strategic partnership with Ronald McDonald House Charities, implementation of our YOUnity program to support our employees’ charitable giving and enable efficient Company matching, and our Community Service Day Program, which allows employees to donate two paid workdays each year to charitable organizations of their choice. In 2019, the Company and its employees donated approximately $235,000 and 1,147 volunteer hours to charitable organizations of their choice. |
• | Require that our property operations vendors agree to a vendor code of conduct and comply with terms and conditions that are designed to promote fair wages, adherence to applicable labor laws and high ethical standards. |
Governance
• | Our Board of Directors values diversity in experience, professional background, tenure and gender. Three of our eight Directors (38%) are women, half of our Directors have served on the Board for fewer than five years, and seven of our eight Directors (88%) qualify as independent within the meaning of NYSE rules. |
• | As discussed elsewhere in this Proxy Statement, we have adopted customary proxy access provisions and a majority vote standard in uncontested elections of Directors. |
• | Our Code of Regulations can be amended by the affirmative vote of shareholders owning a majority of our common shares issued and outstanding on the applicable record date at any meeting of shareholders called for such purpose. |
• | We do not have a classified Board of Directors. We are incorporated under the laws of the State of Ohio and, unlike many REITs incorporated in Maryland, we cannot classify our Board of Directors without shareholder consent. |
• | We have opted out of the Ohio Control Share Act, which requires that an investor seeking to acquire shares in excess of certain ownership thresholds first obtain consent from disinterested shareholders. |
SITE Centers Corp. ï 20182020 Proxy Statement 17
This proposal to eliminate cumulative voting is not in response to any shareholder effort of which we are aware to remove any Directors or otherwise gain representation on the Board of Directors, to accumulate our common shares, or to obtain control of the Company or the Board of Directors by means of a solicitation in opposition to management or otherwise.
The actual text of the proposed revisions to ARTICLE SEVENTH of our Third Amended and Restated Articles of Incorporation, marked with underlining to indicate additions, is attached to this Proxy Statement as Annex A. The amendment to the Third Amended and Restated Articles of Incorporation will become effective upon its filing with the Secretary of State of Ohio (which is expected to occur promptly following shareholder approval), subject to shareholder approval of this4. Proposal Two.
Approval of this management proposal will require the affirmative vote of the holders of a majority of the outstanding common shares of the Company. Shares represented by properly delivered proxies will be voted at the meeting in accordance with the shareholders’ instructions. In the absence of specific instructions, the shares will be voted FOR this management proposal. Abstentions and brokernon-votes will have the same effect as votes cast against the proposal. If this proposal is approved by our shareholders, it will be implemented only if Proposal Threeis also approved. Accordingly, even if this proposal is approved by our shareholders, it will not be implemented unless Proposal Threeis also approved by our shareholders at the Annual Meeting.
BOARD RECOMMENDATION:
“For” the Adoption of an Amendment to the Company’s Articles of Incorporation to
Eliminate the Ability of Shareholders to Exercise Cumulative Voting in the Election of Directors.
18 DDR Corp.ï 2018 Proxy Statement
5. Proposal Three: Adoption of an Amendment to the Company’s Code of Regulations to Implement Proxy Access in Connection with Annual Meetings of Shareholders
Proposal Summary and Board Recommendation
We are asking our shareholders to approve an amendment to our Amended and Restated Code of Regulations to implement “proxy access” in connection with future annual meetings of shareholders. Proxy access, as further described below, allows eligible shareholders to include their own nominee or nominees for election to the Board of Directors in our proxy materials, along with candidates nominated by the Board of Directors.
This proposal is a result of an ongoing review of corporate governance matters by the Board of Directors and its Nominating and Corporate Governance Committee. The Board of Directors and the Nominating and Corporate Governance Committee have considered the advantages and disadvantages of providing proxy access rights to shareholders, including the view that proxy access rights would increase the accountability of Directors to shareholders and would allow shareholders to express preferences in Director nominations more easily. This proxy access proposal addresses our findings and we believe it to be in line with market practices.
The proposed amendment would permit a single shareholder, or group of up to 20 shareholders, holding full voting and investment rights and full economic interest, that has maintained continuous ownership of at least three percent of the Company’s outstanding common shares for at least the previous three years to include a specified number of Director nominees for election to the Board of Directors in the proxy statement for the Company’s annual meeting of shareholders.
Number of Shareholder-Nominated Candidates
The maximum number of shareholder-nominated candidates would be equal to 20 percent of the Directors in office as of the last day a shareholder nomination may be delivered or received or, if the 20 percent calculation does not result in a whole number, the closest whole number below 20 percent and in any event, not less than two shareholder nominated candidates. If the Board of Directors decides to reduce the size of the Board of Directors after the nomination deadline due to Director retirement, resignation or otherwise, the 20 percent calculation will be applied to the reduced size of the Board of Directors, with the potential result that a shareholder-nominated candidate may be disqualified. Shareholder-nominated candidates that the Board of Directors determines to include in the proxy materials as Board-nominated candidates will be counted against the maximum.
Procedure for Selecting Candidates in the Event the Number of Nominees Exceeds the Maximum
Nominating shareholders are required to provide a list of their proposed nominees in rank order. If the number of shareholder-nominated candidates exceeds the maximum number of permitted shareholder candidates, the highest ranked nominee from the nominating shareholder or group of nominating shareholders, as the case may be, with the largest qualifying ownership will be selected for inclusion in the proxy materials first followed by the highest ranked nominee from the nominating shareholder or group of shareholders, as the case may be, with the next largest qualifying ownership, and continuing on in that manner, until the maximum number of nominees is reached.
DDR Corp.ï 2018 Proxy Statement 19
Nominating Procedure
Requests to include shareholder-nominated candidates in our proxy materials must be received, under most circumstances, no earlier than 150 days and no later than 120 days before the anniversary of the date that we issued our proxy statement for the previous year’s annual meeting of shareholders. Each shareholder or shareholder group seeking to include a shareholder nominee in our proxy materials is required to provide certain information, including, but not limited to, the verification of share ownership, biographical information about the nominee and certain representations, as set forth in the proposed amendment attached hereto as Annex B.
Independence and Other Qualifications of Shareholder Nominees
A shareholder nominee would not be eligible for inclusion if the Board of Directors determines that he or she is not independent under the listing standards of the principal U.S. exchange upon which our common shares are listed (which is the NYSE), any applicable rules of the SEC, or any publicly disclosed standards used by the Board of Directors in determining and disclosing the independence of Directors.
Furthermore, a shareholder nominee would not be qualified to be a Director if, among other things: (i) his or her election would cause us to be in violation of our governing documents, the listing standards of the principal U.S. exchange upon which our common shares are listed, any applicable federal law, rule or regulation or our publicly disclosed policies and procedures; (ii) he or she has been an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, within the past three years; (iii) he or she is a named subject of a pending criminal proceeding or has been convicted in a criminal proceeding within the past 10 years (excluding traffic violations and other minor offenses); (iv) he or she is subject to certain enforcement orders related to the regulation of securities; or (v) he or she has provided, or his or her nominating shareholder or group of nominating shareholders has provided, information to us that is not accurate, truthful and complete in all material respects, or that otherwise contravenes certain specified agreements, representations or undertakings.
The proposed amendment to the Amended and Restated Code of Regulations is set forth in Annex B, with deletions indicated by strike-throughsand additions indicated by underlining. The amendment to the Amended and Restated Code of Regulations will become effective upon the filing of the amendment to the Third Amended and Restated Articles of Incorporation referred to in Proposal Two with the Secretary of State of Ohio (which is expected to occur promptly following shareholder approval of such proposal), subject to shareholder approval of this Proposal Three.
Approval of this management proposal will require the affirmative vote of the holders of a majority of the outstanding common shares of the Company. Shares represented by properly delivered proxies will be voted at the meeting in accordance with the shareholders’ instructions. In the absence of specific instructions, the shares will be voted FOR this management proposal. Abstentions and brokernon-votes will have the same effect as votes cast against the proposal. If this proposal is approved by our shareholders, it will be implemented only if Proposal Twois also approved. Accordingly, even if this proposal is approved by our shareholders, it will not be implemented unless Proposal Twois also approved by our shareholders at the Annual Meeting.
BOARD RECOMMENDATION:
“For” the Adoption of an Amendment to the Company’s Code of Regulations to Implement Proxy Access in Connection with Annual Meetings of Shareholders.
20 DDR Corp.ï 2018 Proxy Statement
6. Proposal Four: Authorization of the Company’s Board of Directors to Effect, in its Discretion, a Reverse Stock Split of the Company’s Common Stock and Adoption of a Corresponding Amendment to the Company’s Articles of Incorporation
Proposal Summary and Board Recommendation
We are asking our shareholders to (i) authorize the Board of Directors to effect, in its discretion prior to December 31, 2018, a reverse stock split of the outstanding common shares of the Company, as well as those held in treasury, at a ratio of1-for-2 and (ii) adopt a corresponding amendment to our Third Amended and Restated Articles of Incorporation to effect the reverse stock split, reduce proportionately the total number of common shares that the Company is authorized to issue and reduce proportionally the stated capital of the Company, subject to the Board of Directors’ authority to abandon such reverse stock split and amendment.
If the shareholders approve this Proposal Four, the Board of Directors will effect the reverse stock split and cause the corresponding amendment to our Third Amended and Restated Articles of Incorporation to be filed with the Secretary of State of the State of Ohio only if the Board of Directors determines that the reverse stock split is in the best interests of the Company and its shareholders. The Board of Directors may determine in its discretion not to effect the reverse stock split and not to file the amendment.
Purposes of the Reverse Stock Split
The Board of Directors believes that implementing the reverse stock split would increase the market price of our common shares, as fewer shares will be outstanding. The Board of Directors further believes that the increased market price of our common shares may improve the marketability and liquidity of the common shares and may encourage greater interest and trading in Company common shares.
Furthermore, the Company has announced its intent to spin off certain of its assets into a separate publicly-traded company called Retail Value Inc., or RVI. In connection with thespin-off of RVI, the Board expects that the Company’s market capitalization and, therefore, the trading price of the Company’s common shares, will decrease in proportion to RVI’s enterprise value. This decrease may be significant. A significantly decreased trading price could make the Company’s common shares less marketable or liquid, because investors may be less interested in trading securities with small values. Moreover, many institutional investors and investment funds may be reluctant to invest—or, in some cases, prohibited from investing—in lower priced securities.
In the event that the Company does not consummate thespin-off, the Board believes that the Company would still experience benefits from the reverse stock split. There can be no assurance that the Company will effect the reverse stock split, before or after the consummation of thespin-off, if consummated at all, or if the reverse stock split will result in the benefits discussed or any other benefits.
Board Discretion to Implement the Reverse Stock Split
If this Proposal Four is approved by shareholders and the Board of Directors determines to implement the reverse stock split, the Company will communicate to the public, prior to the effective date of the reverse stock split, detailed information regarding the reverse stock split. The Board of Directors reserves the right to elect not to proceed with the reverse stock split if it determines, in its sole discretion, that it would not be in the best
DDR Corp.ï 2018 Proxy Statement 21
interests of the Company or its shareholders. The Board of Directors may make such a determination if the Company abandons thespin-off of RVI or for other reasons.
Impact of the Reverse Stock Split
The reverse stock split would affect all of the Company’s common shareholders uniformly and would not affect any common shareholder’s percentage ownership interests or proportionate voting power, except to the extent that the reverse stock split could result in any of the Company’s common shareholders receiving cash in lieu of fractional shares, as described below. Furthermore, certain conversion ratios applicable to other securities issued by the Company, as well as exercise prices of, metrics for and amounts of common shares reserved in connection with equity andnon-equity awards to the Company’s employees, will be adjusted to reflect the reverse stock split. Common shareholders who hold small amounts or odd lots of common shares as a result of the reverse stock split may encounter increased costs or other difficulties in selling such shares. The reverse stock split will not affect our obligations to file reports with the Securities and Exchange Commission under the Securities Exchange Act of 1934. Following the reverse stock split our common shares will continue to be listed on the New York Stock Exchange under the symbol “DDR.”
Practical Considerations
Common shareholders will not receive fractional shares in connection with the reverse stock split. Instead, the Company’s transfer agent will aggregate all fractional shares that would otherwise be issued in the reverse stock split into whole common shares and sell them on behalf of shareholders in the open market, when, how and through which broker-dealers as determined in its sole discretion without any influence by the Company, at prevailing market prices, and distribute the net proceeds pro rata to each shareholder who would otherwise have been entitled to receive a fractional share in the reverse stock split. Shareholders will not be entitled to any interest on the amount of payment made in lieu of a fractional share. Furthermore, ownership of fractional interests will not give holders any voting, dividend or other right, except the right to receive the cash payment. This cash payment may be subject to applicable U.S. federal, state and local income tax. If a holder’s common shares are held in multiple accounts, such shares may not be aggregated for determining such holder’s cash payment in lieu of fractional shares. If you hold our common shares in multiple accounts, you may wish to consolidate your holdings into one account to maximize the common shares that you will hold after the effective date of the reverse stock split. Common shares held in registered form (that is, stock held by you in your own name in our share register records maintained by our transfer agent) and common shares held in “street name” (that is, common shares held by you through a bank, broker or other nominee) for the same investor will be considered held in separate accounts and will not be aggregated when calculating post-reverse stock split holdings and cash payments in lieu of fractional shares. Furthermore, banks, brokers or other nominees may apply their own specific procedures for processing the reverse stock split. If you hold our common shares through an account or other arrangement with a bank, broker or other nominee, and if you have any questions in this regard, we encourage you to contact your nominee.
Shareholders should be aware that, under the escheat laws of the various jurisdictions where shareholders reside, where the Company is domiciled and where funds will be deposited, sums due for fractional shares that are not timely claimed may be required to be paid to the designated agent for each such jurisdiction. Thereafter, shareholders otherwise entitled to receive such funds may have to obtain them directly from the jurisdictions to which they were paid.
The Company will provide a letter of transmittal and/or other documentation in connection with any consummation of the reverse stock split. The letter of transmittal and/or other documentation will provide instructions and other information with respect to the reverse stock split, including procedures for exchanging stock certificates, shares held in registered book-entry form and shares held on behalf of beneficial owners by a bank, broker or other nominee.
22 DDR Corp.ï 2018 Proxy Statement
Accounting Consequences
The par value per share of our common shares will remain unchanged at $0.10 per share after the reverse stock split. As a result, on the effective date of the reverse stock split, the stated capital attributable to our common shares will be reduced proportionately, based on the reverse stock split ratio, from its present amount, and the additionalpaid-in capital account will be credited with the amount by which the stated capital is reduced. Our common shares held in treasury will also be reduced proportionately based on the reverse stock split ratio. After the reverse stock split, net income or loss per share, and other per share amounts will be increased because there will be fewer of our common shares outstanding. In subsequent financial statements and other financial disclosures, net income or loss per share and other per share amounts for periods ending before the reverse stock split will be recast to give retroactive effect to the reverse stock split. We do not anticipate that any other material accounting consequences will arise as a result of the reverse stock split.
Procedure for Effecting Reverse Stock Split
If the common shareholders approve this Proposal Four and the Board of Directors decides to implement the reverse stock split, the reverse stock split will become effective at the time and on the date of the filing of, or at such later time as is specified in, the corresponding amendment to our Third Amended and Restated Articles of Incorporation. Beginning on the effective date of the reverse stock split, each certificate representingpre-reverse stock split common shares or book-entry statement reflecting such shares will immediately be deemed for all corporate purposes to evidence ownership of post-reverse stock split common shares.
The actual text of the proposed revisions to ARTICLE FOURTH of our Third Amended and Restated Articles of Incorporation, marked with deletions indicated by strike-throughs and underlining to indicate additions, is attached to this Proxy Statement as Annex C. The amendment to our Third Amended and Restated Articles of Incorporation will become effective upon its filing with the Secretary of State of the State of Ohio, subject to shareholder approval of this Proposal Fourand the discretion of the Board of Directors.
Approval of this management proposal will require the affirmative vote of the holders of a majority of the outstanding common shares of the Company. Shares represented by properly delivered proxies will be voted at the meeting in accordance with the shareholders’ instructions. In the absence of specific instructions, the shares will be voted FOR this management proposal. Abstentions and brokernon-votes will have the same effect as votes cast against the proposal.
BOARD RECOMMENDATION:
“For” the Authorization of the Company’s Board of Directors to Effect, in its Discretion, a Reverse Stock Split of the Company’s Common Stock and the Adoption of a Corresponding Amendment to the Company’s Articles of Incorporation
DDR Corp.ï 2018 Proxy Statement 23
7. Proposal Five:Two: Approval, on an Advisory Basis, of the Compensation of the Company’s Named Executive Officers
Proposal Summary and Board Recommendation
As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Securities Exchange Act of 1934, we are asking you to cast an advisory(non-binding) vote on the following resolution at the Annual Meeting:
RESOLVED, that, on an advisory basis, the compensation of our named executive officers, as disclosed pursuant to Item 402 of RegulationS-K, including in the Compensation Discussion and Analysis, compensation tables and related narratives and descriptions of our Proxy Statement for the 20182020 Annual Meeting, is hereby APPROVED.
This advisory vote, commonly known as a“Say-on-Pay” vote, gives you the opportunity to express your views about the compensation we pay to our named executive officers, as described in this Proxy Statement. The Board believes that our executive compensation program is designed appropriately and working effectively to help ensure that we compensate our named executive officers for the achievement of annual and long-term performance goals which will enhance shareholder value. Before you vote, please review the sections captioned “Compensation Discussion and Analysis” and “Executive Compensation Tables and Related Disclosure” below. These sections describe our named executive officer pay programs and the rationale behind the decisions made by our Compensation Committee.
You may vote “FOR” or “AGAINST” the resolution or abstain from voting on the resolution. The result of theSay-on-Pay vote will not be binding on us or our Board; however, the Board values the views of our shareholders. The Board and Compensation Committee will review the results of the vote and expect to take them into consideration in addressing future compensation policies and decisions.
Thisnon-binding advisory vote is currently scheduled to be conducted every year. The nextSay-on-Pay vote is expected to take place at our 20192021 Annual Meeting of Shareholders.
BOARD RECOMMENDATION:
“For” the Approval, on an Advisory Basis, of the Compensation of the Company’s Named Executive Officers
24 DDR Corp.ï 2018 Proxy Statement
We believe that you should vote “FOR” the approval, on anon-binding, advisory basis, of our named executive officer compensation, which, as described more fully under the section captioned “Compensation Discussion and Analysis,” we have designed to have strong links to performance, both in terms of operational and financial results as well as in optimizingcreation and implementation of a corporate strategy which is designed to optimize shareholder value.At-risk elements such as annual bonus incentives and long-term equity incentives typically comprise a significant portion of our overall executive remuneration. For these incentive plans, we establish performance goalsmetrics and objectives so that the level of compensation received appropriately corresponds to the level of performance achieved. In addition, the vesting of time-based restricted stock unitRSU awards is designed to encourage ownership that results in business decisions that build long-term shareholder value and thus stock price appreciation, and retention of our named executive officers. We believe that
As further described below, we experienced a transition in our Chief Financial Officer position in November 2019 from Matthew Ostrower to Conor Fennerty. Upon his departure from the Company, Mr. Ostrower forfeited all time-based and performance-based equity which had not previously vested in accordance with its terms. Mr. Ostrower also did not receive any annual incentive compensation paidpayout in connection with his service to the Company in 2019.
18 SITE Centers Corp.ï 2020 Proxy Statement
Half of our Chief Executive Officer’s and, excluding Mr. Fennerty, 60% of our other named executive officers appropriately reflectsofficers’ annual incentive award payout for 2019 was determined by reference to the Company’s performance with respect to two key achievements resultingquantifiable metrics: growth in same property net operating income (“Same Store NOI”) and operating funds from the leadershipoperations (“Operating FFO”). The remaining portion of these namedexecutives’ annual incentive award was tied to the Compensation Committee’s assessment of individual performance and the achievement of objectives for which the executive officers. Our namedwas individually responsible. For Mr. Fennerty, whose annual incentive compensation program was established early in 2019 at a time when he was not serving as an executive officer compensation program has been designed to:
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of the Company, his 2019 incentive award was determined entirely based on a subjective, discretionary assessment of his individual performance by the Compensation Committee. We believe you should vote “FOR” the 2019 compensation of our named executive officers because the compensation actually earned by our named executive officers for 2017 performance, as described in this Proxy Statement,it was aligned with both ourpay-for-performance philosophy and our actual 2017 performance.2019 performance and appropriately reflects key achievements resulting from their leadership.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of RegulationS-K with management. Based on such review and discussions, the Compensation Committee recommended to our Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 20172019 and the Proxy Statement for the 20182020 Annual Meeting of Shareholders for filing with the SEC.
Compensation Committee
Terrance R. Ahern, Chair
Victor B. MacFarlaneJane E. DeFlorio
Barry A. SholemDawn M. Sweeney
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during 20172019 were Terrance R. Ahern, Victor B. MacFarlaneJane E. DeFlorio, and Barry A. Sholem.Dawn M. Sweeney. None of our executive officers serves or has served on the board of directors or compensation committee (or other board committee performing equivalent functions) of any entity that has onefor which any of Mr. Ahern or moreMses. DeFlorio or Sweeney at the same time serves or served as executive officer. Also, none of our executive officers servingserves or served on the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of any entity, one of whose executive officers at the same time serves or served as a member of our Board or Compensation Committee.Board.
DDRSITE Centers Corp. ï 20182020 Proxy Statement 2519
8.5. Compensation Discussion and Analysis
In this section of the Proxy Statement, we explain and discuss our 20172019 executive compensation program that appliedprogram. This discussion is also intended to describe our compensation policies with respect to our named executive officers. We also describe the principles underlyingofficers and to provide a review of our named executive officer compensation policies and practices, including ourpay-for-performance compensation philosophy. In addition, we outline our named executive officer compensation decisions for 20172019. Our goal is to provide a better understanding, both in light of theabsolute terms and relative to our performance, of the Companyour compensation practices and the transition indecisions made concerning the compensation payable to our executive management team.
Impact of Management Transition on Compensation Disclosure
In March 2017, David R. Lukes was appointed our President andofficers, including the Chief Executive Officer, or CEO, and the other executive officers named in connection with the separation of Thomas F. August, who served“2019 Summary Compensation Table” below. We refer to the executive officers included in that table as a memberour “named executive officers”.
The Compensation Committee of our Board, from May 2016referred to March 2017in this section as the “Committee,” generally designs and asadministers our President and Chief Executive Officer from July 2016executive compensation program. All principal elements of compensation paid to March 2017. Concurrently, Michael A. Makinen was named our Executive Vice President and Chief Operating Officer in connection with the separation of William T. Ross, our former Chief Operating Officer, and Matthew L. Ostrower was named Executive Vice President, Chief Financial Officer and Treasurer. Christa A. Vesy, who had served as our Executive Vice President, Chief Accounting Officer and Interim Chief Financial Officer prior to March 2017, ceased to hold the position of Interim Chief Financial Officer as of March 2017 but remained our Executive Vice President and Chief Accounting Officer. In connection with this management transition, Vincent A. Corno, our former Executive Vice President of Leasing and Development, also separated from the Company.
As a result of the management transition, we have seven named executive officers (“NEOs”) for 2017. Fourare subject to approval by the Committee.
2019 Performance Highlights
Following our management transition in 2017 and the RVIspin-off and Dividend Trust Portfolio transactions in 2018, we focused our efforts in 2019 both on the continued execution of the five-year sustainable growth plan announced at our October 2018 Investor Day presentation and on continued improvement of our NEOs, whobalance sheet. Our five-year plan targets average annual growth in Same Store NOI of 2.75%, annual growth in Operating FFO of 5.00% and annual growth in net asset value (“NAV”) of 5.00%. As outlined in that presentation, significant drivers of projected Same Store NOI and NAV growth include plans to lease 60 anchor vacancies identified at the time of the presentation and make opportunistic investments of $75 million per year on average. As of January 31, 2020, we referhad leased 38 of the 60 anchor vacancies identified at the October 2018 presentation, of which 25 spaces were open and paying rent. During the course of 2019, we also invested an aggregate of approximately $99 million through a combination of the repurchase of 1.2 million of our common shares at an average cost of $11.31 per share and the acquisition of three shopping centers for an aggregate purchase price of approximately $85 million. This collective activity contributed significantly to as our “Current Officers”, were still serving as2019 Same Store NOI growth of 3.6% and 2019 Operating FFO of $1.27 per share.1
We also took significant steps in 2019 to continue to improve the strength of our executive officers asbalance sheet and the quality of our portfolio. In October 2019 we sold approximately 13.2 million shares of our common stock for net proceeds of approximately $195 million ($14.76 per share). In November 2019, we used the proceeds from this offering to redeem all of our outstanding 6.50% Class J Cumulative Redeemable Preferred Shares having an aggregate liquidation preference of $200 million. In addition, in October 2019, we announced an agreement to sell our 15% stake in the DDRTC joint venture, comprised oftwenty-one properties with population and household income demographics substantially below those of our consolidated portfolio, to our joint venture partner for net proceeds of approximately $143 million before giving effect to working capital adjustments in a transaction which closed in February 2020.
We believe that support for the execution of our strategy to date is evidenced by the performance of our common stock and feedback from the investment community. From December 31, 2017:14, 2017, the date on which the Company’s current management team commenced the implementation of its strategy with the announcement of its plan to spin off RVI, through close of trading on February 28, 2020, the total shareholder return on the Company’s common shares was 0.6% compared to a return of-5.9% for the FTSE NAREIT Shopping Center Index.
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More information with respect to the calculation of Same Store NOI growth and a reconciliation of net income (loss) attributable to SITE Centers to Same Store NOI can be found on pages 54 to 55 of our Annual Report on Form |
a reconciliation of net income (loss) attributable to common shareholders to Operating FFO for the year ended December 31, 2019, including on a per share basis, see pages 51 to 54 of our Annual Report on Form |
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The three remaining NEOs, who we collectively refer to as the “Former Officers”, were no longer employed by us as of December 31, 2017:
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The following discussion is intended to focus on compensation arrangements with respect to our Current Officers. Information regarding compensation arrangements with our Former Officers is separately discussed in the section below entitled “2017 Compensation Program – Separation Payments and Benefits for Former Officers”.
Overview of Key 2017 Compensation Decisions and Actions
In March 2017, we entered into new employment agreements with Messrs. Lukes, Makinen, and Ostrower, and in December 2016 we entered into a new employment agreement with Ms. Vesy. These employment agreements form the foundation of our executive compensation program, which is designed to balance three objectives: to attract and retain highly qualified individuals; to incentivize them to deliver superior returns to our shareholders through the execution of a well-crafted strategy, the achievement of key financial and operational goals and the reduction of the risk profile of the Company; and to ensure that the cost of our compensation program is reasonable to shareholders. The program emphasizes the use of “at risk” performance-based awards for both annual and long-term compensation in order to better align the interests of our management team with those of
2620 DDRSITE Centers Corp. ï 20182020 Proxy Statement
Chief Financial Officer Transition and Employment Agreement
On November 5, 2019, Mr. Ostrower, our shareholders. In approvingformer Executive Vice President, Chief Financial Officer and Treasurer, informed us of his intention to terminate his employment with us. Upon his departure from the employment agreementsCompany on November 27, 2019, Mr. Ostrower forfeited all time-based and performance-based equity which had not previously vested in accordance with its terms. Mr. Ostrower also did not receive any annual incentive compensation payout in connection with his service to the Company in 2019.
On November 6, 2019, the Board appointed Mr. Fennerty as the Company’s Executive Vice President, Chief Financial Officer and Treasurer effective upon Mr. Ostrower’s departure. Mr. Fennerty was not serving as an executive officer of the Company at the beginning of 2019, so he did not participate in all of the same compensation programs as our other named executive officers. We have outlined where there are differences in the compensation programs for our Current Officers, the Compensation Committee, which we refer toMr. Fennerty in this section ofProxy Statement. In particular, compensation arrangements with Mr. Fennerty, and considerations relevant to the Proxy Statement as the “Committee”, sought to provide competitive target annual compensation and considered market data and the recommendations provided by our independent compensation consultant, Gressle & McGinley LLC (“Gressle & McGinley”). More information concerning the terms of the employment agreements for our Current Officers is provided under the section immediatelyCommittee’s design thereof, are more fully described below entitled “Compensation Program Design” as well as under the section entitled “Employment Agreements” in the “Executive Compensation Tables and Related Disclosure” section of this Proxy Statement.
The principal components2019 Annual Incentive Compensation Program Overview
Our 2019 annual performance-based incentive compensation program for our named executive officers, excluding Mr. Fennerty, was adopted by the Committee in March 2019 and was based upon a combination of quantitative and qualitative performance measures. Half of our CEO’s and 60% of our other participating named executive officers’ annual incentive award for 2019 was linked to the Company’s performance during the year with respect to two key metrics: Same Store NOI growth and Operating FFO. The remainder of the annual incentive award determinations involved a qualitative assessment of each participating named executive officer’s performance, with particular consideration given to the achievement ofpre-identified goals for which each participating executive was individually responsible.
Mr. Ostrower resigned his employment with us effective November 27, 2019 and therefore did not receive any annual incentive payment on account of his performance in 2019. In addition, in contrast to the program described above, Mr. Fennerty’s 2019 annual performance-based incentive compensation program consistwas originally designed in early 2019, prior to his appointment as an executive officer, to involve a subjective, discretionary assessment of his individual performance and was not based on formulaic performance metrics or specific goal assessment. In consideration of the significant portion of the year which had elapsed prior to Mr. Fennerty’s promotion as our Chief Financial Officer in November 2019, the Committee determined to retain this original design, and the amount of Mr. Fennerty’s 2019 annual incentive compensation was determined by the Committee based on a subjective assessment of his performance for the year.
According to this design, and based on the achievements highlighted below, the Committee approved annual incentive payments to our named executive officers for 2019 at the following levels:
Named Executive Officer
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Annual Incentive Target ($)
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Actual Annual Incentive Award Payout ($)
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David R. Lukes
| 1,062,500 | 1,445,000 | ||||||||||||
Michael A. Makinen
| 500,000 | 650,000 | ||||||||||||
Conor M. Fennerty
| N/A | 350,000 | ||||||||||||
Christa A. Vesy
| 285,000 | 492,480 | ||||||||||||
Matthew L. Ostrower
| 500,000 | 0 |
In accordance with their employment agreements, annual incentive payments were provided to Messrs. Lukes, Makinen and Fennerty in cash and to Ms. Vesy in a combination of cash and RSUs.
SITE Centers Corp.ï 2020 Proxy Statement 21
Overview of 2019 Equity Grants and Performance-Based Equity Results
2019 Performance-Based RSU Awards. Pursuant to the terms of their employment agreements, on March 2, 2019, Messrs. Lukes, Makinen and Ostrower were granted 225,158, 75,053 and 75,053 performance-based RSUs having “target” values of $3 million, $1 million and $1 million, respectively, subject to a performance period beginning on March 1, 2019 and ending February 28, 2022. These performance-based RSUs (or “PRSUs”) become payable to the executives in shares of our common stock at the end of the performance period, if at all, based on the percentile rank of the total shareholder return (“TSR”) of the Company measured over the performance period as compared to the total shareholder return of a base salary, andefined group of peer companies, subject generally to the executives’ continued employment with us. If our TSR does not exceed the 33rd percentile of the peer group during the performance period, no shares will be earned by the participants at the conclusion of the performance period. Upon his departure from the Company, Mr. Ostrower forfeited this award. For more information about these awards, see “– 2019 Compensation Program – Performance-Based and Retention-Based Equity Grants” below.
2019 Retention-Based RSU Awards. On February 22, 2019, Messrs. Lukes, Makinen and Ostrower were granted 70,476, 20,403 and 20,403 time-based RSUs having grant date fair values of $950,016, $275,032 and $275,032, respectively, which RSUs generally vest in substantially equal installments on each of the first three anniversaries of the grant date, subject generally to the executives’ continued employment with us. In general, these awards were granted to the executives to help motivate and retain the core of our successful leadership team, and to help us avoid losing them to other employment opportunities. Despite the Committee granting this award, Mr. Ostrower forfeited these time-based RSUs upon his departure from the Company in November 2019 to pursue another opportunity. In retrospect, Mr. Ostrower’s departure confirms the need for and the advisability of our Committee in designing and granting these retention awards in early 2019. Ms. Vesy also received 22,701 RSUs in early 2019 in settlement of her annual bonusincentive opportunity for 2018, which RSUs generally vest in substantially equal installments on each of the first three anniversaries of the grant date. On November 6, 2019, in connection with the execution of his employment agreement, Mr. Fennerty was granted 19,342 RSUs which vest in equal installments on the second and long-term performance equity. Duringthird anniversaries of the grant date. For more information about these awards, see “– 2019 Compensation Program – Performance-Based and Retention-Based Equity Grants” below.
Settlement of Certain 2017 Performance-Based Awards; Realized Pay. On March 1, 2017, in accordance with the terms of their employment agreements, the Company granted to each of Messrs. Lukes, Makinen and Ostrower also received an award of restricted share units (“RSUs”) with time-based vesting requirements in connection with their retentionperformance shares having a performance period ending on February 28, 2018, performance-based RSUs having a performance period ending on February 28, 2019 and the execution of their employment agreements, and Ms. Vesy received an award ofadditional performance-based RSUs with time-based vesting requirements in satisfaction ofhaving a portion of her 2016 annual performance-based incentive compensation. In addition, each of Messrs. Lukes, Makinen and Ostrower received awards of performance equity pursuant to their employment agreements. No amounts are guaranteed to be paid to our executives with respect to their annual bonus opportunities or their performance equity awards.
Given that Messrs. Lukes, Makinen and Ostrower joined us during the course of 2017, the Committee did not set specific performance metrics governing their 2017 bonuses; instead, bonus determinations for these officers were madeperiod ending on the basis of the Committee’s discretionary, qualitative evaluation undertaken at the conclusion of the year. In evaluating their performance, among other things, the Committee focused on the achievement of key personal and organizational goals and objectives, including extending the weighted average maturity profile of the Company’s indebtedness, disposing ofnon-core assets in order to further reduce leverage levels, reducing general and administrative expenses and developing a long-term strategy. Based on the substantial progress made by the new management team during the remainder of the year with respect to these objectives, the Committee awarded cash bonuses to these executives in the following amounts, expressed both in absolute amount and as a percentage of the bonus targets set forth in their employment agreements(pro-rated for the actual number of days employed by us in 2017):
Named Executive Officer | Annual Bonus Target ($) | Pro-Rated Bonus Target ($) | Actual Bonus Award ($) | % of Pro-Rated (%) | ||||||||||||
David R. Lukes | 1,062,500 | 887,842 | 1,154,195 | 130 | ||||||||||||
Michael A. Makinen | 500,000 | 417,808 | 522,260 | 125 | ||||||||||||
Matthew L. Ostrower | 500,000 | 417,808 | 522,260 | 125 |
The Committee adopted a 2017 annual incentive compensation program for Ms. Vesy, the only Current Officer who was our employee for all of 2017, based on a combination of Same Store Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) growth and the achievement of individual objectives (in each case, as further described below). Based on our Same Store EBITDA results and the Committee’s assessment of Ms. Vesy’s individual performance, the Committee awarded her a 2017 annual incentive in the amount of $255,000 which is 100% of the bonus target set forth in her employment agreement, of which amount $136,000 was paid in cash and $119,000 was paid in the form of RSUs. In acknowledgment of Ms. Vesy’s service as Interim Chief Financial Officer during a portion of 2017 and her significant contributions to the Company’s management transition and proposedspin-off transaction, the Committee also awarded Ms. Vesy special bonus compensation of $68,000 in cash and $85,000 in RSUs.
In early 2018, consistent with its compensation philosophy, the Committee adopted a 2018 annual incentive compensation program for each of our Current Officers which is comprised of financial and operating metrics, including growth in same-property net operating income and operating funds from operations, and individualized goals.
February 28, 2020. Based on the relative performanceTSR of the Company’s share priceCompany during the twelve-month12-month period ended February 28, 2018, it was determined thatthe24-month period ending February 28, 2019 and the36-month period ended February 28, 2020, no shares were issuableearned by Messrs. Lukes, Makinen or Ostrower with respect to theone-year performance shares or thetwo-year and three-year performance-based RSUs having performance periods ending on those dates (the three-year performance based RSUs were forfeited by Mr. Ostrower upon his departure, but would not have paid out even if he had remained with the Company through the full performance period).
The results of these performance-based awards are evidence of the alignment of our compensation program with actual performance: due to the relative performance of our share price, the participating named executive officers have earned significantly less compensation to date than intended under our performance-based equity programs and less compensation than the target compensation levels provided in their March 2017 employment agreements. In addition, in certain cases our named executive officers have realized significantly less compensation than the compensation levels reported for applicable prior years (namely 2017) in the “2019 Summary Compensation Table” below. For example, although theone-year performance shares,two-year performance-based RSUs and three-year performance-based RSUs awarded to Mr. Lukes in March 2017 had grant date fair values of approximately $455,000, $918,000 and $1.4 million, respectively, and in the aggregate comprised approximately $2,773,000 of the $7,541,235 total compensation reported for Mr. Lukes for 2017 in the Summary Compensation Table, no compensation was ultimately paid to Mr. Lukes in respect of these awards.
22 SITE Centers Corp.ï 2020 Proxy Statement
For a summary of performance-based equity awards granted to Messrs. Lukes, Makinen and Ostrower in 2017, 2018 and 2019 and their status through February 29, 2020, see “– 2019 Compensation Program – Status of Performance-Based Equity Grants” below.
Investor Outreach
We proactively meet with respectour largest shareholders from time to time in order to discuss a variety of topics regarding the performance shares awarded under their employment agreements having a performance period ending on that date. Similarly, no shares were issuedCompany and to Ms. Vesy on accountgive these investors an opportunity to raise questions and provide our management team with feedback. Since January 1, 2019, we have held meetings with sixteen of our largest institutional investors who we believe collectively own, together with members of the three measurement dates occurring during 2017 underOtto family, over 60% of our common shares as of December 31, 2019. Topics of discussion in these meetings often include executive compensation, the 2016 Value Sharing Equity Program (“2016 VSEP”).composition of our Board of Directors and other corporate governance matters. Based on the discussion of our executive compensation program at these meetings, we believe that these investors understand our executive compensation program and have a favorable view of the alignment of pay and performance created by the program’s significant use of performance-based equity. Based on these meetings, we are not aware of any significant shareholder concerns regarding our pay practices or executive compensation program.
DDR Corp.ï 2018 Proxy Statement 27
Compensation Philosophy and Objectives
Our primary executive compensation objectives are to:
• attract, retain and motivate executives who are capable of advancing our mission and strategy and ultimately maintain and grow our long-term equity value; |
• reward executives in a manner aligned with our financial performance, organizational objectives and their individual goals; |
• align the management team’s interests with our shareholders’ long-term interests through equity participation and ownership; and |
• ensure that the cost of the compensation program is reasonable to shareholders. |
To achieve our objectives, we generally deliver executiveOur compensation through a combinationprogram rewards executives for not only delivering superior returns but also for reducing the risk profile of the following components: (1) base salary; (2) annual incentive compensation; (3)Company, as well as for achieving financial andnon-financial measures of performance that enhance long-term equity compensation;shareholder value. Our executives and (4) other employee benefitsthe Board have intentionally avoided short-term decisions that might produce inflated short-term shareholder returns in favor of longer term strategies that provide sustainable growth opportunities and perquisites.enhance net asset value.
SITE Centers Corp.Negotiation of Employment Contracts for Current Officersï 2020 Proxy Statement 23
In March 2017, we
We entered into new employment agreements with Messrs. Lukes, Makinen and Ostrower in March 2017 and with Mr. Fennerty in November 2019, which agreements form the foundation of our executive compensation program for these NEOs.executives. In structuring arrangements withnegotiating these executives,agreements, the Committee worked closely with its compensation consultant, Gressle & McGinley. The Committee first focused on determiningemphasized the appropriate leveluse of target compensationperformance-based awards for our CEO, Mr. Lukes. To this end,both the Committee reviewed a report prepared by Gressle & McGinley that summarized the total target CEO compensation of our direct shopping center REIT peers, as well as theannual and long-term incentive components of suchthese executives’ compensation (salary, bonus and annualized equity). The report focused on 16 other public shopping center REITs with total enterprise values ranging from $330 million to approximately $17 billion which ownnon-mall retail assets similar to those of DDR (specifically, Kimco Realty Corporation; Brixmor Property Group Inc.; Federal Realty Investment Trust; Regency Centers Corporation; Weingarten Realty Investors; Retail Properties of America, Inc.; Equity One, Inc.; Acadia Realty Trust; Kite Realty Group Trust; Urban Edge Properties; Retail Opportunity Investments Corp.; Ramco-Gershenson Properties Trust; Cedar Realty Trust, Inc.; Urstadt Biddle Properties Inc.; Whitestone REIT; and Wheeler Real Estate Investment Trust, Inc.). This list was used solely for purposes of evaluating potential target annual compensation for Mr. Lukes, and not for performance equity award evaluation,non-competition or other purposes. In addition, the Committee focused on the report’s evaluation of the relationship between company size and actual CEO compensation for the disclosed entities based on information reported in proxy statements using a regression analysis. Based on this data and following negotiations with Mr. Lukes, the Committee determined that the target annual compensation for Mr. Lukes should be approximately $5.65 million (approximately the 75th percentile of this group), which amount the Committee also felt was in line with actual compensation recently paid to CEOs of similarly sized shopping center REITs.
The Committee then considered how this target level of total compensation should be allocated between salary, annual cash bonus, performance equity and service-based equity. In allocating amounts between short-term and long-term compensation, and between cash and equity, the Committee had several objectives:
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28 DDR Corp.ï 2018 Proxy Statement
In determining the components of CEO compensation, the Committee focused on market data within this same group of shopping center REITs. Based on this data, and in particular considering Mr. Lukes’ location in New York City and the compensation breakdown for CEOs of those shopping center REITs considered by the Committee to be the Company’s direct peers and representative of the market for the Company’s executive talent, Mr. Lukes’ annual salary was set at $850,000, which was the 75th percentile of the peer group, and the target level of his annual cash incentive pay was set at 125% of base salary with a maximum opportunity of 200% of base salary. These amounts and our agreement with Mr. Lukes were also influenced by our arms’ length negotiation with Mr. Lukes.
The Committee structured the equity component of the CEO’s compensation with three main objectives in mind: a significant portion of the equity should be “at risk”; performance should be evaluated solely based on relative total shareholder return (“TSR”) compared against other shopping center REITs; and payouts under performance-based equity awards should be reduced in the event relative TSR exceeds the threshold level but returns to shareholders are negative. Accordingly, the Committee granted Mr. Lukes both an upfront equity award that vests over time based on continued employment and initial performance-based equity awards subject toone-,two- and three-year performance periods. Time-based RSUs valued at approximately $2.95 million were granted to Mr. Lukes in connection with the execution of his employment agreement in March 2017 and generally vest in four equal annual installments on the first four anniversaries of the grant date.
The Committee allocated $3.0 million of the targeted $5.65 million annual CEO compensation program to “at risk” performance-based equity. In March 2017, Mr. Lukes was granted “target” awards of 34,398 performance shares, 68,795 performance-based RSUs and 103,193 performance-based RSUs with performance periods beginning in March 2017 and ending in February 2018, 2019 and 2020, respectively. With respect to these awards, the Committee has established rigorous performance thresholds as a condition to the amount of compensation ultimately received by the executive. As a result, no shares are payable under a particular performance-based award unless our relative TSR over the measurement period exceeds that of at least 33% of the peer group (at which point 50% of the award is payable), and the “target” number of shares is not payable unless our TSR exceeds that of at least 55% of the peer group. To achieve the maximum value of the award (in other words, 200% of target) our relative TSR must be at or above the 70th percentile of peer group TSR. Straight-line mathematical interpolation applies between levels above the threshold level. In order to better align the interests of our CEO’s compensationnamed executive officers with shareholder returns, the Committee also felt that payouts under these performance-based equity awards should be reduced in situations where relative TSR performance thresholds are met but absolute TSR is negative. Therefore, under the terms of these awards, if our absolute TSR is negative over the performance period, any payout is reduced byone-third. Additional information concerning the terms of these performance-based equity awards is provided below under the section of this Compensation Discussion and Analysis entitled “2017 Compensation Program”. Beginning in 2018, Mr. Lukes is expected to receive (subject to the approvalthose of the Committee) similarly structured annual awards of performance-based RSUs having a “target” value of $3.0 million and a three-year performance period.
DDR Corp.ï 2018 Proxy Statement 29
Company’s shareholders. At annualized 20172019 “target” compensation levels, the compensation of our CEO is summarized in the chart below, illustrating that our program is heavily weighted toward “at risk”, incentive compensation:
* | Aggregate annualized grant date fair value |
** | Annual cash |
The Committee used comparative data provided by Gressle & McGinleyultimate payout with respect to model compensation programs for our Chief Operating Officer, Mr. Makinen,long-term performance equity is dependent entirely on our TSR relative to that of a defined group of peer companies. Largely as a result of stock performance in 2017, our total shareholder return lagged that of the peer companies during theone-,two- and Chief Financial Officer, Mr. Ostrower, after the CEO’s design. The target total annual compensation for both of these officers was set at $1.8 million, comprised of base salary of $500,000, target cash bonus of $500,000, annualthree-year performance periods ending on February 28, 2018, February 28, 2019 and February 28, 2020, respectively, applicable to performance-based equity of $600,000 (at target), and annualized time-based equity of $200,000. In additionawarded to the data analysis, these agreements and amounts were again subject to arms’ length negotiations with Messrs. Makinen and Ostrower. Each of Messrs. Makinen and Ostrower was awarded “target” numbers of 6,880 performance shares, 13,759 performance-based RSUs and 20,639 performance-based RSUs with performance periods beginningMr. Lukes in March 20172017. As a result, the amount of compensation realized by Mr. Lukes in recent years has been significantly below his target compensation, which further evidences our compensation philosophy and ending in February 2018, 2019commitment to strongly align the interests of management and 2020, respectively, whichshareholders through the use of performance-based equity. For a summary of performance-based equity awards are subject to substantially the same performance objectives as are applicablegranted to Mr. Lukes’ initial performance-based equity awards.Lukes and their status through February 29, 2020, see “– 2019 Compensation Program – Status of Performance-Based Equity Grants” below.
3024 DDRSITE Centers Corp. ï 20182020 Proxy Statement
Pay Governance
Over the past several years we have adopted a number of compensation-related policies and have entered into new employment agreements with our executives in order to implement several best practices in executive compensation. The following are key features of our executive compensation program.
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Role of the Committee and Management in Executive Compensation
The Committee has overall responsibility for the compensation programs provided to our named executive officers. Pursuant to the Committee’s charter, the Committee has the authority to review and approve the compensation for executive officers, including the review and approval of the design and implementation of any incentive arrangements, equity compensation, and supplemental retirement programs. Consistent with this authority, the Committee typically establishes financial performance metrics and targets used for annual performance-based incentives, conducts anin-depth review of performance against these objectives, reviews from time to time market pay practices as they relate to both cash-based and equity-based award programs primarily to remain informed about general compensation trends in the market, designs and adopts our long-term equity incentive compensation programs and specifically approves compensation arrangements for our Chief Executive Officer.
Our Chief Executive Officer provides significant input in setting the compensation for our other executive officers by providing the Committee with an evaluation of their performance and making recommendations for any adjustments to their base and target bonus compensation. The Committee can accept, reject or modify the Chief Executive Officer’s recommendations as it sees fit, subject to the terms of any applicable employment agreement.
Role of the Compensation Consultant in Executive Compensation
For 2017, the Committee continued its retention of Gressle & McGinley as its independent compensation consultant. Gressle & McGinley was selected as the advisor to the Committee based on its extensive knowledge of the REIT sector, especially retail REITs, its experience with the Company, and its deep knowledge and experience in designing executive compensation programs over the past 30 years across multiple sectors of the economy. The Committee has assessed the independence of Gressle & McGinley, as required under NYSE
DDR Corp.ï 2018 Proxy Statement 31
listing rules. The Committee has also considered and assessed all relevant factors, including but not limited to those set forth in Rule10C-1(b)(4)(i) through (vi) under the Securities Exchange Act of 1934, that could give rise to a potential conflict of interest with respect to Gressle & McGinley. Based on this review, the Committee is not aware of any conflict of interest that has been raised by the work performed by Gressle & McGinley.
Among other matters, in 2017 Gressle & McGinley assisted the Committee by:
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Consideration of 2017Say-on-Pay Voting Results
At our 2017 Annual Meeting, we received nearly 97% approval, based on the total votes cast, for our annual advisorySay-on-Pay vote to approve the compensation of our named executive officers. Our Board and Committee considered these voting results in connection with their review of the Company’s compensation program during 2017. The Committee and Gressle & McGinley specifically discussed the voting results when reviewing and considering any potential changes to our named executive officer compensation program for 2017. The Committee believes these voting results demonstrate significant, continuing support for our named executive officer compensation program, and chose to not make any substantial changes to the existing program for 2017 specifically in response to the 2017Say-on-Pay voting results. The Committee will, however, continue to explore from time to time various executive pay and corporate governance changes with Gressle & McGinley to the extent appropriate to keep our executive compensation program aligned with best practices in our competitive market. Based on the results of thenon-binding advisory vote held at our 2017 Annual Meeting regarding the frequency of futureSay-on-Pay votes, our Board expects to continue to holdSay-on-Pay votes at our future annual meetings of shareholders.
32 DDR Corp.ï 2018 Proxy Statement
Principal Elements of Our Compensation Program
The following table summarizes the key elements of our named executive officer compensation program for our Current Officers for 2017:2019:
Type | Element | Form | Objectives | Characteristics | ||||||||||||
Fixed | Base Salary | Cash | Competitive annual cash compensation
| Competitive compensation based on comparative market analysis and contractual commitments
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At Risk / Performance- Based Incentive |
Annual Performance- Based Incentive Compensation | Cash and, for Ms. Vesy, time-based RSUs | Incentivizes executives to achieve individual and Company objectives and aligns executives’ investment interests | Payouts typically earned based on financial and operating metrics and individual performance and, in the case of RSUs awarded to Ms. Vesy, subject to additional time-based vesting
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Long-Term Incentive Compensation | Performance- Based RSUs or Performance Shares (for Messrs. Lukes, Makinen, Ostrower and | Motivates and rewards executives for achieving relative total shareholder return objectives, helps attract and retain executives, and aligns executives’ compensation interests with shareholders’ investment interests
| Earned based on total shareholder return achievement relative to a peer group | |||||||||||||
Time-Based RSUs | Helps attract and retain executives, and aligns executives’ compensation interests with shareholders’ investment interests by linking the value ultimately realized to the Company’s share price
| Generally subject to time-based vesting on a ratable basis | ||||||||||||||
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Other
| Retirement Benefits
| Plan Contributions
| Provides benefits that are competitive with industry practices
| Standardtax-qualified defined contribution (401(k)) plan that provides a tax efficient vehicle to accumulate retirement savings, subject to limits on compensation under the Internal Revenue Code | ||||||||||||
Nonqualified
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Health and Other Welfare Benefits | Benefit Coverage | Provides benefits that are competitive with industry practices | Broad-based employee benefits program, including health, life, disability and other insurance, and customary fringe benefits providing for basic health and welfare needs
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Perquisites | Expense Reimbursement | Helps attract and retain executives | Automobile service for Mr. Lukes. Reimbursement of life insurance premiums for Messrs. Lukes, Ostrower and
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SITE Centers Corp.ï 2020 Proxy Statement 25
Pay Governance
Over the past several years we have adopted a number of compensation-related policies and have entered into new employment agreements with our executives in order to implement several best practices in executive compensation. The following are key features of our executive compensation program.
What We Do | What We Don’t Do | |||||||
✓ | We tie pay to performance by making a significant portion of compensation “at risk”. | X | We do not guarantee minimum incentive bonus awards. | |||||
✓ | Annual incentive pay is generally based on multiple performance metrics established at the beginning of each year and individual performance. | X | We do not encourage excessive risk taking as we use different performance metrics for our annual and long-term incentive compensation programs. | |||||
✓ | A significant portion of the value of long-term performance incentives depends on relative shareholder return. | X | We do not pay dividends on unearned equity awards subject to performance-based vesting. | |||||
✓ | We have stock ownership guidelines for our Directors and our named executive officers. | X | We do not allow Directors or officers to hedge or pledge company securities. | |||||
✓ | We engage an independent compensation consultant to advise the Committee, which is comprised solely of independent Directors. | X | We do not allow for repricing of stock options without shareholder approval. | |||||
X | We do not include excise taxgross-up provisions in our executive compensation arrangements. | |||||||
X | We do not offer excessive perquisites or special health and welfare plans to executives. |
Role of the Committee and Management in Executive Compensation
The Committee has overall responsibility for the compensation programs provided to our named executive officers. Pursuant to the Committee’s charter, the Committee has the authority to review and approve the compensation for executive officers, including the review and approval of the design and implementation of any incentive arrangements, equity compensation, and supplemental retirement programs. Consistent with this authority, the Committee establishes financial performance metrics and targets used for annual performance-based incentives, conducts anin-depth review of performance against these objectives and subjectively evaluates individual performance, reviews from time to time market pay practices as they relate to both cash-based and equity-based award programs primarily to remain informed about general compensation trends in the market, designs and adopts our long-term equity incentive compensation programs and specifically approves compensation arrangements for our named executive officers.
Our CEO provides significant input in setting the compensation for our other named executive officers by providing the Committee with an evaluation of their performance and making recommendations for any adjustments to their base and target annual incentive compensation. The Committee can accept, reject or modify the CEO’s recommendations as it sees fit, subject to the terms of any applicable employment agreement.
Role of the Compensation Consultant in Executive Compensation
For 2019, the Committee continued its retention of Gressle & McGinley as its independent compensation consultant. Gressle & McGinley was selected as the advisor to the Committee based on its extensive knowledge of the REIT sector, especially retail REITs, its experience with the Company, and its deep knowledge and experience in designing executive compensation programs over the past 30 years across multiple sectors of the economy. The Committee has assessed the independence of Gressle & McGinley, as required under NYSE
DDR26 SITE Centers Corp. ï 20182020 Proxy Statement 33
listing rules. The Committee has also considered and assessed all relevant factors, including but not limited to those set forth in Rule10C-1(b)(4)(i) through (vi) under the Securities Exchange Act of 1934, that could give rise to a potential conflict of interest with respect to Gressle & McGinley. Based on this review, the Committee is not aware of any conflict of interest that has been raised by the work performed by Gressle & McGinley.
Among other matters, in 2019 Gressle & McGinley assisted the Committee with its:
• Implementation of our 2019 annual executive incentive compensation program andyear-end performance review of our named executive officers; |
• Evaluation of an increase in the target amount of performance-based RSUs awarded to Messrs. Makinen and Ostrower in February 2019; |
• Evaluation of the amount and design of time-based RSU awards granted to Messrs. Lukes, Makinen and Ostrower in February 2019; |
• Analysis of peer data used to determine the appropriate level and forms of compensation provided in the employment agreement executed with Mr. Fennerty; |
• Annual evaluation of the Company’s Director compensation program; and |
• Analysis of whether any aspects of the Company’s compensation policies and practices create or encourage the taking of risks that could reasonably be expected to cause a material adverse impact on the Company. |
Consideration of 2019Say-on-Pay Voting Results
At our 2019 Annual Meeting, we received nearly 99% approval, based on the total votes cast, for our annual advisorySay-on-Pay vote to approve the compensation of our named executive officers. The Committee considered this result in connection with its review of compensation policies and decisions in 2019. The Committee believes these voting results demonstrate significant, continuing support for our named executive officer compensation program, and the Committee chose not to make any substantial changes to the existing program for 2019 specifically in response to the 2019Say-on-Pay voting results. The Committee will, however, continue to work with Gressle & McGinley to monitor changes in executive compensation to keep our executive compensation program aligned with best practices in our competitive market.
Base Salary Levels
We pay salaries to our named executive officers to provide them with a base level of income for services rendered. These base salaries are originally established at the time of the named executive officer’s first employment with us based on an analysis of the salaries paid to executives in comparable positions within our industry provided by Gressle & McGinley. Base salaries may be increased by the Committee from time to time, including at the time we extend or enter into new employment agreements are entered into with theour named executive officers, based on market conditions and prior performance.
Base salaries for Messrs. Lukes, Makinen and Ostrower were established by the Committee in March 2017 as discussed above in connection with the execution of their employment agreements. Baseagreements and were not adjusted for 2018 or 2019. Mr. Fennerty’s base salary levels for these executives were set by the Committee,level was increased in November 2019 from $280,000 to $400,000 in connection with the assistanceexecution of comparative analysis provided by Gressle & McGinley, in order to align with general market compensation trends for executives inhis employment agreement and his appointment as our industry.Executive Vice President, Chief Financial Officer and Treasurer. Ms. Vesy’s base salary level was increased on January 1, 2019 from $340,000 to $340,000 in 2016$380,000 in accordance with the terms of her amended employment agreement and remained at that level for 2017.she had negotiated with us.
SITE Centers Corp.ï 2020 Proxy Statement 27
Annual Incentive Compensation Design
Messrs. Lukes, MakinenThe employment agreements with our named executive officers specify threshold, target and Ostrower. Based on the analysis of compensation paid by other shopping center REITs, the “target”maximum annual incentive cash bonusamounts (as a percentage of salary, or, for the CEO was set at 125%portion of base salary with a range between 50% of base salary for “threshold” performance and 200% of base salary for “maximum” performance. For Messrs. Makinen and Ostrower, the “target” annual incentive cash bonus is set at 100% of salary with a range between 50% of base salary for “threshold” performance and 150% of salary for “maximum” performance. In all cases, no cash bonusMs. Vesy’s award that is payable in RSUs, salary plus earned annual incentive award). Our named executive officers are not guaranteed an annual incentive payment and each named executive officer’s annual incentive payment can be as low as zero or as high as the eventmaximum amount set forth in his or her agreement based on the degree of achievement of corporate and individual performance measures established by the Committee at the beginning of each year. Though our employment agreement with Mr. Fennerty specifies threshold, target and maximum annual incentive amounts for calendar year 2020 and beyond, the agreement provided the Committee with discretion in determining the amount of his 2019 annual incentive award, if any. Expressed in dollar values, the minimum, threshold, target and maximum annual incentive award payable to each of our named executive officers for 2019 pursuant to the terms of his or her employment agreement, and the maximum amount expressed as a percentage of the executive’s performance is below the threshold level.base salary, was as follows:
Dollar Value of
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Named Executive Officer
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David R. Lukes | $0 | $425,000 | $1,062,500 | $1,700,000 | 200% | |||||
Michael A. Makinen | $0 | $250,000 | $500,000 | $750,000 | 150% | |||||
Matthew L. Ostrower | $0 | $250,000 | $500,000 | $750,000 | 150% | |||||
Christa A. Vesy | $0 | $133,000 | $285,000 | $646,000 | 170% | |||||
Conor M. Fennerty | $0 | N/A | N/A | N/A | N/A |
In light of the reorganization of the management team in March 2017, and the time needed for the new management team to formulate its long-term strategic plan for our business,2019, the Committee did not implement specific performance metrics governing 2017 bonusesestablished our 2019 annual incentive compensation program for Messrs. Lukes, Makinen and Ostrower. Instead,Ostrower and Ms. Vesy. The program used a combination of company-wide operating and portfolio objectives as well as tailored goals for which the applicable named executive officer was individually responsible. In each case, the Committee conducted a qualitative, subjective evaluationbelieved that the performance measures were appropriate because their achievement should contribute to our long-term success and the creation of their performancevalue for the purpose of determining their 2017our shareholders. Mr. Fennerty’s 2019 annual incentive compensation. In particular, the Committee focused on the achievement of key organizational goals and objectives identified by the new management team shortly after its arrival, including extending the weighted average maturity profile of the Company’s indebtedness, disposing ofnon-core assets in order to further reduce leverage levels, reducing general and administrative expenses and developing a long-term strategy.
Ms. Vesy. Following the arrival of the new management team, the Committee adopted a 2017 annualperformance-based incentive compensation program forwas originally designed by our Chief Executive Officer in early 2019 when Mr. Fennerty was not serving as an executive officer of the Company. The original design of Mr. Fennerty’s 2019 incentive compensation program involved a subjective, discretionary assessment of his individual performance and was not based on formulaic performance metrics or specific goal assessment. No performance objectives or goals were implemented by the Committee to govern Mr. Fennerty’s 2019 incentive award following his promotion in November 2019 given the significant portion of the year which had elapsed prior to his appointment as our Executive Vice President, Chief Financial Officer and Treasurer.
The following charts identify the performance measures applicable to Messrs. Lukes, Makinen and Ostrower and Ms. Vesy, who was the only Current Officer employed byrange of performance in 2019 for which points were awarded and the Company for allweighting of 2017. The two componentseach of the performance measures to the overall score. Within the performance ranges applicable to each quantitative metric, the program consistedawarded from one to five points based on the Company’s level of (1) growth in Same Store EBITDA and (2) qualitative individualactual performance objectives specifically tailoredrelative to Ms. Vesy’s roles and responsibilitiesbreak-points within the organization.stated performance range on a formulaic, nondiscretionary basis. No points were earned on account of any quantitative measure to the extent actual performance was below the bottom end of the identified performance range. In the case of each individualized performance measure, the participating named executive officers received from zero to five points based on the Committee’s subjective assessment of performance. After points were awarded for each performance measure, each participating named executive officer was given an overall score based on the weighting of each measure as indicated below. An overall score of one point corresponded to a “threshold” incentive payout, a score of three points corresponded to a “target” incentive payout and a score of five points corresponded to a “maximum” incentive payout, in each case as indicated in the applicable executive’s employment agreement (with straight line interpolation applicable to scores between those break-points). Due to Mr. Ostrower’s departure in November 2019, the Committee did not complete a review or evaluation of his performance against his performance measures.
28 SITE Centers Corp.ï 2020 Proxy Statement
Mr. Lukes’ Performance Measures
| Performance Range
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| Measurement
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Same Store NOI growth(1) | 0.5% to 2.5% | 3.6% | 30% | |||||||||
Operating FFO per share(2) | $1.11 to $1.19 | $1.27 | 20% | |||||||||
Leasing progress | 0 to 5 | 3 | 10% | |||||||||
Advancement of sustainable, long-term business plan | 0 to 5 | 5 | 10% | |||||||||
Committee’s evaluation | 0 to 5 | 3 | 30% | |||||||||
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Mr. Makinen’s Performance Measures
| Performance Range
| Results
| Measurement
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Company goals(3) | 0 to 5 | 5 | 60% | |||||||||
Tenant selection and merchandise mix | 0 to 5 | 3 | 10% | |||||||||
Committee’s evaluation | 0 to 5 | 3 | 30% | |||||||||
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Mr. Ostrower’s Performance Measures
| Performance Range
| Results
| Measurement
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Company goals(3) | 0 to 5 | N/A | 60% | |||||||||
Balance sheet management | 0 to 5 | N/A | 10% | |||||||||
Committee’s evaluation | 0 to 5 | N/A | 30% | |||||||||
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Ms. Vesy’s Performance Measures
| Performance Range
| Results
| Measurement
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Company goals(3) | 0 to 5 | 5 | 60% | |||||||||
Financial statement reporting and accuracy | 0 to 5 | 3 | 10% | |||||||||
Committee’s evaluation | 0 to 5 | 3 | 30% |
(1) | The Company defines Same Store NOI, a supplementalnon-GAAP financial metric, as property revenues less property-related expenses, which exclude straight-line rental income and expenses, lease termination income in excess of lost rent, management fee expense, fair market value of leases and expense recovery adjustments. Same Store NOI also excludes activity associated with development and major redevelopment and includes assets owned in comparable periods. Same Store NOI excludes allnon-property and corporate level revenue and expenses. Other real estate companies may calculate Same Store NOI in a different manner. For the limited purpose of determining 2019 executive incentive payouts, reported Same Store NOI growth was designed to be adjusted to eliminate the negative impact of unbudgeted tenant bankruptcies, though no such adjustment was ultimately made. The Company believes NOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level and, when compared across periods, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis. The Company believes Same Store NOI provides investors with additional information regarding the operating performances of comparable assets because it excludes certainnon-cash andnon-comparable items as noted above. |
(2) | Funds from Operations (“FFO”) is a supplementalnon-GAAP financial measure used as a standard in the real estate industry and is a widely accepted measure of REIT performance. FFO is generally defined and calculated by the Company as net income (loss) (computed in accordance with GAAP), adjusted to exclude: (a) preferred share dividends, (b) gains and losses from disposition of real estate property and related investments, which are presented net of taxes, (c) impairment charges on real estate property and related investments, including reserve adjustments of preferred equity interests, and (d) certainnon-cash items. Thesenon-cash items principally include real property depreciation and amortization of intangibles, equity income (loss) from joint ventures and equity income (loss) fromnon-controlling interests and adding the Company’s proportionate share of FFO from its unconsolidated joint ventures andnon-controlling interests, determined on a consistent basis. The Company’s calculation of FFO is consistent with the definition of FFO provided by NAREIT. The Company calculates Operating FFO by excluding certainnon-operating charges, income and gains in order to allow investors to analyze the results of its operations and assess performance of the core operating real estate portfolio. For the limited purpose of determining 2019 executive incentive compensation, reported Operating FFO per share was designed to be adjusted to eliminate the negative impact of unbudgeted tenant bankruptcies, though no such adjustment was ultimately made. The Company believes that Operating FFO provides additional indicators of the financial performance of a REIT. The Company also believes that Operating FFO more appropriately measures the core operations of the Company and provides benchmarks to its peer group. Operating FFO is useful to investors as the Company removesnon-comparable charges, income and gains to analyze the results of its operations and assess performance of the core operating real estate portfolio. Other real estate companies may calculate Operating FFO in a different manner. |
(3) | For each of Messrs. Makinen and Ostrower and Ms. Vesy, “company goals” were defined to consist of the same two organizational-level goals established for Mr. Lukes, namely Same Store NOI growth and Operating FFO per share. |
SITE Centers Corp.ï 2020 Proxy Statement 29
Annual Incentive Compensation Decisions
Based on actual performance in 2019 and the weightings assigned to each performance measure, the Committee determined that Mr. Lukes earned a weighted average score of 4.2 points under the 2019 incentive compensation program. Pursuant to the terms of his employment agreement, Mr. Lukes’ score entitled him to a 2019 incentive bonus of $1,445,000 (approximately 136% of his incentive award target) which was paid in cash.
The Committee determined that Mr. Makinen earned a weighted average score of 4.2 points under the 2019 incentive compensation program. Pursuant to the terms of his employment agreement, Mr. Makinen’s score entitled him to a 2019 incentive bonus of $650,000 (approximately 130% of his incentive award target) which was paid in cash.
Based on a discretionary evaluation of his performance, with significant input from our CEO, the Committee awarded Mr. Fennerty 2019 incentive compensation of $350,000, which amount was paid in cash.
The Committee determined that Ms. Vesy earned a weighted average score of 4.2 points under the 2019 incentive compensation program. Pursuant to the terms of her employment agreement, the “target” annual cashMr. Vesy’s score entitled her to a 2019 incentive opportunity for Ms. Vesy is 40%bonus of base salary with a range between 20% of base salary for “threshold” performance and 80% of base salary for “maximum” performance. Additionally, Ms. Vesy’s employment contract provides for an annual “target” equity incentive opportunity of 25% of the sum$492,480 (approximately 173% of her base salary and annual incentive cash bonus with a range between 12.5%award target), $243,200 of suchwhich amount for “threshold” performance and 50% of such amount for “maximum” performance.
We have used Same Store EBITDA as a compensation performance metric since 2010. EBITDA includes overhead and administrative costs, but excludes interest expense, interest income and othernon-operating items, such as the gain or loss on the sale of properties, asset impairments, valuation allowances, workforce restructuring charges, lease termination fees over a certain dollar threshold, certainnon-cash income items as well as the net impact of the hurricane on the Puerto Rico portfolio. Same Store EBITDA is further defined as EBITDA from wholly-owned and joint venture operating properties and other investments that we have owned for at least two consecutive years. Same Store EBITDA growth is important because it captures key property value drivers, such as occupancy rates, rental rates, and property expenses, and it also includes fee income, and general and administrative expenses. At the same time, Same Store EBITDA is not impacted by financing decisions or current year acquisitions, dispositions or redevelopments, and is a performance measure less prone to influence by financial and other strategies that rely on short-term debt and increased risk.
34 DDR Corp.ï 2018 Proxy Statement
Achievement of our Same Store EBITDA growth goal was measured on a scale from a “none” level (in other words, producing no payout for this component of the award) for performance that is “below expectations” to a “maximum” level for “superior” performance. The achievement opportunities with respect to the Same Store EBITDA growth metric are set forth in the following table:
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The 2017 annual incentive compensation program for Ms. Vesy also consisted of qualitative individual performance objectives which were evaluated by the Committee at the end of the year on the same scale ranging from “below expectations” to “superior” achievement levels. This evaluation took place as part of ouryear-end performance appraisal process. The qualitative individual performance objectives for Ms. Vesy consisted of the following: ensuring the accuracy, transparency and timeliness of the Company’s financial reporting; contributions related to the reduction of general and administrative expenses; and an expanded leadership role for various organizational, accounting, and financial objectives. In determining Ms. Vesy’s overall performance for 2017 and the resulting level of her annual incentive compensation, the individual components of growth in Same Store EBITDA and achievement of qualitative performance objectives were weighted equally.
Annual Incentive Compensation Decisions
Messrs. Lukes, Makinen and Ostrower. The Committee determined 2017 bonuses for Messrs. Lukes, Makinen and Ostrower using a subjective assessment of performance with respect to key organizational goals and objectives and the particular executive’s contribution towards achievement of these goals and objectives. In particular, the Committee considered the following:
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DDR Corp.ï 2018 Proxy Statement 35
Based on the Committee’s assessment of performance, it awarded 2017 annual cash bonuses to these executives in the following amounts:
Annual Bonus Target | Pro-Rated Bonus Target | Actual Bonus Award | % ofPro-Rated Bonus Target | |||||
David R. Lukes | $1,062,500 | $887,842 | $1,154,195 | 130% | ||||
Michael A. Makinen | $500,000 | $417,808 | $522,260 | 125% | ||||
Matthew L. Ostrower | $500,000 | $417,808 | $522,260 | 125% |
Ms. Vesy. Ms. Vesy’s annual incentive compensation was determined by the Committee by reference to two components, growth in Same Store EBITDA and achievement of individual performance objectives. The Company’s growth in Same Store EBITDA for 2017 corresponded to a performance level of “Below Expectations”. With input from Mr. Lukes, the Committee determined Ms. Vesy’s performance with respect to individual performance objectives to be “Superior” based on her performance on the qualitative performance objectives identified above. Weighted equally, these components produced an overall score for Ms. Vesy of “Target” which, pursuant to the terms of her employment agreement, resulted in annual cash incentive compensation of $136,000 and annual equity incentive compensation of $119,000 paid in RSUs. The number of RSUs granted to Ms. Vesy was calculated based on the value of our common shares as of the grant date and generally vests in three equal installments on the first three anniversaries of the grant date.
Special Bonus Compensation
In February 2018, Ms. Vesy was also paid a special bonus of $153,000 in recognition of her service as Interim Chief Financial Officer for a portion of 2017 as well as for her significant contributions to the Company’s successful management transition and the planning of the Company’sspin-off strategy. Of this amount, $68,000 was paid in cash and $85,000$249,280 of which amount was paid in RSUs. The number of RSUs granted to Ms. Vesy was calculated based on the value of our common shares as of the grant date and generally vests in three equal installments on the first three anniversaries of the grant date. On
No annual incentive amount was paid to Mr. Ostrower on account of her 2017his resignation from the Company in November 2019.
With respect to the individualized, qualitative components of the named executive officers’ annual incentive compensation described aboveprogram (or, for Mr. Fennerty, his entire annual incentive compensation program), the Committee recognized the named executive officers’ collective contributions to strong 2019 operating results, the significant improvement in the Company’s balance sheet (including levels of secured indebtedness and this special bonus compensation, on February 22, 2018, Ms. Vesy was granted 26,880 RSUs.preferred stock), the continued reduction of general and administrative expenses in order to better align with the Company’s reduced portfolio size, and higher fee revenues than expected due to successful execution of assets sales within the joint venture and RVI platforms. The Committee also considered the following individual achievements:
• For Mr. Lukes: contributions to strategy definition and execution, including efforts to diversify the Company’s portfolio and tenant roster through acquisitions of urban and alternative-anchored shopping centers; realization of value within the redevelopment pipeline through entitlements and subsequent land sales and ground leases; successful transition of the Chief Financial Officer role; and substantial increase in ancillary income initiatives and revenues. |
• For Mr. Makinen: implementation of consumer data analytics platform in order to better identify and improve economic returns on acquisition and leasing opportunities; led initiative to expedite anchor tenant build-outs in order to achieve earlier rent commencement dates; restructured leasing department leadership and organization; and assumption of leadership role with respect to a major industry trade conference in order to improve the Company’s visibility and relationships with tenants. |
• For Mr. Fennerty: assumption of leadership role from prior Chief Financial Officer with respect to the Company’s banking and investor relationships; restructured funds management team in order to successfully support new Dividend Trust Portfolio relationships; led analysis of value and opportunities with respect to the Company’s legacy joint venture arrangements; and originated Shopko advisory engagement and fee opportunity. |
• For Ms. Vesy: adoption of new lease accounting standards; leadership in tax planning with respect to joint venture initiatives with foreign investors; leadership of efforts to modernize and consolidate workspace within the Company’s headquarters located in Beachwood, Ohio; contributions to general and administrative expense analysis and reductions; and playing a key role in facilitating successful transition of the Chief Financial Officer role. |
30 SITE Centers Corp.ï 2020 Proxy Statement
Performance-Based and Retention-Based Equity Grants Made in 2017
Performance2019 Performance-Based RSU Awards. Pursuant to the terms of their March 2017 employment agreements, on March 2, 2019, Messrs. Lukes, Makinen and Ostrower were granted 225,158, 75,053 and 75,053 performance-based RSUs subject generally to a performance period beginning on March 1, 2019 and ending on February 28, 2022 and having “target” values of $3,000,000, $1,000,000 and $1,000,000, respectively. In the case of Messrs. Makinen and Ostrower, the target value of these awards was increased from $600,000 as set forth in their employment agreements to $1,000,000 following awards upon commencementthe Committee’s consideration of their employment:a report from Gressle & McGinley evidencing that the existing level of target annual compensation for these executives had fallen below the median compensation of comparable executives at eight of the Company’s direct shopping center REIT peers and a desire to provide these executives with a greater incentive to help the Company achieve its five-year strategic plan.
|
|
|
In eachthe case of Messrs. Lukes and Makinen, these performance awards willperformance-based RSUs become payable to the executive at the end of the applicable performance period, if at all, based on the percentile rank of the Company’s TSR of the Company (adjusted as described below) measured over the applicable performance period as compared to the total shareholder return of a particular set of peer companies during such period as shown below (with straight-line interpolation between levels):
Performance Level | Relative TSR | Percentage Earned | |||||
Below Threshold | Below 33rd percentile | 0% | |||||
Threshold | 33rd percentile | 50% | |||||
Target | 55th percentile | 100% | |||||
Maximum | 70th percentile or above | 200% |
36 DDR Corp.ï 2018 Proxy Statement
For these purposes, the peer companies consist of: Acadia Realty Trust, Brixmor Property Group Inc., Federal Realty Investment Trust, Kimco Realty Corporation, Kite Realty Group Trust, Ramco-Gershenson Properties Trust, Regency Centers Corporation, Retail Opportunity Investments Corp., Retail Properties of America, Inc., Urban Edge Properties, and Weingarten Realty Investors. These eleven entities were chosen (and specifically differ from the comparison group used to establish target annual compensation for Mr. Lukes as described above) because they were considered to be most similar to the Company in terms of the economic forces that impact their financial performance and the trading characteristics of their common stock. For purposes of determining TSR, dividends paid on the Company’s common stock during the performance period are deemed reinvested in additional shares of the Company’s common stock. In the event that ourthe TSR of the Company during the applicable performance period is negative, the number of performance shares orperformance-based RSUs awarded toearned by the executive will be reduced byone-third. The performance-based design of this award no longer applies for Mr. Ostrower, as he forfeited this award upon his departure from the Company.
Similarly, on2018 Performance-Based RSU Awards. Pursuant to the terms of their employment agreements, in March 2, 2018, Messrs. Lukes, Makinen and Ostrower were granted 391,389, 78,278 and 78,278 performanceperformance-based RSUs respectively,substantially similar to the 2019 performance-based RSU awards described above, subject generally to a performance period beginning on March 1, 2018 and ending on February 28, 2021. It is expected that on each2021 and having “target” values of March 2,$3,000,000, $600,000 and $600,000, respectively. Although Mr. Ostrower forfeited this award upon his departure from the Company, these awards remain outstanding and unvested for Messrs. Lukes and Makinen as the applicable performance period has yet to be completed.
Settlement of Certain Performance-Based Awards. In early 2018, 2019 and March 2, 2020, attainment of the performance objectives was determined with respect to the performance share and performance-based RSU awards granted to Messrs. Lukes, Makinen and Ostrower will be granted (subject to the approval of the Committee) a number of performance RSUs determined by dividing the applicable award value ($3,000,000 for Mr. Lukes and $600,000 for each of Messrs. Makinen and Ostrower) by the average closing price of a share of our common stock for the ten trading days immediately preceding the grant date, generallyin 2017 that were subject to a three-year performance period beginning on March 1, 2017 and ending on each of February 28, 2018, March 1,February 28, 2019 or March 1,and February 28, 2020, respectively.
Retention-Based RSUs. Inrespectively (the “Completed Awards”). From 0% to 200% of each Completed Award could have been earned based on the percentile rank of the TSR of the Company (incorporating, as a result of equitable adjustments approved by the Committee in connection with the executionspin-off of their employment agreements, eachRVI, dividend and share price performance of RVI, accounting for the distribution ratio for thespin-off) measured over the applicable performance period as compared to the total
SITE Centers Corp.ï 2020 Proxy Statement 31
shareholder return of the same set of peer companies described above with respect to 2019 performance-based RSU awards, and using the same performance matrix as set forth above for such 2019 performance-based RSU awards. Based on relative TSR performance during the applicable performance periods, no portion of the Completed Awards was earned and no shares were received by Messrs. Lukes, Makinen and Ostrower received a retention-based awardwith respect to these awards (the three-year performance based RSUs were forfeited by Mr. Ostrower upon his departure, but would not have paid out even if he had remained with the Company through the full performance period).
On February 28, 2021 and February 28, 2022, attainment of 202,948, 55,036 and 55,036 RSUs, respectively. In general, and subjectthe performance objectives with respect to the Executive’s continued employmentperformance-based RSUs granted to Messrs. Lukes and Makinen in March 2018 and March 2019, respectively, will be determined. If the performance period applicable to the performance-based RSUs granted in March 2018 and March 2019 had ended on February 28, 2020, 60% and 59%, respectively, of the target number of shares applicable to these awards would have been earned by Messrs. Lukes and Makinen thereunder based on our TSR relative to the Company, thesepeer companies through that date.
2019 Retention-Based RSUs. In February 2019, Messrs. Lukes, Makinen and Ostrower were granted 70,476, 20,403 and 20,403 time-based RSUs willhaving grant date fair values of $950,016, $275,032 and $275,032, respectively. Theseone-time awards vest in four substantially equal installments on each of the first fourthree anniversaries of the March 2, 2017grant date, subject generally to the executives’ continued employment with us. Following its consideration of a report received from Gressle & McGinley, the Committee concluded that these awards were necessary and appropriate to incentivize the core of our successful leadership team and to help us avoid losing them to other employment opportunities, especially in the light of the outsized reliance of the Company’s existing executive compensation program on performance-based equity (relative to the degree of utilization of performance-based equity in peer compensation programs). Despite the Committee granting this award, Mr. Ostrower forfeited all unvested performance-based and time-based equity, including these RSUs, upon his departure from the Company in November 2019 to pursue another opportunity. In retrospect, Mr. Ostrower’s departure confirms the need for and the advisability of our Committee in designing and granting these retention awards in early 2019.
Mr. Fennerty received a payout of 2,910 time-based RSUs in February 2019 having a grant date fair value of $39,227 as part of his 2018 annual incentive award earned based on 2018 performance. This award vests in substantially equal installments on the first three anniversaries of the grant date. In November 2019, Mr. Fennerty also received 19,342 RSUs having a grant date fair value of $268,854, which RSUs generally vest in equal installments on the second and third anniversaries of the grant date. These RSUs were provided due to negotiations between the Company and Mr. Fennerty regarding his promotion compensation package.
Ms. Vesy received a payout of 20,701 time-based RSUs in February 2019 having a grant date fair value of $306,009 as part of her 2018 annual incentive award earned on account of 2018 performance. This award generally vests in substantially equal installments on the first three anniversaries of the grant date.
More information concerning the terms of the employment agreements, including the equity compensation granted to the executives thereunder, is provided under the section entitled “Employment Agreements” in the “Executive Compensation Tables and Related Disclosure” section of this Proxy Statement.
2016 Value Sharing32 SITE Centers Corp.ï 2020 Proxy Statement
Status of Performance-Based Equity ProgramGrants
In February 2016, we adoptedThe table below summarizes the 2016 VSEP, a performance-based, long-term equity incentive program,performance periods and awarded opportunities thereunder to certain officers, including Ms. Vesy. The 2016 VSEP was designed to reward participants for contributing to our financial performance and allow such participants to share in “Value Created” (as defined in accordance with the termspayout, or projected payout, of the program), based upon increasesTSR-based performance equity awarded to Messrs. Lukes, Makinen and Ostrower in our adjusted market capitalization over our initial market capitalization, using a starting share price of $17.41 per share,over pre-established periods of time. Under the 2016 VSEP, participants were granted performance-based award opportunities which, if earned, are settled 20% in our common shares and 80% in RSUs that are generally subject to time-based vesting requirements for a period of four years.
Pursuant to the award terms, on five specified measurement dates (the first date occurring on February 23,March 2017, with subsequent measurement dates occurring on June 30, 2017, December 31, 2017, June 30,March 2018 and December 31, 2018), the Company will measure the “Value Created” during the period between the start of the 2016 VSEP and the applicable measurement date. Value Created is measured for each period for the performance awards as the increase in the Company’s market capitalizationMarch 2019 based on the applicable measurement date (in other words, the product of the Company’sfive-day trailing average share price as of each measurement date — price-only appreciation, notour total shareholder return — and the number of shares outstanding as of February 28, 2020. For Mr. Lukes, the measurement date), as adjusted for equity issuances and/or equity repurchases, over the Company’s initial market capitalization at the starttable also includes a comparison of the 2016 VSEP utilizingvalue included in the starting share price. The ending share price used2019 Summary Compensation Table for purposeseach of determining Value Created for the performancethese awards during any measurement period is capped at $25.35 per share. Each participant has been assigned a “percentage share” of the Value Created for the performance awards, which in Ms. Vesy’s case is 0.0600%.
There was no Value Created for the three measurement dates falling in 2017, and therefore no shares or RSUs were issued to Ms. Vesy pursuant to the 2016 VSEP with respectvalue actually realized, or projected to these three measurement periods.be realized, by Mr. Lukes.
Performance Period | 2017 | 2018 | 2019 | 2020 | 2021 | Status | % Payout | Summary Table Value – | Actual Realized Value – CEO (Year) | |||||||||||||
2017 1-Year Performance Shares
|
100% Completed
|
Below Threshold and 100% Forfeited
|
0%
|
$454,686 (2017)
|
$0 (2018)
| |||||||||||||||||
2017 2-Year PRSUs
|
100% Completed
|
Below Threshold and 100% Forfeited
|
0%
|
$918,225 (2017)
|
$0 (2019)
| |||||||||||||||||
2017 3-Year PRSUs
|
100% Completed
|
Below Threshold and 100% Forfeited
|
0%
|
$1,428,225 (2017)
|
$0 (2020)
| |||||||||||||||||
2018 3-Year PRSUs
|
67% Completed
|
|
Above Threshold but Below Target
|
60%*
|
$3,379,167 (2018)
|
$1,945,915* (2021)
| ||||||||||||||||
2019 3-Year PRSUs
|
33% Completed
|
|
Above Threshold but Below Target
|
59%*
|
$3,337,532 (2019)
|
$1,637,820* (2022)
|
* | Projected based on total shareholder return as of February 28, 2020. Projection of actual realized value for the CEO (i) includes dividends declared through February 28, 2020 on shares projected to be awarded and (ii) reflects a 1/3 reduction in projected payout with respect to the 2019 3-Year PRSUs on account of a negative TSR through February 28, 2020. |
Other Benefits and Information
Perquisites and Fringe Benefits. The Current Officersnamed executive officers received certain additional benefits during 2017.2019. The Committee believes that these benefits are reasonable and consistent with its overall compensation program and better enable us to attract and retain superior executive talent.
DDR Corp.ï 2018 Proxy Statement 37
For 2017, while employed by the Company,2019, each of Messrs. Lukes, Makinen, Ostrower and OstrowerFennerty and Ms. Vesy were eligible for participation in health, life, disability and other insurance plans, sick leave, reasonable vacation time, and other customary fringe benefits generally on terms available to our other employees.
Pursuant to his employment agreement, Mr. Lukes is entitled to automobile service for business and personal use. The benefit includes all reasonable related maintenance, repairs, parking, gasoline, insurance and other reasonable costs and expenses.
Pursuant to their employment agreements, Messrs. Lukes, Ostrower and OstrowerFennerty are entitled to reimbursement (up to an aggregate maximum of $25,000 in any calendar year)year of $25,000 for Messrs. Lukes and Ostrower and $10,000 for Mr. Fennerty) for premiums for life, disability and/or similar insurance policies.
Pursuant to his employment agreement, Mr. Lukes was entitled to reimbursements from the Company’s for his reasonable attorneys’ fees and other reasonable expenses incurred in connection with the negotiation of his employment agreement, up to a maximum of $20,000.
Retirement Benefits. We have established a tax qualified 401(k) plan for our employees pursuant to which we made semi-monthly matching contributions during 20172019 equal to 50% of each participant’s contribution, up to 6% of the sum of his or her base salary plus annual cash performance-based incentive, not to exceed 3% of the sum of 3% of the participant’s base salary plus annual cash performance-based incentive, subject to Internal Revenue Code limits.
Elective Deferred Compensation Plan. Our named executive officers are entitled to participate in our Elective Deferred Compensation Plan. Pursuant to the Elective Deferred Compensation Plan, executivecertain of our officers can defer up to 100% of their base salaries and annual cash performance-based incentives, less applicable taxes and authorized benefits deductions. The Elective Deferred Compensation Plan is a nonqualified plan and is an
SITE Centers Corp.ï 2020 Proxy Statement 33
unsecured, general obligation of the Company, and we have established and funded a “rabbi” trust to satisfy our payment obligations under this plan. The Company provides a matching contribution to any executiveparticipant who defers compensation into the Elective Deferred Compensation Plan equal to the difference between (1) up to 3% of the sum of the executive’sparticipant’s base salary and annual cash performance-based incentive eligible for deferral under the 401(k) plan and the Elective Deferred Compensation Plan, combined, and (2) the actual employer matching contribution provided under the 401(k) plan. Earnings on a participant’s deferred account are based on the results of the investment options available in the plan that are selected by the participant. Settlement is generally made in cash at a date determined by the participant at the time a deferral election is made. None of the Current OfficersMessrs. Lukes, Makinen and Ostrower elected to defer anya portion of their 20172019 total annual cash compensation pursuant to the Elective Deferred Compensation Plan.Plan.For more information on the value of annual cash compensation deferred by the named executive officers in 2019, please refer to the 2019 Summary Compensation Table and the 2019 Nonqualified Deferred Compensation Table below.
Equity Deferred Compensation Plan. Pursuant to the Equity Deferred Compensation Plan, certain of our executive officers, including the named executive officers, have the right to defer the receipt of restricted shares or RSUs earned under any equity compensation plan. The value of a participant’s deferrals is converted into units, based on the market value of our common shares at the time of the deferral, so that each unit is equivalent in value to one common share. We have established and funded a “rabbi” trust, which holds our common shares, to satisfy our payment obligations under this plan. Common shares equal to the number of units credited to the participants’ accounts under this plan are placed in the rabbi trust. In the event of our insolvency, the assets of the rabbi trust are available to general creditors. Settlement of units is generally made in our common shares at a date determined by the participant at the time a deferral election is made. None of our Current Officersnamed executive officers elected to defer 20172019 service-based RSUs pursuant to the Equity Deferred Compensation Plan.
Separation Payments and Benefits for Former Officers
Thomas F. August. Mr. August served as our President and CEO until his separation on March 2, 2017. Mr. August’s base salary rate for the period of 2017 in which he was our employee was $750,000 per year, which rate was unchanged from 2016. No equity grants were made to Mr. August during 2017, and no performance metrics were adopted in early 2017 to govern Mr. August’s 2017 annual incentive compensation given the management transition underway. In addition to benefits generally available to officers of the Company, Mr. August was also entitled to a commuting allowance at a rate of not less than $96,000 per year to assist with
38 DDR Corp.ï 2018 Proxy Statement
the costs associated with Mr. August commuting between his residence and our headquarters. For more information about the payments and benefits Mr. August received in connection with his separation from the Company, see “Separations in 2017” in the “Executive Compensation Tables and Related Disclosure” section of this Proxy Statement below.
William T. Ross. Mr. Ross served as our Chief Operating Officer from January 3, 2017 until the arrival of the new management team on March 2, 2017; Mr. Ross’ employment with us formally terminated on May 31, 2017. Pursuant to the terms of his employment agreement, Mr. Ross’ annual base salary rate was $450,000 per year, and Mr. Ross received aone-time, retention-based award of 67,257 RSUs in January 2017 in connection with his commencement of employment with the Company. No additional equity grants were made to Mr. Ross during 2017, and no performance metrics were adopted in early 2017 to govern Mr. Ross’s 2017 annual incentive compensation given the management transition which occurred shortly after his arrival. For more information about the payments and benefits Mr. Ross received in connection with his separation from the Company, see “Separations in 2017” in the “Executive Compensation Tables and Related Disclosure” section of this Proxy Statement below.
Vincent A. Corno. Mr. Corno served as our Executive Vice President of Leasing and Development Effective until the arrival of the new management team on March 2, 2017; Mr. Corno’s employment with us formally terminated on April 15, 2017. Mr. Corno’s base salary rate for the period of 2017 in which he was our employee was $400,000 per year, which rate was unchanged from 2016. No equity grants were made to Mr. Corno during 2017, and no performance metrics were adopted in early 2017 to govern Mr. Corno’s 2017 annual incentive compensation given the management transition underway. For more information about the payments and benefits Mr. Corno received in connection with his separation from the Company, see “Separations in 2017” in the “Executive Compensation Tables and Related Disclosure” section of this Proxy Statement below.
Under our stock ownership guidelines, each named executive officer must own common shares or common share equivalents with an aggregate market value of no less than the applicable multiple of such officer’s annual base salary for the immediately preceding year. For the current Chief Executive Officer, the multiple is five times his annual base salary; for the current Chief Operating Officer and current Chief Financial Officer, the multiple is three times his annual base salary; and for all other Section 16 executive officers, the multiple is one times his/her annual base salary. Our Board established these particular levels of stock ownership for our named executive officers because we want to have the interests of our named executive officers aligned with the investment interests of our shareholders.
Such minimum share ownership requirement must be satisfied (1) initially, by no later than the fifth anniversary of the first March 31st following the date such officer receives his or her first grant as a named executive officer, and then (2) on each anniversary of March 31st thereafter. To that end, and unless otherwise approved by the Nominating and Corporate Governance Committee, each named executive officer is required to retain 50% of the common shares or common share equivalents of the Company acquired through grants from the Company as part of compensation until such time as the minimum share ownership requirement is satisfied. Unvested restricted shares, RSUs and shares deferred into our Equity Deferred Compensation Plan constitute common share equivalents and count toward satisfying the stock ownership guidelines. As of February 28, 2018,29, 2020, all Current Officersof our continuing named executive officers were in compliance with the stock ownership guidelines, and all Former Officers were in compliance with the stock ownership guidelines during the periods they were employed by the Company during 2017.guidelines.
Our Board has adopted a policy prohibiting our Directors and executiveemployees who are officers at or above the level of Vice President (or an equivalent position) from (1) engaging in certain hedging transactions involving the Company’s stock, and (2) pledging Company stock as collateral for a loan or (2) using Company stock in hedging transactions, such as “cashless” collars, forward sales, equity swaps and similar arrangements because the Board determined that such a policy is in the best interests of the Company and our shareholders. Currently, all Current OfficersDirectors, executive officers and, Directorsto our knowledge, other covered employees are in compliance with the Company’s policy.
DDR34 SITE Centers Corp. ï 20182020 Proxy Statement 39
Tax and Accounting Implications
The Company made an election to qualify as a REIT under the Internal Revenue Code, and as such generally will not be subject to federal income tax. Thus, the deduction limit for compensation paid to certain covered employees, provided under Section 162(m) of the Internal Revenue Code of 1986, as amended, was generally not material to the design and structure of our named executive officer compensation program for 2017.2019.
Compensation-Related Risk Analysis
The Committee has overall responsibility for overseeing the risks relating to compensation policies and practices affecting senior management. The Committee uses its consultant, Gressle & McGinley, to independently consider and analyze the extent, if any, to which our compensation policies and practices might create risks for the Company, and this review also focuses on variable and incentive compensation elements, as well as policies and practices that could mitigate or balance any such incentives.
After conducting this review, including most recently in early 2018,2020, the Committee has determined that none of our compensation policies and practices create any risks that are reasonably likely to have a material adverse effect on the Company. In making this determination, the Committee considered that a significant portion of total executive compensation isin recent years has been comprised of time-based RSUs that vest over several years and long-term performance based compensationperformance-based RSUs whose vesting is based on both relative and absolute shareholder return and RSUs that vest over several years.a multi-year period. The Committee believes that these equity award structures and the corresponding vesting conditions encourage actions and behaviors that increase long-term shareholder value rather than short-term risk taking. In addition, annual incentive compensation awarded to our executive officers is typically based on a numbercombination of executive-specificquantitative and qualitative performance metrics, thereby reducing the likelihood that our executives are overly focused on any single metric that might encourage risky behavior.
40 DDRSITE Centers Corp. ï 20182020 Proxy Statement 35
9.6. Executive Compensation Tables and Related Disclosure
20172019 Summary Compensation Table
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(1)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||
David R. Lukes(6) | 2017 | 705,064 | 1,154,195 | 5,624,143 | — | — | 57,833 | 7,541,235 | ||||||||||||||||||||||||
Chief Executive Officer and President | 2016 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
2015 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Michael A. Makinen(6) | 2017 | 414,744 | 522,260 | 1,325,789 | — | — | 10,294 | 2,273,087 | ||||||||||||||||||||||||
Chief Operating Officer | 2016 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
2015 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Matthew L. Ostrower(6) | 2017 | 414,744 | 522,260 | 1,325,789 | — | — | 18,850 | 2,281,643 | ||||||||||||||||||||||||
Executive Vice President, Chief Financial Officer and Treasurer | 2016 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
2015 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Christa A. Vesy(6) | 2017 | 340,000 | 68,000 | 204,026 | — | 136,000 | 10,944 | 758,970 | ||||||||||||||||||||||||
Executive Vice President and Chief Accounting Officer | 2016 | 310,175 | 100,000 | 449,815 | 23,610 | 204,000 | 15,823 | 1,103,423 | ||||||||||||||||||||||||
2015 | 298,541 | — | 115,945 | 38,644 | 131,382 | 10,676 | 595,188 | |||||||||||||||||||||||||
Thomas F. August(6) | 2017 | 130,289 | — | — | — | — | 3,711,080 | 3,841,369 | ||||||||||||||||||||||||
Former Chief Executive Officer and President | 2016 | 375,582 | 484,932 | 3,214,220 | — | — | 57,562 | 4,132,296 | ||||||||||||||||||||||||
2015 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
William T. Ross(6) | 2017 | 187,500 | — | 1,027,014 | — | — | 1,588,188 | 2,802,702 | ||||||||||||||||||||||||
Former Chief Operating Officer | 2016 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
2015 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Vincent A. Corno(6) | 2017 | 166,667 | — | — | — | — | 1,097,702 | 1,264,369 | ||||||||||||||||||||||||
Former Executive Vice President of Leasing and Development | 2016 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
2015 | — | — | — | — | — | — | — |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(1)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||||||||||
David R. Lukes | 2019 | 850,000 | — | 4,287,548 | — | 1,445,000 | 58,177 | 6,640,725 | ||||||||||||||||||||||||||||||||
Chief Executive Officer and President | 2018 | 850,000 | — | 3,379,167 | — | 1,700,000 | 45,691 | 5,974,858 | ||||||||||||||||||||||||||||||||
2017 | 705,064 | 1,154,195 | 5,624,143 | — | — | 57,833 | 7,541,235 | |||||||||||||||||||||||||||||||||
Michael A. Makinen | 2019 | 500,000 | — | 1,387,543 | — | 650,000 | 23,489 | 2,561,032 | ||||||||||||||||||||||||||||||||
Executive Vice President and Chief Operating Officer | 2018 | 500,000 | — | 675,833 | — | 750,000 | 12,639 | 1,938,472 | ||||||||||||||||||||||||||||||||
2017 | 414,744 | 522,260 | 1,325,789 | — | — | 10,294 | 2,273,087 | |||||||||||||||||||||||||||||||||
Conor M. Fennerty | 2019 | 298,623 | 350,000 | 308,081 | — | — | 8,400 | 965,104 | ||||||||||||||||||||||||||||||||
Executive Vice President, Chief Financial Officer and Treasurer | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Christa A. Vesy | 2019 | 380,000 | — | 133,000 | — | 243,200 | 11,244 | 767,444 | ||||||||||||||||||||||||||||||||
Executive Vice President and Chief Accounting Officer | 2018 | 340,000 | 136,000 | 323,019 | — | 272,000 | 11,094 | 1,082,113 | ||||||||||||||||||||||||||||||||
2017 | 340,000 | 68,000 | 204,026 | — | 136,000 | 10,944 | 758,970 | |||||||||||||||||||||||||||||||||
Matthew L. Ostrower | 2019 | 473,718 | — | 1,387,543 | — | — | 34,317 | 1,895,578 | ||||||||||||||||||||||||||||||||
Former Executive Vice President, Chief Financial Officer and Treasurer | 2018 | 500,000 | — | 675,833 | — | 750,000 | 34,300 | 1,960,133 | ||||||||||||||||||||||||||||||||
2017 | 414,744 | 522,260 | 1,325,789 | — | — | 18,850 | 2,281,643 |
(1) | The amounts reported in columns (c) and (g) for |
(2) | The amount reported in column (d) for |
(3) | The amounts reported in column (e) reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of all stock awards granted during the reported years. Assumptions used in the calculation of these amounts for |
• | for |
DDR Corp.ï 2018 Proxy Statement 41
|
• | for |
• | for Ms. Vesy, includes the |
|
36 SITE Centers Corp.ï 2020 Proxy Statement
(4) | The amounts reported in column (g) for |
(5) | The amounts shown in column (h) for the named executive officers for |
• | for Mr. Lukes, automobile service, reimbursement of |
• | for Mr. Makinen, matching contributions to the 401(k) plan and deferred compensation plan of $19,100 and disability insurance premiums; |
• | for Mr. |
• | for Ms. Vesy, matching contributions to the 401(k) plan and disability insurance premiums; and |
• | for Mr. |
|
|
None of the amounts reported for the named executive officers for |
42 DDRSITE Centers Corp. ï 20182020 Proxy Statement 37
20172019 Grants of Plan-Based Awards Table
Name | Grant Date | Committee Action Date | Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of (#)(3) | All Other Option Awards: Number of Underlying Options (#) | Exercise or Option ($/Sh) | Grant Date Fair Value of Stock and Option ($)(4) | ||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#/$) | Target (#/$) | Maximum (#/$) | |||||||||||||||||||||||||||||||||||||||||||
David R. Lukes | 3/02/17 | 3/02/17 | — | — | — | — | — | — | 202,948 | — | — | 2,823,007 | ||||||||||||||||||||||||||||||||||||
3/02/17 | 3/02/17 | — | — | — | 17,199 | 34,398 | 68,796 | — | — | — | 454,686 | |||||||||||||||||||||||||||||||||||||
3/02/17 | 3/02/17 | — | — | — | 34,398 | 68,795 | 137,590 | — | — | — | 918,225 | |||||||||||||||||||||||||||||||||||||
3/02/17 | 3/02/17 | — | — | — | 51,597 | 103,193 | 206,386 | — | — | — | 1,428,225 | |||||||||||||||||||||||||||||||||||||
Michael A. Makinen | 3/02/17 | 3/02/17 | — | — | — | — | — | — | 55,036 | — | — | 765,551 | ||||||||||||||||||||||||||||||||||||
3/02/17 | 3/02/17 | — | — | — | 3,440 | 6,880 | 13,760 | — | — | — | 90,943 | |||||||||||||||||||||||||||||||||||||
3/02/17 | 3/02/17 | — | — | — | 6,880 | 13,759 | 27,518 | — | — | — | 183,645 | |||||||||||||||||||||||||||||||||||||
3/02/17 | 3/02/17 | — | — | — | 10,320 | 20,639 | 41,278 | — | — | — | 285,650 | |||||||||||||||||||||||||||||||||||||
Matthew L. Ostrower | 3/02/17 | 3/02/17 | — | — | — | — | — | — | 55,036 | — | — | 765,551 | ||||||||||||||||||||||||||||||||||||
3/02/17 | 3/02/17 | — | — | — | 3,440 | 6,880 | 13,760 | — | — | — | 90,943 | |||||||||||||||||||||||||||||||||||||
3/02/17 | 3/02/17 | — | — | — | 6,880 | 13,759 | 27,518 | — | — | — | 183,645 | |||||||||||||||||||||||||||||||||||||
3/02/17 | 3/02/17 | — | — | — | 10,320 | 20,639 | 41,278 | — | — | — | 285,650 | |||||||||||||||||||||||||||||||||||||
Christa A. Vesy | — | — | — | 136,000 | 272,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
2/22/17 | 2/07/17 | — | — | — | — | — | — | 14,139 | — | — | 204,026 | |||||||||||||||||||||||||||||||||||||
Thomas F. August | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
William T. Ross | 1/03/17 | 12/12/16 | — | — | — | — | — | — | 67,257 | — | — | 1,027,014 | ||||||||||||||||||||||||||||||||||||
Vincent A. Corno | — | — | — | 240,000 | 360,000 | — | — | — | — | — | — | — |
Name | Grant Date | Committee Action Date | Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of (#)(3) | All Other Option Awards: Number of Underlying Options (#) | Exercise or Option ($/Sh) | Grant Date Fair Value of Stock and Option ($)(4) | ||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#/$) | Target (#/$) | Maximum (#/$) | |||||||||||||||||||||||||||||||||||
David R. Lukes | 3/14/19 | 3/14/19 | 42,500 | 1,062,500 | 1,700,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
3/02/19 | 2/18/19 | — | — | — | 112,579 | 225,158 | 450,316 | — | — | — | 3,337,532 | |||||||||||||||||||||||||||||
2/22/19 | 2/18/19 | — | — | — | — | — | — | 70,476 | — | — | 950,016 | |||||||||||||||||||||||||||||
Michael A. Makinen | 3/14/19 | 3/14/19 | 25,000 | 500,000 | 750,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
3/02/19 | 2/18/19 | — | — | — | 37,527 | 75,053 | 150,106 | — | — | — | 1,112,511 | |||||||||||||||||||||||||||||
2/22/19 | 2/18/19 | — | — | — | — | — | — | 20,403 | — | — | 275,032 | |||||||||||||||||||||||||||||
Conor M. Fennerty | 2/22/19 | 2/07/19 | — | — | — | — | — | — | 2,910 | — | — | 39,227 | ||||||||||||||||||||||||||||
11/06/19 | 11/06/19 | — | — | — | — | — | — | 19,342 | — | — | 268,854 | |||||||||||||||||||||||||||||
Christa A. Vesy | 3/14/19 | 3/14/19 | 7,600 | 152,000 | 304,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
3/14/19 | 3/14/19 | — | — | — | 5,814 | 133,000 | 342,000 | — | — | — | 133,000 | |||||||||||||||||||||||||||||
Matthew L. Ostrower(5) | 3/14/19 | 3/14/19 | 25,000 | 500,000 | 750,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
3/02/19 | 2/18/19 | — | — | — | 37,527 | 75,053 | 150,106 | — | — | — | 1,112,511 | |||||||||||||||||||||||||||||
2/22/19 | 2/18/19 | — | — | — | — | — | — | 20,403 | — | — | 275,032 |
(1) | Amounts |
(2) | Amounts in this column for Messrs. Lukes, Makinen and Ostrower represent performance-based RSU awards |
Amounts in |
(3) | The |
(4) | Amounts |
The amount shown in this column with respect to Ms. Vesy represents the fair value of the incentive award opportunity granted in March 2019 pursuant to which Ms. Vesy was entitled to receive RSUs at the conclusion of 2019 as partial payment of Ms. Vesy’s 2019 annual incentive compensation based upon the achievement of specified performance measures. The fair value of this award was based on the probable outcome of the award, which was determined on the service inception date to be the target value. Such amount does not represent the value of the RSUs granted to Ms. Vesy with respect to the equity portion of her 2019 incentive award, which value was determined in early 2020 to be $249,280. |
For time-based RSU awards granted to Messrs. Lukes, Makinen, Fennerty and Ostrower, the value is calculated using the closing price of our common stock on the grant date. |
38 SITE Centers Corp.ï 2020 Proxy Statement
(5) | As a result of his November 2019 resignation, Mr. Ostrower forfeited all time-based and performance-based equity which had not vested in accordance with its terms prior to his departure, including all grants referenced in this table. |
Grants made in 20172019 are described more fully in the “Compensation Discussion and Analysis” and “Employment Agreements” sections of this Proxy Statement. More information concerning the terms of the employment agreements, if applicable, and the amounts payable pursuant to the employment agreements is provided under the section entitled “Employment Agreements” of this Proxy Statement. More information concerning the amount of salary and incentive compensation in proportion to total compensation for Mr. Lukes is provided under the section entitled “Compensation Program Design” in this Proxy Statement.
DDRSITE Centers Corp. ï 20182020 Proxy Statement 4339
Outstanding Equity Awards at 20172019 FiscalYear-End Table(1)
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(2) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(3) | Market Value of Shares or | Equity Incentive Plan Awards: Number of | Equity Incentive Plan Awards: Market or or Other Rights That Have Not | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or | Equity Incentive Plan Awards: Number of | Equity Incentive Plan Awards: Market or or Other Rights That Have Not | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
David R. Lukes | 3/02/2017 | — | — | — | — | 202,948 | 1,818,414 | — | — | various | — | — | — | — | 133,316 | 1,869,090 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/02/2017 | — | — | — | — | — | — | 17,199 | 154,103 | 3/02/2017 | — | — | — | — | — | — | 31,952 | 528,806 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/02/2017 | — | — | — | — | — | — | 34,398 | 308,202 | 3/02/2018 | — | — | — | — | — | — | 242,380 | 3,827,180 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/02/2017 | — | — | — | — | — | — | 51,597 | 462,305 | 3/02/2019 | — | — | — | — | — | — | 225,158 | 3,291,810 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael A. Makinen | 3/02/2017 | — | — | — | — | 55,036 | 493,123 | — | — | various | — | — | — | — | 37,443 | 524,951 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/02/2017 | — | — | — | — | — | — | 3,440 | 30,822 | 3/02/2017 | — | — | — | — | — | — | 6,390 | 105,755 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/02/2017 | — | — | — | — | — | — | 6,880 | 61,640 | 3/02/2018 | — | — | — | — | — | — | 48,474 | 765,404 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/02/2017 | — | — | — | — | — | — | 10,320 | 92,463 | 3/02/2019 | — | — | — | — | — | — | 75,053 | 1,097,275 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Matthew L. Ostrower | 3/02/2017 | — | — | — | — | 55,036 | 493,123 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/02/2017 | — | — | — | — | — | — | 3,440 | 30,822 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/02/2017 | — | — | — | — | — | — | 6,880 | 61,640 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/02/2017 | — | — | — | — | — | — | 10,320 | 92,463 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conor M. Fennerty | various | — | — | — | — | 50,153 | 703,145 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Christa A. Vesy | 2/21/2008 | 3,336 | — | 37.69 | 2/21/2018 | — | — | — | — | 2/22/2010 | 3,057 | — | 16.33 | 2/22/2020 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/22/2010 | 4,941 | — | 10.11 | 2/22/2020 | — | — | — | — | 2/22/2011 | 1,881 | — | 22.34 | 2/22/2021 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/22/2011 | 3,045 | — | 13.83 | 2/22/2021 | — | — | — | — | 2/22/2012 | 2,775 | — | 22.39 | 2/22/2022 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/22/2012 | 4,482 | — | 13.86 | 2/22/2022 | — | — | — | — | 2/22/2013 | 3,777 | — | 27.33 | 2/22/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/22/2013 | 6,102 | — | 16.92 | 2/22/2023 | — | — | — | — | 2/22/2014 | 12,773 | — | 26.83 | 2/22/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/22/2014 | 20,631 | — | 16.61 | 2/22/2024 | — | — | — | — | 2/22/2015 | 9,830 | — | 31.11 | 2/22/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/22/2015 | 10,584 | 5,292 | 19.26 | 2/22/2025 | — | — | — | — | 2/23/2016 | 9,075 | — | 26.60 | 2/23/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/9/2016 | — | — | — | — | — | — | (6 | ) | (6 | ) | various | — | — | — | — | 37,424 | 524,684 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2/23/2016 | 4,887 | 9,774 | 16.47 | 2/23/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
various | — | — | — | — | 30,956 | 277,366 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas F. August | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
William T. Ross | — | — | — | — | — | 63,165 | 565,958 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vincent A. Corno | — | — | — | — | — | 15,123 | 135,502 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Matthew L. Ostrower | — | — | — | — | — | — | — | — | — |
(1) | Except as otherwise indicated, the information in the Outstanding Equity Awards at |
(2) |
The figures in this column with respect to the following named executive officers reflect |
Mr. Lukes (#) | Mr. Makinen (#) | Mr. Ostrower (#) | Ms. Vesy (#) | Award Type | Vesting Dates | |||||||||||||||
— | — | — | 1,870 | RSA | February 22, 2018 | |||||||||||||||
— | — | — | 1,533 | RSA | June 30, 2018 | |||||||||||||||
— | — | — | 1,531 | RSA | December 31, 2018 | |||||||||||||||
— | — | — | 2,408 | RSA | February 22, 2018 and 2019 | |||||||||||||||
— | — | — | 3,441 | RSU | February 23, 2018, 2019 and 2020 | |||||||||||||||
— | — | — | 6,034 | RSU | December 1, 2018 and 2019 | |||||||||||||||
— | — | — | 14,139 | RSU | February 22, 2018, 2019 and 2020 | |||||||||||||||
202,948 | 55,036 | 55,036 | — | RSU | March 2, 2018, 2019, 2020 and 2021 | |||||||||||||||
202,948 | 55,036 | 55,036 | 30,956 | Total |
Mr. Lukes (#) | Mr. Makinen (#) | Mr. Fennerty (#) | Ms. Vesy (#) | Vesting Dates | ||||||||||||
— | — | 1,215 | — | January 1, 2020 | ||||||||||||
— | — | — | 709 | February 23, 2020 | ||||||||||||
— | — | — | 2,918 | February 22, 2020 | ||||||||||||
62,840 | 17,040 | — | — | March 2, 2020 and 2021 | ||||||||||||
— | — | 4,078 | 11,096 | February 22, 2020 and 2021 | ||||||||||||
70,476 | 20,403 | 2,910 | 22,701 | February 22, 2020, 2021 and 2022 | ||||||||||||
— | — | 22,608 | — | October 1, 2021 | ||||||||||||
— | — | — | 18,900 | February 22, 2021, 2022 and 2023 | ||||||||||||
— | — | 19,342 | — | November 6, 2021 and 2022 | ||||||||||||
133,316 | 37,443 | 50,153 | 56,324 | Total |
Restricted share unitsThe 18,900 RSUs granted on February 22, 2020 to Ms. Vesy constitute the equity portion of her 2019 annual incentive compensation determined in January 2020 to have been earned with respect to performance in 2019; the service inception date for Mr. Ross vest on January 3, 2018, 2019 and 2020. Restricted share units for Mr. Corno vest on July 11, 2018 andthis award occurred in 2019.
These amounts were calculated based upon the closing price of our common shares on December |
For Messrs. Lukes and Makinen, |
4440 DDRSITE Centers Corp. ï 20182020 Proxy Statement
20172019 Option Exercises and Stock Vested Table
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||||||||||||||||||||
David R. Lukes | — | — | — | — | — | — | 31,420 | 409,403 | ||||||||||||||||||||||
Michael A. Makinen | — | — | — | — | — | — | 8,520 | 111,016 | ||||||||||||||||||||||
Conor M. Fennerty | — | — | 3,254 | 40,569 | ||||||||||||||||||||||||||
Christa A. Vesy | — | — | 11,644 | 157,215 | ||||||||||||||||||||||||||
Matthew L. Ostrower | — | — | — | — | — | — | 8,520 | 111,016 | ||||||||||||||||||||||
Christa A. Vesy | — | — | 11,432 | 128,706 | ||||||||||||||||||||||||||
Thomas F. August | — | — | 92,225 | 1,292,310 | ||||||||||||||||||||||||||
William T. Ross | — | — | 67,257 | 577,065 | ||||||||||||||||||||||||||
Vincent A. Corno | — | — | 24,963 | 315,782 |
(1) | Shares acquired on vesting |
20172019 Nonqualified Deferred Compensation Table(1)
Name | Executive Contributions in Last FY ($)(2) | Registrant Contributions in Last FY ($)(3) | Aggregate Earnings in Last FY ($)(4) | Aggregate Withdrawals/ Distributions ($) | Aggregate at Last FYE | Executive Contributions in Last FY ($)(2) | Registrant Contributions in Last FY ($)(3) | Aggregate Earnings in Last FY ($)(4) | Aggregate Withdrawals/ Distributions ($) | Aggregate at Last FYE | ||||||||||||||||||||||||||||||
Elective Deferred Compensation Plan: | ||||||||||||||||||||||||||||||||||||||||
David R. Lukes | — | — | — | — | — | 25,750 | 13,975 | 216 | — | 39,941 | ||||||||||||||||||||||||||||||
Michael A. Makinen | — | — | — | — | — | 13,200 | 10,700 | 1,264 | — | 25,164 | ||||||||||||||||||||||||||||||
Conor M. Fennerty | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Christa A. Vesy | — | — | 7,781 | — | 31,534 | |||||||||||||||||||||||||||||||||||
Matthew L. Ostrower | — | — | — | — | — | 36,667 | — | 4,648 | — | 41,314 | ||||||||||||||||||||||||||||||
Christa A. Vesy | — | — | 4,429 | — | 24,851 | |||||||||||||||||||||||||||||||||||
Thomas F. August | 463,837 | — | 30,206 | (494,043 | ) | — | ||||||||||||||||||||||||||||||||||
William T. Ross | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Vincent A. Corno | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Equity Deferred Compensation Plan: | ||||||||||||||||||||||||||||||||||||||||
David R. Lukes | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Michael A. Makinen | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Matthew L. Ostrower | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Christa A. Vesy | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Thomas F. August | 1,210,873 | — | (504,531 | ) | (919,664 | ) | — | |||||||||||||||||||||||||||||||||
William T. Ross | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Vincent A. Corno | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Directors’ Deferred Compensation Plan: | ||||||||||||||||||||||||||||||||||||||||
David R. Lukes | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Michael A. Makinen | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Matthew L. Ostrower | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Christa A. Vesy | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Thomas F. August | — | — | (46,967 | ) | (77,854 | ) | — | |||||||||||||||||||||||||||||||||
William T. Ross | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Vincent A. Corno | — | — | — | — | — |
(1) | Our nonqualified deferred compensation plans |
(2) |
DDR Corp.ï 2018 Proxy Statement 45
The amounts reported for our named executive officers in this column are |
The amounts reported for our named executive officers in this column are included in the “All Other Compensation” column of the 2019 Summary Compensation Table above. |
(4) | This amount is not reported in the |
(5) | $19,998 of |
46 DDRSITE Centers Corp. ï 20182020 Proxy Statement 41
Potential Payments uponUpon Termination or Change in Control
We have entered into certain agreements and we maintain certain plans and policies that will require us to provide certain compensation and other benefits to our continuing named executive officers in the event of a termination of employment or a change in control of the Company. Based on a hypothetical termination and/or change in control occurring on December 29, 2017 (the last business day of 2017),31, 2019, the following tables describe the potential payments upon such termination or change in control forowing to each named executive officer then-servingthen serving at the end of the year under his/her employment agreement if applicable, in effect on December 29, 2017.31, 2019. The terms and conditions of the named executive officers’ employment agreements, and any applicable Company policies and compensation arrangements, will govern any potential payments for actual terminations or a change in control occurring after December 29, 2017.31, 2019.
Event | David R. Lukes ($) | Michael A. Makinen ($) | Matthew L. Ostrower ($) | Christa A. Vesy ($) | David R. Lukes ($) | Michael A. Makinen ($) | Conor M. Fennerty ($) | Christa A. Vesy ($) | ||||||||||||||||||||||||
Retirement or other Voluntary Termination (without Good Reason) | ||||||||||||||||||||||||||||||||
Accrued Vacation(1) | 32,692 | 19,231 | 19,231 | 13,077 | 32,692 | 19,231 | 15,385 | 14,615 | ||||||||||||||||||||||||
Total | 32,692 | 19,231 | 19,231 | 13,077 | 32,692 | 19,231 | 15,385 | 14,615 | ||||||||||||||||||||||||
Involuntary Not for Cause or Good Reason Termination | ||||||||||||||||||||||||||||||||
Cash Severance(2) | 3,825,000 | 1,500,000 | 1,500,000 | 850,000 | 2,390,625 | 1,250,000 | 900,000 | 798,000 | ||||||||||||||||||||||||
Unvested Restricted Stock Units and VSEP Awards(3) | 1,818,414 | 493,123 | 493,123 | 239,035 | ||||||||||||||||||||||||||||
Unvested Restricted Shares(4) | — | — | — | — | ||||||||||||||||||||||||||||
Unvested Performance-Based Equity Awards(5) | 0 | 0 | 0 | — | ||||||||||||||||||||||||||||
Unvested Stock Options(6) | — | — | — | 0 | ||||||||||||||||||||||||||||
Post-Termination Health and Welfare Benefits(7) | 45,000 | 45,000 | 45,000 | 30,000 | ||||||||||||||||||||||||||||
Outplacement Services(8) | — | — | — | 15,000 | ||||||||||||||||||||||||||||
Unvested Restricted Stock Units | 1,869,090 | 524,951 | 703,145 | 524,684 | ||||||||||||||||||||||||||||
Unvested Performance-Based Equity Awards(3) | 6,399,546 | 1,621,704 | — | — | ||||||||||||||||||||||||||||
Post-Termination Health and Welfare Benefits(4) | 44,011 | 51,978 | 39,668 | 43,665 | ||||||||||||||||||||||||||||
Outplacement Services(5) | — | — | — | 8,250 | ||||||||||||||||||||||||||||
Accrued Vacation(1) | 32,692 | 19,231 | 19,231 | 13,077 | 32,692 | 19,231 | 15,385 | 14,615 | ||||||||||||||||||||||||
Total | 5,721,106 | 2,057,354 | 2,057,354 | 1,147,112 | 10,735,964 | 3,467,864 | 1,658,198 | 1,389,214 | ||||||||||||||||||||||||
For Cause Termination | ||||||||||||||||||||||||||||||||
No Payments | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
Total | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
Involuntary or Good Reason Termination (Change in Control) | ||||||||||||||||||||||||||||||||
Cash Severance(2) | 5,737,500 | 2,500,000 | 2,500,000 | 1,326,000 | 5,737,500 | 2,500,000 | 1,500,000 | 1,330,000 | ||||||||||||||||||||||||
Unvested Restricted Stock Units and VSEP Awards(3) | 1,818,414 | 493,123 | 493,123 | 239,035 | ||||||||||||||||||||||||||||
Unvested Restricted Shares(4) | — | — | — | 38,331 | ||||||||||||||||||||||||||||
Unvested Performance-Based Equity Awards(5) | 0 | 0 | 0 | — | ||||||||||||||||||||||||||||
Unvested Stock Options(6) | — | — | — | 0 | ||||||||||||||||||||||||||||
Post-Termination Health and Welfare Benefits(7) | 45,000 | 45,000 | 45,000 | 30,000 | ||||||||||||||||||||||||||||
Outplacement Services(8) | — | — | — | 15,000 | ||||||||||||||||||||||||||||
Unvested Restricted Stock Units | 1,869,090 | 524,951 | 703,145 | 524,684 | ||||||||||||||||||||||||||||
Unvested Performance-Based Equity Awards(3) | 6,399,546 | 1,621,704 | — | — | ||||||||||||||||||||||||||||
Post-Termination Health and Welfare Benefits(4) | 44,011 | 51,978 | 39,668 | 43,665 | ||||||||||||||||||||||||||||
Outplacement Services(5) | — | — | — | 8,250 | ||||||||||||||||||||||||||||
Accrued Vacation(1) | 32,692 | 19,231 | 19,231 | 13,077 | 32,692 | 19,231 | 15,385 | 14,615 | ||||||||||||||||||||||||
Total | 7,633,606 | 3,057,354 | 3,057,354 | 1,661,443 | 14,082,839 | 4,717,864 | 2,258,198 | 1,921,214 |
DDR42 SITE Centers Corp. ï 20182020 Proxy Statement 47
Event | David R. Lukes ($) | Michael A. Makinen ($) | Matthew L. Ostrower ($) | Christa A. Vesy ($) | ||||||||||||
Disability | ||||||||||||||||
Cash Severance(2) | 1,062,500 | 500,000 | 500,000 | 612,000 | ||||||||||||
Unvested Restricted Stock Units and VSEP Awards(3) | — | 493,123 | — | 239,035 | ||||||||||||
Unvested Restricted Shares(4) | — | — | — | 38,331 | ||||||||||||
Unvested Performance-Based Equity Awards(5) | — | 0 | — | — | ||||||||||||
Unvested Stock Options(6) | — | — | — | 0 | ||||||||||||
Post-Termination Health and Welfare Benefits(7) | 45,000 | 45,000 | 45,000 | 20,000 | ||||||||||||
Disability Insurance Proceeds(9) | 1,731,581 | 2,120,806 | 1,731,581 | 2,943,688 | ||||||||||||
Accrued Vacation(1) | 32,692 | 19,231 | 19,231 | 13,077 | ||||||||||||
Total | 2,871,773 | 3,178,160 | 2,295,812 | 3,866,131 | ||||||||||||
Death | ||||||||||||||||
Cash Severance(2) | 1,062,500 | 500,000 | 500,000 | 612,000 | ||||||||||||
Unvested Restricted Stock Units and VSEP Awards(3) | — | 493,123 | — | 239,035 | ||||||||||||
Unvested Restricted Shares(4) | — | — | — | 38,331 | ||||||||||||
Unvested Performance-Based Equity Awards(5) | — | 0 | — | — | ||||||||||||
Unvested Stock Options(6) | — | — | — | 0 | ||||||||||||
Post-Termination Health and Welfare Benefits(7) | 45,000 | 45,000 | 45,000 | 20,000 | ||||||||||||
Accrued Vacation(1) | 32,692 | 19,231 | 19,231 | 13,077 | ||||||||||||
Total(10) | 1,140,192 | 1,057,354 | 564,231 | 922,443 |
Event | David R. Lukes ($) | Michael A. Makinen ($) | Conor M. Fennerty ($) | Christa A. Vesy ($) | ||||||||||||
Disability | ||||||||||||||||
Cash Severance(2) | 1,062,500 | 500,000 | 200,000 | 532,000 | ||||||||||||
Unvested Restricted Stock Units | — | 524,951 | — | 524,684 | ||||||||||||
Unvested Performance-Based Equity Awards(3) | — | 1,621,704 | — | — | ||||||||||||
Post-Termination Health and Welfare Benefits(4) | 44,011 | 51,978 | 39,668 | 29,110 | ||||||||||||
Disability Insurance Proceeds(6) | 1,627,304 | 1,854,769 | 2,625,760 | 2,766,417 | ||||||||||||
Accrued Vacation(1) | 32,692 | 19,231 | 15,385 | 14,615 | ||||||||||||
Total | 2,766,507 | 4,572,633 | 2,880,812 | 3,866,826 | ||||||||||||
Death | ||||||||||||||||
Cash Severance(2) | 1,062,500 | 500,000 | 200,000 | 532,000 | ||||||||||||
Unvested Restricted Stock Units | — | 524,951 | — | 524,684 | ||||||||||||
Unvested Performance-Based Equity Awards(3) | — | 1,621,704 | — | — | ||||||||||||
Post-Termination Health and Welfare Benefits(4) | 44,011 | 51,978 | 39,668 | 29,110 | ||||||||||||
Accrued Vacation(1) | 32,692 | 19,231 | 15,385 | 14,615 | ||||||||||||
Total(7) | 1,139,203 | 2,717,864 | 255,053 | 1,100,410 |
(1) | Assumes two weeks of personal time off (“PTO”) is paid pursuant to our current PTO policy. |
(2) | Reported amounts calculated pursuant to the terms of the respective employment agreement, if applicable, assuming an annual |
(3) |
Reported amounts reflect the value of |
Reported amounts consist of our estimate of continued health and welfare benefits costs (or a lump sum payment related thereto) of 18 months for Messrs. Lukes, Makinen and |
Reported amounts consist of our estimate of one year of outplacement service. |
Reported amounts consist of our estimate of payments for long-term disability using a present value calculation that takes into account (a) age and total payments over the benefit term assuming that the disability occurs on December |
Reported amounts do not include payments under personal life insurance policies arranged and obtained by the executives for which |
48 DDRSITE Centers Corp. ï 20182020 Proxy Statement 43
Employment Agreements in Effect During 20172019 with Messrs. Lukes, Makinen Ostrower and AugustOstrower
On December 1, 2016 (but effective July 8, 2016), we entered into an employment agreement with Mr. August. Then, in connection with Mr. August’s separation from the Company, onIn March 2, 2017, we entered into employment agreements with Messrs. Lukes, Makinen and Ostrower. Mr. Ostrower terminated his employment with us effective November 27, 2019. The key terms in effect for 2017 forof these employment agreements are described below.
Term. Pursuant to their employment agreements, Messrs. Lukes and Makinen |
During his employment with the Company, Mr. August’s employment agreement provided that he would serve as President and Chief Executive Officer.Officer, Chief Operating Officer and Chief Financial Officer, respectively. The fixed term of each of those employment agreements ends on March 1, 2021.
•Base Salary and Benefits. The employment agreements provide for minimum annual base salary rates of (for Mr. August’sLukes) $850,000 and (for Messrs. Makinen and Ostrower) $500,000. In addition, the employment agreement was initially setagreements provide for participation in certain employee benefit plans, reasonable paid time off, and other customary fringe benefits.
•Annual Cash Incentive Compensation. Pursuant to endthe employment agreements, each executive is entitled to an annual performance-based cash incentive compensation opportunity targeted at (for Mr. Lukes) 125% or (for Messrs. Makinen and Ostrower) 100% ofyear-end base salary, the payout of which would bepro-rated for any partial year during the contract period based on July 7, 2019. As of March 2, 2017, however, Mr. August was no longer an employeethe executive’s service during such year. See “Compensation Discussion and Analysis — 2019 Compensation Program” for a discussion of the Company,methods used to calculate the annual performance-based cash incentive compensation and the executives’ annual performance-based cash incentive compensation terms below no longer apply, other than with respect to his severance compensation.award opportunities.
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Initial Equity Grants. Pursuant to the employment agreements, Messrs. Lukes, Makinen and Ostrower were entitled to initial equity grants during 2017 of (1) service-based RSUs with a value (determined in accordance with the applicable employment agreement) equal to (for Mr. Lukes) $2,950,000 or (for Messrs. Makinen and Ostrower) $800,000, which RSUs generally vest in four substantially equal annual installments, (2) performance shares |
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DDR Corp.ï 2018 Proxy Statement 49
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The employment agreement with Mr. August provided that on July 8, 2017 and ending on February 28, 2018, (3) performance-based RSUs covering a “target” award with a value (determined in accordance with the applicable employment agreement) equal to (for Mr. Lukes) $1,000,000 or (for Messrs. Makinen and Ostrower) $200,000, generally subject to continued employmenta performance period beginning on March 1, 2017 and the approval of the Committee, Mr. August would have been eligible to receive a grant ofending on February 28, 2019, and (4) performance-based RSUs (orcovering a substantially similar award)“target” award with a grant date “target” value of at least $3,000,000. These(determined in accordance with the applicable employment agreement) equal to (for Mr. Lukes) $1,500,000 or (for Messrs. Makinen and Ostrower) $300,000, generally subject to a performance period beginning on March 1, 2017 and ending on February 28, 2020. The initial performance-based awards would have paidcould pay out (if at all) from a threshold level of 50% of target, to a maximum level of 200% of target, based on relative total shareholder return performance of the Company (and RVI following its separation from the Company), subject to a reduction by 1/3 in the event that the Company’s absolute total shareholder return during the applicable performance period is negative. For purposes of determining total shareholder return, dividends paid during the performance period on the Company’s (and RVI’s) common stock are deemed reinvested in additional shares of the Company’s common stock. The performance criteria set forth in theone-year performance shares,two-year performance-based RSUs and three-year performance-based RSUs awarded to Messrs. Lukes, Makinen and Ostrower in March 2017 were not satisfied and no compensation was negative. Dueultimately paid in respect of these awards.
•Annual Equity Grants. The employment agreements with Messrs. Lukes, Makinen and Ostrower also provide that, on March 2, 2018, 2019 and 2020, subject to his separation fromcontinued employment and the Company,approval of the Committee, such executives are eligible to receive grants of performance-based RSUs (or substantially similar awards) covering a “target” number of shares with a value (determined in accordance with the applicable employment agreement) at least equal to (for Mr. August did not receive this grant in 2017.Lukes) $3,000,000 or (for Messrs. Makinen and Ostrower) $600,000. The annual performance-based awards will have terms similar to those for the
44 SITE Centers Corp.ï 2020 Proxy Statement initial performance-based awards described above except that (1) these awards will cover three-year performance periods and (2) only the performance-based RSUs granted in March 2017 and March 2018 will be impacted by the performance of RVI’s common stock. •Termination. The employment agreements may be terminated under a variety of circumstances. Our Board has the right to terminate an employment agreement for “cause” if the executive engages in certain specified conduct, for “disability” if the executive is disabled for a specified period of time, or at any other time without cause by giving the executive at least 90 days’ prior written notice. The executive also has the right to terminate his employment agreement for “good reason” in certain specified circumstances or at any other time without good reason by giving us at least 90 days’ prior written notice. •Benefits Upon a Termination. The executives are entitled under the employment agreements to certain additional payments and benefits in the event of certain termination circumstances. |
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– | If the executive is terminated without cause, terminates his employment for good reason, or his employment terminates as a result of death or disability, during the agreement term, the executive (or his personal representative or dependents, as appropriate) is entitled to receive, subject in certain circumstances to the execution of a customary release of claims in favor of the Company: |
(1) | for Messrs. Lukes, Makinen and Ostrower, if the termination is the result of a termination by the Company other than for cause, death or disability, or a termination by the executive for good reason, a lump sum equal to up to two times for Mr. Lukes, and up to 1.5 times for Messrs. Makinen and Ostrower (in each case, the “Multiplier”), the sum of (a) the executive’s then-current base salary plus (b) an amount equal to (i) if the termination |
(2) |
a lump sum amount equal in value to the annual bonus that would have been earned for his year of termination based on actual performance,pro-rated based on the executive’s period of service during such year, and calculated on the basis of actual performance of the applicable performance objectives for the entire performance period (except that, if the termination is due to death or disability, thepro-rated annual bonus will be based on the “target” level); and |
50 DDR Corp.ï 2018 Proxy Statement
a lump sum in cash equal to 18 months |
– | If a “Triggering Event” occurs during the term following a “Change in Control” as described below under the section entitled “Change in Control Provisions,” the executive is entitled to receive (1) a lump sum equal to three times for Mr. Lukes and 2.5 times for Messrs. |
The actual amounts of the August separation payments and benefits are described under “Separations in 2017” below.
SITE Centers Corp.ï 2020 Proxy Statement 45
• | Other Terms. |
– | The employment agreements include customarynon-competition andnon-solicitation restrictive covenants that extend for one year |
– | Pursuant to Mr. Lukes’ |
– | For Mr. Lukes only, the Company agreed to provide suitable automobile service for Mr. Lukes’ business use, including all reasonable related maintenance, repairs, parking, gasoline, insurance and other reasonable costs and expenses, which automobile may also be used by Mr. Lukes (and anyone authorized by Mr. Lukes) for personal use at no cost to Mr. Lukes (except for applicable taxes). |
– | For Messrs. Lukes and Ostrower only, the Company agreed to reimburse (up to an aggregate maximum of $25,000 in any calendar year) |
Employment Agreement in Effect During 2019 with Mr. Fennerty
On November 6, 2019, the Board appointed Mr. Fennerty as the Company’s Executive Vice President, Chief Financial Officer and Treasurer effective upon Mr. Ostrower’s departure. In structuring Mr. Fennerty’s three-year employment agreement, the Committee worked closely with Gressle & McGinley, the Committee’s compensation consultant, and Mr. Lukes to provide Mr. Fennerty with a compensation package consistent with the structure and performance-based philosophy utilized in designing employment agreements for Messrs. Lukes, Makinen and Ostrower in 2017. Specifically, the Committee reviewed compensation data with respect to recent chief financial officer hires at eight similarly sized REITs and determined that the target annual compensation for Mr. Fennerty should be $1,250,000 (approximately the 30th percentile of the benchmarking group). The Committee then considered how the target level of compensation should be allocated between salary, annual cash bonus, time-based equity and performance equity. Based on Mr. Fennerty’s location in New York City and the compensation breakdown for the benchmarking group, Mr. Fennerty’s base salary was set at $400,000 (the 43rd percentile of the benchmarking group) and his target level of annual incentive pay was set at $300,000 (the 37th percentile of the benchmarking group). The Committee also awarded Mr. Fennerty with time-based RSUs valued at approximately $300,000 vesting over three years and provided an expectation of annual performance-based equity grants having a target value of $450,000 per year.
The key terms of this employment agreement are more fully described below.
•Term. Pursuant to Mr. Fennerty’s employment agreement, Mr. Fennerty serves as the Company’s Executive Vice President, Chief Financial Officer and Treasurer. The fixed term of Mr. Fennerty’s employment agreement ends on November 6, 2022.
•Base Salary and Benefits. The employment agreement with Mr. Fennerty provides for minimum annual base salary at a rate of $400,000. In addition, the employment agreement provides for Mr. Fennerty’s participation in certain employee benefit plans, reasonable paid time off, and other customary fringe benefits.
•Annual Cash Incentive Compensation. Pursuant to his employment agreement, Mr. Fennerty is entitled to an annual performance-based cash incentive compensation opportunity targeted at 75% ofyear-end base salary, provided that the amount of Mr. Fennerty’s annual cash incentive for 2019 did not have apre-established target amount and was left to the discretion of the Committee based on an evaluation of his performance.
•Initial Equity Grants. Pursuant to the employment agreement, Mr. Fennerty received a grant of service-based RSUs with a value (determined in accordance with the employment agreement) equal to $300,000,
46 SITE Centers Corp.ï 2020 Proxy Statement
which RSUs generally vest in substantially equal annual installments on the second and third anniversaries of the grant date. On March 2, 2020, Mr. Fennerty also received (1) an award of performance-based RSUs covering a “target” number of shares with a value (determined in accordance with the employment agreement) equal to $75,000, generally subject to a performance period beginning on March 1, 2020 and ending on February 28, 2021, (2) an award of performance-based RSUs covering a “target” number of shares with a value (determined in accordance with the employment agreement) equal to $150,000, generally subject to a performance period beginning on March 1, 2020 and ending on February 28, 2022, and (3) an award of performance-based RSUs covering a “target” number of shares with a value (determined in accordance with the employment agreement) equal to $225,000, generally subject to a performance period beginning on March 1, 2020 and ending on February 28, 2023. The initial performance-based awards could pay out (if at all) from a threshold level of 50% of target, to a maximum level of 200% of target, based on relative total shareholder return performance of the Company, subject to a reduction by 1/3 in the event that the absolute total shareholder return during the applicable performance period is negative. For purposes of determining total shareholder return, dividends paid during the performance period on the Company’s common stock are deemed reinvested in additional shares of the Company’s common stock.
•Annual Equity Grants. The employment agreement with Mr. Fennerty also provides that, on March 2, 2021 and 2022, subject to continued employment and the approval of the Committee, Mr. Fennerty is eligible to receive grants of performance-based RSUs (or substantially similar awards) covering a “target” number of shares with a value (determined in accordance with the employment agreement) at least equal to $450,000. The annual performance-based awards will have terms similar to those for the initial performance-based awards described above except that these awards will cover three-year performance periods.
• Termination. Mr. Fennerty’s employment agreement may be terminated under a variety of circumstances. Our Board has the right to terminate the employment agreement for “cause” if the Mr. Fennerty engages in certain specified conduct, for “disability” if the executive is disabled for a specified period of time, or at any other time without cause by giving the executive at least 90 days’ prior written notice. Mr. Fennerty also has the right to terminate his employment agreement for “good reason” in certain specified circumstances or at any other time without good reason by giving us at least 90 days’ prior written notice.
•Benefits Upon a Termination. Mr. Fennerty is entitled under the employment agreement to certain additional payments and benefits in the event of certain termination circumstances.
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(1) | If the termination is the result of a termination by the Company |
(2) | a lump sum amount equal in value to the annual bonus that would have been earned for his year of termination based on actual performance,pro-rated based on the executive’s period of service during such year, and calculated on the basis of actual performance of the applicable |
SITE Centers Corp.ï 2020 Proxy Statement 47
performance objectives for the entire performance period (except that, if the termination is due to death or disability, thepro-rated annual bonus will be based on the “target” level); and |
(3) | a lump sum in cash equal to 18 months of monthly COBRA premiums for health, dental and vision benefits (if COBRA coverage is elected) and the employer portion of the premium for other insurance provided by the Company (or, in the event of death, a substantially similar benefit to his beneficiaries). |
– | If a “Triggering Event” occurs during the term following a “Change in Control” as described below under the section entitled “Change in Control Provisions,” Mr. |
•Other Terms.
– | The employment agreement includes customarynon-competition andnon-solicitation restrictive covenants that extend for one year following termination and perpetual confidentiality and mutualnon-disparagement restrictive covenants. |
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Employment Agreement in Effect During 2019 with Ms. Vesy
In December 2016, we entered into an employment agreement with Ms. Vesy which was amended in February 2018. The terms of this employment agreement (as amended) are described below.
•Term. Pursuant to Ms. Vesy’s employment agreement, Ms. Vesy serves as our Executive Vice President and Chief Accounting Officer. The fixed term of Ms. Vesy’s employment agreement ends on December 31, 2021.
•Base Salary and Benefits. The employment agreement with Ms. Vesy provides for minimum annual base salary at a rate of $340,000 for 2017 and 2018 and $380,000 for 2019 and thereafter during the term of the employment agreement. In addition, the employment agreement provides for Ms. Vesy’s participation in health, life, disability and other insurance plans, reasonable paid time off, and other customary fringe benefits.
•Annual Cash Incentive Compensation. Pursuant to her employment agreement, Ms. Vesy is entitled to an annual performance-based cash incentive compensation award targeted at 40% ofyear-end base salary. See “Compensation Discussion and Analysis — 2019 Compensation Program” for a discussion of the methods used to calculate the annual performance-based cash incentive compensation and Ms. Vesy’s annual performance-based cash incentive compensation award opportunity.
•Annual Equity Incentive Awards. For each calendar year during the term of her employment agreement (beginning with 2016), Ms. Vesy is eligible to receive performance-based equity incentive compensation having a grant date target value of 25% of the sum of heryear-end base salary and her annual performance-based cash incentive compensation award payout.
•Termination. Ms. Vesy’s employment agreement can be terminated under a variety of circumstances, including upon death. Our Board has the right to terminate the employment agreement for “cause” if Ms. Vesy has engaged in certain specified conduct, for “disability” if Ms. Vesy was disabled for a specified
DDR48 SITE Centers Corp. ï 2018 Proxy Statement 51
Employment Agreements in Effect During 2017 with Ms. Vesy and Messrs. Corno and Ross
During 2017, we were also a party to employment agreements with Ms. Vesy and Messrs. Corno and Ross. The terms in effect for 2017 for these employment agreements are described below.
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52 DDR Corp.ï 20182020 Proxy Statement
period of time, or at any other time without cause by giving her at least 90 days’ prior written notice. The executive also has the right to terminate the employment agreement for “good reason” in certain specified circumstances or at any other time without good reason by giving us at least 90 days’ prior written notice. •Benefits Upon a Termination. Ms. Vesy is entitled under her employment agreement to certain additional payments and benefits in the event of certain termination circumstances. |
– | If |
– | If |
– | If a “Triggering Event” occurs during the term following a “Change in Control” as described below under the section entitled “Change in Control Provisions,” |
The actual amounts of the separation payments and benefits for Messrs. Corno and Ross are described under “Separations in 2017” below.• Other Terms.
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– | Ms. Vesy’s employment agreement |
– | Ms. Vesy also received a |
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DDR Corp.ï 2018 Proxy Statement 53
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In February 2018, we entered into an amendment to Ms. Vesy’s employment agreement which extends the term of her employment agreement to December 31, 2021 and, effective January 1, 2019, increases her minimum annual base salary to $380,000.
SITE Centers Corp.ï 2020 Proxy Statement 49
The employment agreements in effect during 20172019 for the named executive officers included provisions regarding the payments and benefits to which he/she would be entitled in certain circumstances in the event of a change in control. In general, the Committee believes that the inclusion of change in control provisions in these agreements is appropriate because such agreements help ensure a continuity of management during a potential change in control and help ensure that management remains focused on completing a transaction that is likely to maximize shareholder value. The Committee also believes that the payment of change in control compensation would be appropriate because the executive officer may forego other opportunities at the time of the change in control. For information concerning the amounts payable upon a change in control measured as of December 31, 2017,2019 see the following discussion and the “Executive Compensation Tables and Related Disclosure — Potential Payments Upon Termination or Change in Control” section above.
Under the employment agreements in effect during 20172019 for the named executive officers, benefits would be payable by us if a “Triggering Event” occurs within two years after a “Change in Control” (each as defined in the employment agreements). Payments for all named executive officers are only triggered if both (1) a change in control occurs, and (2) the officer is terminated or effectively terminated, or certain actions are taken that materially and adversely impacted the officer’s position with us or his/her compensation. This is referred to as a “double-trigger” change in control provision.
For Messrs. Lukes, Makinen, OstrowerFennerty and August,Ostrower, a “Triggering Event” has occurred if within two years after a change in control:
• we terminate the employment of the executive, other than in the case of a termination for “Cause” (as defined in the employment agreement), a termination following disability, or a termination based on death; or • |
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the executive terminates his employment for “Good Reason” (as defined in the employment agreement). |
For Ms. Vesy, and Messrs. Corno and Ross, a “Triggering Event” has occurred if within two years after a change in control:
• we terminate Ms. Vesy’s employment, other than in the case of a termination for “Cause” (as defined in the employment agreement), a termination following disability, or a termination based on death;
• we reduce Ms. Vesy’s title, responsibilities, power, or authority in comparison with Ms. Vesy’s title, responsibilities, power, or authority at the time of the change in control, and Ms. Vesy then terminates her employment with us; • we assign Ms. Vesy duties that were inconsistent with the duties assigned to her on the date on which the change in control occurred and which duties we persisted in assigning to Ms. Vesy despite the prior written objection, and Ms. Vesy then terminated her employment with us; • we (1) reduce Ms. Vesy’s base salary, annual performance-based cash bonus percentages of salary, certain health and welfare benefits (including any such benefits provided to Ms. Vesy’s family), pension, retirement or profit-sharing benefits or any benefits provided by our equity-based award plans or any substitute therefore, (2) exclude Ms. Vesy from any plan, program or arrangement in which our other executive officers are included, (3) establish criteria and factors to be achieved for the payment of annual performance bonus compensation that are substantially different than the criteria and factors established for our other similar executive officers, or (4) fail to pay Ms. Vesy any annual performance bonus compensation to which she is entitled through the achievement of the criteria and factors established for the payment of such bonus, and Ms. Vesy then terminates her employment with us; or • we require Ms. Vesy to be based at or generally work from any location more than 50 miles from the geographical center of Cleveland, Ohio, and Ms. Vesy then terminates her employment with us. A “Change in Control” generally occurs if: • there is a consummation of a consolidation or merger in which we are not the surviving corporation, the sale of substantially all of our assets, or the liquidation or dissolution of the Company; |
5450 DDRSITE Centers Corp. ï 20182020 Proxy Statement
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• any person or other entity (subject to certain exceptions) purchases our shares (or securities convertible into our shares) pursuant to a tender or exchange offer without the prior consent of the Board, or becomes the beneficial owner of 30% or more of the voting power of our outstanding securities without the prior consent of the Board; or
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A “Change• during anytwo-year period, we experience a turnover of a majority of the Directors on our Board (subject to certain exceptions for replacement Directors approved by at leasttwo-thirds of the Directors serving at the beginning of such period, but specifically excluding certain replacement Directors elected in Control” generally occurs if:connection with an election or proxy contest).
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Upon the occurrence of a Triggering Event under the 2017 employment agreements, we would have been required to pay a named executive officer the applicable amounts described above under “Employment Agreements.”
Restricted shares and stock options granted by the Company prior to 2016 generally vest in full in the event of termination due to death or disability, or a termination by the Company without cause within two years after a change in control. With respect to time-based RSUs granted in 2017 and 2019 to Messrs. Lukes, Makinen and Ostrower, in the event of a termination without cause or for good reason, unvested RSUs would generally continue to vest; for Mr. Makinen, his unvested RSUs would vest in full in the event of his death or disability. With respect to time-based RSUs granted to Mr. Fennerty, in the event of a termination without cause or for good reason, unvested RSUs would generally continue to vest except with respect to time-based RSUs granted in November 2019 which would not vest. In the event of a termination without cause or termination by the participantexecutive for good reason within two years after a change in control, all RSUs and stock options previously granted to the executives would generally vest in full. With respect to time-based RSUs and stock options granted in 2016, 2017, 2018 and 20172019 to Ms. Vesy, in the event of death or disability, unvested time-based RSUs and stock options would vest in full, and in the event of a termination of employment by the Company without cause, unvested time-based RSUs and stock options would generally continue to vest.
With respect to the performance shares and performance-based RSUs granted to Messrs. Lukes, Makinen and Ostrower in 2017, 2018 and 2019, and the performance-based RSUs granted to Messrs. Lukes, Makinen and Fennerty in 2020, in the event of a termination of employment by the Company without cause, or a termination by the NEOexecutive for good reason, the awards would be earned (if at all) on the basis of the relative achievement of the
DDR Corp.ï 2018 Proxy Statement 55
applicable performance objectives measured as of the date of termination; Mr. Makinen would receive the same treatment in the event of a termination due to death or disability. In the event of a change in control, the performance-based awards of Messrs. Lukes, Makinen, Ostrower and OstrowerFennerty would vest based on the relative achievement of the applicable performance objectives measured as of the date of the change in control, unless a “replacement award” (as described in the applicable award agreements) is provided.
In connection with his separation from the Company on March 2, 2017, Mr. August received only those payments and benefits to which he was contractually entitled under the terms of his employment agreement with the Company for termination “without cause”. In addition to certain accrued compensation and benefits, these payments consisted of: (1) a lump sum amount equal in value to his “target” annual incentive for the 2017 calendar year (which target amount was $997,750),pro-rated based on the number of days in 2017 for which he was employed by us; (2) a lump sum amount equal to two times the sum of (a) his base salary plus (b) an amount equal to his target 2017 annual incentive; and (3) a lump sum amount equal to the product of six multiplied by the sum of (a) the monthly COBRA premium for health, dental and vision benefits, plus (b) the employer portion of the monthly premium for other Company provided insurance in effect for Mr. August as of the date of his separation. In addition, 83,300 unvested, service-based RSUs initially awarded to Mr. August pursuant to the terms of his July 2016 employment agreement immediately vested upon his termination. Threshold performance conditions applicable to performance-based RSUs granted to Mr. August were not satisfied as of the date of his termination and therefore Mr. August did not receive any payout with respect thereto.
In connection with his separation from the Company on May 31, 2017, Mr. Ross received only those payments and benefits to which he was contractually entitled under the terms of his employment agreement with the Company for termination “without cause”. In addition to certain accrued compensation and benefits, these contractual payments and benefits consisted of: (1) a lump sum amount equal in value to his “target” annual incentive for the 2017 calendar year (which target amount was $450,000),pro-rated based on the number of days in 2017 for which he was employed by us; (2) a lump sum amount equal to 1.5 times the sum of (a) his base salary plus (b) an amount equal to his target 2017 annual incentive; and (3) a lump sum amount equal to the product of 18 multiplied by the sum of (a) the monthly COBRA premium for health, dental and vision benefits, plus (b) the employer portion of the monthly premium for other Company provided insurance in effect for Mr. Ross as of the date of his separation. In addition, 67,257 unvested, service-based RSUs awarded to Mr. Ross pursuant to the terms of his December 2016 employment agreement will continue to vest over time on accordance with the three-year vesting schedule set forth in the original award.
In connection with his departure from the Company on April 15, 2017, Mr. Corno received payments and benefits to which he was contractually entitled under the terms of his employment agreement with the Company for termination “without cause”. In addition to certain accrued and unpaid compensation and benefits, these payments consisted of: (1) a lump sum amount equal in value to his “target” annual incentive for the 2017 calendar year (which target amount was $240,000),pro-rated based on service credited through May 31, 2017; (2) a lump sum amount equal to 1.0 times the sum of (a) his base salary plus (b) an amount equal to his target 2017 annual incentive; and (3) a lump sum amount equal to the product of 12 multiplied by the sum of (a) the monthly COBRA premium for health, dental and vision benefits, plus (b) the employer portion of the monthly premium for other Company provided insurance in effect for Mr. Corno as of the date of his separation. In addition, an aggregate of 24,963 unvested, service-based RSUs largely awarded to Mr. Corno pursuant to the terms of his July 2016 employment agreement will continue to vest over time in accordance with the three-year vesting schedules set forth in the original awards. Conditions applicable to performance-based RSUs and performance shares granted to Mr. Corno in 2016 and an award equivalent to a deemed opportunity to participate in the 2016 VSEP were not satisfied as of the date of his termination and therefore Mr. Corno did not receive any payout with respect thereto. In connection with his termination, Mr. Corno also received payments of $240,000 on account of aone-time special cash opportunity originally awarded to him in November 2016 which was otherwise scheduled to be paid in January 2018 and $80,000 in satisfaction of obligations under certain provisions of his employment agreement.
56 DDR Corp.ï 2018 Proxy Statement
For 2017,2019, the ratio of the annual total compensation of Mr. Lukes, our Chief Executive Officer who was serving in such capacity on October 1, 2017CEO (“CEO Compensation”), to the median of the annual total compensation of all of our employees and those of our consolidated subsidiaries (other than Mr. Lukes) (“Median Annual Compensation”) was approximately 9879 to 1. The annual total compensation of Mr. Lukes in 2017 includes a retention-based award of RSUs having a grant date fair value of approximately $2.82 million that was granted to him in connection with the execution of his employment agreement in March 2017. Excluding the value of this award, the ratio of Mr. Lukes’ 2017 annual total compensation to the Median Annual Compensation would have been approximately 63 to 1.
We note that, due to our permitted use of reasonable estimates and assumptions in preparing this pay ratio disclosure, the disclosure may involve a degree of imprecision, and thus this ratio disclosure is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K using the data and assumptions described below. In this summary, we refer to the employee who received the Median Annual Compensation as the “Median Employee.” For purposes of this disclosure, the date used to identify the Median Employee was October 1, 2017 (the “Determination Date”).
For purposes of this pay ratio disclosure, CEO Compensation was $7,880,811. As further discussed above, Mr. Lukes served as our Chief Executive Officer from March 2, 2017 through the end of 2017.$6,657,317. CEO Compensation for purposes of this disclosure represents the total compensation reported for Mr. Lukes under the “2017“2019 Summary Compensation Table” for 2017, annualized based on Mr. Lukes’ period of service during 20172019 and reasonable estimates regarding the composition of Mr. Lukes’ compensation that would have been applicable if Mr. Lukes had been employed by us for all of 2017. CEO Compensation for these purposes also includes the Company’s contributions to group health and welfare benefits provided to Mr. Lukes.
For purposes of this pay ratio disclosure, Median Annual Compensation was $80,606,$84,580, and was calculated by totaling for our Median Employee all applicable elements of compensation for 20172019 in accordance with Item 402(c)(2)(x) of RegulationS-K. This Median Annual Compensation amount consists of salary, bonus, and the Company’s contributions to group health and welfare benefits provided to the Median Employee.
We refer to the employee who received the Median Annual Compensation as the “Median Employee.” Significant asset sales occurring over the past two years have materially impacted the size and composition of our employee population since we last determined our Median Employee on October 1, 2017. Therefore, we identified a new
SITE Centers Corp.ï 2020 Proxy Statement 51
Median Employee for purposes of calculating our CEO pay ratio for 2019 rather than using the Median Employee utilized to calculate our CEO pay ratio for 2017 and 2018. To identify the new Median Employee, we first measured compensation for the period beginning on January 1, 20172019 and ending on SeptemberNovember 30, 20172019 for 462367 employees, representing all full-time, part-time, seasonal and temporary employees of the Company and its consolidated subsidiaries as of the Determination Date.December 1, 2019 (the “Determination Date”). This number does not include any independent contractors or “leased” workers, as permitted by the applicable SEC rules. This number also does not exclude anynon-U.S. employees and does not exclude any employees of businesses acquired by us or combined with us. ThisWe moved our Determination Date from October 1 to December 1 in order to capture the full extent of our employee population changes for 2019. The compensation measurement was calculated by totaling, for each employee, cash compensation (except as described in the next sentence), including regular pay (wages and salary), all variants of overtime, taxgross-up earnings related to awards, dividend equivalent payments, car allowances, short-term disability payments, and all variants of bonus payments. Specifically excluded from the calculation were the value of equity and equity-based awards, equity deferred compensation, deferred equity distributions, option exercises, deferred equity dividend earnings, taxable fringe benefits for executive long-term disability, andsign-on bonuses. Further, we did not utilize any statistical sampling orcost-of-living adjustments for purposes of this pay ratio disclosure. A portion of our employee workforce (full-time and part-time) identified above worked for less than the full fiscal year due to commencing employment after January 1, 2017.2019. In determining the Median Employee, we annualized the total compensation for such individuals (but avoided creating full-time equivalencies) based on reasonable assumptions and estimates relating to our employee compensation program.
DDR52 SITE Centers Corp. ï 20182020 Proxy Statement 57
10.7. Proposal Six:Three: Ratification of PricewaterhouseCoopers LLP as the Company’s Independent Registered Public Accounting Firm
Proposal Summary and Board Recommendation
PricewaterhouseCoopers LLP served as our independent registered public accounting firm in 20172019 and is expected to be retainedhas been selected by our Audit Committee to do so in 2018.2020. Our Board has directed that management submit the selection of the independent registered public accounting firm for ratification by the shareholders at the Annual Meeting. A representative of PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting, be available to respond to appropriate questions and have an opportunity to make a statement, if desired.
Shareholder ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm is not required by our Amended and Restated Code of Regulations or otherwise. However, our Board is seeking ratification of PricewaterhouseCoopers LLP as a matter of good corporate practice. If the shareholders do not approve the ratification of PricewaterhouseCoopers LLP, then the Audit Committee will reconsider whether to retain the firm. In such event, the Audit Committee may retain PricewaterhouseCoopers LLP, notwithstanding the fact that the shareholders did not approve the ratification of PricewaterhouseCoopers LLP, or select another nationally recognized accounting firm withoutre-submitting the matter to the shareholders. Even if the shareholders ratify PricewaterhouseCoopers LLP as our independent registered public accounting firm, the Audit Committee reserves the right in its discretion to select a different nationally recognized accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its shareholders.
BOARD RECOMMENDATION:
“For” Ratification of PricewaterhouseCoopers LLP as the Company’s Independent Registered Public Accounting Firm
Fees Paid to PricewaterhouseCoopers LLP
The following table presents fees for services rendered by PricewaterhouseCoopers LLP for the years ended December 31, 20172019 and 2016.2018.
Type of Fees | 2017 ($) | 2016 ($) | 2019 ($) | 2018 ($) | ||||||||||||
Audit fees(1) | 2,199,609 | 2,483,260 | 1,842,427 | 2,466,120 | ||||||||||||
Audit-related fees(2) | 430,960 | 467,636 | 594,930 | 727,917 | ||||||||||||
Tax fees(3) | 545,832 | 327,899 | 652,274 | 1,145,852 | ||||||||||||
All other fees(4) | 328,444 | 1,944 | 2,916 | 1,812,615 | ||||||||||||
Total | 3,504,845 | 3,280,739 | 3,092,547 | 6,152,504 |
(1) | Audit fees consisted principally of fees for the audit of our financial statements, as well as audit-related tax services and registration statement-related services performed pursuant to SEC filing requirements. Of these amounts, the fees for the registration statement-related services were |
(2) | Audit-related fees consisted of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.” Such audit-related fees consisted solely of fees for separate entity and joint venture audits. Several of our joint venture agreements and loan agreements require the engagement of an independent registered public accounting firm to perform audit-related services. |
(3) | Tax fees consisted of fees billed for professional services rendered for tax compliance and tax consulting services. The fees for tax compliance services for |
(4) | All other fees consisted of fees billed for other products and services. The fees billed in |
58 DDRSITE Centers Corp. ï 20182020 Proxy Statement 53
Policy on Audit CommitteePre-Approval of Audit and PermissibleNon-Audit Services of Independent Auditors
The Audit Committee has a policy for thepre-approval of audit and permissiblenon-audit services pursuant to which the Audit Committeepre-approves all audit and permissiblenon-audit services provided by the Company’s independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The Audit Committeepre-approves specifically described audit and permissiblenon-audit services, and periodically grants generalpre-approval of categories of audit and permissiblenon-audit services up to specified cost thresholds. Any services exceedingpre-approved cost levels must be specificallypre-approved by the Audit Committee. All of the services rendered by PricewaterhouseCoopers LLP under the categories “Audit-related fees,” “Tax fees,” and “All other fees” described above werepre-approved by the Audit Committee.
The Audit Committee believes that thenon-audit services provided by PricewaterhouseCoopers LLP are compatible with maintaining PricewaterhouseCoopers LLP’s independence.
In accordance with its written charter adopted by ourthe Board, the Audit Committee assists ourthe Board in fulfilling its responsibility for oversight of the quality and integrity of ourthe accounting, auditing and financial reporting practices.practices of the Company. The Audit Committee meets at least quarterly to review quarterly or annual financial information prior to its release and inclusion in SEC filings. As part of each meeting, the Audit Committee has the opportunity to meet independently with management and our independent registered public accounting firm.
In discharging its oversight responsibility as to the audit process, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, has discussed with the independent registered public accounting firm any relationships that may impact its objectivity and independence, and has satisfied itself as to the independent registered public accounting firm’s independence.
The Audit Committee reviewed and discussed with the independent registered public accounting firm all communications required by generally accepted auditing standards, including the matters required to be discussed by the Statement on Auditing Standards No. 1301, “Communication with Audit Committees,” as adopted byapplicable requirements of the Public Company Accounting Oversight Board.Board and the SEC.
The Audit Committee reviewed and discussed the audited financial statements of the Company for the year ended December 31, 2017,2019, with management and the independent registered public accounting firm. Management has the responsibility for the preparation of ourthe Company’s financial statements, and the independent registered public accounting firm has the responsibility for the examination of those statements.
Based on the above-described review and discussions with management and the independent registered public accounting firm, the Audit Committee recommended to ourthe Board that the Company’s audited financial statements be included in itsthe Company’s Annual Report onForm 10-K for the year ended December 31, 2017, for filing2019 filed with the SEC.
Audit Committee
Scott D. Roulston, Chair
Jane E. DeFlorio, Chair
Robert H. GidelLinda B. Abraham
Terrance R. Ahern
Dawn M. Sweeney
DDR54 SITE Centers Corp. ï 20182020 Proxy Statement 59
11.8. Corporate Governance and Other Matters
Code of Ethics for Senior Financial Officers
We have a Code of Ethics for Senior Financial Officers that applies to the senior financial officers of the Company, including, among others, the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Controller, Treasurer, and Chief Internal Auditor, who we collectively refer to as our senior financial officers. Among other matters, this code requires our senior financial officers to:
• Act with honesty and integrity and ethically handle all actual or apparent conflicts of interest between personal and professional relationships; |
• Endeavor to provide information that is full, fair, accurate, timely and understandable in all reports and documents that we file with, or submit to, the SEC and other public filings or communications we make; |
• Endeavor to comply faithfully with all laws, rules and regulations of federal, state and local governments and all applicable private or public regulatory agencies as well as all applicable professional codes of conduct; |
• Not knowingly or recklessly misrepresent material facts or allow their independent judgment to be compromised; |
• Not use for personal advantage confidential information acquired in the course of their employment; |
• Proactively promote ethical behavior among peers and subordinates in the workplace; and |
• Promptly report any violation or suspected violation of this code in accordance with our Reporting andNon-Retaliation Policy and, if appropriate, directly to the Audit Committee. |
Only the Audit Committee or our Board, including a majority of the independent Directors, may waive any provision of this code with respect to a senior financial officer. Any such waiver or any amendment to this code will be promptly disclosed on our website or in a Current Report on Form8-K, as required by applicable rules or regulations. This code is posted on our website,www.ddr.comwww.sitecenters.com, under “Governance” in the “Investors” section.
Code of Business Conduct and Ethics
We also have a Code of Business Conduct and Ethics that addresses our commitment to honesty, integrity and the ethical behavior of our employees, officers and Directors. This code governs the actions and working relationships of our employees, officers and Directors with current and potential tenants, vendors, contractors, fellow employees, competitors, vendors, government and self-regulatoryregulatory agencies and officials, potential or actual joint venture partners, third-party consultants, investors, the public, the media and anyone else with whom we have or may have contact.conduct business. Only our Board or the Nominating and Corporate Governance Committee may waive any provision of this code with respect to an officer or Director. Any such waiver or any amendment to this code will be promptly disclosed on our website or in a Current Report on Form8-K, as required by applicable rules or regulations. The Company’s Corporate Compliance Officer may waive any provision of this code with respect to all other employees. This code is posted on our website,www.ddr.comwww.sitecenters.com, under “Governance” in the “Investors” section.
60 DDRSITE Centers Corp. ï 20182020 Proxy Statement 55
Reporting andNon-Retaliation Policy
We are committed to honesty, integrity and ethical behavior and have adopted a Reporting andNon-Retaliation Policy. The purpose of the policy is to encourage all employees to disclose any alleged wrongdoing that may adversely impact us, our tenants, shareholders, fellow employees, investors, or the public at large without fear of retaliation. The policy sets forth procedures for the reporting by employees and interested third parties of alleged financial (including auditing, accounting, and internal control matters) andnon-financial wrongdoing on a confidential and anonymous basis, and a process for investigating such reported acts of alleged wrongdoing and retaliation. Reports concerning alleged wrongdoing may be made directly to our Corporate Compliance Officer, Eric C. Cotton, our Audit Committee Chair, Scott D. Roulston, or to NAVEX Global, an independent third-party service retained on our behalf. An inquiry or investigation is then initiated by the Corporate Compliance Officer or the Audit Committee Chair. The results of all investigations concerning wrongdoing are reviewed quarterly by the Corporate Compliance Officer and the Chair of the Audit Committee. Reports of all matters are reported to our Board by the Chair of the Audit Committee and the Corporate Compliance Officer in a timely manner and, in no event, less than once per year. This policy is posted on our website,www.ddr.comwww.sitecenters.com, under “Governance” in the “Investors” section.
Policy Regarding Related-Party Transactions
We have a written policy regarding the review and approval of related-party transactions. A proposed transaction between us and certain parties enumerated in the policy must be submitted to theour General Counsel or Corporate Compliance Officer. The policy applies to our Directors, nominees for Directors, officers, and employees; subsidiaries and joint venture partners; significant shareholders (generally a beneficial owner holding 5% or more of our voting securities) of us or of our subsidiaries or joint venture partners; family members (such as spouse, parent, stepparent, children, stepchildren, sibling, mother orfather-in-law, son ordaughter-in-law or sister orbrother-in-law of such person or anyone residing in such person’s home) and close friends of Directors, nominees for Directors, officers, employees or significant shareholders; entities in which a Director, nominee for Director, officer or employee (or a family member or close friend of such person) has a significant interest or holds an employment, management or board position; provided, however, ownership of less than 1% of a publicly-traded entity will not be deemed a significant interest; trusts for the benefit of employees, such as profit-sharing, deferred compensation or retirement fund trusts, that are managed by or under the trusteeship of management; or any other party who directly or indirectly controls, is controlled by or under common control with us (or our subsidiaries) (“control” means the power to direct or cause the direction of the management and policies of an entity through ownership, contract or otherwise). The relationship of the parties and the terms of the proposed transaction, among other things, are reviewed by theour General Counsel or Corporate Compliance Officer to determine if the proposed transaction would constitute a material related-party transaction, in which case it is reported to the Nominating and Corporate Governance Committee.Committee prior to its approval. The committeeNominating and Corporate Governance Committee will then determine whether the transaction requires Board approval. All material related-party transactions, whether or not those transactions must be disclosed under federal securities laws, are subject to prior approval by our Board pursuant to the policy and reviewed quarterly with the Nominating and Corporate Governance Committee.
DDR56 SITE Centers Corp. ï 20182020 Proxy Statement 61
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information regarding the beneficial ownership of our common shares as of February 21, 2018,2020, except as otherwise disclosed in the notes below, by each person who is known by us to own beneficially more than 5% of our outstanding common shares based on a review of filings with the SEC. Except as otherwise described in the following notes, the following beneficial owners have sole voting power and sole investment power with respect to all common shares set forth opposite their respective names.
More Than 5% Owners | Amount and Nature of Beneficial Ownership of Common Shares | Percentage Ownership (%)(6) | ||
Alexander Otto and Katharina Otto-Bernstein | ||||
Cohen & Steers, Inc. | 31,198,370(2) | 16.1 | ||
The Vanguard Group, Inc. | ||||
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(1) | According to a Form 4 filed with the SEC on February 18, 2020 and Schedule 13D/A filed with the SEC on |
(2) | According to a report on Schedule 13G/A filed with the SEC on February |
(3) | According to a report on Schedule 13G/A filed with the SEC on February 12, 2020 by The Vanguard Group, Inc., The Vanguard Group, Inc. is the beneficial owner of |
According to a report on Schedule 13G/A filed with the SEC on |
According to a report on Schedule 13G/A filed with the SEC on |
Percentages are calculated based on |
62 DDRSITE Centers Corp. ï 20182020 Proxy Statement 57
Section 16(a) Beneficial Ownership Reporting ComplianceShareholder Proposals for 2021 Annual Meeting
Section 16(a)In order to be included in the Company’s proxy statement for the 2021 Annual Meeting of Shareholders, a shareholder proposal submitted pursuant to Rule14a-8 under the Securities Exchange Act of 1934 requiresmust be received in writing by our Directors, executive officers, and owners ofSecretary at 3300 Enterprise Parkway, Beachwood, Ohio 44122 no later than December 2, 2020, assuming the 2021 Annual Meeting is not advanced or delayed by more than 10%30 calendar days from the date of a registered classthe anniversary of our equity securities, to filethe 2020 Annual Meeting, and otherwise comply with all requirements of the SEC for shareholder proposals.
If an eligible shareholder, or a group of up to 20 eligible shareholders, desires to have a Director nomination included in the Company’s proxy statement for the 2021 Annual Meeting, such nomination shall conform to the applicable requirements in the Company’s Code of Regulations and the NYSE initial reports of ownership and reports of changes in ownership of our common shares and other equity securities. Executive officers, Directors and owners of more than 10% of our common shares are required by SECany applicable regulations to furnish us with copies of all forms they file pursuant to Section 16(a).
To our knowledge, based solely on our review of the copiesSEC concerning the submission and content of such reports furnished to usDirector nominations for inclusion in the Company’s proxy statement, and written representations that no other reports were required, during the fiscal year ended December 31, 2017, all officers, Directors, and greater than 10% beneficial owners filed the required reports on a timely basis, except for one report for Ms. Vesy reporting one transaction, which was filed late due to administrative error.
Shareholder Proposals for 2019 Annual Meeting
Any shareholder proposals intended to be presented at our 2019 Annual Meeting of Shareholders must be received by our Secretary at 3300 Enterprise Parkway, Beachwood, Ohio 44122 onno earlier than November 2, 2020 and no later than December 2, 2020, assuming the 2021 Annual Meeting is not advanced more than 30 calendar days and not delayed by more than 60 calendar days of the date of the anniversary of the 2020 Annual Meeting.
In addition, the Company’s Code of Regulations provides that any shareholder who desires to make a Director nomination or before December 3, 2018, for inclusiona proposal of other business at an annual meeting without including the nomination or proposal in our Proxy Statement and formthe Company’s proxy statement must give timely written notice of proxy relatingthe proposal to the 2019Company’s Secretary. To be timely, the notice must be delivered to the above address not less than 120 calendar days prior to the first anniversary of the date on which the Company’s proxy statement was released to shareholders in connection with the previous year’s annual meeting of shareholders. In the event the annual meeting is advanced or delayed by more than 30 calendar days of the date of the anniversary of the preceding year’s annual meeting, the notice must be received not later than the close of business on the later of the 90th calendar day prior to such annual meeting and the tenth calendar day following the day on which public announcement of the date of the annual meeting is first made. Therefore, to be timely, any such proposal or nomination for the 2021 Annual Meeting of Shareholders. Shareholders must be received no later than December 2, 2020. The notice must also provide certain information required by the Company’s Code of Regulations.
As to any proposal that a shareholder intends to present to shareholders other than by inclusion in our Proxy Statementproxy statement for our 2019the 2021 Annual Meeting, of Shareholders, the proxies named in management’s proxy for that meeting will be entitled to exercise their discretionary voting authority on that proposal unless we receive notice of the matter to be proposed not later than February 17, 2019.15, 2021. Even if proper notice is received on or prior to February 17, 201915, 2021, the proxies named in our proxy for that meeting may nevertheless exercise their discretionary authority with respect to such matter by advising shareholders of that proposal and how they intend to exercise their discretion to vote on such matter, unless the shareholder making the proposal solicits proxies with respect to the proposal to the extent required by RuleRule 14a-4(c)(2) under the Securities Exchange Act of 1934.
The SEC permits a single set of annual reports and Proxy Statements to be sent to any household at which two or more shareholders reside if they appear to be members of the same family. Each shareholder continues to receive a separate Proxy Card. This procedure, referred to as householding, reduces the volume of duplicate information shareholders receive and reduces mailing and printing costs. A number of brokerage firms have instituted householding. Only one copy of this Proxy Statement and the accompanying annual report will be sent to certain beneficial shareholders who share a single address, unless any shareholder residing at that address gave contrary instructions.
If any beneficial shareholder residing at such an address desires at this time or in the future to receive a separate copy of this Proxy Statement and the accompanying annual report or if any such shareholder who currently receives a separate Proxy Statement and annual report and would like to receive only a single set in the future, the shareholder should provide such instructions to us by calling Matthew Ostrower,Conor Fennerty, Chief Financial Officer, at(216) 755-5500, or by writing to DDRSITE Centers Corp., Attn. Investor Relations, at 3300 Enterprise Parkway, Beachwood, Ohio 44122.
58�� SITE Centers Corp.ï 2020 Proxy Statement
Shareholders and other interested parties may send written communications to our Board or thenon-management Directors as a group by mailing them to our Board, c/o Aaron M. Kitlowski, Secretary, DDRSITE Centers Corp., 3300 Enterprise Parkway, Beachwood, Ohio 44122. All communications will be forwarded to our Board or thenon-management Directors as a group, as applicable.
DDRSITE Centers Corp. ï 20182020 Proxy Statement 6359
12.9. Frequently Asked Questions
Why did you send me this Proxy Statement?
The Company sent you this Proxy Statement and the accompanying Notice of Annual Meeting of Shareholders, 2019 Annual Report, which includes our financial statements, and Proxy Card because our Board is soliciting your proxy to vote at our 20182020 Annual Meeting of Shareholders. This Proxy Statement summarizes information you need to know in order to vote at the Annual Meeting. The Annual Meeting will be held at Loews Regency Hotel at 540 Park Avenue, New York, New York 10065, on May 8, 2018,12, 2020, at 9:00 a.m. local time. The hotel’s front desk will direct shareholders to the conference room where the Annual Meeting will be held. If your sharesyou are not registereda shareholder of record (i.e. if you do not hold shares in your own name,an account with our transfer agent), you must provide evidence of your share ownership as of March 14, 201820, 2020 in order to attend the Annual Meeting. You can obtain this evidence from your bank, brokerage firm or other nominee through which you hold your shares. For further information regarding directions to attend the Annual Meeting and vote in person, please contact Matthew Ostrower,Conor Fennerty, Chief Financial Officer, at(216) 755-5500 or at 3300 Enterprise Parkway, Beachwood, Ohio 44122.
As part of our contingency planning regarding novel coronavirus (COVID-19), due to considerations of safety and accessibility, we are preparing for the possibility that the date, time or location of the Annual Meeting may be changed or that the Annual Meeting may be held by means of remote communication (sometimes referred to as a “virtual meeting”). If we take this step, we will announce the decision to do so in advance through a press release and public filing with the Securities and Exchange Commission, and details will be available at www.sitecenters.com/investors.
However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote by telephone, over the Internet, or by completing and mailing the accompanying Proxy Card. Shareholders who owned our common shares at the close of business on March 14, 2018,20, 2020, the record date for the Annual Meeting, are entitled to vote. On the record date, there were 369,271,805193,148,522 common shares outstanding. Our 2017 Annual Report, which includes our financial statements, also accompanies this Proxy Statement.
This solicitation of proxies is made by and on behalf of our Board. We will bear the cost of the solicitation of proxies. In addition to the solicitation of proxies by mail, certain of our employees may solicit proxies by telephone, facsimile, or email. Those employees will not receive any additional compensation for their participation in the solicitation. We retained Georgeson, Inc., at an estimated cost of $11,500, plus reimbursement of expenses, to assist in the solicitation of proxies from brokers, nominees, institutions and individuals.
You areEach share of our common stock outstanding on the record date is entitled to one vote on each item submitted to shareholders for each of our common shares that you owned on the record date.their consideration. The accompanying Proxy Card indicates the number of shares that you owned on the record date.
Although the Board has submitted a proposal included in this Proxy Statement to be voted upon by Our shareholders at the 2018 Annual Meeting to eliminate cumulative voting by shareholders in future Director elections, shareholders have the right to request cumulative voting for the election of Directors at the 2018 Annual Meeting. If written notice is given by any shareholder to our President, any Vice President, or the Secretary at least 48 hours before the Annual Meeting that the shareholder desires that cumulative voting be used for the election of Directors, and if an announcement of the giving of that notice is made when the Annual Meeting is convened by the Chairman of the Board, the President, or the Secretary, or by or on behalf of the shareholder giving such notice, then each shareholder willdo not have the right to cumulate the voting power that the shareholder possessestheir votes in the election of Directors. This means that each shareholder will be able to give one candidate a number of votes equal to the number of Directors to be elected multiplied by the number of common shares owned by such shareholder, or to distribute the shareholder’s votes on the same principle among two or more candidates, as the shareholder may elect.
If voting for the election of Directors is cumulative, the persons named in the accompanying Proxy Card will vote the common shares represented by proxies given to them in such manner so as to elect as many of the nominees named in this Proxy Statement as possible.
6460 DDRSITE Centers Corp. ï 20182020 Proxy Statement
Shareholders may vote either by completing, properly signing, and returning the accompanying Proxy Card via mail, by telephone, or over the Internet, or by attending and voting at the Annual Meeting. If you properly complete and timely return your Proxy Card or properly and timely follow the telephone or Internet voting instructions described below, your proxy (meaning one of the individuals named in the Proxy Card) will vote your shares as you have directed, provided however, if you do not indicate specific choices as to your vote, your proxy will vote your shares as recommended by our Board:
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Shareholders of record (i.e., shareholders with shares held in an account with our transfer agent) may vote by calling1-800-652-8683 or over the Internet by accessing the following website:www.investorvote.com/ddrsitc. Voting instructions, including your shareholder account number and personal proxy control number, are contained on the accompanying Proxy Card. Those shareholders of record who choose to vote by telephone or over the Internet must do so by 11:59 p.m., Eastern Time, on May 7, 2018.11, 2020.
A number of banks and brokerage firms participate in a program that also permits shareholders whose shares are held in “street name” to direct their vote by telephone or over the Internet. If your shares are held in an account at a bank or brokerage firm that participates in such a program, you may direct the vote of these shares by telephone or over the Internet by following the voting instructions enclosed with the Proxy Card from the bank or brokerage firm. The Internet and telephone proxy procedures are designed to authenticate shareholders’ identities, to allow shareholders to give their proxy voting instructions, and to confirm that those instructions have been properly recorded. Votes directed by telephone or over the Internet through such a program must be received by 11:59 p.m., Eastern Time, on May 7, 2018.11, 2020. If you hold your shares in “street name”, in order to vote your shares at the Annual Meeting, you must obtain a legal proxy from your bank or brokerage firm giving you the right to vote your shares at the Annual Meeting.
If any other matter is presented at the Annual Meeting, your proxy will vote your shares in accordance with his or her discretion and best judgment. AsThe Company did not receive any notice of a shareholder proposal to be presented at the Annual Meeting by December 3, 2019, the deadline pursuant to the advance notice provision of the Company’s Code of Regulations, and as of the date of this Proxy Statement, we are not aware of any matter to be acted on at the Annual Meeting other than those matters described in this Proxy Statement.
YouIf you are a shareholder of record, you may revoke or change your proxyvote at any time before itthe proxy is exercised by giving writtenfiling a notice to us atof revocation with our principal executive offices located at 3300 Enterprise Parkway, Beachwood, Ohio 44122, by submitting to usSecretary, mailing a duly executedsigned Proxy Card bearing a later date, submitting your proxy again by telephone or over the Internet or by attending the Annual Meeting and voting in person. For shares you hold beneficially in “street name”, you may change your vote by submitting new voting instructions to your brokerage firm or bank or, if you have obtained a legal proxy from your brokerage firm or bank giving noticeyou the right to us in open meeting. It is important to note thatvote your presenceshares, by presenting such proxy at the Annual Meeting without any further action on your part,and voting in person. In either case, the powers of the proxy holders will be suspended if you attend the Annual Meeting in person and so request, although attendance at the Annual Meeting will not by itself revoke youra previously granted proxy.
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Can I receive this Proxy Statement by email in the future?
Yes. By doing so, you are reducing the impact on the environment and helping to save the Company the costs and expenses of preparing and mailing theseproxy materials. If you are a registered shareholder with your shares held
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in an account at our transfer agent, visitwww.computershare.com/investor to create a login and to enroll. You may revoke your election to receive materials by email and instead receive a paper copy via mail at any time by visiting this website. If you hold your shares through a bank or broker, please refer to the information provided by that institution for instructions on how to elect to receive future proxy statements and annual reports over the Internet and how to change your delivery instructions.
The presence at the Annual Meeting, either in person or by proxy, of the holders of a majority of the aggregate number of our common shares issued and outstanding on the record date will represent a quorum permitting the conduct of business at the meeting. Proxy Cards that we receive marked as abstentions or brokernon-votes will be included in the calculation of the number of shares considered to be present at the Annual Meeting for purposes of determining a quorum.
What vote is required to approve each proposal assuming that a quorum is present at the Annual Meeting?
Proposal One: Election of Eight Directors | To be elected, Directors must receive a majority of the votes cast (i.e., the number of shares voted
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Approval, on an Advisory Basis, of the Compensation of the Company’s Named Executive Officers | This vote is advisory only and therefore is not binding on us or our Board. However, the Board and Compensation Committee of the Board will review the results of the vote and will consider the affirmative vote of a majority of the votes cast on this Proposal to be approval by the shareholders of the compensation of our named executive officers. Brokernon-votes and abstentions will not be considered votes cast at the Annual Meeting and will be excluded in determining the number of votes cast at the Annual Meeting.
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Proposal Ratification of PricewaterhouseCoopers LLP as the Company’s Independent Registered Public Accounting Firm | Although our independent registered public accounting firm may be selected by the Audit Committee of our Board without shareholder approval, the Audit Committee will consider the affirmative vote of a majority of the votes cast on this Proposal to be a ratification by the shareholders of PricewaterhouseCoopers LLP as our independent registered public accounting firm. Abstentions will not be considered votes cast at the Annual Meeting and will be excluded in determining the number of votes cast at the Annual Meeting.
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For shareholders who hold their common shares in “street name” through banks or brokeragesbrokerage firms and do not instruct their bank or broker how to vote, the bank or brokerage firm will not vote such shares for Proposals One Two, Three, Four or FiveTwo resulting in brokernon-votes with respect to such shares.As a result, it is important that shareholders vote their shares.
By order of the Board of Directors,
AARON M. KITLOWSKI
Secretary
Dated: April 2, 20181, 2020
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Annex A
AMENDMENT TO THIRD AMENDED AND RESTATED ARTICLES OF INCORPORATION TO ELIMINATE CUMULATIVE VOTING IN DIRECTOR ELECTIONS
SEVENTH: Notwithstanding any provision of Sections 1701.01 to 1701.98, inclusive, of the Ohio Revised Code, or any successor statutes now or hereafter in force, requiring for the authorization or taking of any action the vote or consent of the holders of shares entitling them to exercisetwo-thirds or any other proportion of the voting power of the corporation or of any class or classes of shares thereof, such action, unless otherwise expressly required by law or these Articles of Incorporation, may be authorized or taken by the vote or consent of the holders of shares entitling them to exercise a majority of the voting power of the corporation or of such class or classes of shares thereof.
Except as provided in the Company’s code of regulations with respect to the election of a director to fill a vacancy in the Board of Directors, each director shall be elected by the vote of the majority of the votes cast with respect to the director at any shareholder meeting held for the election of directors at which a quorum is present; provided, however, that if as of the date that is ten days in advance of the date the Company files its definitive proxy statement (regardless of whether or not thereafter revised or supplemented) with the Securities and Exchange Commission with respect to a shareholder meeting the number of nominees for election as a director is greater than the number of directors to be elected, then the directors shall be elected at the meeting by the vote of a plurality of the shares represented in person or by proxy at that meeting and entitled to vote on the election of directors. For purposes of this Section, a majority of the votes cast means the number of shares voted “for” a director exceeds the number of votes cast “against” the director. Brokernon-votes and abstentions will not be considered votes cast at the shareholder meeting and will be excluded in determining the number of votes cast at the shareholder meeting.
No holder of shares of the Company of any class shall have the right to cumulate the voting power of such shares in the election of directors. The right to cumulate the voting power as provided in Section 1701.55 of the Ohio Revised Code, or any successor statute now or hereinafter in force, is hereby specifically denied to all holders of shares of any class of the Company.
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Annex B
AMENDMENT TO AMENDED AND RESTATED CODE OF REGULATIONS TO IMPLEMENT PROXY ACCESS
ARTICLE II
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Section 2.Nomination and Election of Directors. Directors shall be elected at the annual meeting of shareholders, but when the annual meeting is not held or directors are not elected thereat, they may be elected at a special meeting called and held for that purpose. Such election shall be by ballot whenever requested by any shareholder entitled to vote at such election; but, unless such request is made, the election may be conducted in any manner approved at such meeting.
At each meeting of shareholders for the election of directors, the persons receiving the greatest number of votes shall be directors.
Nominations of persons for election as Directors at the annual meeting of shareholders may be made by, and only by, (i) the Board Directors or a committee thereof, (ii) one or more Eligible Shareholders (as defined below) pursuant to and in accordance with this Section 2 and (iii) any holder of shares entitled to vote for the election of directors at such meeting who otherwise complies with the requirements of these Regulations and applicable law.
The Corporation shall include in its proxy statement and proxy for any annual meeting of shareholders (collectively, the “Proxy Materials”), together with any information required to be included in a proxy statement filed pursuant to the rules and regulations of the Securities and Exchange Commission and, if the Eligible Shareholder so elects, a Statement (as defined below), the name of any person nominated for election to the Board of Directors (the “Shareholder Nominee”) by a shareholder, or a group of no more than 20 shareholders, who satisfies the requirements of this Section 2 (an “Eligible Shareholder”) and who expressly elects at the time of providing the written notice required by this Section 2 to have its nominee included in the Proxy Materials pursuant to this Section 2. For purposes of any representation, agreement or other undertaking required by this Section 2, the term “Eligible Shareholder” shall include each member of any group forming an Eligible Shareholder. Such written notice shall consist of a copy of Schedule 14N filed with the Securities and Exchange Commission in accordance with Rule14a-18 of the Securities Exchange Act of 1934, as amended, or any successor schedule or form filed with the Securities and Exchange Commission in accordance with Rule14a-18 of the Securities Exchange Act of 1934, as amended, or any successor provision, the Required Information and the other information required by this Section 2 (all such information collectively referred to as the “Proxy Notice”), and such Proxy Notice shall be delivered to the Corporation in accordance with the procedures and at the times set forth in this Section 2.
Each Proxy Notice must set forth or include (the following, collectively referred to as the “Required Information”): (i) the name and address, as they appear on the Corporation’s books, of the shareholder or group of shareholders giving such notice; (ii) a representation that the shareholder or group of shareholders giving such notice is a holder of record of stock of the Corporation entitled to vote at such annual meeting and intends to appear in person or by proxy at the annual meeting to nominate the person or persons specified insuch notice; (iii) the class and number of shares of stock of the Corporation owned beneficially and of record by the shareholder or group of shareholders giving such notice; (iv) a description of all arrangements or
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understandings between or among any of (A) the shareholder or group of shareholders giving such notice, (B) each nominee, and (C) any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder or group of shareholders giving such notice; (v) such other information regarding each nominee proposed by the shareholder or group of shareholders giving such notice as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, by the Board of Directors; (vi) the signed consent of each nominee to serve as a director of the Corporation if so elected, and (vii) if the Eligible Shareholder so elects, a Statement.
To be timely, the Proxy Notice must be delivered to or mailed and received at the principal executive offices of the Corporation no earlier than 150 calendar days and no later than 120 calendar days prior to the first anniversary of the date that the Corporation issued its Proxy Materials for the previous year’s annual meeting of shareholders; provided, however, that in the event that the date of the annual meeting is more than 30 calendar days before or more than 60 calendar days after the first anniversary of the previous year’s annual meeting of shareholders, the Proxy Notice, to be timely, must be delivered to or mailed and received at the principal executive offices of the Corporation not later than (i) 150 calendar days prior to the date of such annual meeting or (i) if the first public announcement ofthe date of such annual meeting is less than 150 calendar days prior to the date of such annual meeting, 10 calendar days following the day on which public announcement is first made by the Corporation of the date of such meeting.
The Corporation shall not be required to include, pursuant to this Section 2, any Shareholder Nominee in the Proxy Materials (i) whose election as a member of the Board of Directors would cause the Corporation to be in violation of these Regulations, the Articles of Incorporation of the Corporation, the rules and listing standards of the principal U.S. exchange upon which the common shares of the Corporation are listed, any applicable state or federal law, rule or regulation, or the Corporation’s publicly disclosed policies and procedures, (ii) who is or has been within the past three years, an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, as amended, (iii) who is a named subject of a pending criminal proceeding or has been convicted in such a criminal proceeding within the past 10 years (excluding traffic violations and other minor offenses) or (iv) who is subject to any order of the type specified in Rule 506(d) of Regulation D promulgated under the Securities Act of 1933, as amended, or any successor provision.
The maximum number of Shareholder Nominees appearing in the Proxy Materials with respect to an annual meeting of shareholders shall not exceed 20% of the number of directors in office as of the last day on which the Proxy Notice may be delivered or received or, if such amount is not a whole number, the closest whole number below 20%, and in any event, not less than two Shareholder Nominees. In the event that one or more vacancies for any reason occurs on the Board of Directors after the last day on which the Proxy Notice may be delivered or received but before or as of the annual meeting of shareholders and the Board of Directors resolves to reduce the size of the Board of Directors in connection therewith, the maximum number of Shareholder Nominees included in the Proxy Materials shall be calculated based on the number of directors in office as so reduced. Shareholder Nominees that were submitted by an Eligible Shareholder for inclusion in Proxy Materials pursuant to this Section 2 but either are subsequently withdrawn after the last day on which the Proxy Notice may be delivered or received or whom the Board of Directors itself determines to nominate for election shall, for the purposes of this Section 2, count as Shareholder Nominees appearing in the Proxy Materials. Each Eligible Shareholder shall rank each Shareholder Nominee it submitted for inclusion in the Proxy Materials and in the event that the number of Shareholder Nominees submitted by Eligible Shareholders pursuant to this Section 2 exceeds this maximum number, the highest ranked Shareholder Nominee from the Eligible Shareholder owning the greatest number of shares of stock of the Corporation will be selected for inclusion in the Proxy Materials first, followed by the highest ranked Shareholder Nominee of the Eligible Shareholder holding the next greatest number of shares of stock of the Corporation, and continuing on in that manner until the maximum number of Shareholder Nominees is reached.
For purposes of this Section 2, an Eligible Shareholder shall be deemed to own only those outstanding common shares as to which the shareholder possesses both (i) the full voting and investment rights pertaining to the
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shares and (ii) the full economic interest in (including the opportunity for profit and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (i) and (ii) shall not include any shares (A) sold by such shareholder or any of its affiliates in any transaction that has not been settled or closed, (B) borrowed by such shareholder or any of its affiliates for any purposes or purchased by such shareholder or any of its affiliates pursuant to an agreement to resell, or (C) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such shareholder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of shares of outstanding common shares, in any such case which instrument or agreement has, or is intended to have, or if exercised would have, the purpose or effect of (x) reducing in any manner, to any extent or at any time in the future, such shareholder’s or its affiliates’ full right to vote or direct the voting of any such shares, or (y) hedging, offsetting or altering to any degree gain or loss arising from the full economic ownership of such shares by such shareholder or affiliate. Further, for purposes of this Section 2, an Eligible Shareholder shall be deemed to own shares held in the name of a nominee or other intermediary so long as the shareholder retains the right to recall the shares for voting purposes on no less than five business days’ notice, represents that they will vote such shares at the applicable shareholder meeting and possesses the full economic interest in the shares. An Eligible Shareholder’s ownership of shares shall be deemed to continue during any period in which the shareholder has delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement that is revocable at any time by the shareholder. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings. Whether outstanding shares of the Common Stock of the Corporation are owned for purposes of this Section 2 shall be determined by the Board of Directors or a committee thereof, in its reasonable discretion. For the purposes of this Section 2, the term “affiliate” or “affiliates” shall have the meaning ascribed thereto under the rules and regulations of the Securities Exchange Act of 1934, as amended. No shares of the Corporation may be attributed to more than one group constituting an Eligible Shareholder and no shareholder or beneficial owner, alone or together with any of its affiliates, may be a member of more than one group constituting an Eligible Shareholder. Furthermore, two or more funds that are (i) under common management and investment control, (ii) under common management and funded primarily by the same employer or (iii) a “group of investment companies,” as such term is defined in the InvestmentCompany Act of 1940, as amended, shall be treated as one shareholder for purposes of determining Eligible Shareholder status.
An Eligible Shareholder must have owned 3% or more of the issued and outstanding common shares continuously for at least three years (the “Required Shares”) as of each of the date the Proxy Notice is delivered to or received by the Corporation, the date the Proxy Notice is required to be delivered to or received by the Corporation in accordance with this Section 2 and the record date for determining shareholders entitled to vote at the annual meeting, and must continue to hold the Required Shares through the date of the annual meeting. Within the time period specified in this Section 2 for delivery of the Proxy Notice, an Eligible Shareholder must provide the following information in writing to the Secretary of the Corporation: (i) one or more written statements from the record holder of the shares (and from each intermediary through which the shares are or have been held during the requisite three-year holding period) verifying that, as of a date within three calendar days prior to the date the Proxy Notice is delivered to or received by the Corporation, the Eligible Shareholder owns, and has owned continuously for the preceding three years, the Required Shares, and the Eligible Shareholder’s agreement to provide, within five business days after each of the date the Proxy Notice is required to be delivered to or received by the Corporation and the record date for the annual meeting, written statements from the record holder and intermediaries verifying the Eligible Shareholder’s continuous ownership of the Required Shares through each of the date the Proxy Notice is required to be delivered to or received by the Corporation and the record date, along with a written statement that the Eligible Shareholder will continue to hold the Required Shares through the date of the annual meeting; (ii) the Required Information, together with the written consent of each Shareholder Nominee to being named in the Proxy Statement as a nominee; (iii) a representation that (A) the Eligible Shareholder acquired the Required Shares in the ordinary course of business and did not acquire any of the Required Shares with the intent to change or influence control of the Corporation, and does not presently have such intent, (B) the Eligible Shareholder has not nominated and will not nominate for election to the Board of Directors at the annual meeting any person other than the Shareholder Nominee(s) being nominated pursuant to this Section 2, (C) the Eligible Shareholder has not engaged and will not engage in,
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and has not and will not be a “participant” in another person’s, “solicitation” within the meaning of Rule14a-1(l) under the Securities Exchange Act of 1934, as amended, or any successor provision, in support of the election of any individual as a director at the annual meeting other than its Shareholder Nominee or a nominee of the Board of Directors, (D) that the Shareholder Nominee(s) is or are eligible for inclusion in the Proxy Materials under this Section 2 and (E) the Eligible Shareholder will not distribute to any shareholder any proxy for the annual meeting other than the form distributed by the Corporation, (iv) an undertaking that the Eligible Shareholder agrees to (A) assume all liability stemming from any legal or regulatory violation arising out of the Eligible Shareholder’s communications with the shareholders of the Corporation or out of the information that the Eligible Shareholder provided to the Corporation, (B) comply with all other laws and regulations applicable to any solicitation in connection with the annual meeting, and (C) provide to the Corporation prior to the election of directors such additional information as requested with respect thereto, including any other certifications, representations or undertakings as the Corporation may reasonably request, (v) in the case of a nomination by a group of shareholders that together is an Eligible Shareholder, the designation by all group members of one group member that is authorized to act on behalf of all such members with respect to the nomination, (vi) an undertaking that the Eligible Shareholder agrees to immediately notify the Corporation if the Eligible Shareholder ceases to own any of the Required Shares prior to the date of the applicable annual meeting and (vii) in the case of a nomination by an Eligible Shareholder that includes a group of funds whose shares are aggregated for purposes of constituting an Eligible Shareholder, an undertaking that the Eligible Shareholder agrees to provide all documentation and other information reasonably requested by the Corporation to demonstrate that the funds satisfy the requirements of this Section 2. If the Eligible Shareholder does not comply with each of the applicable representation, agreements and undertakings set forth in this Section 2, or the Eligible Shareholder provides information to the Corporation regarding a nomination that is untrue in any material respect or omitted to state a material fact necessary in order to make a statement made, in light of the circumstances under which it was made, not misleading, the Shareholder Nominee(s) nominated by such Eligible Shareholder shall be deemed to have been withdrawn and will not be included in the Proxy Materials.
The Eligible Shareholder may provide to the Secretary of the Corporation, at the time the information required by this Section 2 is first provided, a written statement (the “Statement”) for inclusion in the Proxy Materials, not to exceed 500 words, in support of the Shareholder Nominee’s candidacy. Notwithstanding anything to the contrary contained in this Section 2, the Corporation may omit from the Proxy Materials any information or Statement that it, in good faith, believes is materially false or misleading, omits to state any material fact or would violate any applicable law or regulation. If multiple members of a shareholder group submit a statement for inclusion, the statement received by the Eligible Shareholder owning the greatest number of shares will be selected.
On or prior to the date the Proxy Notice is required to be delivered or received by the Corporation as specified in this Section 2, a Shareholder Nominee must deliver to the Secretary of the Corporation the written questionnaire required of directors and officers. The Shareholder Nominee must also deliver to the Corporation such additionalinformation as the Corporation may request to permit the Board of Directors to determine if the Shareholder Nominee is independent under the rules and listing standards of the principal U.S. exchange upon which the Corporation’s common shares are listed, any applicable rules of the Securities and Exchange Commission, any publicly disclosed standards used by the Board of Directors in determining and disclosing the independence of its directors. If the Board of Directors determines in good faith that the Shareholder Nominee is not independent under any of these standards, the Shareholder Nominee will be deemed to have been withdrawn and will not be included in the Proxy Materials. If a Shareholder Nominee or an Eligible Shareholder fails to continue to meet the requirements of this Section 2, if the Eligible Shareholder fails to meet the all of the requirements of the notice provisions set forth in this Section 2 or if a Shareholder Nominee dies, becomes disabled or is otherwise disqualified from being nominated for election or serving as a director prior to theannual meeting of shareholders: (i) the Corporation may, to the extent feasible, remove the name of the Shareholder Nominee and the Statement from its proxy statement, remove the name of the Shareholder Nominee from its form of proxy and/or otherwise communicate to its shareholders that the Shareholder Nominee will not be eligible for nomination at the annual meeting of Shareholders; and (ii) the Eligible Shareholder may not name another Shareholder Nominee or, subsequent to the date on which the Proxy Noticeis required to be delivered to or received by the Corporation, otherwise cure in any way any defect preventing the nomination of the Shareholder
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Nominee at the annual meeting of Shareholders. On or prior to the date the Proxy Notice is required to be delivered to or received by the Corporation as specified in this Section 2, a Shareholder Nominee must deliver to the Secretary of the Corporation a written representation and agreement that such person (i) is not and will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question that has not been disclosed to the Corporation, (ii) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the Corporation, and (iii) will comply with all the Corporation corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines, and any other the Corporation policies and guidelines applicable to directors. If the Shareholder Nominee fails to comply with any of the requirements included in this Section 2, the Shareholder Nominee will be deemed to have withdrawn and will not be included in the Proxy Materials.
Notwithstanding the provisions of this Section 2, unless otherwise required by law or otherwise determined by the Board of Directors, if (i) the Eligible Shareholder or (ii) a qualified representative of the Eligible Shareholder does not appear at the applicable annual meeting to present its Shareholder Nominee or Shareholder Nominees, such nomination or nominations shall be disregarded, and no vote on such Shareholder Nominee or Shareholder Nominees will occur, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 2, to be considered a qualified representative of an Eligible Shareholder, a person must be authorized by a writing executed by such Eligible Shareholder or an electronic transmission delivered by such Eligible Shareholder to act for such Eligible Shareholder as proxy at the applicable annual meeting and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the applicable annual meeting.
Notwithstanding anything in this Section 2 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased by the Board of Directors, and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 130 calendar days prior to the first anniversary of the preceding year’s annual meeting, a Proxy Notice shall also be considered timely, but only with respect to Shareholder Nominees for any new positions created by such increase and only to the extent the increase in the size of the Board of Directors increases the number of Shareholder Nominees permitted under this Section 2, if it shall be delivered to or received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth calendar day following the day on which such public announcement is first made by the Corporation.
Compliance with this Section 2 shall be the exclusive method for shareholders to include nominees for director in the Corporation’s proxy materials.
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Annex C
AMENDMENT TO THIRD AMENDED AND RESTATED ARTICLES OF INCORPORATION CORRESPONDING TO EFFECT REVERSE STOCK SPLIT
FOURTH: The authorized number of shares of the Corporation is611,000,000311,000,000, consisting of600,000,000300,000,000common shares, $0.10 par value per share (hereinafter called “Common Shares”), 750,000 Class A Cumulative Preferred Shares, without par value (hereinafter called “Class A Shares”), 750,000 Class B Cumulative Preferred Shares, without par value (hereinafter called “Class B Shares”), 750,000 Class C Cumulative Preferred Shares, without par value (hereinafter called “Class C Shares”), 750,000 Class D Cumulative Preferred Shares, without par value (hereinafter called “Class D Shares”), 750,000 Class E Cumulative Preferred Shares, without par value (hereinafter called “Class E Shares”), 750,000 Class F Cumulative Preferred Shares, without par value (hereinafter called “Class F Shares”), 750,000 Class G Cumulative Preferred Shares, without par value (hereinafter called “Class G Shares”), 750,000 Class H Cumulative Preferred Shares, without par value (hereinafter called “Class H Shares”), 750,000 Class I Cumulative Preferred Shares, without par value (hereinafter called “Class I Shares”), 750,000 Class J Cumulative Preferred Shares, without par value (hereinafter called “Class J Shares”), 750,000 Class K Cumulative Preferred Shares, without par value (hereinafter called “Class K Shares”), 750,000 Noncumulative Preferred Shares, without par value (hereinafter called “Noncumulative Shares”), and 2,000,000 Cumulative Voting Preferred Shares, without par value (hereinafter called “Voting Preferred Shares”). The Class A Shares, Class B Shares, Class C Shares, Class D Shares, Class E Shares, Class F Shares, Class G Shares, Class H Shares, Class I Shares, Class J Shares, Class K Shares and Voting Preferred Shares are sometimes collectively referred to herein as the “Cumulative Shares.”
Effective as of[ ][a.m./p.m.], Eastern Time, on [Effective Time to be determined] the (“Effective Time”), each two of the Common Shares issued and outstanding or held by the Corporation as treasury stock shall, automatically and without any action on the part of the Corporation or the respective holders thereof, be combined and converted into one Common Share. Each outstanding share certificate that, immediately prior to the Effective Time, represented one or more Common Share shall, thereafter, automatically and without the necessity of surrendering the same for exchange, represent the number of whole Common Shares equal to the product of (x) the number of Common Shares represented by such certificate immediately prior to the Effective Time and (y) one half, rounded down to the nearest whole integer; and Common Shares held in uncertificated form shall be treated in the same manner. No fractional shares shall be issued in connection with such combination and conversion and, in lieu thereof, any holder of less than one Common Share shall, upon due surrender to the Corporation, be entitled to receive a cash payment equal to its pro rata portion of the net proceeds of the open market sale of all fractional Common Shares that would otherwise be issued, aggregated into whole Common Shares, at prevailing market prices.
At the Effective Time, the stated capital of the Common Shares shall be reduced proportionately to the reduction in the number of issued and outstanding Common Shares.
DIVISION A
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C-1
Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. | ||||||||||
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Online | ||||||||||
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Annual Meeting Proxy Card |
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q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
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Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 11:59 PM Eastern Time on May 7, 2018.
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Vote by telephone
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
A | Proposals |
1. | Election of Eight Directors: |
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01 - Linda B. Abraham | ☐ | ☐ | ☐ | 02 - Terrance R. Ahern | ☐ | ☐ | ☐ | 03 - Jane E. DeFlorio | ☐ | ☐ | ☐ | |||||||||||||||||||
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Adoption of an Amendment to the Company’s Articles of Incorporation to Eliminate the Ability of Shareholders to Exercise Cumulative Voting in the Election of Directors. |
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Adoption of an Amendment to the Company’s Code of Regulations to Implement Proxy Access in Connection with Annual Meetings of Shareholders. |
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Authorization of the Company’s Board of Directors to Effect, in its Discretion, a Reverse Stock Split of the Company’s Common Stock and the Adoption of a Corresponding Amendment to the Company’s Articles of Incorporation. |
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☐ | 5. | Approval, on an Advisory Basis, of the Compensation of the Company’s Named Executive Officers. | ☐ | ☐ | ☐ | |||||||||
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Ratification of PricewaterhouseCoopers LLP as the Company’s Independent Registered Public Accounting Firm. |
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Approval, on an advisory basis, of the compensation of the Company’s named executive officers. | ☐ | ☐ | ☐ | 3.
| Ratification of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm. | ☐ | ☐ | ☐ | |||||||||
B | Authorized Signatures |
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
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03740B |
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders to be held on May 8, 2018.12, 2020.
The DDRSITE Centers Corp. 20182020 Proxy Statement and the 20172019 Annual Report to Shareholders are available at:www.proxydocs.com/ddrsitc
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q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
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Proxy |
Annual Meeting of Shareholders – May 8, 201812, 2020
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints Matthew L. Ostrower,Conor M. Fennerty, Aaron M. Kitlowski and Christa A. Vesy, and each of them, with power to act without the others and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the DDRSITE Centers Corp. Common Shares that the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Shareholders of the Company to be held May 8, 201812, 2020 or at any adjournment or postponement thereof, with all powers which the undersigned would possess if present at the Annual Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” THE ELECTION OF ALL DIRECTOR NOMINEES AND “FOR” ITEMS 2 THROUGH 6.AND 3.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card. To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
(Continued and to be marked, dated and signed on the other side)
If voting by mail, complete sections A and C and, if applicable, section B on the reverse side of this card.card and, if applicable, section C below.
C | Non-Voting Items |
Change of Address | Comments |