UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
☑ | Filed by the Registrant | ☐ | 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 Under Rule 14a-12 |
SL Green Realty Corp.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX): | |||
☑ | No fee required. | ||
☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||
1) Title of each class of securities to which transaction applies: | |||
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☐ | Fee paid previously with preliminary materials: | ||
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. | ||
1) Amount previously paid: | |||
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4) Date Filed: |
20182019 PROXY STATEMENT HIGHLIGHTS
Logistics |
Date & Time | Location | Record Date |
Roadmap of Voting Matters |
You are being asked to vote on the following matters:
Proposal | Board Recommendation | See Page | |||||
1 | Election of Directors | ||||||
The Board unanimously recommends a vote for each of John H. Alschuler, Edwin T. Burton, III, Lauren B. Dillard, | ✓ | FOR Each Nominee | |||||
2 | Advisory Approval of Executive Compensation | ||||||
The Company seeks non-binding stockholder approval of the compensation of the company’s named executive officers, as described in the Compensation Discussion and Analysis section and compensation tables included in this proxy statement. | ✓ | FOR | |||||
3 | Ratification of Independent Registered Public Accounting Firm | ||||||
The Audit Committee and the Board believe that the continued appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, | ✓ | FOR |
In addition, stockholders may be asked to consider and vote upon any other matters that may properly be brought before the annual meeting and at any adjournments or postponements thereof.
Your Vote is Important—Vote Now |
Your vote is very important to us. Please vote as soon as possible by one of the methods shown below:
By Internet | By Tablet or Smartphone Scan this QR code to vote with your mobile device | By Telephone |
2018 Proxy2019Proxy Statement 1
20182019 PROXY STATEMENT HIGHLIGHTS
Business Overview and Highlights |
Our Mission | We are a fully integrated REIT focused on maximizing total return to stockholders through strategically acquiring, redeveloping, repositioning and managing commercial properties, located primarily in Manhattan, in order to generate cash flow and create value. | ||||
Who We Are1 | $1.8 Billion Combined Revenues | #1 Owner of Office Property in Manhattan | Total Square Feet2 | $ Enterprise Value |
We differentiate ourselves from our peers and competitors in three key ways:
Active and Engaged Business Strategy | ||
●SLG does not subscribe to a traditional “buy and hold” strategy and is a very active transaction-oriented company ●In any given year, we execute more transactions than many of our competitors do over a much longer, multi-year period ●Accordingly, we frequently capitalize on opportunities in the market, maximizing returns | ||
Operations on Multiple Platforms | ||
●Buy and sell properties independently and collaborate with other organizations through joint ventures when advantageous ●Invest in redeveloping existing assets (e.g. 609 Fifth Avenue) and ●Provide financing for other real estate | ||
NYC-Focused Business Model | ||
●Singularly focused on New York City real estate – one of the most liquid and resilient markets through business cycles, ●Presence and operations in this complex and highly competitive market necessitate a top level of talent in our executive ranks ●Our leadership team |
Growth in FFO Per Share | |||
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Superior Long-Term TSR | ||||
SLG TSR % vs. MSCI U.S. REIT Index Total Return(4) | ||||
We have continued to deliver superior long-term return to stockholders, or TSR |
1 | Data as of12/31/ |
2 | Includes debt and preferred equity investments and suburban properties |
3 | Refer to Appendix A to this proxy statement for a reconciliation of Normalized FFO |
4 | Source: |
2 SL Green Realty Corp.
20182019 PROXY STATEMENT HIGHLIGHTS
Stockholder Engagement and Responsiveness – Significant Changes for 2019
Since the2018annual meeting, we have reached out to over70% of stockholders. In response to feedback we received from stockholders,our engagement efforts, our Board reduced director compensation, and the Compensation Committee fundamentally redesigned our CEO’s compensation as governed by his employment agreement, significantly simplifying the structure of ourexecutive compensation program by reducingto implement the overall components and enhancing the transparency of the program.following changes:
Stockholder Feedback (“What We | Action (“What We Did”) | Executive | Effective | Impact | |||||||
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CEO - Holliday | Retroactive to 1/18/2018 | ● ●Reduces target cash bonus | |||||||||
●Eliminated deferred compensation | CEO - Holliday President - Mathias | 2019onward | ●Eliminates multiple fixed pay elements | ||||||||
Annual Incentive | ●Annual incentive should focus on metrics within executives’ control | ●Eliminated TSR, | |||||||||
CEO - Holliday President - Mathias | 2018onward | ● | |||||||||
●Discretionary annual equity bonus | ● | ||||||||||
CEO - Holliday President - Mathias | 2019onward | ●Eliminates discretion, improves transparency into total compensation | |||||||||
Long-Term Incentive | ●Retesting feature allows for multiple vesting opportunities | ●Eliminated retesting | CEO - Holliday President - Mathias CLO & GC - Levine | 2019onward | ●Strengthens rigor of performance-based equity | ||||||
●Performance period for | ● ●50% LTIP units earned based on 3-year relative | ||||||||||
CEO - Holliday President - Mathias CLO & GC - Levine | 2019onward | ● ●Improves long-term alignment of executives’ interests | |||||||||
● | |||||||||||
● | CEO - Holliday President - Mathias CLO & GC - Levine | 2019onward | ● | ||||||||
Overall | ● | ●Reduced | |||||||||
CEO - Holliday President - Mathias | 2019onward | ●Improves transparency to assess pay-for-performance linkage | |||||||||
●Reduce Executive Chairman compensation | ●Stephen L. Green transition to Chairman Emeritus; no longer employee of the Company | Stephen L. Green | Jan17,2019 | ●No longer compensated as executive of company | |||||||
●Director compensation is high relative to peers | ●Reduced Director Compensation | All Non-Executive Directors | 2019onwards | ●Strengthens alignment of director pay relative to peers |
2018 Proxy2019Proxy Statement 3
2018 PROXY STATEMENT HIGHLIGHTS
2017 Pay Outcomes Demonstrate Pay-for-Performance Alignment
2017 Annual Cash Bonus Program
The following table reflects the2017cash bonuses awarded to Messrs. Holliday, Green and Mathias pursuant to our annual cash bonus program. As a result of the rigor of the performance targets established by the Committee for our annual cash bonus program, the amounts paid to Messrs. Holliday, Green and Mathias were below target and significantly reduced for2017compared to2016
Executive | Actual Cash Bonus (% of Target) | 2017 Actual Cash Bonus ($) | 2016 Actual Cash Bonus ($) | % Change 2017 vs. 2016 | ||||||||
Marc Holliday | 71.75 | % | $ | 1,937,250 | $ | 2,473,125 | -21.7 | % | ||||
Stephen L. Green | 71.75 | % | $ | 938,437 | $ | 1,161,718 | -19.2 | % | ||||
Andrew Mathias | 71.75 | % | $ | 1,001,000 | $ | 1,239,166 | -19.2 | % |
Actual Results of the 2014 Outperformance Plan
The performance period of the2014Outperformance Plan concluded August31,2017, with the following actual performance for the period from September1,2014to August31,2017:
Metric | Results | Results relative to Target | Percentage of LTIP Units Earned | |||
Cumulative Absolute TSR | 3.3% | Below threshold of 25% | 0% | |||
Relative TSR | 27th Percentile | Below threshold of 50thpercentile | 0% |
Despite the disclosed grant values appearing in our SummaryCompensation Tables for fiscal years 2015-2017, our named executiveofficers ultimately received no payout under the 2014 OPP.
Companies used for comparison in G&A expense analysis are: Alexandria Real Estate Equities, Inc., Boston Properties, Inc., Brandywine Realty Trust, Douglas Emmett, Inc., Empire State Realty Trust, Inc., Kilroy Realty Corporation, Mack-Cali Realty Corporation, Paramount Group, Inc. and Vornado Realty Trust. Office peer data obtained from Weekly Sector Scorecard, Office, dated4/6/2018published by Stifel, Nicolaus & Company, Incorporated
4 SL Green Realty Corp.
20182019 PROXY STATEMENT HIGHLIGHTS
Corporate Governance Highlights |
Diversity | Experience | Leadership | ||||
Our Board
| Our Board members have broad experience serving on public boards in industries relevant to the Company
| Our Board members have strong corporate leadership backgrounds such as being a CEO, CFO or holding other Executive positions | ||||
33%of our independent Board members are women | 78%of our Board currently serve or have served on the Boards of other publicly traded companies | 89%of our Board currently serve or have served as CEO or in senior leadership positions |
We remain focused on refreshing the membership and leadership of the Board and its Committees. | ||||||
Chairman transition: In | Committee chair rotations: In February 2018,Lauren DillardreplacedJohn Alschuleras chair of our Compensation Committee In March 2018,Craig HatkoffreplacedJohn Levyas chair of our Nominating and Corporate Governance Committee |
Stockholder Amendments to Bylaws | |||
In December 2018, we amended our bylaws topermit our stockholders to amend our bylawsby a majority vote without any ownership or holding period limitations. |
Declassified Board | |||
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Proxy Access | ||||||
A stockholder | 3% / 3-years | 2candidates /20% | ||||
Owning3% or more of our outstanding common stock continuously for at least three years |
To nominate and include in our proxy materials director candidates constituting up to the greater of two individuals or |
2018Proxy Statement 45 SL Green Realty Corp.
20182019 PROXY STATEMENT HIGHLIGHTS
ESG Highlights |
We are committed to corporate social responsibility initiatives that deliver efficiency, value and health for our business, tenants and community. Highlights of these initiatives are set forth below. Our Global Reporting Initiative (GRI) compliant sustainability reports and other information relating to these initiatives are available on our website at http://www.slgreen.com/sustainability.
● | Bloomberg ESG Disclosure score is the highest score for all companies in the REITs-Office Property sector | |||
● | Thomson Reuters ESG score of “A-” | |||
● | ENERGY STAR Partner of the Year – Sustained Excellence | |||
● | Achieved a “B” Carbon Disclosure Project score as a first-time reporter (2018) | |||
● | Awarded the “Changemaker Award” by the NYC Mayor’s Office of Service in recognition of SL Green’s volunteerism and philanthropic efforts (2018) | |||
● | Real Estate Finance & Investment’s “Most Sustainable REIT” | |||
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Environmental Initiatives | ||||
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● | 3 million square feet in active sustainable development projects, including One Vanderbilt |
Social Initiatives | ||||
● | Investment in employees through funding of training programs, tuition reimbursement and continued education courses | |||
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Market-leading | ||||
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Governance Initiatives - Sustainability | ||||
● | Executive and Board oversight of sustainability mission statement and goal setting | |||
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● | Annual GRI sustainability reports distributed to the Board, investors, tenants, vendor partners and government stakeholders | |||
● | Stakeholder engagement and materiality assessment processes initiated across tenants, community members, industry peers and employees to identify material ESG |
Going Greener
SL Green reports “In Accordance - Core” with the Global Reporting Initiative’s (GRI) G4framework, which ensures our sustainability program is transparent to all stakeholders. Adhering to GRI facilitates decision making, year-over-year performance and goal-setting surrounding our ESG initiatives.
We are proud of our industry-leading sustainability program and we encourage you to learn more about our sustainability strategy and achievements. Our reports and sustainability news are available on our website at http://www.slgreen.com/sustainability.
6 2019 Proxy StatementSL Green Realty Corp. 5
SL GREEN REALTY CORP.
420Lexington Avenue
New York, New York10170-1881
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
You are invited to attend the2018annualthe2019annual meeting of stockholders of SL Green Realty Corp., a Maryland corporation, which will be held on Thursday, May31,2018at10:May30,2019at10:00a.m., local time, at the Andaz Hotel,485 5thConvene (The Club Room),237Park Avenue, (at41st Street),2nd Floor, New York, NY10017.New York,10017. The annual meeting will be held for the following purposes:
1. | To elect the |
2. | To hold an advisory vote on executive compensation; and |
3. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending |
In addition, stockholders may be asked to consider and vote upon any other matters that may properly be brought before the annual meeting and at any adjournments or postponements thereof.
Any action may be taken on the foregoing matters at the annual meeting on the date specified above, or on any date or dates to which the annual meeting may be adjourned, or to which the annual meeting may be postponed.
The Board of Directors has fixed the close of business on March29,2018asMarch29,2019as the record date for determining the stockholders entitled to notice of, and to vote at, the annual meeting and at any adjournments or postponements thereof.
By Order of the Board of Directors,
New York, New York
April30,201825,2019
Voting | ||
You may authorize your proxy via the Internet or by telephone: | ||
Visit www.proxyvote.com | ||
Scan this QR code to vote with your mobile device | ||
Call1-800-454-8683 | ||
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on May This proxy statement and our |
Whether or not you plan to attend the annual meeting, please complete, sign, date and promptly return the enclosed proxy card in the post-prepaid envelope provided or authorize your proxy by telephone or the Internet by following the instructions on your proxy card. For specific instructions on voting, please see the instructions on the proxy card or the information forwarded by your broker, bank or other holder of record. If you attend the annual meeting, you may vote in person if you wish, even if you previously have signed and returned your proxy card. Please note that if your shares are held of record by a bank, broker or other nominee and you wish to vote in person at the annual meeting, you must obtain a proxy issued in your name from such bank, broker or other nominee.
2018Proxy Statement 67 SL Green Realty Corp.
References in this proxy statement to “we,”“us, “us,”“our, “our,”“ours, “ours,” and the “Company” refer to SL Green Realty Corp., unless the context otherwise requires. This proxy statement and a form of proxy have been made available to our stockholders on the Internet and will be mailed to stockholders on or about April30,2018.April25,2019.
8 2019 Proxy StatementSL Green Realty Corp. 7
OUR BOARD OF DIRECTORS AND
CORPORATE GOVERNANCE
We are committed to operating our business under strong and accountable corporate governance practices. You are encouraged to visit the “Investors—Corporate Governance” section of our corporate website at http://www.slgreen.com to view or obtain copies of our committee charters, Code of Ethics, Governance Principles and director independence standards. The information found on, or accessible through, our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document we file with,or furnish to, the SEC. You also may obtain, free of charge, a copy of the respective charters of our committees, Code of Ethics, Governance Principles and director independence standards by directing your request in writing to SLGreen Realty Corp.,420Lexington Avenue, New York, New York10170-1881, Attention: Investor Relations. Additional information relating to the corporate governance of the Company also is included in other sections of this proxy statement.
Proposal 1: Election of Directors |
The Board, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated John H. Alschuler, Edwin T. Burton, III, Lauren B. Dillard, and Stephen L. Green, Craig M. Hatkoff and Andrew W. Mathias for election to serve as directors until the2019annualthe2020annual meeting of stockholders and until their successors are duly elected and qualify. Messrs. Alschuler, Burton, Green, Hatkoff and GreenMathias and Ms. Dillard are currently are serving as our directors. Each of Messrs. Alschuler, Burton, Green, Hatkoff and GreenMathias and Ms. Dillard has consented to being named in this proxy statement and to serve as a director if elected. However, if any of Messrs. Alschuler, Burton, Green, Hatkoff and GreenMathias and Ms. Dillard is unable to accept election, proxies voted in favor of such nominee will be voted for the election of such other person as the Board nominates.
Majority Voting StandardBoard Refreshment
Chairman transition:
A majorityIn January 2019,Stephen L. Greenstepped down as Chairman of all the votes cast with respectBoard and transitioned into the role of Chairman Emeritus, andMarc Hollidaywas appointed to a nominee’s election is required for such nomineesucceedMr. Greenas our Chairman in addition to be elected to serve on the Board. This means that the number ofvotes cast “for” a nominee must exceed the number of votes cast “against” such nominee, with abstentions and broker non-votes not countedserving as a vote cast either “for” or “against” a nominee. For more information on the operationour Chief Executive Officer
Committee chair rotations:
In February 2018,Lauren DillardreplacedJohn Alschuleras chair of our majority voting standard in director elections, see the section entitled “Our BoardCompensation Committee
In March 2018,Craig HatkoffreplacedJohn Levyas chair of Directorsour Nominating and Corporate Governance—Corporate Governance—Majority Voting Standard and Director Resignation Policy.”Governance Committee
Stockholder Amendments to Bylaws | |||
In December 2018, we amended our bylaws topermit our stockholders to amend our bylawsby a majority vote without any ownership or holding period limitations. |
Declassified Board | |||
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| 3% / 3-years | 2candidates /20% | ||||
Owning3% or more of our outstanding common stock continuously for at least three years | To nominate and include in our proxy materials director candidates constituting up to the greater of two individuals or 20% of the Board, if the nominee(s) satisfy the requirements specified in our bylaws |
4 SL Green Realty Corp.
2019 PROXY STATEMENT HIGHLIGHTS
ESG Highlights |
We are committed to corporate social responsibility initiatives that deliver efficiency, value and health for our business, tenants and community. Highlights of these initiatives are set forth below. Our Global Reporting Initiative (GRI) compliant sustainability reports and other information relating to these initiatives are available on our website at http://www.slgreen.com/sustainability.
ESG Awards | ||||
● | Bloomberg ESG Disclosure score is the highest score for all companies in the REITs-Office Property sector | |||
● | Thomson Reuters ESG score of “A-” | |||
● | ENERGY STAR Partner of the Year – Sustained Excellence (2018, 2019) | |||
● | Achieved a “B” Carbon Disclosure Project score as a first-time reporter (2018) | |||
● | Awarded the “Changemaker Award” by the NYC Mayor’s Office of Service in recognition of SL Green’s volunteerism and philanthropic efforts (2018) | |||
● | Real Estate Finance & Investment’s “Most Sustainable REIT” (2017, 2018) |
Environmental Initiatives | ||||
● | Goal to reduce greenhouse gas emissions intensity 30% by 2025 portfolio-wide | |||
● | LEED certified 63% of fully owned and operated properties | |||
● | Achieved 20 ENERGY STAR labels in 2018 within the Manhattan portfolio across 14 million square feet, representing 9% of all ENERGY STAR labels achieved in Manhattan | |||
● | 18 million square feet of Manhattan portfolio participating in the WELL Portfolio program | |||
● | 3 million square feet in active sustainable development projects, including One Vanderbilt |
Social Initiatives | ||||
● | Investment in employees through funding of training programs, tuition reimbursement and continued education courses | |||
● | Market-leading benefits program spanning healthcare, 401k match, employee stock purchase plan, disability coverage, wellness and life insurance | |||
● | Coordinate over 130 volunteering events annually, including employer-sponsored volunteer days | |||
● | Contribute $1M across over 100 partner organizations corporately and sponsor a charitable contribution match program |
Governance Initiatives - Sustainability | ||||
● | Executive and Board oversight of sustainability mission statement and goal setting | |||
● | Annual GRI sustainability reports distributed to the Board, investors, tenants, vendor partners and government stakeholders | |||
● | Stakeholder engagement and materiality assessment processes initiated across tenants, community members, industry peers and employees to identify material ESG topics |
2019 Proxy Statement 5
SL GREEN REALTY CORP.
420Lexington Avenue
New York, New York10170-1881
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
You are invited to attend the2019annual meeting of stockholders of SL Green Realty Corp., a Maryland corporation, which will be held on Thursday, May30,2019at10:00a.m., local time, at Convene (The Club Room),237Park Avenue, New York, New York,10017. The annual meeting will be held for the following purposes:
1. | To elect the six director nominees named in the proxy statement to serve on the Board of Directors for a one-year term and until their successors are duly elected and qualify; |
2. | To hold an advisory vote on executive compensation; and |
3. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019. |
In addition, stockholders may be asked to consider and vote upon any other matters that may properly be brought before the annual meeting and at any adjournments or postponements thereof.
Any action may be taken on the foregoing matters at the annual meeting on the date specified above, or on any date or dates to which the annual meeting may be adjourned, or to which the annual meeting may be postponed.
The Board of Directors has fixed the close of business on March29,2019as the record date for determining the stockholders entitled to notice of, and to vote at, the annual meeting and at any adjournments or postponements thereof.
By Order of the Board of Directors,
Andrew S. Levine
Secretary
New York, New York
April25,2019
Voting | ||
You may authorize your proxy via the Internet or by telephone: | ||
Visit www.proxyvote.com | ||
Scan this QR code to vote with your mobile device | ||
Call1-800-454-8683 | ||
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on May 30, 2019. This proxy statement and our 2018 Annual Report to Stockholders are available at http://www.proxyvote.com |
Whether or not you plan to attend the annual meeting, please complete, sign, date and promptly return the enclosed proxy card in the post-prepaid envelope provided or authorize your proxy by telephone or the Internet by following the instructions on your proxy card. For specific instructions on voting, please see the instructions on the proxy card or the information forwarded by your broker, bank or other holder of record. If you attend the annual meeting, you may vote in person if you wish, even if you previously have signed and returned your proxy card. Please note that if your shares are held of record by a bank, broker or other nominee and you wish to vote in person at the annual meeting, you must obtain a proxy issued in your name from such bank, broker or other nominee.
6 SL Green Realty Corp.
10 SL Green Realty Corp.
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
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2018 Proxy Statement 11
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Continuing Directors—Terms Will Expire in 2019
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12 SL Green Realty Corp.
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
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2018 Proxy Statement 13
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Continuing Directors—Terms Will Expire in 2020
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14 SL Green Realty Corp.
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
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2018 Proxy Statement 15
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board Refreshment
Led by our Nominating
Chairman transition:
In April2018, January 2019,Stephen L. Green our founder and long-timestepped down as Chairman of the Board announced that he will be stepping down as Chairman following his more than20years of distinguished service in this role and will transitiontransitioned into the role of Chairman Emeritus. We will appoint Emeritus, andMarc Hollidaywas appointed to succeedMr. Greenas our Chairman in addition to serving as our Chief Executive Officer to also serve as the Chairman of the Board upon the effectiveness of Mr. Green’s transition in January2019. Mr. Green intends to continue serving as Chairman Emeritus and as a director of the Company. We have also rotated
Committee chairs, with chair rotations:
In February 2018,Lauren Dillard replacing replacedJohn Alschuleras chair of our Compensation Committee and
In March 2018,Craig Hatkoff replacing replacedJohn Levyas chair of our Nominating and Corporate Governance Committee. Over the longer term,Committee
Stockholder Amendments to Bylaws | |||
In December 2018, we |
Declassified Board | |||
Our directors |
Proxy Access | ||||||
Our bylaws permit: | ||||||
A stockholder | 3% / 3-years | 2candidates /20% | ||||
Owning3% or more of our |
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4 SL Green Realty Corp.
2019 PROXY STATEMENT HIGHLIGHTS
ESG Highlights |
We are committed to corporate social responsibility initiatives that deliver efficiency, value and health for our business, tenants and community. Highlights of these initiatives are set forth below. Our Global Reporting Initiative (GRI) compliant sustainability reports and other information relating to these initiatives are available on our website at http://www.slgreen.com/sustainability.
ESG Awards | ||||
● | Bloomberg ESG Disclosure score is the highest score for all companies in the REITs-Office Property sector | |||
● | Thomson Reuters ESG score of “A-” | |||
● | ENERGY STAR Partner of the Year – Sustained Excellence (2018, 2019) | |||
● | Achieved a “B” Carbon Disclosure Project score as a | |||
● | Awarded the “Changemaker Award” by the NYC Mayor’s Office of Service in recognition of SL Green’s volunteerism and philanthropic efforts (2018) | |||
● | Real Estate Finance & Investment’s “Most Sustainable REIT” (2017, 2018) |
Environmental Initiatives | ||||
● | Goal to reduce greenhouse gas emissions intensity 30% by 2025 portfolio-wide | |||
● | LEED certified 63% of fully owned and operated properties | |||
● | Achieved 20 ENERGY STAR labels in 2018 within the Manhattan portfolio across 14 million square feet, representing 9% of all ENERGY STAR labels achieved in Manhattan | |||
● | 18 million square feet of Manhattan portfolio participating in the WELL Portfolio program | |||
● | 3 million square feet in active sustainable development projects, including One Vanderbilt |
Social Initiatives | ||||
● | Investment in employees through funding of training programs, tuition reimbursement and continued education courses | |||
● | Market-leading benefits program spanning healthcare, 401k match, employee stock purchase plan, disability coverage, wellness and life insurance | |||
● | Coordinate over 130 volunteering events annually, including employer-sponsored volunteer days | |||
● | Contribute $1M across over 100 partner organizations corporately and sponsor a charitable contribution match program |
Governance Initiatives - Sustainability | ||||
● | Executive and Board oversight of sustainability mission statement and goal setting | |||
● | Annual GRI sustainability reports distributed to the Board, | |||
● | Stakeholder engagement and materiality assessment processes initiated across tenants, community members, industry peers and employees to identify material ESG topics |
2019 Proxy Statement 5
SL GREEN REALTY CORP.
420Lexington Avenue
New York, New York10170-1881
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
You are invited to attend the2019annual meeting of stockholders of SL Green Realty Corp., a Maryland corporation, which will be held on Thursday, May30,2019at10:00a.m., local time, at Convene (The Club Room),237Park Avenue, New York, New York,10017. The annual meeting will be held for the following purposes:
1. | To elect the |
2. | To hold an advisory vote on executive compensation; and |
3. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for |
In addition, stockholders may be asked to consider and vote upon any other matters that may properly be brought before the annual meeting and at any adjournments or postponements thereof.
Any action may be taken on the foregoing matters at the annual meeting on the date specified above, or on any date or dates to which the annual meeting may be adjourned, or to which the annual meeting may be postponed.
The Board of Directors has fixed the close of business on March29,2019as the record date for determining the stockholders entitled to notice of, and to vote at, the annual meeting and at any adjournments or postponements thereof.
By Order of the Board of Directors,
Andrew S. Levine
Secretary
New York, New York
April25,2019
Voting | ||
You may authorize your proxy via the Internet or by telephone: | ||
Visit www.proxyvote.com | ||
Scan this QR code to | ||
Call1-800-454-8683 | ||
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to This proxy statement and our 2018 Annual Report to Stockholders are available at http://www.proxyvote.com |
Whether or not you plan to attend the annual meeting, please complete, sign, date and promptly return the enclosed proxy card in the post-prepaid envelope provided or authorize your proxy by telephone or the Internet by following the instructions on your proxy card. For specific instructions on voting, please see the instructions on the proxy card or the information forwarded by your broker, bank or other holder of record. If you attend the annual meeting, you may vote in person if you wish, even if you previously have signed and returned your proxy card. Please note that if your shares are held of record by a bank, broker or other nominee and you wish to vote in person at the annual meeting, you must obtain a proxy issued in your name from such bank, broker or other nominee.
6 SL Green Realty Corp.
2019PROXY STATEMENT HIGHLIGHTS | 1 |
Business Overview and Highlights | 2 |
Compensation Highlights | 3 |
Corporate Governance Highlights | 4 |
ESG Highlights | 5 |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS | 6 |
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | 8 |
Proposal1: Election of Directors | 8 |
Board Structure and Independence | 17 |
Board Committees | 19 |
Corporate Governance | 21 |
Director Compensation | 25 |
Executive Officers | 26 |
EXECUTIVE COMPENSATION | 27 |
Proposal 2: Advisory Vote on the Compensation of our Named Executive Officers | 27 |
Compensation Committee Report | 27 |
Compensation Discussion and Analysis | 28 |
Executive Compensation Tables | 45 |
AUDIT COMMITTEE MATTERS | 59 |
Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm | 59 |
Audit Committee Report | 59 |
Fee Disclosure | 60 |
Pre-Approval Policies and Procedures of our Audit Committee | 60 |
STOCK OWNERSHIP INFORMATION | 61 |
Security Ownership of Certain Beneficial Owners and Management | 61 |
Section16(a) Beneficial Ownership Reporting Compliance | 63 |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | 64 |
OTHER INFORMATION | 66 |
Questions and Answers About the Annual Meeting | 66 |
Other Matters | 68 |
APPENDICES | |
Appendix A: Information Regarding Certain Financial Measures | A-1 |
References in this proxy statement to “we,” “us,” “our,” “ours,” and the “Company” refer to SL Green Realty Corp., unless the context otherwise requires. This proxy statement and a form of proxy have been made available to our stockholders on the Internet and will be mailed to stockholders on or about April25,2019.
2019 Proxy Statement 7
OUR BOARD OF DIRECTORS AND
CORPORATE GOVERNANCE
Proposal 1: Election of Directors |
The Board, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated John H. Alschuler, Edwin T. Burton, III, Lauren B. Dillard, Stephen L. Green, Craig M. Hatkoff and Andrew W. Mathias for election to serve as directors until the2020annual meeting of stockholders and until their successors are duly elected and qualify. Messrs. Alschuler, Burton, Green, Hatkoff and Mathias and Ms. Dillard are currently serving as directors. Each of Messrs. Alschuler, Burton, Green, Hatkoff and Mathias and Ms. Dillard has consented to being named in this proxy statement and to serve as a director if elected. However, if any of Messrs. Alschuler, Burton, Green, Hatkoff and Mathias and Ms. Dillard is unable to accept election, proxies voted in favor of such nominee will be voted for the election of such other person as the Board nominates.
Majority Voting Standard
A majority of all the votes cast with respect to a nominee’s election is required for such nominee to be elected to serve on the Board. This means that the number of votes cast “for” a nominee must exceed the number of votes cast “against” such nominee, with abstentions and broker non-votes not counted as a vote cast either “for” or “against” a nominee. For more information on the operation of our majority voting standard in director elections, see the section entitled “Our Board of Directors and Corporate Governance—Corporate Governance—Majority Voting Standard and Director Resignation Policy.”
The Board unanimously recommends a vote“FOR” the election of Messrs. Alschuler, Burton, Green, Hatkoff and Mathias and Ms. Dillard. |
Information Regarding the Nominees and the Continuing Directors
The following table, matrix and biographical descriptions set forth certain information with respect to the nominees for election as directors at the2019annual meeting and the continuing directors whose terms expire at the annual meeting of stockholders in2020, based upon information furnished by each director. At our annual meeting of stockholders in2017, stockholders approved a proposal to declassify our board. Accordingly, our board classes are being phased out, and directors whose terms are expiring will be elected for one-year terms. Our Board of Directors will be fully declassified by our2020annual meeting.
Name | Age | Expiration of Term | Director Since | |||
Nominees (terms will expire in 2020) | ||||||
John H. Alschuler* | 71 | 2020 | 1997 | |||
Edwin T. Burton, III* | 76 | 2020 | 1997 | |||
Lauren B. Dillard* | 43 | 2020 | 2016 | |||
Stephen L. Green | 81 | 2020 | 1997 | |||
Craig M. Hatkoff* | 65 | 2020 | 2011 | |||
Andrew W. Mathias | 45 | 2020 | 2014 | |||
Continuing Directors (terms will expire in 2020) | ||||||
Betsy Atkins* | 65 | 2020 | 2015 | |||
Marc Holliday | 52 | 2020 | 2001 | |||
John S. Levy* | 83 | 2020 | 1997 |
* | Independent Director |
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OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Continuing Director and Director Nominees Business Experience
The matrix below represents some of the key skills that our Board has identified as particularly valuable to the effective oversight of the Company and the execution of our strategy. This matrix highlights the depth and breadth of skills of our current directors.
Executive Leadership | 9 | Finance/Capital Markets | 9 | Risk Management | 8 | |||||
REIT/Real Estate Industry | 6 | Experience Over Several Business Cycles | 5 | Public Company Board Service/Corporate Governance | 5 | |||||
Talent Management | 5 | Academia | 3 | Accounting | 2 | |||||
Governmental/Regulatory | 2 | Technology | 2 | |||||||
Director Nominees—Terms Will Expire in 2020
John H. Alschuler | Director Since:1997Age:71Lead Independent Director | |||||||||||||||||||||||||||||
SL Green ●Compensation Committee ●Nominating and Corporate Governance Committee ●Executive Committee | Mr. Alschuler’s achievements in Professional Experience ●Chairman of
●Xenia Hotels and
|
2019 Proxy Statement 9
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Edwin T. Burton, III | Director Since:1997Age:76Independent Director | ||||||||||||||||||||||||||||||||||||||||
SL Green
Committee, Chair ●Compensation Committee | In addition to his experience in academia as a seasoned professor of economics, Mr. Burton’s extensive skills and experience in corporate governance, financial, compensation and legal matters allow him to provide valuable financial expertise and insights into the Company’s business. Professional Experience ●Professor of Economics at the University of Virginia since 1988; has held teaching positions at York College, Rice University and Cornell University, and has written and lectured extensively in the field of Economics ●Consultant to numerous companies on investment strategy and investment banking ●Member of the Board of Trustees of the Virginia Retirement System for state and local employees of the Commonwealth of Virginia from 1994 to 2001 and then again from 2004 to 2014, and served as its Chairman from 1997 until March 2001 ●Senior Vice President, Managing Director and director of Interstate Johnson Lane, Incorporated, an investment banking firm, where he was in charge of the Corporate Finance and Public Finance Divisions from 1994 to 1995 ●President of Rothschild Financial Services, Incorporated (a subsidiary of Rothschild, Inc. of North America), an investment banking company headquartered in New York City that is involved in proprietary trading, securities lending and other investment activities from 1987 to 1994 ●Consultant to the American Stock Exchange from 1985 to 1986 ●Senior vice president with Smith Barney (or its corporate predecessor) from 1976 to 1984 ●Member of the Board of Directors of Chase Investors, a privately-held registered investment advisor, since 2004 ●Former member of the Board of Directors of Capstar Hotel Company, a publicly-traded hotel company, Virginia National Bank, a publicly-traded commercial bank, and SNL Securities, a private securities data company ●B.A. degree in Economics from Rice University and Ph.D. degree in Economics from Northwestern University
●None |
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OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Lauren B. Dillard | Director | |
SL Green ●Audit Committee ●Compensation Committee, Chair | Ms. Dillard’s sophisticated understanding of tax, real estate, investment programs, finance, compensation and corporate governance, all viewed through the lens of over fifteen years of global private equity experience and together with her considerable operational expertise, provides the Board and the Company with deep and practical insight on a broad range of matters. Professional Experience ●Managing Director for the Carlyle Group, a global alternative asset manager, since 2011, head of Carlyle’s Investment Solutions Group since December 2015 and member of Carlyle’s Management Committee; joined Carlyle in 2002 ●Chief Operating Officer and Chief Financial Officer of Carlyle’s Investment Solutions Group from 2013 to December 2015; former head of Global Tax Department and head of Global Equity Programs; and member of Carlyle’s Transaction Team where she played a significant role in transactions, including Carlyle’s initial public offering ●Served in the Real Estate and Financial Services Group of the Tax Practice of Arthur Andersen, LLP prior to 2002 ●Member of the Board of Directors of AlpInvest Partners. ●Founder and leader of Carlyle’s Women’s Employee Resource Group, member of the Private Equity Women Investor Network (PEWIN) and other industry initiatives ●Recipient of the prestigious One Carlyle Award in recognition of her contributions to and support of the firm’s collaborative culture ●B.S. in business administration from the University of Richmond Other Public Board Directorships ●None | |
Stephen L. Green | Director Since:1997Age:81Director | |
SL Green ●Executive Committee | In addition to his industry-wide reputation, Mr. Green’s extensive skills and experience in real estate, including founding our predecessor, provide him with invaluable knowledge of and expertise in our business and industry. This experience, particularly his experience having led our predecessor and the Company, contributes depth and context to the Board’s discussions of the Company’s business. Professional Experience ●Chairman Emeritus at the Company since January 2019 ●Chairman of the Board of the Company from 1997 through January 2019 ●Former executive officer working in conjunction with our Chief Executive Officer and overseeing the Company’s long-term strategic direction; formerly served as our Chief Executive Officer ●Founded our predecessor, S.L. Green Properties, Inc., in 1980; prior to our initial public offering in 1997, Mr. Green was involved in the acquisition of over 50 Manhattan office buildings containing in excess of 10.0 million square feet ●Chairman of the Board of Gramercy Capital Corp. from August 2004 to June 2009 ●At-large member of the Executive Committee of the Board of Governors of the Real Estate Board of New York ●Member of the Board of Directors of Streetsquash, Inc., a Section 501(c)(3) tax-exempt organization ●Previously member of the Board of Directors of Stemedica Cell Technologies, Inc., August 2007 to April 2009; Chairman of the Real Estate Board of New York’s Tax Committee ●B.A. degree from Hartwick College and J.D. degree from Boston College Law School Other Public Board Directorships ●None |
2019 Proxy Statement 11
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Craig M. Hatkoff | Director Since:2011Age:65Independent Director | |
SL Green ●Audit Committee ●Nominating and Corporate Governance Committee, Chair | Mr. Hatkoff has in-depth expertise and knowledge of real estate, capital markets, finance, private investing, entrepreneurship and executive management through his work with Chemical Bank, Victor Capital Group and Capital Trust. As a result of the foregoing, Mr. Hatkoff provides a unique insight into the financial markets generally, valuation analysis, strategic planning, and unique financing structures and alternatives. He also possesses entrepreneurial, brand marketing, social media, technology and innovation, and senior leadership experience through his private investments and service on the Boards of numerous educational and charitable organizations. Mr. Hatkoff also has extensive Board and Board committee experience at other public companies, including his prior service at Taubman Centers, Inc. and his long-standing service to Capital Trust, Inc., which enables him to provide significant insight as to governance and compliance-related matters particular to real estate companies. Professional Experience ●Vice Chairman of Capital Trust, Inc., a real estate investment management company that was listed on the New York Stock Exchange, and one of the largest dedicated real estate mezzanine lenders, from 1997 to 2000, and served on its Board of Directors from 1997 to 2010 ●Trustee of the New York City School Construction Authority, the agency responsible for the construction of all public schools in New York City, from 2002 to 2005 ●Founder and a managing partner of Victor Capital Group, L.P. from 1989 until its acquisition by Capital Trust, Inc. in 1997 ●Former co-head of the real estate investment banking unit at Chemical Bank, where he was a pioneer in commercial mortgage securitization ●Co-founder of the Tribeca Film Festival; Chairman of Turtle Pond Publications LLC, which is active in children’s publishing and entertainment, and private investor in other entrepreneurial ventures ●Adjunct Professor at Columbia Business School, where he teaches courses on entrepreneurship and innovation Other Public Board Directorships
●Taubman Centers, Inc. from 2004 to January 2019 | |
Andrew W. Mathias | Director Since:April 2014Age:45President | |
Mr. Mathias’ extensive experience in real estate, including commercial real estate investment, and in-depth knowledge of the New York City real estate market, as well as his role as President of the Company, provide him with valuable knowledge of our business and industry. Furthermore, Mr. Mathias’ presence on the Board facilitates communication between the Board and the Company’s senior management. Professional Experience ●President of the Company since 2007 ●Joined the Company in March 1999 as Vice President and was promoted to Director of Investments in 2002 ●Chief Investment Officer of the Company from January 2004 until January 2011 ●Chief Investment Officer of Gramercy Capital Corp. from August 2004 to October 2008 ●Worked at Capital Trust, Inc. and its predecessor, Victor Capital Group, L.P. ●Worked on the high yield and restructuring desk at Bear Stearns and Co. ●Member of the Board of Directors for the Regional Plan Association, which works to improve the prosperity, infrastructure, sustainability and quality of life of the New York-New Jersey-Connecticut metropolitan region ●B.S. degree in Economics from the Wharton School at the University of Pennsylvania Other Public Board Directorships ●None |
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OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Continuing Directors—Terms Will Expire in 2020
Betsy Atkins | Director Since:April 2015Age:65Independent Director | |
SL Green ●Audit Committee ●Nominating and Corporate Governance Committee | Ms. Atkins has deep expertise in many areas, including executive leadership and operational experience in various technology, durable goods, energy efficiency infrastructure and retail industries, as well as significant public board experience, which gives her broad experience and thought leadership in corporate governance matters generally, including executive compensation and evolving best practices in sustainability and enterprise risk management. Professional Experience ●Chief Executive Officer of Baja Corp, an independent venture capital firm focused on technology, renewable energy and life sciences industries, since 1994 ●Chief Executive Officer and Chairman of the Board of Directors of Clear Standards, Inc., a provider of energy management solutions, from February 2009 to August 2009, when Clear Standards was acquired by SAP AG, a business software company ●Chairman and Chief Executive Officer of NCI, Inc., a functional food/nutraceutical company, from 1991 through 1993 ●Co-founded Ascend Communications, Inc. in 1989, member of its Board of Directors and Executive Vice President of sales, marketing, professional services and international operations prior to its acquisition by Lucent Technologies ●Formerly an advisor to SAP SE, an advisor to British Telecom and a presidential-appointee to the Pension Benefit Guaranty Corporation advisory committee ●B.A. from the University of Massachusetts Other Public Board Directorships ●Schneider Electric, SA since April 2011 ●Wynn Resorts Ltd. since April 2018 ●Covetrus, Inc. since February 2019 Previous (during the past 5 years): ●Cognizant Technology Solutions Corporation from April 2017 to October 2018 ●HD Supply, Inc. from September 2013 to April 2018 ●Polycom, Inc. from 1999 to April 2016 ●Darden Restaurants, Inc. from October 2014 to September 2015 ●Ciber, Inc. from July 2014 to October 2014 |
2019 Proxy Statement 13
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Marc Holliday | Director Since:December 2001Age:52Chief Executive Officer and Chairman of the Board | |
SL Green ●Executive Committee, Chair | Mr. Holliday’s extensive experience and skills in real estate and finance, as well as his role as Chief Executive Officer of the Company, provide him with valuable knowledge of and expertise in our business and industry. Furthermore, Mr. Holliday’s presence on the Board facilitates communication between the Board and the Company’s senior management. Professional Experience ●Chief Executive Officer of the Company since January 2004; Chairman of the Board since January 2019 ●Joined the Company as Chief Investment Officer July 1998; stepped down as President in April 2007 following promotion of Andrew Mathias, current President, to that position ●President and Chief Executive Officer of Gramercy Capital Corp., from August 2004 to October 2008, when Mr. Holliday stepped down ●Managing Director and Head of Direct Originations for New York-based Capital Trust Inc., a mezzanine finance company, where he was in charge of originating direct principal investments for the firm, consisting of mezzanine debt, preferred equity and first mortgages ●Served in various management positions, including Senior Vice President at Capital Trust, Inc.’s predecessor, Victor Capital Group, L.P. from 1991 to 1997 ●Member of the Board of Directors of NYRA and Columbia University, and executive officer and member of the Board of the Real Estate Board of New York ●B.S. degree in Business and Finance from Lehigh University in 1988 and M.S. degree in Real Estate Development from Columbia University in 1990 Other Public Board Directorships Previous (during the past 5 years): ●Gramercy Capital Corp. from 2004 to September 2014 | |
John S. Levy | Director Since:1997Age:83Independent Director | |
SL Green ●Nominating and Corporate Governance Committee ●Compensation Committee | Mr. Levy’s extensive skills, experience and sophistication in corporate governance, financial, compensation, legal and commercial matters, including his corporate finance expertise developed at Lehman Brothers, allow him to provide valuable insights into the Company’s business and finances. Professional Experience ●Retired from Lehman Brothers Inc. in 1995; from 1983 to 1995, served as ●Associated with A.G. Becker Incorporated (or its predecessors) from 1960 to 1983, where Mr. Levy served as ●B.A. degree from Dartmouth College. Other Public Board Directorships ●None |
14 SL Green Realty Corp.
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board Refreshment
Led by our Nominating and Corporate Governance Committee, the Board engages in ongoing director succession planning, including a focus on refreshing the membership and leadership of the Board and its Committees and enhancing the level of diversity. Most recently, in January2019, the leadership of the Board was transitioned from Stephen L. Green, our founder and long-time Chairman of the Board, to Marc Holliday, who also serves as our Chief Executive Officer. Mr. Green stepped down as Chairman of the Board nearly40years after he founded our predecessor and following his more than20years of distinguished service in this role. Mr. Green continues to serve as a director and as our Chairman Emeritus. The Board also rotated Committee chairs in2018, with Lauren Dillard replacing John Alschuler as chair of our Compensation Committee and Craig Hatkoff replacing John Levy as chair of our Nominating and Corporate Governance Committee.
Over the longer term, we have added three new independent directors since2011, including two women – Betsy Atkins, who joined our Board in2015, and Lauren Dillard, who joined our Board in2016. For our commitment to board diversity, we were recognized as a2020Women on Boards Winning ‘W’ Company for2017. Together with the addition of Craig Hatkoff in2011, these additions have provided new perspectives and enhanced the quality of the Board while also reducing the average age and tenure of our independent directors. Following these additions, one-third of our independent directors are women.
Diversity | Experience | Leadership | ||
Our Board has a diversity of knowledge, skills | Our Board members have broad experience | Our Board members have strong corporate leadership backgrounds such as being a CEO, CFO or holding other Executive positions | ||
33%of our independent Board members are women | 78%of our Board currently serve or have served on the Boards of other publicly traded companies | 89%of our Board currently serve or have served as CEO or in |
Identification of Director Candidates
Our Nominating and Corporate Governance Committee assists the Board in identifying and reviewing director candidates to determine whether they qualify for membership on the Board and recommends director nominees to the Board to be considered for election at our annual meeting of stockholders. Our Nominating and Corporate Governance Committee adopted a written policy on the criteria and process of identifying and reviewing director candidates.
Each director candidate must have:
1. | education and experience that provides knowledge of business, financial, governmental or legal matters that are relevant to the Company’s business or to its status as a publicly owned company; |
2. | an unblemished reputation for integrity; |
3. | a reputation for exercising good business judgment; and |
4. | sufficient available time to be able to fulfill his or her responsibilities as a member of the |
The Nominating and Corporate Governance Committee ensures that the potential nominee is not an employee or agent of and does not serve on the board of directors or similar managing body of any of our competitors and determines whether the potential nominee has an interest in any transactions to which we are a party.
2019Proxy Statement 15
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Director Recruitment Process | ||||||||||
1 | Identify Potential Candidates | 2 | In-Depth Committee Review | 3 | Recommend Candidates to Full Board | 4 | Review by Full Board | |||
Identified by: ●Independent Directors ●Executive Officers ●Third Party Search Firms ●Stockholders | ●Consider experience, qualifications, and diversity ●Meet with candidates and conduct interviews ●Review independence and potential conflicts | ●NCGC presents potential candidates to full Board for open discussion | ●The full Board is responsible for approving potential candidates |
NCGC Director Recruitment Process
In making recommendations to the Board, our Nominating and Corporate Governance Committee considers such factors as it deems appropriate, in light of the skills, qualifications and diversity of the other members of the Board. Such factors include diversity with respect to gender and ethnicity. The Nominating and Corporate Governance Committee may also consider the following:
● | ability to bring new perspectives and add to Board discussion and consideration |
● | experience with businesses and other organizations comparable to the Company (including experience managing public companies, marketing experience or experience determining compensation of officers of public companies) |
● | the interplay of the candidate’s experience with the experience of other Board members |
● | the candidate’s industry knowledge and experience |
● | the ability of a nominee to devote sufficient time to the affairs of the Company |
● | any actual or potential conflicts of interest and whether the candidate meets the NYSE independence criteria |
● | the extent to which the candidate generally would be a desirable addition to the Board and any committees of the Board |
● | qualifications to serve on appropriate Board committees (including financial acumen) |
● | technological literacy |
● | strategic insight |
● | ability to introduce the Company to business or other opportunities |
● | reputation in the corporate governance community |
● | risk management skills |
Prior to a vote as to whether a potential nominee is recommended to the Board of Directors, each member of the Nominating and Corporate Governance Committee is provided access to such potential nominee. Such accessincludes an opportunity to interview such potential nominee in person or by telephone and to submit questions to such potential candidate. In addition, each potential nominee provides the Nominating and Corporate Governance Committee with a written detailed biography and other requested information.
In considering a potential nominee, each member of the Nominating and Corporate Governance Committee has the opportunity to interview potential nominees in person or by telephone and to submit questions to such potential candidate.
Our Nominating and Corporate Governance Committee solicits and considers suggestions of our directors and management regarding possible nominees. Our Nominating and Corporate Governance Committee also may procure the services of outside sources or third parties to assist in the identification of director candidates.
Role of Third Party Advisors in Director Recruitment Process
FTI Consulting, Inc., or FTI Consulting, assists us in the initial search, screening, interviewing and vetting of potential new directors and worked closely with our Nominating and Corporate Governance Committee in connection with the additions of Craig Hatkoff in2011, Betsy Atkins in2015and Lauren Dillard in2016.
Our Nominating and Corporate Governance Committee solicits and considers suggestions of our directors or management regarding possible nominees. Our Nominating and Corporate Governance Committee also may procure the services of outside sources or third parties to assist in the identification of director candidates.
Role of Third Party Advisors in Director Recruitment Process
In connection with the identification and review of director candidates and related matters, FTI Consulting, Inc., or FTI Consulting, provides services to us that include actively working with the Chairman of the Board, the Lead Independent Director and our Chief Executive Officer in reviewing governance issues, specific board member roles and responsibilities and committee assignments. FTI Consulting also assists us in the initial search, screening, interviewing and vetting of potential new directors and worked closely with our Nominating and Corporate Governance Committee in connection with the recent additions of Craig Hatkoff in2011, Betsy Atkins in2015and Lauren Dillard in2016(who was initially recommended for consideration by our Chief Executive Officer and has been nominated for re-election at the annual meeting).
Stockholder Recommendations of Director Candidates
Our Nominating and Corporate Governance Committee may consider director candidates recommended by our stockholders. Our Nominating and Corporate Governance Committee will apply the same standards in considering candidates submitted by stockholders as it does in evaluating all other candidates. Any recommendations by stockholders are to follow the procedures outlined under “Other Information—Other Matters—Stockholder Proposals and Nominations” in this proxy statement and should provide the reasons supporting a candidate’s recommendation, the candidate’s qualifications and the candidate’s written consent to being considered as a director nominee.
2018 Proxy Statement 1617 SL Green Realty Corp.
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board Structure
The Board currently consists of nine members. At the annual meeting of stockholders in2017, stockholders approved a proposal to declassify our board. Accordingly, our board classes are being phased out, and directorselecteddirectors elected at the annual meeting of stockholders in2018willin2019will serve for one-year terms and until their successors are duly elected and qualify. Our Board of Directors will be fully declassified by our2020annual meeting.
Board Leadership Structure; Lead Independent Director
As noted above,The current leadership structure of the Board currently is comprisedconsists of six independent and three employee directors. Mr. Green has servedMarc Holliday, who serves as the Chairman of the Board since1997andand our Chief Executive Officer, John Alschuler, who serves as an executive officer. The Board has appointed Mr. Alschuler, one of the independent directors, as Lead Independent Director to facilitate the role of the independent directors. We believe that the number of independent, experienced directors that make up the Board, along with the independent oversight of our Lead Independent Director, benefitsand the independent directors who serve as Chairs for the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee of the Board. Overall, the Board believes that the participation of members of management and independent directors in its leadership structure helps promote unified leadership and direction for the Company and its stockholders.the Board while also ensuring appropriate independent oversight of management by the Board.
We recognize that different boardAfter more than20years under the leadership structures may be appropriate for companiesof Stephen L. Green, in different situations, and that no one structure is suitable for all companies. Our currentJanuary2019, the leadership of the Board leadership structure has been effective for us for many years,was transitioned to Marc Holliday, who also serves as it has demonstrated to ouremployees and other stakeholders that the Company is under strong leadership, coordinated closely between a separateour Chief Executive Officer and Chairman. In April2018,Officer. Mr. Green announced he will be steppingstepped down as Chairman of the Board nearly40years after he founded our predecessor and transitioning into the rolefollowing his more than20years of Chairman Emeritus, and we will appoint Mr. Holliday to succeed Mr. Green as Chairmandistinguished service in January2019in addition to serving as our Chief Executive Officer.this role. The Board believes that it has been well served by Mr. Green’s leadership over the Companyyears and our stockholdersthat it will continue to be well served by havingwith Mr. Holliday serveserving in the role as Chairman and Chief Executive Officer.of the Board. With over14yearsover15years of experience leading the Company, Mr. Holliday is uniquely qualified to serve as ourthe Chairman of the Board, and Chief Executive Officer. In addition, the Board believes that Mr. Holliday’s combined role as Chairman of the Board and Chief Executive Officer will continue to promote unified leadership and direction for the Company and the Board.
The Board, which is currently comprised of six independent directors and three non-independent directors, established the role of Lead Independent Director beginning in2010. The Board believes that having a Lead Independent Director improves the overall functioning of the Board and executive management.strengthens the ability of the independent directors to effectively exercise independent oversight of management during periods when the Chairman of the Board is not an independent director. The Lead Independent Director is appointed by the independent directors on the Board, and has a number of responsibilities that help facilitate communication among our independent directors and between our independent directors and our Chief Executive Officer and Chairman, and ensure appropriate independent oversight of management by the Board.John Alschuler currently serves as our Lead Independent Director.
182019Proxy Statement SL Green Realty Corp.17
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Role of the Lead Independent Director
In addition to presiding at executive sessions of independent directors, the Lead Independent Director has the responsibility to:
1. | consult with the Chief Executive Officer and Chairman as to an appropriate schedule and agenda for each Board meeting, seeking to ensure that the independent directors can perform their duties effectively and responsibly; |
2. | ensure that the independent directors have adequate resources, especially by way of full, timely and relevant information to support their decision making; |
3. | advise the Chief Executive Officer and Chairman as to the quality, quantity and timeliness of the information submitted by the Company’s management that is necessary or appropriate for the independent directors to effectively and responsibly perform their duties; |
4. | recommend to the Board and the Board Committees the retention of advisers and consultants who report directly to the Board; |
5. | ensure that independent directors have adequate opportunities to meet and discuss issues in sessions of the independent directors without management present and, as appropriate, call meetings of the Independent Directors; |
6. | serve as Chairman of the sessions of the independent directors; |
7. | serve as principal liaison between the independent directors and the Chief Executive Officer and Chairman of the Company and between the independent directors and senior management; |
8. | communicate to management, as appropriate, the results of private discussions among independent directors; |
9. | chair the meetings of the Board when the Chairman is not present; |
10. | with respect to questions and comments directed to the Lead Independent Director or to the independent directors as a group, determine the appropriate means of response, with such consultation with the Chief Executive Officer and Chairman and other directors as the Lead Independent Director may deem appropriate; and |
11. | perform such other duties as the Board from time to time may delegate. |
Board and Committee Self-Evaluations
The Board believes that good governance can only be achieved through rigorous self-evaluation. Each year, our Nominating and Corporate Governance Committee establishes formal self-assessment procedures that are consistent with our Governance Principles, NYSE listing requirements and best practices identified during prior self-evaluations. The Board also engages with stockholders and third party advisers throughout the year to discuss corporate governance practices, and to ensure that the Board and its committees follow practices that are optimal for the Company and its stockholders while also delivering superior total return. The Board then conducts its annual evaluation to determine whether it and its committees function effectively, with independent directors meeting separately with outside counsel. The discussions with stockholders, as well as the evaluations, are the basis for the Board’s annual review of possible changes to the Company’s corporate governance practices.
Board Evaluation Process | |||||||||
1 | Initiate Process | 2 | Conduct Evaluation | 3 | Implement Conclusions | ||||
NCGC establishes Board and committee self-evaluation process, including incorporation of process improvements from previous review cycle | Directors meet to formally discuss the functioning of the Board and any committees on which they serve to identify areas for improvement | The Board and each committee implement proposed governance improvements with assistance of management and third party advisors, as needed |
2018 Proxy Statement18 19SL Green Realty Corp.
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Director Independence
Our Governance Principles provide that a majority of our directors serving on the Board must be independent as required by the listing standards of the NYSE and the applicable rules promulgated by the SEC. In addition, the Board adopted director independence standards that assist the Board in making its determinations with respect to the independence of directors. The Board has reviewed all relevant facts and circumstances and considered all applicable relationships of which the Board had knowledge, between or among the directors and the Company or our management (some of such relationships are described in the section of this proxy statement entitled “Certain Relationships and Related Party Transactions”). BaseduponBased upon this review, the Board has determined that each of the following directors and director nominees has no direct or indirect material relationship with us and is independent under the listing standards of the NYSE, the applicable rules promulgated by the SEC and our director independence standards: Mses. Betsy Atkins and Lauren B. Dillard and Messrs. John H. Alschuler, Edwin T. Burton, III, John H. Alschuler,Craig M. Hatkoff and John S. Levy and Craig M. Hatkoff.Levy. The Board has determined that Messrs. Stephen L. Green, Marc Holliday and Andrew W. Mathias, our three other directors, are not independent because they are also executive officers of the Company.Company or have been within the last three years.
In determining that Ms. Dillard qualified as an independent director, the Board considered the Company’s relationship with The Carlyle Group, which entered into a lease for office space at One Vanderbilt.
Executive Sessions of Non-Management Directors
Our Governance Principles require the non-management directors serving on the Board to meet in an executive session at least annually without the presence of any directors or other persons who are part of our management. In accordance with such requirement, theindependent directors, who currently comprise all of the non-managementindependent directors meet in executive sessions from time to time on such a basis. The executive sessions are regularly chaired by our Lead Independent Director.
Communications with the Board
We have a process by which stockholders and/or other parties may communicate with the Board, individual directors (including the independent directors) or independent directors as a group. Any such communications may be sent to the Board or any named individual director (including the independent directors), by U.S. mail or overnight delivery andshouldand should be directed to Andrew S. Levine, Secretary, at SL Green Realty Corp.,420Lexington Avenue, New York, New York10170-1881. Mr. Levine forwards all such communications to the intended recipient or recipients. Any such communications may be made anonymously.
Director Attendance
The Board held fourfive meetings and all directors attended75% or more of the board of directors meetings and meetings of the committees on which they served during the periods they served during fiscal year2017.year2018. In addition to participating in formal meetings, our Board members regularly communicate with each other, members of management and advisors and take action by written consent.
We encourage each member of the Board to attend each annual meeting of stockholders. ThreeFour of our directors attended the annual meeting of stockholders held on June1,2017.May31,2018.
Board Committees |
The Board has four standing committees: an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and an Executive Committee. The current charters for each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are available on our corporate website at www.slgreen.comwww.slgreen. com under the “Investors—Corporate Governance” section. Further, wewillwe will provide a copy of these charters without charge to each stockholder upon written request. Requests for copies should be addressed to Andrew S. Levine, Secretary, at SL Green Realty Corp.,420Lexington Avenue, New York, New York10170-1881. From time to time, the Board also may create additional committees for such purposes as the Board may determine.
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OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Audit Committee
Our Audit Committee consists of Edwin ThomasT. Burton, III (Chair), Betsy S. Atkins, Lauren B. Dillard and Craig M. Hatkoff, each of whom is “independent”independent within the meaning of the rules of the NYSE and the SEC and each of whom meets the financial literacy standard required by the rules of the NYSE. Our Audit Committee’s primary purposeispurpose is to select and appoint our independent registered public accounting firm and to assist the Board in its oversight of the integrity of the Company’s financial statements; the Company’s compliance with legal and regulatory requirements; the qualifications and independence of the registered public accounting firm employed by
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the Company for the audit of the Company’s financial statements; the performance of the people responsible for the Company’s internal audit function; and the performance of the Company’s independent registered public accounting firm. Our Audit Committee also prepares the report that the rules of the SEC require be included in this proxy statement and provides an open avenue of communication among the Company’s independent registered public accounting firm, its internal auditors, its management and the Board. Our management is responsible for the preparation, presentation and integrity of our financial statements and for the effectiveness of internal control over financial reporting. Management is responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws andregulations.and regulations. Our independent registered public accounting firm is responsible for planning and carrying out a proper audit of our annual financial statements prior to the filing of our Annual Report on Form10-K, reviewing our quarterly financial statements prior to the filing of each Quarterly Report on Form10-Q and annually auditing the effectiveness of our internal control over financial reporting and other procedures. Our Audit Committee held12meetingsheld13meetings during fiscal year2017.year2018. Additional information regarding the functions performed by our Audit Committee is set forth in the “Audit Committee Report” included in this annual proxy statement.
Audit Committee Financial Expert
The Board determined that Edwin T. Burton, III qualifies as an “audit committee financial expert,” as defined in Item401(h) of SEC Regulation S-K.
Compensation Committee
Our Compensation Committee consists of Lauren B. Dillard (Chair), John H. Alschuler, Edwin ThomasT. Burton, III and John S. Levy, each of whom is “independent”independent within the meaning of the rules of the NYSE. Our Compensation Committee’s primary purposes are to determine how the Company’s Chief Executive Officer should be compensated; to administer the Company’s employee benefit plans and executive compensation programs; to determine compensation of our executive officers other than our Chief Executive Officer; and to produce the report on executive compensation that is required to be included in this proxy statement. With respect to the compensation of our executive officers, our Compensation Committee solicits recommendations from our Chief Executive Officer regarding total compensation for all executive officers other than the Chief Executive Officer and reviewshisreviews his recommendations in terms of total compensation and the allocation of such compensation among base salary, annual bonus amounts and other long-term incentive compensation as well as the allocation of such items between cash and equity compensation. Our Compensation Committee retained Gressle & McGinley LLC as its independent outside compensation consulting firm and engaged Gressle & McGinley LLC to provide our Compensation Committee with relevant data concerning the marketplace, our peer group and its own independent analysis and recommendations concerning executive compensation. Gressle & McGinley LLC regularly participates in Compensation Committee meetings. See “Executive Compensation—Compensation Discussion and Analysis.” Our Compensation Committee held one meetingthree meetings during fiscal year2017.year2018. In addition to participating in formal meetings, our Compensation Committee members regularly communicate with each other, members of management and advisors and take action by written consent.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee consists of Craig M. Hatkoff (Chair), John H. Alschuler, Betsy Atkins and John S. Levy, each of whom is “independent”independent within the meaning of the rules of the NYSE. Our Nominating and Corporate Governance Committee’s primary purposes are to identify individuals qualified to fill vacancies or newly-created positions on the Board; to recommend to the Board the personsitpersons it should nominate for election as directors at annual meetings of the Company’s stockholders; to recommend directors to serve on all committees of the Board; and to develop and recommend to the Board governance principles applicable to the Company. Our Nominating and Corporate Governance Committee held one meetingtwo meetings during fiscal year2017.year2018. In addition to participating in formal meetings, our Nominating and Corporate Governance Committee members regularly communicate with each other, members of management and advisors and take action by written consent.
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Executive Committee
Subject to the supervision and oversight of the Board, our Executive Committee, which consists of Marc Holliday (Chair), Stephen L. Green (Chair), Marc Holliday and John H. Alschuler, is responsible for, among other things, the approval of our acquisition, disposition and financing of investments; the authorization of the execution of certain contracts and agreements, including those relating to our borrowing of money; and theexercise,the exercise, in general, of all other powers of the Board, except for such powers that require action by all directors or the independent directors under our articles of incorporation or bylaws or under applicable law. Our Executive Committee did not hold any meetings and did not take any actions by written consent during fiscal year2017,year2018, as all matters within its authority were approved by the Board.
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Corporate Governance |
Board Oversight of Strategy
One of the most important functions of the Board relates to its role in formulating and overseeing the execution of our business strategy. The Board actively participates with management in the formulation and refinement of our business strategy to help ensure that our strategic goals are thoughtfully constructed and well-articulated. To facilitate this process, the Board periodically meets with our management and external advisors in full day or multi-day retreatssessions focused on long-term strategic planning. Additionally, on a more frequent basis, the Board receives updates from management regarding internal progress toward strategic goals and changes in market conditions and external strategic opportunities and challenges, which the Board uses to assist our management in refining its business strategy and reacting to particular opportunitiesoropportunities or challenges that arise. While management is charged with executing strategy on a daily basis, the Board monitors and evaluates performance through these regular updates and by actively engaging in dialogues with our senior management team. Aspects of our business strategy are discussed at every meeting, and key elements of our strategy are embedded in the work performed by the committees of the Board. In addition to financial and operational performance, non-financial measures, including sustainability, social and governance goals, are discussed by the Board. The Board believes that, through these ongoing efforts, they areit is able to focus on our performance over the short, intermediate and long term to secure the continuing health and success of the business for our stockholders.
Stockholder Outreach
The Board and our Lead Independent Director believe that engaging in stockholder outreach is an essential element of strong corporate governance. We strive for a collaborative approach to issues of importance to investors and continually seek to better understand the views of our investors on key topics affecting our business. In2017and2018,topics. Over the past several years, our Lead Independent Director, the chairman of our Compensation Committee and members of our senior management team contacted many of our largest institutional investors. Since the2018annual meeting of stockholders, we have reached out to institutional investors representing ownership of approximately66%over70% of our outstanding common stock. We held meetings, conducted calls and otherwise engagedwithengaged with all of these investors who were interested in doing so, which ultimately included stockholders accounting for58% of our shares outstanding.so. We then shared the feedback received during our outreach process with the Board and its committees to make meaningful changes to our corporate governance practices and launch new initiatives. As a result of our stockholder engagement efforts and our commitment to corporate governance, over the last few years, we have undertaken the declassification of our Board, adopted a proxy access bylaw, and implemented a majority voting standard for director election, and adopted an amendment to our bylaws to permit our stockholders to amend our bylaws by a majority vote, as discussed in more detail below.
Stockholder Amendments to Bylaws
In December2018, we amended our bylaws to permit our stockholders to amend our bylaws by the affirmative vote of a majority of all the votes entitled to be cast on the matter. As amended, our bylaws do not place any limitations on stockholder proposals to amend our bylaws beyond the advance notice provisions that apply to all stockholder proposals. Accordingly, all of our stockholders now have the right to propose any amendments to our bylaws that are permitted by applicable law and, if any such amendment is approved by the affirmative vote of a majority of the votes entitled to be cast on the matter, it will become effective.
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Declassified Board
We proposedOur directors are now elected for one-year terms following stockholder approval of our proposal to declassify our Board of Directors, which proposal was approvedsubmitted to stockholders at our2017annualthe2017annual meeting of stockholders. We are phasing out board classes so that beginning with our2018annual meeting of stockholders,directors whose terms are expiring will be elected for one-year terms. By our2020annual meeting, our Board of Directors will be fully declassified.
Proxy Access
In March2016, weWe have adopted a proxy access bylaw provision, enabling our stockholders to include their own director nominees in our proxy materials along with candidates nominated by the Board, so long as stockholder-nominees meetcertainmeet certain requirements, as set forth in our bylaws. For more information on our proxy access bylaw, see the section entitled “Other Information—Other Matters—Stockholder Proposals and Nominations.”
Majority Voting Standard and Director Resignation Policy
In March2016, the Board implementedWe have a majority voting standard for director elections. In an uncontested election (as is the case for this annual meeting), our bylaws provide that a majority of all the votes cast with respect to a nominee’s election is required for such nominee to beelectedbe elected to serve on the Board. This means that the number of votes cast “for” a nominee must exceed the number of votes cast “against” such nominee, with abstentions and broker non-votes not counted as a vote cast either “for” or “against” a nominee. With respect to a contested election, a
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plurality of all of the votes cast is sufficient for the election of directors. For this purpose, a contested election is deemed to occur at any meeting of stockholders for which the Secretary determines that the number of nominees or proposed nominees exceeds the number of directors to be elected at such meeting as of the seventh day preceding the date the Company files its definitive proxy statement for such meeting with the Securities and Exchange Commission (SEC) (regardless of whether or not thereafter revised or supplemented).
If a nominee who currently is serving as a director receives a greater number of votes “against” his or her election than votes “for” such election in an uncontested election, Maryland law provides that the director would continue to serve on the Board as a “holdover director.” However, under our Governance Principles, any nominee for election as a director in an uncontested election who receives a greater number of votes “against” his or her election than votes “for” such election must, within ten business days following the certification of the stockholder vote, tenderhistender his or her written resignation to the Chairman of the Board for consideration by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee will consider the resignation and, within60days following the date of the stockholders’ meeting at which the election occurred, will make a recommendation to the Board concerning the acceptance or rejection of the resignation.
The Board will then take formal action on the recommendation no later than90days following the date of the stockholders’ meeting at which the election occurred. In considering the recommendation, the Board will consider the information, factors and alternatives considered by the Nominating and Corporate Governance Committee and such additional factors, information and alternatives as the Board deems relevant. We will publicly disclose, in a Form8-K filed with the SEC, the Board’s decision within four business days after the decision is made. The Board also will provide, if applicable, the Board’s reason or reasons for rejecting the tendered resignation.
Sustainability
With executive-level participation on SL Green’s Sustainability Team and Board oversight of the program, environmental responsibility has top-down support and is a company-wide priority. The Company is committed to environmental, social, and governance initiatives that deliver value and health for our stakeholders. Structured around the three key areas, of efficiency, tenant experience, and industry leadership, our sustainabilitymarket-leading program integrates market-leading initiativescontinues to address energy usage, natural resource consumption, air quality, recycling, transportationminimize environmental impact and education.increase resiliency. As New York City’s largest landlord,owner of office real estate, we take responsibility for implementing best practices, operating at the highest efficiency standards and strengthening our city’s resiliency.
Our commitment toward efficiency is evidenced by the implementation of energy efficiency investments of $60million$66million and targeted sustainability programs across100% of our New York City properties. By implementing cutting edge technologies and modernizing obsolete building systems, we continue to optimize building performance, reduce maintenance costs and provide tenants with a Class A experience. We have installed more than35,000LED bulbs, monitor energy consumption through a real-time energy platform and track our portfolio’s sustainability performance through a web based environmental management system. Currently, we are exploring the deployment
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Collaborative opportunities with tenants are integral to our sustainability strategy. Our mission to creating a greener footprint begins with the10-year participation in the New York City Carbon Challenge, where we work with tenants to realize a30percent reduction in greenhouse gas emissions. We have partnered with Viacom at1515Broadway, Bloomberg at919Third Avenue and Sony at11Madison Avenue to make joint investments towards energy efficiency. One Vanderbilt and One Madison represent3million square feet of sustainable development in New York City that will achieve LEED certification through efficient design and infrastructure. One Vanderbilt creates a Class-A office experience for tenants, visitors, and the local community. The building is projected to consume26.3% less energy compared with the LEED version3baseline and it will achieve one of the lowest carbon footprints in the city. Some of the building’s features include indoor air quality that will surpass the ASHRAE62.1standard by30% and premier access to daylighting for85% of tenant floor area.
Our industry leadership has been widely recognized. During2015,2016,2017and2018,During2015,2016,2018and2019, we were recognized by the United States Environmental Protection Agency as an ENERGY STAR Partner for our efforts to strategically manage and improve energy performance across our Manhattan and suburban portfolios.portfolios, and in2019we achieved “Sustained Excellence” for the second consecutive year. In addition to releasing a GRI report for the past4consecutivepast5consecutive years, in2017and2018we have been awarded “REIT of the Year – Sustainability” by Real Estate & Investment Finance and receivedFinance. We also achieved an “A” Rating for ESG performance on therating under Global Real Estate Sustainability Benchmark’s (GRESB) Public“Public Disclosure Report.
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OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCEthe largest5,000global companies. In2018, we submitted our first response to CDP, formerly Carbon Disclosure Project, and achieved a “B,” leading the way among industry peers and over7,000participating companies.
The industry recognition garnered for our market-leading program is a testament to the sustainability commitment embodied by management and our Board. REIT of the Year – Sustainability (2017 and 2018) – Real Estate & Investment Finance 2017 Sustainability Award – Business Intelligence Group Earth Award: 1515 Broadway – Building Owners and Managers Association (BOMA) “A” Rating for ESG Performance – Global Real Estate Sustainability Benchmark’s (GRESB) Public Disclosure Report (2017) ENERGY STAR Partner Sustainability Report Our sustainability strategy, achievements and reports are available on our website at http://www.slgreen.com/sustainability. |
Risk Oversight
The Board is responsible for overseeing the Company’s risk management process. The Board focuses on the Company’s general risk management strategy and the most significant risks facing the Company, and ensures that appropriate risk mitigation strategies are implemented by management. The Board also is apprised of particular risk management matters in connection with its general oversight and approval of corporate matters. In particular, the Board focuses on overseeing risks relating to the structure and amount of our debt, including overall aggregate principal balance, variable rate versus fixed rate debt, maturity schedules and balance of secured and unsecured debt.
The Board delegated to the Audit Committee oversight of the Company’s risk management process. Among its duties, the Audit Committee reviews with management (a) the Company policies with respect to risk assessment and management of risks that may be material to the Company, (b) the Company’s system of disclosure controls and system of internal controls over financial reporting and (c) the Company’s compliance with legal and regulatory requirements. The Audit Committee also is responsible for reviewing major legislative and regulatory developments that could have a material impact on the Company’scontingentCompany’s contingent liabilities and risks. Our otherOther Board committees also consider and address risk as they perform their respective committee responsibilities. All committees report to the full Board as appropriate, including when a matter rises to the level of a material or enterprise level risk.
In addition, our Compensation Committee considers thepotential risks to the Company’s stockholders and toCompany in its determinations of the achievementoverall structure of our goals that may be inherent in the Company’s executive compensation program.program and the specific goals it establishes for our executives.
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The Company’s management is responsible for day-to-day risk management, including the primary monitoring and testing function for company-wide policies and procedures, and management of the day-to-day oversight of the risk management strategy for the ongoing business of the Company. This oversight includes identifying, evaluating, and addressing potential risks that may exist at the enterprise, strategic, financial, operational, and compliance and reporting levels.
We believe the division of risk management responsibilities described above is an effective approach for addressing the risks facing the Company and that the Board leadership structure supports this approach.
Governance Principles
The Board adopted Governance Principles that address significant issues of corporate governance and set forth procedures by which the Board carries out its responsibilities. Among the areas addressed by the Governance Principles are director qualification standards, director responsibilities, director access to management and independent advisors, director compensation, director orientation and continuing education, management succession, annual performance evaluation of the Board and management responsibilities. Our Nominating andCorporateand Corporate Governance Committee is responsible for, among other things, assessing and periodically reviewing the adequacy of the Governance Principles and will recommend, as appropriate, proposed changes to the Board. Although there is no one-size-fits all approach to corporate governance, we believe that our Governance Principles are aligned with the expectations of our stockholders, including the Investor Stewardship Group (ISG) and the ISG Corporate Governance Principles.
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Code of Ethics
The Board adopted a Code of Ethics that applies to our directors, executive officers and employees. The Code of Ethics is designed to assist our directors, executive officers and employees in complying with the lawlegal requirements and in resolving moral and ethical issues that may arise, and in complying with our policies and procedures. Among the areas addressed by the Code of Ethics are legal compliance, with applicable laws, conflicts of interest, use and protection of the Company’s assets, confidentiality, communications with the public, accounting matters, records retention, fair dealing, discrimination, harassment and health and safety. We intend to disclose on our corporate website any amendment to, or waiver of, any provisions of this Code applicable to our directors and executive officers that would otherwise be required to be disclosed under the rules of the SEC or the NYSE.
Whistleblowing and Whistleblower Protection Policy
Our Audit Committee established procedures for (1) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and (2) the confidential and anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. If you wish to contact our Audit Committee to report complaints or concerns relating to the financial reporting of the Company, you may do so in writing to the Chair of our Audit Committee, c/o Andrew S. Levine, Secretary, SL Green Realty Corp., 420 Lexington,420Lexington Avenue, New York, New York 10170-1881.York10170-1881. Any such communications may be made anonymously.
Additional Information
You are encouraged to visit the “Investors—Corporate Governance” section of our corporate website at http://www.slgreen.com to view or obtain copies of our committee charters, Code of Ethics, Governance Principles and director independence standards. The information found on, or accessible through, our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document we file with, or furnish to, the SEC. You also may obtain, free of charge, a copy of the respective charters of our committees, Code of Ethics, Governance Principles and director independence standards by directing your request in writing to SL Green Realty Corp.,420Lexington Avenue, New York, New York10170-1881, Attention: Investor Relations.
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Director Compensation |
Directors of the Company who are also employees receive no additional compensation for their services as directors. The following table sets forth information regarding the compensation paid to our non-employee directors during the fiscal year ended December 31, 2017.December31,2018.
Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | Option Awards(3) ($) | Total ($) | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | Option Awards(3) ($) | Total ($) | ||||||||||||||
Edwin T. Burton, III | $ | 104,000 | $ | 300,000 | — | $ | 404,000 | $ | 106,500 | $ | 300,000 | — | $ | 406,500 | ||||||||
John H. Alschuler | $ | 179,000 | $ | 300,000 | — | $ | 479,000 | $ | 170,667 | $ | 300,000 | — | $ | 470,667 | ||||||||
John S. Levy | $ | 70,500 | $ | 300,000 | — | $ | 370,500 | $ | 63,069 | $ | 300,000 | — | $ | 363,069 | ||||||||
Craig M. Hatkoff | $ | 77,500 | $ | 300,000 | — | $ | 377,500 | $ | 83,931 | $ | 300,000 | — | $ | 383,931 | ||||||||
Betsy Atkins | $ | 62,500 | $ | 300,000 | — | $ | 362,500 | $ | 72,500 | $ | 300,000 | — | $ | 372,500 | ||||||||
Lauren B. Dillard | $ | 74,500 | $ | 300,000 | — | $ | 374,500 | $ | 118,333 | $ | 300,000 | — | $ | 418,333 |
(1) | Mr. Levy and Ms. Dillard deferred all of |
(2) | Amounts shown reflect the full grant date fair value on the date of grant of shares of our common stock or phantom stock units granted to the directors |
(3) | There were no stock options granted to members of the Board |
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Annual cash retainers | |||
Cash retainer | $ | 50,000 | |
Additional cash retainer if serving as the Lead Independent Director | $ | 85,000 | |
Additional cash retainer if serving as a chair of the Audit Committee | $ | 25,000 | |
Additional cash retainer if serving as a chair of the Compensation Committee | $ | 7,500 | |
Additional cash retainer if serving as a chair of the Corporate Governance Committee | $ | 5,000 | |
Meeting fees | |||
For each meeting of the Board or a committee of the Board | $ | 1,500 | |
For each special meeting of the Audit Committee held independently of Board meetings | $ | 4,000 | |
Stock grant | |||
Valued at the grant date with shares fully vested on such grant date. | $ | 300,000 |
The annual fees and meeting fees generally are payable quarterly in cash. Each director may elect to receive some or all of these fees in stock and, as noted below, may elect to defer some or all of these fees.
Under our Non-Employee Directors’ Deferral Program, our non-employee directors were entitled to elect to defer up to 100%to100% of their annual fees, meeting fees and annual stock grant. At each director’s election, cash fees deferred under the program could be credited in the form of either phantom stock units, account credits that accrue earnings or losses based on the 30-daythe30-day LIBOR rate at the beginning of each month plus 2%plus2% (or based on such other rate or the performance of such investments as may be determined in advance by the Board) or measurement fund credits that track the performance of one or more open-ended mutual funds selected by the director. Stock grants deferred under the program are credited in the form of phantom stock units. Subject to limitations contained in the program, on a fixed date each quarter, a director may convert phantom stock units into account credits or measurement fund credits or vice versa or change the mutual funds that some or all of the director’s measurement fund credits track. All cash fees credited as, and conversions of or into, phantom stock units or measurement fund credits are based on the fair market value of our common stock or
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the applicable mutual fund on the date the cash fees otherwise would have been paid or the date of the conversion, as applicable. Unless otherwise elected by a director, a director’s phantom stock units, account credits and measurement fund credits are payable on the earlier of the January1stcoincident with or next following the director’s termination of service from the Board, or a change in control of the Company, as defined by the program. Phantom stock units are payable in an equal number of shares of our common stock; provided that we may elect to instead settle a director’s phantom stock units by paying the director cash in an amount equal to the value of such shares of common stock. Account credits and measurement fund credits are payable in cash. Under the program, each director is entitled to receive dividend equivalents that are paid currently on the director’s phantom stock units, unless the director elected to defer payment of such dividend equivalents and have them concurrently reinvested into additional phantom stock units.
For the fiscal year ending 2017, we increased the annual cash retainer for serving as chair of our Audit Committee from $10,000 to $25,000, but otherwise retained the same director compensation arrangements that were in place for 2016.
Going forward, we will reduce the value of the annual stock grant from $300,000 to $250,000 and reduce the cash retainer paid for serving as our Lead Independent Director from $85,000 to $70,000.
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Executive Officers |
The following sets forth biographical information regarding our executive officers who are not also directors.
Matthew J. DiLiberto | Chief Financial Officer | |
Age: Executive | Matthew J. DiLibertojoined the Company in September 2004 and currently serves as the Company’s Chief Financial Officer overseeing the finance, accounting, tax, investor relations and corporate capital markets functions of the organization. Mr. DiLiberto previously served as the Company’s Chief Accounting Officer & Treasurer from 2007 to 2014. From June 2000 to September 2004, Mr. DiLiberto was with Roseland, New Jersey-based Chelsea Property Group, now a division of Simon Property Group, a REIT focused on the development and ownership of premium outlet centers, where he was a Controller and Director of Information Management. From August 1998 to June 2000, Mr. DiLiberto worked at New York-based Vornado Realty Trust, a diversified REIT with ownership interests in office, retail, and other property types, where he worked as a Senior Financial Analyst focusing on accounting and controls as well as the preparation of high level management reports and SEC filings. Prior to joining Vornado Realty Trust, Mr. DiLiberto worked as a Business Assurance Associate at Coopers and Lybrand, LLP (now PricewaterhouseCoopers LLP). Mr. DiLiberto currently serves on the National Association of Real Estate Investment Trust’s Best Financial Practices Council and is a member of the Board of Directors of the FDNY Foundation. Mr. DiLiberto received a B.S. degree in Accounting from The University of Scranton. |
Andrew S. Levine | Chief Legal Officer and General Counsel | |
Age: Executive | Andrew S. Levinehas served as our Chief Legal Officer and General Counsel since April 2007 and as our General Counsel, Executive Vice President and Secretary since November 2000. Prior to joining the Company, Mr. Levine was a partner in the REIT and Real Estate Transactions and Business groups at the law firm of Pryor, Cashman, Sherman & Flynn, LLP. Prior to joining Pryor, Cashman, Sherman & Flynn, LLP, Mr. Levine was a partner at the law firm of Dreyer & Traub. Mr. Levine received a B.A. degree from the University of Vermont and a J.D. degree from Rutgers School of Law, where Mr. Levine was an Editor of the Law Review. He currently serves as a member of the Advisory Board of Rutgers Center for Corporate Law and Governance. |
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Proposal 2: Advisory Vote on the Compensation of our Named Executive Officers |
Section 14A(a)Section14A(a)(1) of the Exchange Act generally requires each public company to include in its proxy statement a separate resolution subject to a non-binding stockholder vote to approve the compensation of the company’s named executive officers, as disclosed in its proxy statement pursuant to Item 402 ofItem402of Regulation S-K, not less frequently than once every three years. This is commonly known as, and is referred to herein as, a “say-on-pay” proposal or resolution.
At our 2017 annualour2017annual stockholder meeting, our stockholders advised on a non-binding basis, by an affirmative vote of a majority of all votes cast, that the Company should hold non-binding advisory votes on executive compensation on an annual basis. On June 1, 2017,June1,2017, the Board determined that it will include future advisory votes on the compensation of our named executive officers in the Company’s annual meeting proxy materials every year until the next advisory vote on the frequency of stockholder votes on executive compensation, which will occur no later than the Company’s annual meeting of stockholders in 2023.in2023.
Accordingly, pursuant to Section 14A(a)Section14A(a)(1) of the Exchange Act, the Company is providing stockholders with the opportunity to approve the following non-binding, advisory resolution:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in this proxy statement pursuant to Item 402 ofItem402of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
The affirmative vote of a majority of all the votes cast with respect to this proposal will be required to approve this proposal.
Compensation Committee Report |
The Compensation Committee of the Board of Directors of SL Green Realty Corp. has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b)Item402(b) of Regulation S-K with management and, based on such review and discussions, our Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this annual proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-KForm10-K for the year ended December 31, 2017.December31,2018.
Submitted by our Compensation Committee
Lauren B. Dillard (Chair)
John H. Alschuler
Edwin ThomasT. Burton, III
John S. Levy
2019Proxy Statement 27
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis |
This section of our proxy statement discusses the principles underlying our executive compensation policies and decisions and the most important factors relevant to an analysis of these policies and decisions. It provides qualitative and quantitative information regarding the manner and context in which compensation is awarded to, and earned by, our named executive officers and places in perspective the data presented in the tables and narrative that follow.
Throughout this proxy statement, the individuals who served as our Chief Executive Officer and Chief Financial Officer during our 2017 fiscalour2018fiscal year, as well as the other individuals included in the “Summary Compensation Table” are referred to as the “named executive officers” or our “executives.”
28 SL Green Realty Corp.
EXECUTIVE COMPENSATION
Executive Summary
Business Overview
Our Mission | We are a fully integrated REIT focused on maximizing total return to stockholders through strategically acquiring, redeveloping, repositioning and managing commercial properties, located primarily in Manhattan, in order to generate cash flow and create value. |
Who We Are | $1.8Billion in Combined Revenues | #1Owner of Office Property in Manhattan | Total Square Feet | $ Enterprise Value |
We are differentiated from our peers and competitors in three key ways described below:
Active and Engaged Business Strategy | |
● | SLG does not subscribe to a traditional “buy and hold” strategy and is a very active transaction-oriented company |
● | In any given year, we execute more transactions than many of our competitors do over a much longer, multi-year period |
● | Accordingly, we frequently capitalize on opportunities in the market, maximizing returns |
Operations on Multiple Platforms | |
● | Buy and sell properties independently and collaborate with other organizations through joint ventures when advantageous |
● | Invest in redeveloping existing assets (e.g. 609 Fifth Avenue) and |
● | Provide financing for other real estate |
NYC-Focused Business Model | |
● | Singularly focused on New York City real estate – one of the most liquid and resilient markets through business cycles, |
● | Presence and operations in this complex and highly competitive market necessitate a top level of talent in our executive ranks |
● | Our leadership team |
28 SL Green Realty Corp.
EXECUTIVE COMPENSATION
ESG Excellence
We are committed to corporate social responsibility initiatives that deliver efficiency, value and health for our business, tenants and community. Evidence of our commitment to these initiatives includes the following:
● | Bloomberg ESG Disclosure score is the highest score for all companies in the REITs-Office Property sector |
● | Thomson Reuters ESG score of “A-” |
● | ENERGY STAR Partner of the Year – Sustained Excellence (2018, 2019) |
● | Achieved a “B” Carbon Disclosure Project score as a first-time reporter (2018) |
● | Awarded the “Changemaker Award” by the NYC Mayor’s Office of Service in recognition of SL Green’s volunteerism and philanthropic efforts (2018) |
● | Real Estate Finance & Investment’s “Most Sustainable REIT” (2017, 2018) |
Our GRI compliant sustainability reports and other information relating to our ESG initiatives are available on our website at http://www.slgreen.com/sustainability.
Long-Term Stockholder Value Creation
We have demonstrated strong operational and financial performance since our IPO and have created tremendous value for our stockholders over the long-term as we’ve positioned the Company for sustainable success.
●$ ●Leased Approximately ● ● |
(1) | Refer to Appendix A to this proxy statement for a reconciliation of Normalized FFO. |
2018 Proxy Statement 29
EXECUTIVE COMPENSATION
Our superior long-term total returnsreturn to stockholders since our IPO – over several cycles – demonstrates the enduring strength of our company and the talent of our executive team.
10-Year Indexed Returns: SLG TSR % vs. MSCI U.S. REIT Index Total Return |
Source: Bloomberg (data as of 12/31/2008 – 12/31/2018)
2019 Proxy Statement 29
EXECUTIVE COMPENSATION
2018 Executive Compensation
Majority of Pay is at Risk
CEO Pay Mix | Other NEO Pay Mix | |||
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2017 Say-on-Pay2018 Pay Outcome Shareholderfor CEO
The following table reflects total annual direct compensation, and differs slightly from Summary Compensation Table figures because of timing differences, mainly related to the annual equity bonus.
Element of Compensation | 2017 | 2018 | % Change | |||||
Base Salary | $ | 1,350,000 | $ | 1,250,000 | -7.4% | |||
Deferred Compensation | $ | 750,000 | $ | 750,000 | — | |||
Formulaic Annual Cash Bonus | $ | 1,937,250 | $ | 2,746,491 | 41.8% | |||
Annual Equity Bonus(1) | $ | 4,512,750 | $ | 4,003,509 | -11.3% | |||
Performance-based LTIP Units Granted under Employment Agreement | $ | 6,873,737 | $ | 7,336,210 | 6.7% | |||
Total | $ | 15,423,737 | $ | 16,086,210 | 4.3% |
(1) | Annual equity bonuses are paid in the year following the year of performance, and because they are made in equity are shown in the Summary Compensation Table for the year of grant. In the table above, they are shown for the year they were earned. |
Grants of Class O LTIP units, which are intended to be similar to stock options from an economic perspective, are excluded from the table above as they only have value to the extent of appreciation in the value of our assets on a per share basis following the grant date. No grants of Class O LTIP Units were made to our Chief Executive Officer in2018.
Majority of 2018 CEO Compensation is Deferred and Paid in Equity
Compensation Realized Immediately / Paid in Cash | Deferred Compensation / Paid in Equity | |||||
●Base Salary ●Cash Bonus | 24.9% | ●Deferred Compensation Contributions ●Equity Bonus ●Employment Agreement Equity Awards | 75.1% |
Other NEOs have similar weightings of cash and equity compensation.
30 SL Green Realty Corp.
EXECUTIVE COMPENSATION
Stockholder Engagement and Responsiveness – Significant Changes for 2019
Our Compensation Committee continually evaluates our executive compensation programs to determine their effectiveness in linking pay to performance and the shareholder experience. We were disappointed that our2017advisory vote on executive compensation received support from only43% of stockholders. In response, the Committee and our management team initiated acontinued its robust stockholder engagement program in2018and2019, as it has for the past several years, to solicit stockholder perspectives on our executive compensation programs.
As part of this engagement program, since the2018annual meeting of stockholders, we contacted stockholders accounting for66%for over70% of our shares outstanding and engaged with stockholders accounting for58% of such shares.outstanding. All of these discussions were led by the chair of our Compensation Committee, or the Committee, and by the Lead Independent Director. Several shareholders declined our invitation to meet, indicating to us that they were satisfied with our current compensation and corporate governance practices and that a meeting was not necessary at that time.Committee.
The feedback we received in these meetings was shared with the Committee and the entire Board, as applicable. The Committee carefully considered this feedback and implemented changes to our executive compensation program that are responsive to the views that we heard.
The table below details stockholders’ feedback we received during our engagements with them and the actions the Committee took to address investors’ perspectives on our executive compensation program. The Committee is confident that theseThese changes – including the materially re-designed compensation for our CEOChief Executive Officer, President and Chief Legal Officer and General Counsel as governed by histheir employment agreementagreements – reflect our Board’s ongoing commitment to shareholderstockholder engagement and responsiveness. With these changes, the Committee has significantly simplified the structure of our compensation program, by reducing the overall components of compensation from seven to four and enhancedenhancing the transparency of our compensation program so that stockholders can better recognize how they link pay with performance.
30 SL Green Realty Corp.
EXECUTIVE COMPENSATION
Element | Stockholder Feedback (“What We | (“What We | Executive | Effective | Impact |
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●Base salary and deferred compensation provide | ● | CEO | Retroactive to 1/18/2018 | ●Reduces fixed pay ● | |
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● | CEO - Holliday President - Mathias | 2019onward | ●Eliminates multiple fixed pay elements | ||
Annual Incentive | ●Annual incentive should focus on metrics | ●Eliminated TSR, | CEO - Holliday President - Mathias | 2018onward | ●Strengthens link to operational metrics |
● | ● | CEO - Holliday President - Mathias | 2019onward | ●Eliminates discretion, improves transparency into total compensation | |
Long-Term | |||||
● | ● | CEO President - Mathias CLO & GC - Levine | 2019onward | ●Strengthens rigor of performance-based | |
●Performance period for | ● ● | CEO - Holliday President - Mathias CLO & GC - Levine | 2019onward | ●Strengthens pay-for-performance link ●Improves long-term alignment of executives’ interests | |
● | ● | CEO President - Mathias CLO & GC - Levine | 2019onward | ●Eliminates contractual guarantees | |
| ●Compensation program is complicated | ●Reduced elements of compensation from 7 to 4 | CEO - Holliday President - Mathias | 2019onward | ●Improves transparency to assess pay-for-performance linkage |
●Reduce | ● | ||||
Jan17,2019 | ● |
20182019 Proxy Statement31
EXECUTIVE COMPENSATION
Expected Components of Compensation for CEO and President – Effective in 2019
Beginning in January2019– when our CEO’sChief Executive Officer’s and our President’s new employment agreement becomesagreements became effective – histheir compensation will bewas simplified with enhanced transparency and improved long-term orientation, per the changes described above.orientation.
Pay Element | Key Changes / Characteristics | |
Fixed | Base Salary | ●Only fixed component of compensation awarded to our CEO and President |
Annual | Annual Cash Bonus | ●100% formulaic based on specific performance criteria and weightings that link to our strategy; criteria and weightings were revised in 2018 |
Long-Term | Performance-Based LTIP Units | ●50% ●50% |
Time-Based Equity Award | ●Annual target amount ●Adjustments to target amount to be determined by the Committee, based on the short-term and long-term performance of our Company and the executive; subject to three-year ratable vesting and a no-sell restriction for three years after grant date |
In addition, as partSimilar changes were incorporated into the structure of our regular effortChief Legal Officer and General Counsel’s new employment agreement also effective in2019. We intend to refreshalign our Board Committee chairs and bring new perspectives to those leadership positions, Lauren Dillard became chair of the Compensation Committee in February2018, succeeding John Alschuler.
During our discussions with investors, we discussed our overall executive compensation programs including the extent to which each NEO’s long-term compensation is determined by their individualChief Financial Officer’s next employment agreements. The NEOs –agreement with the exceptionrevised structure upon expiration of his current employment agreement,including elimination of retesting periods for earning performance-based LTIP units.
The following charts illustrate the target compensation of our Chairman – have distinct agreements, with staggered expiration dates, tailored to their individual rolesChief Executive Officer, President and responsibilities. In response to shareholder feedback, the Committee simplified the long-term equity awards granted under Mr. DiLiberto’s new contract, executed in February2018. The Committee demonstrated its intent to design new employment agreements for the other NEOs in a manner consistent with this enhanced approach when it structured the new contract for Mr. Holliday, with the details described above.Chief Legal Officer and General Counsel effective in2019.
32 SL Green Realty Corp.
EXECUTIVE COMPENSATION
Our 2017 Executive Compensation Programs
Our named executive officers’ compensation in2017had three primary components, which are discussed in more detail below:
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Variable pay constitutes the vast majority of our executives’ compensation, which allows the Committee to reward superior performance, while the substantial long-term equity incentive portions of our compensation programs serve to align the interests of our named executive officers with our stockholders.
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Majority of Pay is at Risk
Majority of 2017 CEO Compensation is Deferred and Paid in Equity
Compensation Realized Immediately / Paid in Cash | Deferred Compensation / Paid in Equity | |||||
●Base Salary ●Cash Bonus | 17.6% | ●Deferred Compensation Contributions ●Equity Bonus ●Employment Agreement Equity Awards ●2014 OPP Remaining Allocations | 82.4% |
Other NEOs have similar weightings of cash and equity compensation.
2018 Proxy Statement 33
EXECUTIVE COMPENSATION
Pay Outcome for CEO
Reflecting continued competitiveness in our industry, our CEO’s total annual direct compensation as determined by the Board decreased modestly year over year. The following table reflects total annual direct compensation, and differs slightly from Summary Compensation Table figures because of timing differences, mainly related to the annual equity bonus.
Element of Compensation | 2016 | 2017 | % Change | |||||
Base Salary | $ | 1,350,000 | $ | 1,350,000 | — | |||
Deferred Compensation | $ | 750,000 | $ | 750,000 | — | |||
Annual Cash Bonus | $ | 2,473,125 | $ | 1,937,250 | -21.7% | |||
Annual Equity Bonus(1) | $ | 4,276,875 | $ | 4,512,750 | 5.5% | |||
Performance-based LTIP Units Granted under Employment Agreement | $ | 7,238,379 | $ | 6,873,737 | -5.0% | |||
Total | $ | 16,088,379 | $ | 15,423,737 | -4.1% |
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In addition, though awards granted under the 2014 Outperformance Plan have been disclosed in the Summary Compensation Table under the 2015 and 2017 fiscal years, none of those awards were earned and they are not included in the table above. Grants of Class O LTIP units, which are intended to be similar to stock options from an economic perspective, are also excluded from the table above as they only have value to the extent of appreciation in the value of our assets on a per share basis following the grant date.
Our Executive Compensation Philosophy
We adopted an executive compensation philosophy that rewards the achievement of annual and long-term goals of both the Company and individual executives. Our executive compensation programs are designed to achieveexecutives, while achieving the following objectives:
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32 SL Green Realty Corp.
EXECUTIVE COMPENSATION
In order to reach these goals, the Committee, in consultation with our Chief Executive Officer and the Committee’s independent compensation consultant, adopted executive compensation practices that promote a pay-for-performance philosophy. Our primary business objective, of maximizing TSR through growth in FFO while seeking appreciation in the value of our investment properties, demands a long-term focus. Therefore, on both a current and historical basis, our executive compensation programs are based heavily on the achievement of both annual and multi-year performance measures.
Competitive Market for Talent
In the market for talent and compensation, SLG is most comparable to other real estate companies, as well as other complex financial services-related industries. We evaluate our compensation in the same way: as a “fee, expense or load.” To that end, we evaluate our compensation as a function of our total assets and revenue – fundamental performance metrics that industry analysts use to measure efficiency and the effectiveness of management teams.
34 SL Green Realty Corp.
EXECUTIVE COMPENSATION
We compensate management at a low cost to shareholders relative to peers, while continuing to execute best-in-class operational performance.
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As a REIT focused specifically on office spacereal estate in Manhattan–New York City – a high cost and complex market – we compete with companies, both public and private, for a small number of talented executives. Among the top15New York City real estate companies – in terms of Manhattan office-space ownership – only six of those companies, including SL Green, are public. Many of our competitors are private companies and are not required to publicly disclose their compensation arrangements.
Given the unique nature of our company – manifested by three primary characteristics: Active and Engaged Business Strategy, Operations on Multiple Platforms, and NYC-Focused Business Model – the Compensation Committee is continuously evaluating our executive compensation program to ensure that it aligns with our current business priorities and external market factors.
Compensation Practices
We believe that our executive compensation programs provide appropriate performance-based incentives to attract and retain leadership talent in the highly competitive New York City real estate market, to align management and stockholder interests and to continue to drive our long-term track record of superior return to stockholders. The following are key features of our executive compensation programs, which reflect thereflecting changes we have adopted following our extensive stockholder outreach in recent years:outreach:
WHAT WE DO | |||
✓ | Pay for performance and create alignment with stockholders | ||
✓ | Include robust hurdles in our incentive plans | ||
✓ | Pay a majority of total compensation for our CEO and named executive officers in equity | ||
✓ | Follow robust | ||
✓ | Impose a clawback policy with respect to incentive payments | ||
✓ | Require a double trigger for cash severance and accelerated vesting in connection with a change in control |
WHAT WE DON’T DO | |||
✕ | No dividends or distributions paid on unearned equity awards subject to performance-based vesting | ||
✕ | No excise tax gross-up provisions | ||
✕ | No repricing of stock options | ||
✕ | No single trigger cash severance or accelerated vesting in connection with a change in control | ||
✕ | Don’t allow directors or officers to hedge our securities |
2018Proxy2019Proxy Statement 3533
EXECUTIVE COMPENSATION
2017Our 2018 Executive Compensation Program
Our named executive officers’ compensation in2018, which has been simplified and changed for 2019, had three primary components:
● | annual base salary and deferred compensation |
● | annual incentive awards, which include cash and equity bonuses |
● | long-term equity incentive awards |
Variable pay constitutes the vast majority of our executives’ compensation, which allows the Committee to reward superior performance, while the substantial long-term equity incentive portions of our compensation programs serve to align the interests of our named executive officers with our stockholders.
Pay Element | Key Characteristics | Changes for 2019 Employment Agreements | |
Fixed | Base Salary | ●Reflects the scope of each executive officer’s duties and responsibilities taking into account the competitive market compensation paid by other companies for similar positions | ●Decreased base salary by $100,000for our CEO |
Deferred Compensation | ●Delivered as stock units to our top three named executive officers; subject to one year vesting; delivered at the termination of employment; encourages retention of key executives | ●Removed in2019 | |
Annual Incentives | Annual Cash Bonus | ●100% formulaic payout for our top three named executives, based on specific performance criteria linked to our strategy | ●No change |
Annual Equity Bonus | ●Equity award determined by the Committee, based on the short-term and long-term performance of our Company and the executive; subject to a no-sell restriction until three years after grant date | ●Removed; all equity now granted under the long-term incentive element of compensation | |
Long-Term Incentives | Contract Equity Awards | ●Long-term equity incentives granted in connection with new or extended employment agreements; includes performance-based LTIP units and time-based LTIP units. Previously included stock options or Class O LTIP units | ●Removed; long-term incentives now include a target performance-based equity award that can be earned based on operational measures with an absolute TSR modifier and relative TSR (with no “retesting” feature) and a target time-based equity award |
Outperformance Plan (OPP) Awards | ●Multi-year equity awards that are subject to challenging performance-based hurdles |
2018 Pay Outcomes
Annual Base Salary and Deferred Compensation
Base salaries are established at levels intended to reflect the scope of each executive’s duties and responsibilities and further take into account the competitive market compensation paid by other companies for similar positions. Since such salaries are not based on performance, they are intentionally structured to be a relatively low percentage of total compensation.
34 SL Green Realty Corp.
EXECUTIVE COMPENSATION
The following sets forth the annual base salaries for our named executive officers for2016and2017, which reflect amounts agreedfor2017and2018. In connection with entry into his new employment agreement effective starting in2019, Mr. Holliday consented to a reduction of the aggregate per annum minimum base salary payable pursuant to Mr. Holliday’s then-current employment agreement, from $1.35million to $1.25million, effective for calendar year2018, retroactive to January18,2018.
Executive | 2017 Base Salary | 2018 Base Salary | % Change | |||||
Marc Holliday | $ | 1,350,000 | $ | 1,250,000 | -7.4% | |||
Stephen L. Green | $ | 750,000 | $ | 750,000 | — | |||
Andrew Mathias | $ | 800,000 | $ | 900,000 | 12.5% | |||
Matthew J. DiLiberto | $ | 500,000 | $ | 550,000 | 10% | |||
Andrew S. Levine | $ | 550,000 | $ | 550,000 | — |
Eliminated in each executive’s employment agreement. We did not make any adjustments in annual base salaries for2017, other than for Mr. DiLiberto.2019
Executive | 2016 Base Salary | 2017 Base Salary | % Change | |||||
Marc Holliday | $ | 1,350,000 | $ | 1,350,000 | — | |||
Stephen L. Green | $ | 750,000 | $ | 750,000 | — | |||
Andrew Mathias | $ | 800,000 | $ | 800,000 | — | |||
Matthew J. DiLiberto | $ | 400,000 | $ | 500,000 | 25.0% | |||
Andrew S. Levine | $ | 550,000 | $ | 550,000 | — |
In addition to base salary, each of Messrs. Holliday, Green and Mathias also received a contribution of deferred notional stock units that are subject to vesting based on continued employment during a one-year period following the contribution and are only paid upon termination of employment or a change in control.
This deferred compensation is viewed by the Committee as an award designed to encourage retention because the value of this deferred compensation is tied to the value of our common stock, and these The executives will not receive this deferred compensation until the termination of their employment or a change in control. This deferredcompensation program further establishes alignment of management and stockholder interests and helps ensure that the executives remain focused on long-term stockholder value creation. Similar to annual base salary, it is granted in fixed amounts each year.
The amount of deferred compensation that each of Messrs. Holliday, Green and Mathias received for2017wasfor2018was equal to the base amount provided for under the executive’s employment agreement and associated deferred compensation agreement that waswere in effect for2017.for2018. The following table sets forth the deferred compensation grants made to our executives in2017.in2018.
Executive | Deferred Compensation Amount | Notional Stock Units(1) | Deferred Compensation Amount | Notional Stock Units(1) | ||||||
Marc Holliday | $ | 750,000 | 6,956 | $ | 750,000 | 7,692 | ||||
Stephen L. Green | $ | 150,000 | 1,396 | $ | 150,000 | 1,482 | ||||
Andrew Mathias | $ | 550,000 | 5,120 | $ | 550,000 | 5,436 |
(1) | Deferred compensation contributions were converted into notional stock units based on the market price of our common stock on the date of the contribution. |
Under our new employment agreements with our executives and as part of our simplified executive compensation program, we will no longer make deferred compensation contributions on behalf of our executives. Outstanding stock units previously granted will remain outstanding.
Annual Incentive Awards
We pay annual incentive awards in the form of annual cash and equity bonuses to reward our named executive officers for achieving key corporate financial and operational objectives and individual goals. Based in part on the feedback we received in connection with our outreach efforts relating to executive compensation, the Committee decided to revise the structure of our annual incentive award program for our Chief Executive Officer, Executive Chairman and President. In2017,In2018, the entire amount of the annual cash bonuses paid to our top three named executive officers was determined pursuant to this annual cash bonus program, which is described in more detail below.
Annual Cash Bonus Program (Top Three Named Executive Officers)
As noted above, the annual cash bonuses paid to our top three named executive officers for2017werefor2018were determined pursuant to our annual cash bonus program. Under this program, the Committee established specific threshold, target and maximum cash bonus amounts that each of our top three named executive officers could earn for2017andfor2018and established specific performance criteria that were to be used in a formulaic manner to determine100% of each of these executives’ cash bonuses. For2017,For2018, each of Messrs. Holliday, Green and Mathias were eligible to earn the following percentages of his base salary (with linear interpolation used to determine the percentage earned for performance that falls between threshold, target and/or maximum):
Executive | Threshold | Target | Maximum | |||
Marc Holliday | 100% | 200% | 300% | |||
Stephen L. Green | 100% | 175% | 250% | |||
Andrew Mathias | 100% | 175% | 250% |
362019Proxy Statement SL Green Realty Corp.35
EXECUTIVE COMPENSATION
Executive | Threshold | Target | Maximum | |||
Marc Holliday | 100% | 200% | 300% | |||
Stephen L. Green | 100% | 175% | 250% | |||
Andrew Mathias | 100% | 175% | 250% |
One hundred percent of each executive’s annual cash bonus was determined in a formulaic manner based on the level of our achievement of a number of performance criteria as compared to the level established in advance by the Committee. The following sets forth the specific performance criteria selected for2017,for2018, the relative weighting of each, the threshold, target and maximum performance levels established by the Committee in advance for each, and our actual2017resultsactual2018results for each.
Performance criteria | 2018 Weighting Levels | Threshold | Target | Maximum | 2018 Actual Performance | |||||||||
Normalized FFO per share(1) | 30.0% | $ | 6.60 | $ | 6.70 | $ | 6.80 | $ | 6.78 | |||||
Annual same-store cash NOI growth(2) | 30.0% | 4.5% | 5.5% | 6.5% | 4.5% | |||||||||
Dividend growth | 30.0% | 3.0% | 4.0% | 5.0% | 4.8% | |||||||||
G&A expense (in millions) | 10.0% | $ | 97.75 | $ | 94.90 | $ | 92.05 | $ | 92.63 |
(1) | Refer to Appendix A for a reconciliation. |
(2) | Excludes lease termination income. Refer to Appendix A for a reconciliation. |
These performance criteria were chosen by the Committee because they are key drivers of stockholder value creation:
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● | Annual same-store cash NOI growth:cash NOI is a key metric |
● | Dividend growth: represents a key measure of the income we return to stockholders each year. |
● | G&A expense:represents corporate overhead and is a key metric |
Performance criteria | 2017 Weighting Levels | Threshold | Target | Maximum | 2017 Actual Performance | |||||||||
FFO per share(1) | 25.0% | $ | 6.30 | $ | 6.40 | $ | 6.50 | $ | 6.45 | |||||
Same-store cash NOI growth | 25.0% | 2.0% | 2.3% | 2.6% | 2.0% | |||||||||
Dividend growth | 20.0% | 3.0% | 4.0% | 5.0% | 4.8% | |||||||||
Relative TSR for2017(2) | 15.0% | 40th | 60th | 80th | 17th | |||||||||
Absolute TSR for2017 | 15.0% | 5.0% | 7.0% | 9.0% | -3.27% |
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For2018, the threshold level goals established for normalized FFO per share and annual same-store cash NOI growth significantly exceeded2017maximum level goals, which demonstrates the rigor of our formulaic annual cash bonus program. Our2018dividend growth goals were the same as2017. General and administrative expense was a new category for2018. The following table reflects the2017cashthe2018cash bonuses awarded to Messrs. Holliday, Green and Mathias pursuant to our annual cash bonus program, presented based on the percentages of each executive’s target bonus:
Executive | Target Cash Bonus ($) | Actual Cash Bonus (% of Target)(1) | Actual Cash Bonus ($) | Target Cash Bonus ($) | Actual Cash Bonus (% of Target)(1) | Actual Cash Bonus ($) | ||||||||||
Marc Holliday | $ | 2,700,000 | 71.75% | $ | 1,937,250 | $ | 2,500,000 | 109.86% | $ | 2,746,491 | ||||||
Stephen L. Green | $ | 1,312,500 | 71.75% | $ | 938,437 | $ | 1,312,500 | 108.45% | $ | 1,423,420 | ||||||
Andrew Mathias | $ | 1,400,000 | 71.75% | $ | 1,001,000 | $ | 1,575,000 | 108.45% | $ | 1,708,105 |
(1) | Consistent with the timing of prior years’ annual cash bonus determinations, payouts and determinations under the annual cash bonus program were made in |
(2) | The Compensation Committee approved in advance that executives may elect to receive some or all of their 2018 cash bonus LTIP units. Mr. Green elected to receive 55% of his 2018 cash bonus in LTIP units, and accordingly, Mr. Green was granted 9,862 LTIP units in January 2019. Mr. Mathias elected to receive 100% of his 2018 cash bonus in LTIP units, and accordingly, Mr. Mathias was granted 21,224 LTIP units in December 2018. |
As a result of the rigor of the performance targets established by the Committee for our annual cash bonus program, the amounts paid to Messrs. Holliday, Green and Mathias were significantly reduced for2017as compared to2016, as set forth in the table below:
Executive | 2016 Annual Cash Bonus | 2017 Annual Cash Bonus | % Change | |||||
Marc Holliday | $ | 2,473,125 | $ | 1,937,250 | -21.7% | |||
Stephen L. Green | $ | 1,161,718 | $ | 938,437 | -19.2% | |||
Andrew Mathias | $ | 1,239,166 | $ | 1,001,000 | -19.2% |
2018Proxy Statement 37
EXECUTIVE COMPENSATION
Annual Equity Bonuses (Top Three Named Executive Officers)Eliminated in 2019
WeIn2018, we also maintainmaintained an equity bonus program for our top three named executive officers, which provides annual bonuses that are determined by the Committee based on the short-term and long-term performance of our Company and the executive, the Committee’s view of appropriate annual incentive awards in light of the executive’s historical compensation, skill, experience and position, competitive market factors and such other factors as are determined appropriate by the Committee.
In making these awards for2017,for2018, the Committee sought to find a balance between:
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36 SL Green Realty Corp.
EXECUTIVE COMPENSATION
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The Committee’s decisions regarding the amount of the equity bonuses to be paid also took into account our performance as compared to specific company goals and objectives for2018that were presented at our investor day conference in December2017, which are set forth below:
1,600,000square feet of Manhattan offices leases | ||
$ | ||
$ | ||
Dispose of more than $100million of suburban assets | ||
Issue $300million index eligible unsecured bonds | Achieved: $350million | |
Acquire JV partner for2Herald Square | Achieved: Closed JV | |
$500million of share repurchases | Achieved: $982million | |
Keep debt and preferred equity balance flat | $2.1billion | |
$200million debt and preferred equity investment income | Achieved: $211million | |
Complete installation of structural steel to the39thfloor of One Vanderbilt | Achieved:48thfloor | |
Raise $200million EB-5financing | Achieved: $250million loan upsize | |
Lease37% of One Vanderbilt | Achieved:52% | |
Obtain construction financing for185Broadway | Achieved: $225million | |
Achieve7.0x or better net debt to EBITDA (per Fitch) | Achieved | |
Rating agency outlook upgrade | ||
TSR greater than10% | ||
TSR in excess of MSCI US REIT Index by250basis points |
The differences in compensation awarded to our named executive officers are generally a function of the executive’s position and authority, as well as the competitive landscape for executives in similar positions. The table below sets forth the annual equity bonus awards that were granted to each of Messrs. Holliday, Green and Mathias for2016and2017,for2017and2018, as approved by the Committee:
Executive | 2016 Equity Bonus | 2017 Equity Bonus | % Change | |||||
Marc Holliday | $ | 4,276,875 | $ | 4,512,750 | 5.5% | |||
Stephen L. Green | $ | 788,282 | $ | 411,563 | -47.8% | |||
Andrew Mathias | $ | 3,560,834 | $ | 3,599,000 | 1.1% | |||
Total | $ | 8,625,991 | $ | 8,523,313 |
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Executive | 2017 Equity Bonus | 2018 Equity Bonus | % Change | |||||
Marc Holliday | $ | 4,512,750 | $ | 4,003,509 | -11.3% | |||
Stephen L. Green | $ | 411,563 | $ | — | -100% | |||
Andrew Mathias | $ | 3,599,000 | $ | 3,091,895 | -14.1% | |||
Total | $ | 8,523,313 | $ | 7,095,404 | -16.8% |
The amounts of the equity bonus awards for our executives in2017asin2018as compared to2016wereto2017were primarily determined based on our strong operational achievements, and, on an individual basis, the changing role of our Executive Chairman, as balanced against our disappointing short-term TSR performance in2017. In particular,in2018. Additionally, reflecting our Executive Chairman’sMr. Green’s evolving role, we significantly reduced thedid not pay an equity bonus award paid to our Executive Chairman. The2017equityChairman for2018. The2018equity bonuses paid to each of our top three named executive officers listed above were paid in early2018inearly2019in the form of LTIP units that vested upon grant, but remain subject to a no-sell restriction until three years after their grant date. Our named executive officers received the following number of LTIP units for these equity bonuses: Mr. Holliday—47,269; Mr. Green—4,311;50,435; and Mr. Mathias—37,698.38,951.
In response to stockholder feedback, we eliminated this discretionary equity bonus program for Messrs. Holliday and Mathias beginning in2019.
2019Proxy Statement 37
EXECUTIVE COMPENSATION
Bonuses to Other Executives
Consistent with our historical practice, annual bonuses for Messrs. DiLiberto and Levine were determined by the Committee in its discretion in substantially the same manner as the equity bonuses for our top three named executive officers. The table below sets forth the annual bonus awards that were granted to Messrs. DiLiberto and Levine for2016and2017,for2017and2018, as approved by the Committee, to the extent paid in cash or LTIP units:Committee:
Executive | 2016 Bonus | 2017 Bonus | % Change | 2017Bonus | 2018Bonus | % Change | ||||||||||
Matthew J. DiLiberto | $ | 1,700,000 | $ | 1,900,000 | 11.8% | $ | 1,900,000 | $ | 2,000,000 | 5.3% | ||||||
Andrew S. Levine | $ | 1,350,000 | $ | 1,275,000 | -5.6% | $ | 1,275,000 | $ | 1,350,000 | 5.9% |
Similar to the annual equity bonus awards that were granted to our top three named executive officers, these annual bonuses for Messrs. DiLiberto and Levine reflected our significant operational achievements for2017,for2018, our continued superior long-term TSR performance and their evolving roles at our company, as balanced against our disappointing short-term TSR performance for2017. These2017bonusesfor2018. These2018bonuses were paid to Messrs. DiLiberto and Levine in early2018in the form of cash and LTIP units thatgranted in early2019that were vested upon grant, but remain subject to no-sell restriction until three years after their grant date. Mr. DiLiberto received $1,600,000in cash and3,142LTIPand5,039LTIP units and Mr. Levine received13,355LTIPreceived17,007LTIP units.
In addition, during2017, to recognize the continuing contributions of Messrs. DiLiberto and Levine, the Committee determined to make time-based cash awards of $1,500,000and $2,000,000, respectively, to aid with retention and provide further incentive for future performance. These cash awards will only be paid to the extent Messrs. DiLiberto and Levine remain employed through specified future dates, with50% to be paid on December31,2019and50% to be paid on December31,2020.
Long-Term Equity Incentive Awards
For2017,For2018, long-term equity incentives were provided to our named executive officers through the grant of Class O LTIP units / stock options, performance-based LTIP units and time-based LTIP units pursuant to our outperformance plans and in connection with new or extended employment agreements. The majority of these awards included performance-based vesting hurdles that must be met in order for recipients to earn them. The grant of equity awards links a named executive officer’s compensation and net worth directly to the performance of our stock price as well as the achievement of other performance-based vesting hurdles in some cases, which wecases. We believe encourages our named executive officers to make decisions with an ownership mentality and provides alignment of interest with our stockholders. The Committee has made long-term equity incentive awards a central part of our executive compensation program due to these features.
Outperformance Plans
A main component of our long-term equity incentive award program has been our outperformance plans. Our outperformance plans provided equity awards to our named executive officers and other employees that were subject to performance-based hurdles based on TSR or stock price appreciation over a multi-year period, and are eligible for potential acceleration in specific, limited circumstances. In addition to the performance-based vesting hurdles, all of these equity awards had additional time-based vesting provisions of four to five years in the aggregate with principally back-end vesting, based on continued employment, which acted as a retention device and provided a strong incentive to the executives to increase stockholder value during the vesting period.
Our outperformance plans were designed to provide strong and direct alignment of our executive’s interests with long-term stockholder interests. As a result, historically, we provided a meaningful percentage of our executives’ total compensation in the form of equity awards under our outperformance plans.
In conjunction with the Committee’s decision to significantly restructure our CEO’s compensation – as governed by his new employment agreement – future long-term equity awards for our CEO will be delivered in the form of performance-based and LTIP units and time-based equity awards as described in this proxy. Our other executive officers are expected to receive similar performance-based LTIP units and time-based equity awards – pending their future employment agreements – that contain similar features, including simplified structure, enhanced performance hurdles and extended performance periods. The Committee believes these enhanced long-term equity incentive awards effectively incentivize outperformance and link it to compensation.
Terms of the 2014 Outperformance Plan
In August2014, the Committee approved the general terms of our2014Outperformance Plan. Under our2014Outperformance Plan, participants could earn awards based on our TSR on an absolute basis as well as on a relative basis
2018Proxy Statement 39
EXECUTIVE COMPENSATION
compared to the constituents of the MSCI US REIT Index, or Index Companies, over a three-year performance period beginning on September 1, 2014 and end on August 31, 2017. Awards earned based on absolute TSR would have been determined independently of awards earned based on relative TSR.
In order for participants to have earned the full award under our 2014 Outperformance Plan, our TSR during the performance period must have equaled or exceeded50%, which would represent total returns to stockholders in excess of$5billion, and been in thetop25%of Index Companies.
Awards that would have been earned under our 2014 Outperformance Plan would also have been subject to vesting based on continued employment through August 31, 2018 with 50% of the awards earned vesting on August 31, 2017 and the remaining 50% vesting on August 31, 2018. The maximum number of LTIP units that could have been earned under our 2014 Outperformance Plan was 610,000 LTIP units.
Under the 2014 Outperformance Plan, two-thirds of the LTIP units could have been earned based on our absolute TSR and one-third of the LTIP units could have been earned based on our relative TSR compared to Index Companies. The table below reflects the minimum and maximum thresholds for both the absolute TSR and relative TSR components:
Absolute TSR | Percentage of Absolute TSR LTIP Units Earned (two-thirds of total) | Relative TSR | Percentage of Relative TSR LTIP Units Earned (one-third of total) | ||||
Less than 25% | 0% | Below 50thpercentile | 0% | ||||
25% | 37.5% | 50thpercentile | 37.5% | ||||
50% or higher | 100% | 75thpercentile or greater | 100% |
The number of LTIP units that would have been earned if performance was above the minimum thresholds, but below the maximum hurdles, would have been determined based on linear interpolation between the percentages earned at the minimum and maximum thresholds.
The following awards under our 2014 Outperformance Plan were made pursuant to which our named executive officers had the opportunity to earn the following LTIP units:
Award Opportunity (# of LTIP Units) | ||||||
Executive | Threshold | Maximum | Actual Earning Based on Results through 8/31/2017 | |||
Marc Holliday | 43,208 | 115,222 | 0 | |||
Stephen L. Green | 14,045 | 37,455 | 0 | |||
Andrew Mathias | 30,500 | 81,333 | 0 | |||
Matthew J. DiLiberto | 6,621 | 17,657 | 0 | |||
Andrew S. Levine | 7,725 | 20,600 | 0 |
Pursuant to our employment agreements with Messrs. Holliday and Mathias, we agreed to allocate at least 22.67% and 16.00%, respectively, of the total awards under our 2014 Outperformance Plan to these executives. Prior to the conclusion of the 2014 Outperformance Plan, we allocated 18.9% and 13.3% to Messrs. Holliday and Mathias, respectively, of the total awards under our 2014 Outperformance Plan to which they are entitled, representing the full allocation of LTIP units that each could have earned based on our absolute TSR performance and one-half of the allocation of LTIP units that each could have earned based on our relative TSR performance. Messrs. Holliday and Mathias each waived their right to the remaining LTIP units that they were entitled to be allocated.
No Payout Under the 2014 Outperformance Plan
The performance period of the 2014 Outperformance Plan concluded August 31, 2017, with the following actual performance for the period from September 1, 2014 to August 31, 2017:
Metric | Results | Results relative to Target | Percentage of LTIP Units Earned | ||||
Cumulative Absolute TSR | 3.3% | Below threshold of 25% | 0% | ||||
Relative TSR | 27thPercentile | Below threshold of 50thpercentile | 0% |
Despite the disclosed grant values appearing in our Summary Compensation Tables for fiscal years2015-2017, our named executive officers ultimately received no payout under the2014OPP.
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To guarantee that our long-term equity incentive awards reward only exceptional returns, our outperformance plans have historically incorporated challenging performance hurdles, as was the case for the 2014 Outperformance Plan. During prior periods where stockholders did not realize superior returns, such as during 2008 and 2009, our outperformance plans did not provide payouts. Due to the variable, at-risk nature of our outperformance plans, our executives must truly drive our overall performance and TSR to earn awards.
Employment Agreement Awards
The second main component of our long-term equity incentive award program is equity awards grantedEliminated in connection with new or extended employment agreements.
These types of employment agreements – and equity award opportunities that correspond with them – are not unusual in the REIT industry. Given the extremely competitive market for talent in the industry, the Compensation Committee has determined that the employment agreements made with our named executive officers and their corresponding equity award opportunities are essential for retaining our leaders and incentivizing performance that creates long-term stockholder value creation.
We typically enter into employment agreements with each of our named executive officers, other than Mr. Green, that have terms of three or four years. In connection with these agreements, we typically grant one or more types of equity awards to our named executive officers that have vesting periods aligned with the terms of these agreements. Vesting of these awards has been based on continued employment and, for a majority of these awards, the achievement of performance hurdles.2019
Our employment agreements with Messrs. Holliday, Mathias and MathiasDiLiberto provided for the grants of the stock options and LTIP units that were made in 2017,in2018, as noted in the table below. These long-term equity incentive awards vest over the three-year terms of the employment agreements. Pursuant to these agreements, equity awards were made to Messrs. Holliday and Mathias over several years to avoid the distortion in measuring annual compensation that otherwise might have occurred if all the equity awards were granted in the same year the agreements were executed. The agreements provided that the executives would be entitled to terminate their employment and receive severance payments and benefits if the grants were not made on or before their scheduled vesting dates.
The table below indicates equity awards grants made in accordance with the terms of the employments agreements that were in effect with Mr. Holliday on January 1, 2017 and Mr. Mathias as of January 1, 2017 andthe executives during2018and summarizes the terms and grant dates of the long-term equity incentive awards made, to our named executive officers pursuant to these employment agreements during 2017.during2018.
Stock options / Class O LTIP units | Performance-based LTIP units | Time-based LTIP units | |||||||||||||
Executive | Grant Value | # of Shares | Grant Value | # of Shares | Grant Value | # of Shares | |||||||||
Marc Holiday | $ | 2,196,857 | 105,000 | $ | 6,873,737 | 76,980 | — | — | |||||||
Andrew Mathias | — | — | — | — | $ | 4,870,459 | 54,545 |
Description of Awards
Performance-based LTIP units | Time-based LTIP units | |||||||||||
Executive | # of Units | Grant Value | # of Units | Grant Value | ||||||||
Marc Holiday | 61,584 | (1) | $ | 4,850,525 | — | — | ||||||
Andrew Mathias | — | $ | — | 56,000 | (2) | $ | 4,544,372 | |||||
Matthew J. DiLiberto | 15,000 | (3) | $ | 1,471,050 | 15,000 | (4) | $ | 1,360,721 |
either annual FFO growth | |
or TSR of 5-8% | |
per year or TSR in the top | |
(2) | This grant of LTIP units was subject to vesting based on continued employment through December31,2018. |
(3) | This grant of LTIP units was subject to the achievement of performance-based vesting hurdles over three years. One-third of the LTIP units were initially eligible to be earned in each of 2019, 2020 and 2021, with 50-100% of such LTIP units earned upon the achievement of either annual FFO growth of 2.5-5.0% per year or TSR in the top 66.7-33.3% of the MSCI US REIT Index, respectively, during the prior year (or on a cumulative basis from 2018 through the end of such year or a subsequent quarter during the |
(4) | This grant of LTIP units was subject to vesting in equal installments on each of January1,2019, January1,2020and January1,2021, subject to continued employment through such dates. |
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Compensation Program Changes for 20182019 Long-Term Equity Incentive Awards
PursuantAs mentioned above, in response to feedback that we received from shareholders,during stockholder engagements meetings, we significantly restructured our long-term equity incentive award program for our named executive officers. Beginning in2019, we have made the following changes to our compensationlong-term equity incentive award program starting with 2018.
Annual Bonus
In January 2018, the Compensation Committee approved changes to the annual cash bonus and weightings to further strengthen the link between pay and performance. These changes include:
2018 Proxy Statement 41
EXECUTIVE COMPENSATION
The 2017 and 2018 metrics and weightings are as follows:
2017 | 2018 | ||||||
Performance Criteria | Weighting Levels | Performance Criteria | Weighting Levels | ||||
FFO per share | 25.0% | FFO per share | 30.0% | ||||
Same-store cash NOI growth | 25.0% | Same-store cash NOI growth | 30.0% | ||||
Dividend growth | 20.0% | Dividend growth | 30.0% | ||||
Relative TSR for 2017 | 15.0% | G&A Expense | 10.0% | ||||
Absolute TSR for 2017 | 15.0% |
Additional changes have been made to Mr. Holliday’s compensation program under the terms of his new employment agreement as described below.
New Employment Agreements for Marc Holliday and Matthew DiLiberto
Mr. Holliday
As mentioned above, following our 2017 advisory vote onnamed executive compensation and in response to feedback we received during shareholder engagement meetings, the Compensation Committee significantly restructured Mr. Holliday’s compensation, as governed by his new employment agreement, which was entered into in April 2018 and will become effective in January 2019 following the expiration of the term of his current employment agreement. Mr. Holliday’s compensation was restructured to simplify its composition and enhance the transparency in the structure of short-term and long-term awards.officers:
These changes, as set forth in his new employment agreement, include the following enhancements:
● | Simplified the structure of long-term equity awards, to include annual performance-based LTIP units and time-based LTIP |
● | Eliminated stock option |
● | Eliminated employment agreement awards with fixed |
● | Eliminated performance-based awards with multiple alternative performance |
● | Included multi-year performance criteria in all performance-based awards; and |
● | Replaced periodic outperformance plan awards with more regular annual performance-based LTIP |
As a result, beginning in2019, our long-term equity incentive award program will consist solely of annual grants of performance-based equity awards and time-based equity awards that vest over a multi-year period based on continued service as described in more detail below. The target amounts of performance-based equity awards and time-based equity awards for each of Messrs. Holliday and Mathias for2019are set forth below:
Target Equity Award Amounts | |||||||||
Executive | Performance-Based | Time-Based | Total | ||||||
Marc Holliday | $ | 7,500,000 | $ | 4,500,000 | $ | 12,000,000 | |||
Andrew Mathias | $ | 6,000,000 | $ | 3,500,000 | $ | 9,500,000 |
The target amounts of the performance-based and time-based equity awards for Messrs. Holliday and Mathias reflect amounts agreed to in each executive’s employment agreement. The target value of the performance-based equity awards for each of Messrs. Holliday and Mathias is more than60% of the total annual target value of each executive’s long-term equity incentive awards.
Annual Performance-Based Equity Awards
We plan to make annual awards of performance-based LTIP Units –62.5%units to each of target long-term incentive compensation
Annual Time-Based LTIP Units –37.5%our named executive officers,50% of target long-term incentive compensationwhich may be earned based on our relative TSR performance over a three-year period and50% of which may be earned based on achievement of specified operating performance criteria over a one-year period, with a further modifier based on absolute TSR over a three-year period. The specific performance-based hurdles will be determined each year by the Committee in its discretion, except that for2019, we agreed with Messrs. Holliday and Mathias in each of their employment agreements that the relative TSR performance hurdles will range from the
33rdpercentile (at threshold) to the67thpercentile (at maximum) of companies included in the SNL Office Index and the absolute TSR modifiers will range from3.5% per year (at threshold) to7.5% (at maximum). The Committee believes these changes are consistent with feedback we heard from our shareholderswill establish threshold, target and tightenmaximum performance hurdles pursuant to which50%,100% and225% of the link between performance and pay, and will continue to incentivize our CEO to lead sustainable, long-term performance.
Mr. DiLiberto
At the December 2017 Compensation Committee meeting, the Committee approved the general termstarget number of a new employment agreement for Mr. DiLiberto (which was determined before Mr. Holliday’s new employment agreement), for a term of three years from January 1, 2018 to January 1, 2021.
Under this new contract, Mr. DiLiberto will receive 30,000 LTIP units may be earned, with linear interpolation for his serviceearning between levels. For the portion of the performance-based LTIP units that may be earned based on operating performance criteria, between50% -200% may be preliminarily earned based on achievement of the operating performance criteria over a one-year period. The final amount earned may then be increased or decreased by up to12.5% of the amount preliminarily earned based on absolute TSR performance over a three-year period. 15,000None of the performance-based LTIP units will be delivered as time-based awards that vest 33% on each of January 1, 2019, January 1, 2020earned if the threshold relative TSR performance criteria and January 1, 2021, and 15,000operating performance criteria are not met. Vesting of the LTIP unitsawards will also be delivered as a performance-based award. Undersubject to continued employment through the termsend of the performance-based award, upperformance period, subject to one-third of the award can vest each year based on the following performance hurdles:acceleration in certain circumstances.
422019Proxy Statement SL Green Realty Corp.39
EXECUTIVE COMPENSATION
The following set forth the structure of the SNL Office REIT Index, awards will be earned as shown in the table below, with linear interpolation between performance levelsperformance-based LTIP units granted to our named executive officers in2019:
Relative TSR Component (50% of Total Award) | ||||
Level | ||||
Threshold | ||||
Target | ||||
Maximum | 67thpercentile of SNL Office Index Companies |
Operational Performance Component (50% of Total Award) | ||||
Operational Performance Goals (One Year) | ||||
Level | Percentage of Target Amount Earned | Operational Performance Goals (weighting) | ||
Threshold | 50% | ●Funds Available for Distribution (25%) ●Debt/EBITDA Ratio (25%) ●Manhattan Office Same Store Leased Occupancy (25%) ●Manhattan Office Leasing Volume (25%) | ||
Target | 100% | |||
Maximum | 200% |
Level | Adjustment to Percentage Earned | Absolute TSR | ||
Threshold | -12.5% | 3.5% or less | ||
Target | — | 5.5% | ||
Maximum | +12.5% | 7.5% or more |
Under Time-Based Equity Awards
We also plan to make annual awards of LTIP units to each of our named executive officers that will be subject to vesting over three years, with one-third of each award vesting on January1stof each of the first three years following the grant of each award. The annual value of each executive’s equity award will be determined by the Committee based on its evaluation of prior year performance; provided that, pursuant to the employment agreements we recently entered into with our executives, the amounts awarded for target performance will not be less than the following: Mr. Holliday - $4,500,000; Mr. Mathias - $3,500,000and Mr. Levine - $1,300,000. Pursuant to this program, Mr. Levine received an annual award of LTIP units in January2019with a value of $1,300,000based on his2018performance. The total number of LTIP units granted to Mr. Levine equaled15,976, with one-third schedule to vest on each of January1,2020,2021and2022, subject to continued employment through each date.
Mr. DiLiberto’s new contract, there are two opportunities to earn 100% ofcurrent employment agreement was entered into before the LTIP units, down from three in the prior agreement. Similarly, there are opportunities to earn 50% and 75% of granted shares for threshold and target performance, respectively. During our discussions with investors, we described how much of the long-term compensation paidCommittee implemented these changes to our NEOs is governed by their individual employment agreements that have staggered expiration dates. The Committee took this opportunity to simplify the long-term equity awardsincentive award program. Given that are partMr. DiLiberto received a long-term equity award in connection with the signing of this agreement, Mr. DiLiberto’s new contractDiLiberto will not begin participating in response to shareholder feedback.this aspect of our long-term equity incentive award program until after the term of his current employment agreement has expired.
Other Compensation Policies and Information
How We Determine Executive Compensation
The Compensation Committee determines compensation for our named executive officers and is comprised of four of our independent directors, Lauren B. Dillard (Chair), John H. Alschuler, Edwin ThomasT. Burton, III and John S. Levy.
Consideration of Say-on-Pay Vote
The Committee considered the results of our2018advisory vote on executive compensation and the feedback received through our extensive stockholders engagement program in its decisions for2018compensation and its decision to significantly restructure our executive compensation programs beginning in2019. The significant increase in the votes cast for our2018advisory vote on executive compensation from2017 was viewed by the Committee as an indication of our stockholders’ support for the significant changes made to our executive compensation programs beginning in2019.
Independent Compensation Consultant/Compensation Process
The Committee retained Gressle & McGinley LLC as its independent outside compensation consulting firm and engaged Gressle & McGinley LLC to provide the Committee with relevant data concerning the marketplace, our peer group and its own independent analysis and recommendations concerning executive compensation. Gressle & McGinley LLC regularly participates in Compensation Committee meetings. Gressle & McGinley LLC does not provide any additional services to the Committee and does not provide any services to the Company other than to the Committee. Its sole role is as an
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independent consulting firm to advise the Committee with respect to the compensation of our named executive officers. The ultimate determination of total compensation and the elements that comprise that total compensation is made solely by the Committee.
With respect to our named executive officers, the Committee solicits recommendations from our Chief Executive Officer regarding total compensation, the allocation of this compensation among base salary, annual bonus amounts and other long-term incentive compensation, as well as the portion of overall compensation to be provided in cash or equity. Our former Chairman also advisesadvised the Committee on these matters as they pertainpertained to the compensation of our Chief Executive Officer. FTI Consulting is retained by our management as a general business advisor and provides services to the Company in a number of areas, including compensation. FTI Consulting, which has relationships with certain officers of the Company, providesprovided market data to our Chief Executive Officer and former Chairman, which they review when considering their compensation recommendations. The recommendations with respect to compensation arewere formulated by our Chief Executive Officer and former Chairman and arewere communicated to the Committee by them. The Committee is also provided with the market data compiled by FTI Consulting and its recommendations with respect to the compensation of our named executive officers. The other named executive officers do not play a role in determining their own compensation, other than discussing their performance with our Chief Executive Officer.
All final determinations of compensation for our named executive officers are made solely by the Committee.
The Committee meets during the year to evaluate executive performance, to monitor market conditions in light of our goals and objectives, to solicit input from our independent compensation consultant on market practices, including peer group pay practices and new developments, and to review our executive compensation practices. As part of these meetings, in formulation of its executive compensation policies and practices for 2017,for2018, the Committee reviewed then-existing policies of certain of our institutional investors, Institutional Shareholder Services, Inc., Glass Lewis & Co LLC and other governance groups, as well as feedback provided by such groups in prior year proxy research reports. The Committee engaged with a significant number of stockholders holding a substantial percentage of outstanding shares as discussed above, and annually reviews our executive compensation policies and practices to ensure that such policies are in line with current market practices and stockholders’ best interests. The Committee makes regular reports to the Board.
Peer Group Benchmarking
In 2017,In2018, as in prior years, the Committee reviewed various peer compensation information in connection with its compensation decisions, primarily focused on the chief executive officer’s compensation. The Committee didThis peer information was not use this peer informationused to target a particular percentile for our Chief Executive Officer’s total compensation for 2017,for2018, but rather used this information to confirm that our Chief Executive Officer’s total compensation for 2017 wasfor2018was within an appropriate range of the total compensation, received by the chief executive officers of these peers, considering relative size and performance. With respect to size, we ranked above the median of these peers with respect to common equity market capitalization and total revenue.
2018 Proxy Statement 43
EXECUTIVE COMPENSATION
For 2017, the Committee added four companies to the peer group, including Douglas Emmett, Inc., Empire State Realty Trust, Inc., Kilroy Realty Corporation, and Ventas, Inc. These companies were added because they are appropriately sized REITs specializing in office space or other comparable businesses.
For 2017, the Committee also removed three companies from the peer group, including Brookfield Asset Management, Inc., iStar Financial, and NorthStar Asset Management Group Inc. Brookfield Asset Management, Inc. was removed from the peer group because the size and diversity of the company’s assets under management was no longer directly comparable on a larger scale to SL Green. iStar Financial was removed from the peer group because the company was no longer an appropriate size comparison. NorthStar Asset Management Group Inc. was removed from the peer group because the company merged with Colony Capital, Inc. and NorthStar Realty Finance Corp. in January 2017.
The Committee reviewed 2017 totalreviewed2018total compensation information for the chief executive officers of a New York City traditionalpeer group, with an emphasis on the REIT industry. The peer group. The Committee utilizedgroup included a number of New York City-based peer group givencompanies. That decision is based on the unique characteristics of the New York City real estate marketplace, in which is where we conduct substantially all of our business, and which is one of the most competitive in the world, from both a business and compensation perspective. The following companies were included in the New York City traditional REIT peer group that the Committee reviewed:
Peer Group | ||
● | Alexandria Real Estate Equities, Inc. | |
● | Boston Properties, Inc. | |
● | Douglas Emmett, Inc. | |
● | Empire State Realty Trust, Inc. | |
●Hudson Pacific Properties, Inc. | ||
● | Kennedy-Wilson Holdings, Inc. | |
● | Kilroy Realty Corporation | |
●Ladder Capital Corp. | ||
● | Paramount Group, Inc. | |
● | ||
Vornado Realty Trust |
Our direct New York City competitors, both in terms of real estate business and talent, are not limited to other public REITs doing business in New York City. Rather, the Committee also views our competitors as consisting of top performing hedge funds, international investors, large private firms and others that may have equal or greater financial resources, including access to cost-efficient capital. The Committee believes that the top real estate principals of these non-REIT companies typically receive substantially higher compensation than chief executive officers of public REITs.
However, based on feedback from our stockholders, we previously removed all New York City-based asset managers from our peer group beginning in 2015 and now review compensation based on our New York City traditional REITupdated peer group and a national office REIT index. During2018, and as part of our on-going assessment of our stated peer group methodology, we removed Ventas, Inc. and Brookfield Property REIT Inc. (formerly known as General Growth Properties, Inc.) from our peer group and added Hudson Pacific Properties, Inc. to our peer group as an appropriately sized office REIT.
2019Proxy Statement 41
EXECUTIVE COMPENSATION
Analysis of Risk Associated with Our Executive Compensation Plans
In setting compensation, we also consider the risks to our stockholders and to achievement of our goals that may be inherent in the executive compensation program. We concluded that it is not reasonably likely that our compensation policies and practices will have a material adverse effect on us.
In reaching our executive’s compensation is performance-based and “at-risk,”conclusion, we believe our executive compensation programs are appropriately structured and do not pose a material risk to the Company. We considered the following elementsaspects of our executive compensation plans and policies when evaluating whether such plans and policies encourage our executives to take unreasonable risks:
● | We evaluate performance based upon the achievement of a variety of business objectives and |
● | We |
● | We provide a significant portion of incentive compensation in the form of |
● | We structure payouts under our performance-based awards based on achieving a minimum level of performance, so that some compensation is awarded at levels below full target achievement rather than an “all-or-nothing” approach; |
● | We |
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holdings of equity in the Company under the terms of our | |
● | We adopted a policy for recoupment of incentive payments made to our executives, including our named executive officers, if payment was based on having met or exceeded performance expectations during a period of fraudulent activity for which the executive is responsible. |
In conclusion,Accordingly, although a significant portion of our executives’ compensation is performance-based and “at-risk,” we believe our executive compensation program isprograms are appropriately structured so that (i) we avoidand do not pose a material risk to the type of disproportionately large short-term incentives that could encourage executives to take risks that may not be in our long-term interests, (ii) we provide incentives to manage the Company for long-term performance, (iii) we have adopted a policy for recoupment of incentive payments under certain circumstances and (iv) a significant amount of the wealth of our executives is tied to our long-term success. We believe this combination of factors encourages our executives to manage the Company in a prudent manner.Company.
Executive and Director StockEquity Ownership Guidelines
In furtherance of the Committee’s ongoing efforts to foster an ownership culture among our senior leadership team, we adopted stockequity ownership guidelines for our named executive officers and non-employee directors. We have subsequently revised these guidelines to increase the amount of equity in the Company or its operating partnership that our named executive officers are required to own in order to satisfy the guidelines,directors, as set forth below:
Named Executive Officers and Non-Employee Directors | Multiple of Base Salary or Annual Cash Retainer | |
Chief Executive Officer | 8x | |
Other Named Executive Officers | 6x | |
Non-Employee Directors | 5x |
All of our continuing named executive officers hold at least double thean amount of SLG stockequity significantly in excess of that required by our stockequity ownership guidelines. This further demonstrates that their financial interests are aligned with those of stockholders. They are highly incentivized to create sustainable, long-term shareholderstockholder value.
Named Executive Officers | Actual Multiple of Base Salary(1) | |
Marc Holliday | ||
Andrew Mathias | ||
Matthew J. DiLiberto | ||
Andrew S. Levine |
(1) | As of March31,2019. |
42 SL Green Realty Corp.
EXECUTIVE COMPENSATION
Perquisites and Other Personal Benefits
We do not provide significant perquisites or personal benefits to our named executive officers, except that we reimburse our Chairmanreimbursed Mr. Green for costs associated with an automobile he leasesleased and provide leased automobiles for our Chief Executive Officer and President.
Additionally, we provide our Chairmanprovided Mr. Green with a full-time driver and our Chief Executive Officer receives certain insurance benefits. The costs of these benefits constituteconstituted only a small percentage of the applicable executive’s compensation.
Employment Agreements
As noted above, we have employment agreements with all of our named executive officers. All of the employment agreements with our named executive officers provide for, among other things, severance payments and benefits and acceleration of equity awards in connection with certain qualified terminations. In return, each of our named executive officers has agreed to non-compete, non-solicitation, non-interference and confidentiality provisions. For each of our executives, we believe that, because the severance level is negotiated up front, it makes it easier for us to terminate these executives without the need for protracted negotiations over severance. We also believe that providing pre-negotiated severance benefits for all of our executives in the event they are terminated without cause or terminate their employment for good reason following a change in control helps to further align the interests of our executives and our stockholders in the event of a potentially attractive proposed change in control transaction following which one or more of our executives may be expected to be terminated. See “—Executive Compensation Tables—Potential Payments Upon Termination or Change in Control” for a summary of the employment agreements with our named executive officers.
Clawback Policy
The Board adopted a clawback policy under which any incentive payments made to a named executive officer on the basis of having met or exceeded performance targets during a period of fraudulent activity for which such executive is found personally responsible may be recouped by the Company.
Anti-hedging Policy
The Board has adopted a policy prohibiting all of our executive officers and directors from engaging in hedging transactions with respect to our securities. Pursuant to this policy, our executive officers and directors may not engage in hedging transactions with respect to our securities (including, without limitation, partnership interests in our operating partnership) through puts, calls, covered calls, synthetic purchases, collars, other derivative securities
2018 Proxy Statement 45
EXECUTIVE COMPENSATION
of the Company or otherwise at any time. Prior to the adoption of this policy, none of our executive officers or directors were engaging in any hedging transactions with respect to our securities, and this policy was adopted to formally reflect the practices that our executive officers and directors had already been observing.
Other Matters
LTIP units and Class O LTIP units.Under our2014Outperformance Plan, in lieu of issuing shares of restricted stock, weWe issued a separate class of units of limited partnership interest in our operating partnership, which we refer to as LTIP units. We also used LTIP units, for the equity bonuses that we granted to our named executive officers for2017andfor2018and as equity awards granted in connection with new or extended employment agreements or the provisions of such agreements. LTIP units are similar to common units in our operating partnership, which generally are economically equivalent to shares of our common stock, except that the LTIP units are structured as “profits interests” for U.S. federal income tax purposes under current federal income tax law.Aslaw. As profits interests, LTIP units generally only have value, other than with respect to the right to receive distributions, if the value of the assets of our operating partnership increases between the issuance of LTIP units and the date of a book-up event for partnership tax purposes. If the value of the assets of our operating partnership increases sufficiently, the LTIP units can achieve full parity with common units in our operating partnership. If such parity is achieved, LTIP units may be converted, subject to the satisfaction of applicable vesting conditions, on a one-for-one basis into common units, which in turn are redeemable by the holder for cash or, at our election, on a one-for-one basis into shares of our common stock. LTIP units are not entitled to distributions prior to being earned based on achievement against the performance-based hurdles contained in these plans. Once earned, these LTIP units, whether vested or unvested, entitle the holder to receive distributions per unit from our operating partnership that are equivalent to the dividends paid per share on our common stock.
2019Proxy Statement 43
EXECUTIVE COMPENSATION
In addition to the LTIP units described above that we issued in lieu of shares of restricted stock, we also have issued another class of units of limited partnership interest in our operating partnership that are intended to be similar to stock options from an economic perspective, which we refer to as Class O LTIP units. Class O LTIP units are also intended to qualify as “profits interests” for U.S. federal income tax purposes. During2017,During2018, we useddid not grant any Class O LTIP units as equity awards granted in connection with new or extended employment agreements or the provisions of such agreements, and we also used Class O LTIP units for annual bonuses that we granted to certain of our named executive officers in2018for2017performance.units.
Like stock options, Class O LTIP units operate in a manner that generally permits holders to realize the benefit of any increase in the per share value of our common stock above the value at the time the Class O LTIP units are granted. At the time of the grant of Class O LTIP units, the operatingpartnershipoperating partnership establishes a conversion threshold, the vesting terms and the mandatory conversion date, if any, for the Class O LTIP units. The conversion threshold corresponds to the exercise price of a stock option while the mandatory conversion date corresponds to the expiration date of a stock option. Similar to the exercise price for stock options, the conversion threshold will equal the per unit value of the common units of our operating partnership on the grant date. Class O LTIP units will receive10% distributions relating to periods between grant and vesting upon vesting, and will receive10% distributions from vesting to their conversion as opposed to holders of non-qualified stock options who will not receive any distributions relating to periods between grant and exercise.
Once Class O LTIP units have vested, they may be converted into common units of our operating partnership by the holder at any time prior to their mandatory conversion date in a manner that is similar to a net exercise of stock options. Upon exercise of this conversion right, the Class O LTIP units will convert into a number of common units of the operating partnership that have an aggregate value equal to the aggregate spread of the Class O LTIP units that are converted. Theconverted.The “spread” for each Class O LTIP unit will equal the excess, if any, of the value of our operating partnership’s assets per common unit on the conversion date above the per unit value at the time the Class O LTIP unit was granted (i.e., the conversion threshold). Any Class O LTIP units that have not been voluntarily converted prior to the mandatory conversion date established at the time the Class O LTIP units were granted will automatically convert into common units on such mandatory conversion date, or be forfeited if the value of our operating partnership’s assets per common unit is less than the conversion threshold for the Class O LTIP units.
LTIP units and Class O LTIP units are intended to offer executives substantially the same long-term incentive as shares of restricted stock and stock options, respectively, with more favorable U.S. federal income tax treatment available for “profits interests” under current federal income tax law. More specifically, one key disadvantage of restricted stock is that executives are generally taxed on the full market value of a grant at the time of vesting, even if they choose to hold the stock. Similarly, holders of non-qualified stock options are taxed upon exercise. Conversely, under current federal income tax law, an executive would generally not be subject to tax at the time of issuance or vesting of an LTIP unit or Class O LTIP unit or conversion into common units but only when he or she chooses to liquidate the common units into which his or her LTIP units or Class O LTIP units convert. Therefore, an executive who wishes to hold his or her equity awards for the long term can generally do so in a more tax-efficient manner with LTIP units or Class O LTIP units. In light of the increased tax efficiency, we have chosen to use LTIP units and Class O LTIP units for grants to our executives. We believe that the use of LTIP units and Class O LTIP units has (i) enhanced our equity-based compensation package overall, (ii) advanced the goal of promoting long-term equity ownership by executives, (iii) not adversely impacted dilution as compared to restricted stock, and (iv) further aligned the interests of our executives with the interests of our stockholders.
4644 SL Green Realty Corp.
EXECUTIVE COMPENSATION
Executive Compensation Tables |
Summary Compensation Table
The following table sets forth information regarding the compensation paid to the individuals who served as our Chief Executive Officer and Chief Financial Officer during our2017fiscalour2018fiscal year and each of our three most highly compensatedexecutivecompensated executive officers, other than our Chief Executive Officer and Chief Financial Officer, whose total compensation exceeded $100,000during the fiscal year ended December31,2017,December31,2018, or collectively, the “named executive officers.”
Name And Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Option Awards(2) ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation(3) ($) | Total ($) | |||||||||||||||
Marc Holliday | 2017 | $ | 1,350,000 | — | $ | 11,878,395 | $ | 2,196,857 | $ | 1,937,250 | $ | 45,319 | $ | 17,407,821 | |||||||||
Chief Executive | 2016 | $ | 1,350,000 | — | $ | 11,285,597 | $ | 2,173,500 | $ | 2,473,125 | $ | 44,149 | $ | 17,326,371 | |||||||||
Officer | 2015 | $ | 1,050,000 | $ | 787,500 | $ | 19,159,050 | — | $ | 2,008,125 | $ | 43,074 | $ | 23,047,749 | |||||||||
Stephen L. Green | 2017 | $ | 750,000 | — | $ | 1,019,110 | — | $ | 938,437 | $ | 185,986 | $ | 2,893,533 | ||||||||||
Chairman of the | 2016 | $ | 750,000 | — | $ | 1,933,688 | — | $ | 1,161,718 | $ | 179,800 | $ | 4,025,206 | ||||||||||
Board | 2015 | $ | 750,000 | $ | 468,750 | $ | 3,962,493 | — | $ | 1,202,343 | $ | 170,490 | $ | 6,554,076 | |||||||||
Andrew Mathias | 2017 | $ | 800,000 | — | $ | 8,879,826 | — | $ | 1,001,000 | $ | 43,993 | $ | 10,724,819 | ||||||||||
President | 2016 | $ | 800,000 | — | $ | 9,120,896 | — | $ | 1,239,166 | $ | 38,823 | $ | 11,198,885 | ||||||||||
2015 | $ | 800,000 | $ | 500,000 | $ | 13,436,852 | — | $ | 1,282,500 | $ | 26,790 | $ | 16,046,132 | ||||||||||
Matthew J. DiLiberto | 2017 | $ | 500,000 | $ | 1,600,000 | $ | 255,013 | $ | 748,419 | — | $ | 8,100 | $ | 3,111,532 | |||||||||
Chief Financial | 2016 | $ | 400,000 | $ | 1,400,000 | — | — | — | $ | 7,950 | $ | 1,807,950 | |||||||||||
Officer | 2015 | $ | 400,000 | $ | 1,400,000 | — | — | — | $ | 7,950 | $ | 1,807,950 | |||||||||||
Andrew S. Levine | 2017 | $ | 550,000 | — | $ | 1,256,930 | $ | 748,419 | — | $ | 8,100 | $ | 2,563,449 | ||||||||||
Chief Legal Officer | 2016 | $ | 550,000 | — | $ | 3,709,007 | — | — | $ | 7,950 | $ | 4,266,957 | |||||||||||
and General Counsel | 2015 | $ | 500,000 | — | $ | 873,342 | — | — | $ | 7,950 | $ | 1,381,292 |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Option Awards(2) ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation(3) ($) | Total ($) | |||||||||||||||
Marc Holliday Chief Executive Officer and Chairman of the Board | 2018 | $ | 1,250,000 | — | $ | 9,297,455 | $ | — | $ | 2,746,491 | $ | 61,832 | $ | 13,355,778 | |||||||||
2017 | $ | 1,350,000 | — | $ | 11,878,395 | $ | 2,196,857 | $ | 1,937,250 | $ | 45,319 | $ | 17,407,821 | ||||||||||
2016 | $ | 1,350,000 | — | $ | 11,285,597 | $ | 2,173,500 | $ | 2,473,125 | $ | 44,149 | $ | 17,326,371 | ||||||||||
Stephen L. Green Former Chairman of the Board | 2018 | $ | 750,000 | — | $ | 489,124 | — | $ | 640,539 | $ | 175,922 | $ | 2,055,585 | ||||||||||
2017 | $ | 750,000 | — | $ | 1,019,110 | — | $ | 938,437 | $ | 185,986 | $ | 2,893,533 | |||||||||||
2016 | $ | 750,000 | — | $ | 1,933,688 | — | $ | 1,161,718 | $ | 179,800 | $ | 4,025,206 | |||||||||||
Andrew Mathias President | 2018 | $ | 900,000 | — | $ | 9,471,414 | — | $ | — | $ | 42,923 | $ | 10,414,337 | ||||||||||
2017 | $ | 800,000 | — | $ | 8,879,826 | — | $ | 1,001,000 | $ | 43,993 | $ | 10,724,819 | |||||||||||
2016 | $ | 800,000 | — | $ | 9,120,896 | — | $ | 1,239,166 | $ | 38,823 | $ | 11,198,885 | |||||||||||
Matthew J. DiLiberto Chief Financial Officer | 2018 | $ | 550,000 | $ | 1,600,000 | $ | 3,079,244 | $ | — | $ | 11,000 | $ | 5,240,244 | ||||||||||
2017 | $ | 500,000 | $ | 1,600,000 | $ | 255,013 | $ | 748,419 | — | $ | 8,100 | $ | 3,111,532 | ||||||||||
2016 | $ | 400,000 | $ | 1,400,000 | — | — | — | $ | 7,950 | $ | 1,807,950 | ||||||||||||
Andrew S. Levine Chief Legal Officer and General Counsel | 2018 | $ | 550,000 | — | $ | 1,051,877 | $ | — | — | $ | 11,000 | $ | 1,612,877 | ||||||||||
2017 | $ | 550,000 | — | $ | 1,256,930 | $ | 748,419 | — | $ | 8,100 | $ | 2,563,449 | |||||||||||
2016 | $ | 550,000 | — | $ | 3,709,007 | — | — | $ | 7,950 | $ | 4,266,957 |
(1) | Amounts shown do not reflect compensation actually received by the named executive officer. Instead, the amounts shown are the full grant date fair value of stock awards issued to the executives |
| |
(2) | Amounts shown do not reflect compensation actually received by the named executive officer. Instead, the amounts shown are the full grant date fair value of |
Class O LTIP Unit Grants | Volatility | Annual Dividend Yield | Risk Free Interest Rate | Expected Term | |||||
2017Grants | |||||||||
5Year Mandatory Conversion | 23% | 2.5% | 1.52% | 3.2Years | |||||
10Year Mandatory Conversion | 34% | 2.5% | 1.93% | 5.7Years | |||||
2016Grants | |||||||||
5Year Mandatory Conversion | 23% | 2.3% | 0.89% | 3Years | |||||
10Year Mandatory Conversion | 35% | 2.3% | 1.26% | 5.5Years |
2018 Proxy Statement 47
EXECUTIVE COMPENSATION
(3) | The table and footnotes below show the components of this column |
Name | Year | All Other Compensation ($) | |||||
Marc Holliday | 2018 | $ | 61,832 | (a) | |||
Stephen L. Green | 2018 | $ | 175,922 | (b) | |||
Andrew Mathias | 2018 | $ | 42,923 | (c) | |||
Matthew J. DiLiberto | 2018 | $ | 11,000 | (d) | |||
Andrew S. Levine | 2018 | $ | 11,000 | (d) |
(a) | Represents (i) the Company’s matching contributions with respect to amounts earned by the named executive officer under | |
(b) | Represents leased car ($ | |
(c) | Represents the Company’s matching contributions with respect to amounts earned by the named executive officer under | |
(d) | Represents the Company’s matching contributions with respect to amounts earned by the named executive officer under |
2019Proxy Statement 45
EXECUTIVE COMPENSATION
20172018 Grants of Plan-Based Awards
The following table sets forth certain information with respect to each grant of an award made to a named executive officer in the fiscal year ended December31,2017.December31,2018.
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#)(10) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($) | ||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Approval Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Grant Date | Approval Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||
Marc Holliday | 01/11/2017 | 01/11/2017 | — | — | — | — | — | — | 40,329(1) | — | — | $ | 3,635,357 | 01/15/2018 | 01/15/2018 | — | — | — | — | — | — | 47,269(1) | $ | 3,723,036 | |||||||||||||||||||||||||||||
01/11/2017 | 01/11/2017 | — | — | — | — | — | — | 76,980(2) | — | — | $ | 6,873,737 | 01/15/2018 | 01/15/2018 | — | — | — | — | — | — | 61,584(2) | $ | 4,850,525 | ||||||||||||||||||||||||||||||
01/11/2017 | 01/11/2017 | — | — | — | 17,283(3) | 17,283(3) | 46,089(3) | — | — | — | $ | 612,001 | 01/18/2018 | 02/10/2016 | — | — | — | — | — | — | 7,692(3) | $ | 723,894 | ||||||||||||||||||||||||||||||
01/18/2017 | 02/10/2016 | — | — | — | — | — | — | 6,956(4) | — | — | $ | 757,300 | N/A | N/A | $ | 1,250,000(6) | $ | 2,500,000(6) | $ | 3,750,000(6) | — | — | — | — | — | ||||||||||||||||||||||||||||
06/17/2017 | 06/17/2017 | — | — | — | — | — | — | — | 52,500(5) | $ | 105.73 | $ | 722,400 | ||||||||||||||||||||||||||||||||||||||||
06/17/2017 | 06/17/2017 | — | — | — | — | — | — | — | 52,500(5) | $ | 105.73 | $ | 1,474,457 | ||||||||||||||||||||||||||||||||||||||||
N/A | N/A | $ | 1,350,000(8) | $ | 2,700,000(8) | $ | 4,050,000(8) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Stephen L. Green | 01/01/2017 | 12/09/2009 | — | — | — | — | — | — | 1,396(6) | — | — | $ | 150,140 | ||||||||||||||||||||||||||||||||||||||||
01/11/2017 | 01/11/2017 | — | — | — | — | — | — | 7,433(1) | — | — | $ | 670,029 | |||||||||||||||||||||||||||||||||||||||||
01/11/2017 | 01/11/2017 | — | — | — | 5,618(3) | 5,618(3) | 14,982(3) | — | — | — | $ | 198,941 | |||||||||||||||||||||||||||||||||||||||||
N/A | N/A | $ | 750,000(8) | $ | 1,312,500(8) | $ | 1,875,000(8) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Andrew Mathias | 01/01/2017 | 12/13/2016 | — | — | — | — | — | — | 5,120(6) | — | — | $ | 550,656 | ||||||||||||||||||||||||||||||||||||||||
01/11/2017 | 01/11/2017 | — | — | — | — | — | — | 33,577(1) | — | — | $ | 3,026,715 | |||||||||||||||||||||||||||||||||||||||||
01/11/2017 | 01/11/2017 | — | — | — | — | — | — | 54,545(7) | — | — | $ | 4,870,459 | |||||||||||||||||||||||||||||||||||||||||
01/11/2017 | 01/11/2017 | — | — | — | 12,200(3) | 12,200(3) | 32,533(3) | — | — | — | $ | 431,996 | |||||||||||||||||||||||||||||||||||||||||
N/A | N/A | $ | 800,000(8) | $ | 1,400,000(8) | $ | 2,000,000(8) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Matthew J. DiLiberto | 01/11/2017 | 01/11/2017 | — | — | — | — | — | — | 2,829(1) | — | — | $ | 255,013 | ||||||||||||||||||||||||||||||||||||||||
01/11/2017 | 01/11/2017 | — | — | — | — | — | — | — | 15,000(9) | $ | 106.05 | $ | 272,913 | ||||||||||||||||||||||||||||||||||||||||
01/11/2017 | 01/11/2017 | — | — | — | — | — | — | — | 15,000(9) | $ | 106.05 | $ | 475,506 | ||||||||||||||||||||||||||||||||||||||||
Andrew S. Levine | 01/11/2017 | 01/11/2017 | — | — | — | — | — | — | 12,730(1) | — | — | $ | 1,147,514 | ||||||||||||||||||||||||||||||||||||||||
01/11/2017 | 01/11/2017 | — | — | — | 3,090(3) | 3,090(3) | 8,240(3) | — | — | — | $ | 109,416 | |||||||||||||||||||||||||||||||||||||||||
01/11/2017 | 01/11/2017 | — | — | — | — | — | — | — | 15,000(9) | $ | 106.05 | $ | 272,913 | ||||||||||||||||||||||||||||||||||||||||
01/11/2017 | 01/11/2017 | — | — | — | — | — | — | — | 15,000(9) | $ | 106.05 | $ | 475,506 | ||||||||||||||||||||||||||||||||||||||||
Stephen L.Green | 01/01/2018 | 12/09/2009 | — | — | — | — | — | — | 1,482(4) | $ | 149,578 | ||||||||||||||||||||||||||||||||||||||||||
01/15/2018 | 01/15/2018 | — | — | — | — | — | — | 4,311(1) | $ | 339,546 | |||||||||||||||||||||||||||||||||||||||||||
N/A | N/A | $ | 750,000(6) | $ | 1,312,500(6) | $ | 1,875,000(6) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
AndrewMathias | 01/01/2018 | 12/13/2016 | — | — | — | — | — | — | 5,436(4) | $ | 548,655 | ||||||||||||||||||||||||||||||||||||||||||
01/15/2018 | 01/15/2018 | — | — | — | — | — | — | 37,698(1) | $ | 2,969,198 | |||||||||||||||||||||||||||||||||||||||||||
01/15/2018 | 01/15/2018 | — | — | — | — | — | — | 56,000(5) | $ | 4,544,372 | |||||||||||||||||||||||||||||||||||||||||||
12/21/2018 | 12/21/2018 | — | — | — | — | — | — | 21,224(1) | $ | 1,409,189 | |||||||||||||||||||||||||||||||||||||||||||
N/A | N/A | $ | 900,000(6) | $ | 1,575,000(6) | $ | 2,250,000(6) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Matthew J.DiLiberto | 01/15/2018 | 01/15/2018 | — | — | — | — | — | — | 3,142(1) | $ | 247,473 | ||||||||||||||||||||||||||||||||||||||||||
02/02/2018 | 01/31/2018 | — | — | — | — | — | — | 15,000(7) | $ | 1,360,721 | |||||||||||||||||||||||||||||||||||||||||||
02/02/2018 | 01/31/2018 | — | — | — | 7,500(8) | 11,250(8) | 15,000(8) | — | $ | 1,471,050 | |||||||||||||||||||||||||||||||||||||||||||
Andrew S.Levine | 01/15/2018 | 01/15/2018 | — | — | — | — | — | — | 13,355(1) | $ | 1,051,877 |
(1) | This grant of LTIP units vested immediately upon grant, but remains subject to a |
48 SL Green Realty Corp.
EXECUTIVE COMPENSATION
(2) | This grant of LTIP units was awarded in connection with Mr. Holliday’s employment agreement |
(3) |
|
This grant of notional stock units was subject to vesting based on continued employment through | |
| |
This grant of notional stock units was subject to vesting based on continued employment through | |
This grant of LTIP units was awarded in connection with the automatic | |
Represents cash payouts that were possible pursuant to the formulaic component of our annual cash bonus program |
46 SL Green Realty Corp.
EXECUTIVE COMPENSATION
This grant of LTIP units was awarded in connection with Mr. DiLiberto’s employment agreement, with equal installments vesting on each of January 1, 2019, January 1, 2020 and January 1, 2021, subject to continued employment. | |
(8) | This grant of LTIP units was awarded in connection with Mr. DiLiberto’s employment agreement and was subject to the achievement of performance-based vesting hurdles over three years. One-third of the LTIP units were initially eligible to be earned in each of 2019, 2020 and 2021, with 50-100% of such LTIP units earned upon the achievement of either annual FFO growth of 2.5-5.0% per year or TSR in the top 66.7-33.3% of the MSCI US REIT Index, respectively, during the prior year (or on a cumulative basis from 2018 through the end of such year or a subsequent quarter during the term of Mr. DiLiberto’s employment agreement). None of these LTIP units will vest if threshold performance is not achieved. “Threshold” performance equals annual FFO growth of 2.5% per year or TSR in the top 66.7% of the MSCI US REIT Index. “Target” performance equals annual FFO growth of 3.75% per year or TSR in the top 50% of the MSCI US REIT Index. “Maximum” performance equals annual FFO growth of 5.0% per year or TSR in the top 33.3% of the MSCI US REIT Index. Vesting is also subject to Mr. DiLiberto’s continued employment through January 1st of the year following the year in which the performance-based vesting hurdles are achieved. |
Grants of all equity awards were made pursuant to the Fourth Amended and Restated2005Stock Option and Incentive Plan. LTIP units that are only subject to time-based vesting based on continued employment through a specified date (and have not been forfeited) generally entitle executives to receive cash dividends, dividend equivalents or distributions whether or not then vested. LTIP units that are subject to performance-based vesting hurdles do not entitle the holder to receive distributions prior to the achievement of these hurdles. If and when performance-based vesting occurs, the holders are entitled to receive a combination of cash payments and distributions with respect to all LTIP units that are earned equal to the amounts that would have been received if the earned LTIP units had been entitled to receive full distributions from the beginning of the applicable performance period.
See “Potential Payments Upon Termination or Change in Control” below, for a discussion regarding potential acceleration of the equity awards and a description of the material terms of each named executive officer’s employment agreement.
2019Proxy Statement 47
EXECUTIVE COMPENSATION
Outstanding Equity Awards at Fiscal Year-End 2018
The following table sets forth certain information with respect to outstanding equity awards held by each named executive officer at the fiscal year ended December31,2018.
Option Awards | Stock Awards | ||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(#)(1) | Market Value of Shares or Units of Stock That Have Not Vested(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Units or Other Rights that Have Not Vested(2) | |||||||||||
Marc Holliday | 100,000 | $ | 76.65 | 01/02/2023 | 7,692 | $ | 608,283 | — | — | ||||||||||
52,500 | — | $ | 99.86 | 06/17/2021 | — | — | — | — | |||||||||||
52,500 | — | $ | 99.86 | 06/17/2026 | — | — | — | — | |||||||||||
52,500 | — | $ | 105.73 | 06/17/2022 | — | — | — | — | |||||||||||
52,500 | — | $ | 105.73 | 06/17/2027 | — | — | — | — | |||||||||||
Stephen L. Green | — | — | — | — | — | — | — | — | |||||||||||
Andrew Mathias | 65,000 | — | $ | 91.43 | 11/08/2023 | — | — | — | — | ||||||||||
Matthew J. DiLiberto | 5,000 | 10,000(4) | $ | 106.05 | 01/11/2022 | 20,000 | $ | 1,581,600 | — | — | |||||||||
5,000 | 10,000(4) | $ | 106.05 | 01/11/2027 | — | — | 10,000(3) | $ | 790,800 | ||||||||||
Andrew S. Levine | 12,500 | — | $ | 90.15 | 12/12/2023 | 12,000 | $ | 948,960 | — | — | |||||||||
5,000 | 10,000(4) | $ | 106.05 | 01/11/2022 | — | — | — | — | |||||||||||
5,000 | 10,000(4) | $ | 106.05 | 01/11/2027 | — | — | — | — |
(1) | For each of our named executive officers, includes the following: |
Executive | Notional Stock Units(a) | Performance- Based Employment Agreement LTIP Units(b) | Time-Based Employment Agreement LTIP Units(c) | ||||
Marc Holliday | 7,692 | — | — | ||||
Stephen L. Green | — | — | — | ||||
Andrew Mathias | — | — | — | ||||
Matthew J. DiLiberto | — | 5,000 | 15,000 | ||||
Andrew S. Levine | — | 6,000 | 6,000 |
(a) | Represents notional stock units, each of which represents the contingent right to receive the value of one share of our common stock in accordance with the terms of a deferred compensation agreement. These | |
(b) | Represents LTIP units that vested in 2019 based on 2018 performance. | |
(c) | For Mr. DiLiberto, represents 5,000 LTIP units that vested on 01/01/2019, 5,000 LTIP units scheduled to vest 01/01/2020 and 5,000 LTIP units scheduled to vest on 01/01/2021, subject to continued employment. For Mr. Levine, represents 6,000 LTIP units that vested on 01/01/2019. |
(2) | Based on a price of $79.08 per share/unit, which was the closing price on the NYSE of one share of our common stock on December 31, 2018. Assumes that the value of LTIP units on a per unit basis is equal to the per share value of our common stock. |
(3) | Represents two-thirds of a grant of 15,000 LTIP units that was awarded in connection with Mr. DiLiberto’s employment agreement and was subject to the achievement of performance-based vesting hurdles over three years. One-third of the LTIP units were initially eligible to be earned in each of 2019, 2020 and 2021, with 50-100% of such LTIP units earned upon the achievement of either annual FFO growth of 2.5-5.0% per year or TSR in the top 66.7-33.3% of the MSCI US REIT Index, respectively, during the prior year (or on a cumulative basis from 2018 through the end of such year or a subsequent quarter during the term of Mr. DiLiberto’s employment |
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agreement). None of these LTIP units will vest if threshold performance is not achieved. “Threshold” performance equals annual FFO growth of 2.5% per year or TSR in the top 66.7% of the MSCI US REIT Index. “Target” performance equals annual FFO growth of 3.75% per year or TSR in the top 50% of the MSCI US REIT Index. “Maximum” performance equals annual FFO growth of 5.0% per year or TSR in the top 33.3% of the MSCI US REIT Index. Vesting is also subject to Mr. DiLiberto’s continued employment through January 1st of the year following the year in which the performance-based vesting hurdles are achieved. | |
(4) | Reflects an award |
|
Grants of all equity awards were made pursuant to the Fourth Amended and Restated2005Stock Option and Incentive Plan. LTIP units that are only subject to time-based vesting based on continued employment through a specified date (and have not been forfeited) generally entitle executives to receive cash dividends, dividend equivalents or distributions whether or not then vested. LTIP units that are subject to performance-based vesting hurdles accrue cash dividends, dividend equivalents ordistributions prior to the achievement of these hurdles, and such accrued amounts are only paid to the executives if and when the performance hurdles are met.
See “Potential Payments Upon Termination or a Change in Control” below, for a discussion regarding potential acceleration of the equity awards and a description of the material terms of each named executive officer’s employment agreement.
2018 Proxy Statement 49
EXECUTIVE COMPENSATION
Outstanding Equity Awards at Fiscal Year-End 2017
The following table sets forth certain information with respect to outstanding equity awards held by each named executive officer at the fiscal year ended December31,2017.
Option Awards | Stock Awards | ||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(#)(1) | Market Value of Shares or Units of Stock That Have Not Vested(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Units or Other Rights that Have Not Vested(2) | |||||||||||
Marc Holliday | 100,000 | $ | 76.65 | 01/02/2023 | 6,956 | $ | 702,069 | — | — | ||||||||||
52,500 | — | $ | 99.86 | 06/17/2021 | — | — | — | — | |||||||||||
52,500 | — | $ | 99.86 | 06/17/2026 | — | — | — | — | |||||||||||
— | 52,500(4) | $ | 105.73 | 06/17/2022 | — | — | — | — | |||||||||||
— | 52,500(4) | $ | 105.73 | 06/17/2027 | — | — | — | — | |||||||||||
Stephen L. Green | — | — | — | — | — | — | — | — | |||||||||||
Andrew Mathias | 65,000 | — | $ | 91.43 | 11/08/2018 | — | — | — | — | ||||||||||
65,000 | — | $ | 91.43 | 11/08/2023 | — | — | — | — | |||||||||||
Matthew J. DiLiberto | — | 15,000(5) | $ | 106.05 | 01/11/2022 | 7,000 | $ | 706,510 | — | — | |||||||||
— | 15,000(5) | $ | 106.05 | 01/11/2027 | — | — | — | — | |||||||||||
Andrew S. Levine | 12,500 | — | $ | 90.15 | 12/12/2023 | 18,000 | $ | 1,816,740 | — | — | |||||||||
— | 15,000(5) | $ | 106.05 | 01/11/2022 | — | — | 6,000(3) | $ | 605,580 | ||||||||||
— | 15,000(5) | $ | 106.05 | 01/11/2027 | — | — | — | — |
|
Executive | Notional Stock Units(a) | Performance- Based Employment Agreement LTIP Units(b) | Time-Based Employment Agreement LTIP Units(c) | ||||
Marc Holliday | 6,956 | — | — | ||||
Stephen L. Green | — | — | — | ||||
Andrew Mathias | — | — | — | ||||
Matthew J. DiLiberto | — | 3,500 | 3,500 | ||||
Andrew S. Levine | — | 6,000 | 12,000 |
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| |
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20172018 Option Exercises and Stock Vested
The following table sets forth certain information with respect to the exercise of stock options and the vesting of stock, including restricted stock, restricted stock units, LTIP units and similar instruments for each named executive officer during the fiscal year ended December31,2017.December31,2018.
OptionAwards | StockAwards | Option Awards | Stock Awards | |||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Vesting(1) ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting(2)($) | Number of Shares Acquired on Exercise (#) | Value Realized on Vesting(1) ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting(2) ($) | ||||||||||||
Marc Holliday | 100,000 | $ | 2,339,740 | 130,562 | $ | 13,971,605 | — | — | 115,809 | $ | 11,028,869 | |||||||||
Stephen L. Green | — | — | 11,030 | $ | 1,154,601 | — | — | 5,793 | $ | 528,768 | ||||||||||
Andrew Mathias | — | — | 97,023 | $ | 9,949,282 | 65,000 | $ | 904,436 | 120,358 | $ | 10,165,495 | |||||||||
Matthew J. DiLiberto | 30,000 | 739,338 | 10,477 | $ | 1,118,595 | — | — | 10,142 | $ | 1,006,477 | ||||||||||
Andrew S. Levine | 12,500 | 295,875 | 23,431 | $ | 2,492,121 | — | — | 25,355 | $ | 2,486,162 |
(1) | Amounts reflect the difference between the exercise price of the option and the market price at the time of exercise. |
(2) | Amounts reflect the market value of the stock on the day the stock vested. |
20172018 Nonqualified Deferred Compensation
The following table sets forth certain information regarding non-tax qualified compensation deferred during the year ended December31,2017.December31,2018. All of the information below relates to notional stock units that we have granted to certain of our named executive officers pursuant to employment agreements we havehad entered into with them. Pursuant to these employment agreements, we have agreed to grant notional stock units with a specified value to certain of our named executive officers each year, which are subject to vesting based on continued employment for the following year. Once vested, these notional stock units represent a contingent right to receive the value of one share of our common stock. Under the terms of the deferred compensation agreements, each participant is also entitled to dividend equivalent rights, to be paid in cash on a current basis, equal to the amount per share of any cash dividend we declare, multiplied by the total number of notional units held by such participant as of the record date for such dividend. Vested notional stock units are settled in cash no later than30days following the earliest of (i) the executive’s death, (ii) the date of the executive’s separation from service with us and (iii) the effective date of a change in control.
2018Proxy2019Proxy Statement 5149
EXECUTIVE COMPENSATION
Executive | Executive Contributions in Last FY ($)(1)(2) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(2)(3) | Aggregate Withdrawals/ Distributions ($)(4) | Aggregate Balance at Last FYE ($)(2)(5) | |||||||||
Marc Holliday | $ | 892,703 | — | $ | -152,246 | $ | 161,147 | $ | 4,720,092 | |||||
Stephen L. Green | $ | 140,898 | — | $ | -43,710 | $ | 101,795 | $ | 1,518,290 | |||||
Andrew Mathias | $ | 516,762 | — | $ | -81,692 | $ | 46,633 | $ | 3,314,238 | |||||
Matthew J. DiLiberto | — | — | — | — | — | |||||||||
Andrew S. Levine | — | — | — | — | — |
Under our new employment agreements with our Named Executive Officers, we eliminated nonqualified deferred compensation.
Executive | Executive Contributions in Last FY ($)(1)(2) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(2)(3) | Aggregate Withdrawals/ Distributions ($)(4) | Aggregate Balance at Last FYE ($)(2)(5) | |||||||||
Marc Holliday | $ | 661,307 | — | $ | -939,718 | $ | 193,346 | $ | 4,248,336 | |||||
Stephen L. Green | $ | 117,197 | — | $ | -274,983 | $ | 53,706 | $ | 1,306,797 | |||||
Andrew Mathias | $ | 429,879 | — | $ | -593,101 | $ | 124,387 | $ | 3,026,629 | |||||
Matthew J. DiLiberto | — | — | — | — | — | |||||||||
Andrew S. Levine | — | — | — | — | — |
(1) | Represents values as of the vesting dates for notional units that vested |
(2) | Awards of notional units constitute “Stock Awards” for purposes of the Summary Compensation Table, and, as a result, the full grant date fair value of these awards computed in accordance with |
(3) | The amounts in this column represent the increase or decrease in value of vested notional units from |
(4) | Represents the aggregate value of dividend equivalent rights paid with respect to all vested and unvested notional units held by each executive |
(5) | Based on a per share price of |
Potential Payments Upon Termination or Change in Control
We have contractual arrangements with our named executive officers that provide for payments, acceleration of vesting or other benefits to our named executive officers upon a termination of employment in certain circumstances or upon a change in control. These include our employment agreements with our named executive officers, our performance-based equity awards and our stock options. options and Class O LTIP Units. During2018, we entered into new employment agreements with each of Messrs. Holliday, Mathias and Levine that did not become effective until2019upon the expiration of the terms of each of their then current employment agreements. These agreements are all currently in effect, and they reflect the Compensation Committee’s significant restructuring of our named executive officers’ compensation that was established in response to feedback that we received during stockholder engagement meetings. Because these executive’s prior employment agreements were in effect as of December31,2018, we are providing information below for both these prior employment agreements and the current employment agreements that we have with our executives. Mr. DiLiberto’s current employment agreement was entered into in early2018before we had completed the restructuring of our named executive officers’ compensation and, accordingly, it includes certain elements that we have removed from our other executives’ current employment agreements.
The Compensation Committee currently expects that any new employment agreement entered into with Mr. DiLiberto, to be effective following are certain key aspectsthe end of these contractual arrangements:the term of his current employment agreement, will conform to the structure reflected in the new employment agreements entered into with Messrs. Holliday, Mathias and Levine, including elimination of additional performance retesting periods for earning performance-based LTIP units
In connection with Mr. Green’s transition to his new role as Chairman Emeritus, the term of Mr. Green’s employment agreement expired on December31,2018. We have entered into a Chairman Emeritus agreement with Mr. Green that is described in “Certain Relationships and Related Party Transactions – Chairman Emeritus Agreement.”
The discussion below describes these contractual arrangements in greater detail.
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Employment Agreements in Effect During 2018
We haveDuring2018, we had employment agreements with all of our named executive officers. All of the employment agreements with our named executive officers provideprovided for, among other things, severance payments and benefits and acceleration of equity awards in connection with the termination of employment in certain circumstances. In return, each of our named executive officers has agreed to non-compete, non-solicitation, non-interference and confidentiality provisions. The table below summarizes the material terms of our employment agreements with our named executive officers.
52 SL Green Realty Corp.
Tableofficers, as in effect during2018. In addition, as previously discussed, the Committee significantly restructured Mr. Holliday’s and Mr. Mathias’ compensation, as governed by their new employment agreements, which were entered into in April2018and December2018, respectively, and became effective in January2019following the expiration of Contentsthe terms of their current employment agreements. In addition, the Committee also significantly restructured Mr. Levine’s compensation, as governed by his new employment agreement, which was entered into in December2018, and became effective in January2019following the expiration of the terms of his current employment agreement. The terms of these new employment agreements are further described below.
EXECUTIVE COMPENSATION
Marc Holliday | Stephen L. Green | Andrew Mathias | Matthew J. DiLiberto | Andrew S. Levine | Marc Holliday | Stephen L. Green | Andrew Mathias | Matthew J. DiLiberto | Andrew S. Levine | |||||||||||
Term(1) | 1/18/16–1/17/19 | 1/1/15–1/1/16 | 1/1/18–12/31/18 | 1/1/18–1/1/21 | 1/1/16–1/1/19 | 1/18/16 – 1/17/19 | 1/1/18 – 12/31/18 | 1/1/18 – 12/31/18 | 1/1/18 – 1/1/21 | 1/1/16 – 1/1/19 | ||||||||||
Annual Salary | $1.35M | $750K | $900K | $550K | $550K | $1.25M(3) | $750K | $900K | $550K | $550K | ||||||||||
Annual Deferred Compensation(2) | $750K | $150K | $550K | None | None | $750K | $150K | $550K | None | None | ||||||||||
Guaranteed Bonus | None(3) | None | None | None | None | None(4) | None | None | None | None | ||||||||||
Future OPP Allocations | 24% | None | 16% | None | None | 24% | None | 16% | None | None | ||||||||||
Other Benefits | $10M of life | $5M of life | None | None | None | $10M of life insurance | $5M of life insurance | None | None | None | ||||||||||
Stock Options and Class O LTIP units (Grant Year) | 210,000(5) | None | None | None | None | |||||||||||||||
Time-Based LTIP Units | None | None | 56,000(7) | 15,000(8) | 18,000(9) | |||||||||||||||
Performance- Based LTIP Units | 76,980(6) | None | None | 15,000(8) | 18,000(10) | |||||||||||||||
insurance | insurance | 61,584(6) | None | None | None | None | ||||||||||||||
61,584(6) | None | None | None | None |
| ||||
Severance Benefits | If the executive’s employment is terminated by us without Cause or by the executive for Good Reason during the term, the executive will be entitled to the following payments or benefits subject (except if such termination is in connection with a Change-in-Control) to the effectiveness of a mutual release: | |||
Termination without Change-in-Control | Termination with Change-in-Control | |||
●1x average annual base salary, deferred compensation, if any, and bonus ●Pro-rata bonus for partial year ●Acceleration of all unvested equity awards (other than OPP awards) and deferred compensation, if any ●Grant of certain employment agreement equity awards not previously granted ●Option exercise period extended to second January 1st following termination ●12 months of benefit continuation/ payments | ●2x-3x average annual base salary, deferred compensation, if any, and bonus ●Pro-rata bonus for partial year ●Acceleration of all unvested equity awards (other than OPP awards) and deferred compensation, if any ●Grant of employment agreement awards not previously granted ●Option exercise period extended to second January 1st following termination ●24 months of benefit continuation/ payments ●Section 280G modified cut-back |
2018Proxy2019Proxy Statement 5351
EXECUTIVE COMPENSATION
Marc Holliday | Stephen L. Green | Andrew Mathias | Matthew J. DiLiberto | Andrew S. Levine | ||||||
Death/Disability | If the executive’s employment is terminated by us upon death or disability during the term, the executive will be entitled to the following payments or benefits subject (in the case of disability) to the effectiveness of a mutual release: | |||||||||
Death | Disability | |||
●Pro-rata bonus for partial year ●Partial acceleration of unvested equity awards (other than OPP awards) and deferred compensation, if any ●Grant of certain employment agreement equity awards not previously granted ●Payments/benefits to Messrs. Holliday and Green are reduced by life insurance benefit | ●1x average annual base salary, deferred compensation, if any, and bonus ●Pro-rata bonus for partial year ●Partial acceleration of unvested equity awards (other than OPP awards) and deferred compensation, if any ●Grant of certain employment agreement equity awards not previously granted ●36 months of benefit continuation/payments |
Post-Change-in- Control Salary | For periods following a Change-in-Control, in lieu of the base salary, annual bonus, deferred compensation and OPP awards described above, each executive, while employed, will be entitled to receive salary payable in cash at a per annum rate equal to the sum of his annual base salary in effect prior to the Change-in-Control plus his annual bonus and the value of his deferred compensation contributions and his equity awards (other than those granted under outperformance plans) that vested during the most recent fiscal year prior to the Change-in-Control. |
Restrictive Covenants | For Messrs. Holliday, Green and Mathias, noncompetition with us for 18 months following termination (12 months if employment is terminated upon or after the scheduled expiration of the term of employment or 6 months if employment is terminated in connection with or within 18 months after a Change-in-Control). Non-solicitation, non-disparagement, non-interference and litigation cooperation covenants also apply. | For Messrs. DiLiberto and Levine, noncompetition with us for 12 months after termination unless employment is terminated upon non-renewal of the agreement or without Cause or for Good Reason in connection with or within 18 months after a Change-in-Control. Non-solicitation, non-disparagement, |
(1) | The terms automatically renew for one year (for Messrs. Green and Mathias) and six months (for Messrs. DiLiberto and Levine) unless either party |
(2) | Annual deferred compensation contributions are made in the form of notional stock units at the beginning of the term and on each anniversary of such date during the term, subject to vesting based on continued employment for one year from the grant date, and are payable no later |
(3) | Pursuant to an agreement Mr. Holliday and the Company entered into in April 2018 in connection with entry by Mr. Holliday into a new employment agreement with the Company, Mr. Holliday consented to a reduction of the aggregate per annum minimum base salary payable pursuant to Mr. Holliday’s then-current employment agreement from $1.35 million to $1.25 million, retroactive to January 18, 2018. |
(4) | Mr. Holliday is eligible to participate in an annual formulaic cash bonus program pursuant to which he will be able to earn up to three times his base salary based on the achievement of specific goals established in advance by the Committee. |
(5) | Granted 50% in 2016 and 50% in 2017. Vested on the first anniversary of the date of grant. 50% expiring 5 years after grant and 50% expiring 10 years after grant. |
(6) | Granted in 2017, 2018 and 2019, respectively. Performance-Based LTIP units vesting 1/17/17, 1/17/18 and 1/17/19, respectively contingent on the achievement of performance-based vesting hurdles, with 50-100% of the LTIP units vesting based on the achievement of either annual FFO growth or TSR of 5-8% per year or TSR in the top 50-35% of the MSCI US REIT Index, respectively, during 2018 (or on a cumulative basis from 2016 through the end of 2018 or a subsequent quarter during the term of Mr. Holliday’s employment agreement). None of these LTIP units would have vested if threshold performance had not been achieved. Vesting was also subject to Mr. Holliday’s continued employment through January 17th of the year following the year in which the performance-based vesting hurdles were achieved; two-year post-vesting no-sale. |
(7) | Granted in 2018. Vested on December 31, 2018; two-year post-vesting no-sale. |
(8) | See “Executive Compensation Tables – 2018 Grants of Plan-Based Awards.” |
(9) | Granted in 2016. Vest on each of January 1, 2017, January 1, 2018 and January 1, 2019, subject to continued employment. |
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(10) | Granted in 2016. One-third vesting on 1/1/17, 1/1/18 and 1/1/19 contingent on achievement of performance hurdle; from 50-100% vesting based on achievement of either annual FFO growth or TSR of 5-8% per year or TSR in the top 35-50% of the MSCI US REIT Index, respectively, for the prior year (or on a cumulative basis from 2016 through such year or a subsequent quarter during the term); no vesting unless the 50% threshold performance criteria described above is met. |
(11) | Severance benefits in the event of a termination by us without Cause or by the executive for Good Reason in connection with or |
Calculated based on the sum of the named executive officer’s (i) average annual base salary in effect during the | |
Pro-rata bonus is for the year in which employment is terminated (and a bonus for the prior year if such bonus had not yet been determined) based on average annual cash bonus calculated in the manner described in footnote (5) above. | |
Only applicable to Mr. Holliday. Mr. Holliday will be entitled to receive the stock options or Class O LTIP units provided for in his employment agreement, but will not be entitled to receive any other employment agreement equity awards that had not yet been granted unless his termination is in connection with or |
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In the event that any payment or benefit constitutes an excess “parachute payment” under | |
Full acceleration of vesting of any unvested equity awards granted in lieu of cash bonuses and deferred compensation |
The terms Cause, Good Reason and Change-in-Control, as used above, are specifically defined in each executive’s employment agreement. The summary above is qualified in its entirety by reference to the copies of the employment agreements and the deferred compensation agreements with our named executive officers, which have been previously filed by us with the SEC, as referenced in our Form10-K for the year ended December31,2017,December31,2018, and are incorporated herein by reference.
Performance-Based Equity Awards
Upon a change in control, the performance-based vesting criteria for the performance-based LTIP unit awards that we granted to our named executive officers pursuant to their employment agreements will be determined based on performance through the date of the change in control. Regardless of the satisfaction of the performance-based vesting criteria, these awards will remain subject to vesting based on continued employment through the originally established vesting dates. In the event of a termination by us without Cause or by an executive for Good Reason (as defined in each executive’s employment agreement) in connection with or within18months after a change in control, all of the performance-based LTIP units will vest. Otherwise, the vesting of these performance-based LTIP units upon a termination of employment will be treated in the same manner as other equity awards under our executive’s employment agreements.
Stock Options and Class O LTIP units
Under the general terms of the2005Plan, the vesting of stock options and Class O LTIP units granted thereunder, including those granted to our named executive officers, will fully accelerate in the event of a termination of the recipient’s employment upon death or disability. Vested stock options and Class O LTIP units generally may be exercised or converted until the earlier of (i) their stated expiration date or mandatory conversion date or (ii) subject to extension of the exercise period or conversion period pursuant to our named executive officers’ employment agreements, a specified period of time after termination of employment (i.e., upon termination in the event of termination for cause, one year after termination in the event of termination due to death or disability and three months after termination in all other cases).
Hypothetical Illustration of Payments upon Termination or Change in Control
The following tables show the potential payments and estimated value of the benefits that our named executive officers would have been entitled to receive upon a termination of their employment by us without cause or by them for good reason or upon the death or disability as of December31,2017basedDecember31,2018based on the employment agreements and other contractual arrangements in effect as of that date. Our named executive officers would not have been entitled to any payments or benefits other than those already accrued in the event of a termination of their employment by us for cause or by them without good reason (including upon retirement) or a change in control without termination. The types of events constituting cause, good reason, disability and a change in control may differ in some respects among the different arrangements providing for benefits to the named executive officers; however, for consistency in presentation, the payments and estimated value of benefits have been grouped together based on these concepts without regard for any such differences. Information is not presented for Mr. Green, who retired as Executive Chairman as of January17,2019and, in accordance with his existing agreements, did not receive any payments or benefits that had not otherwise previously vested.
Marc Holliday
Payment/Benefit | Termination without Cause or for Good Reason | Termination w/ Change in Control | Disability | Death(1) | ||||||||
Pro-Rata Bonus | $ | 6,875,000 | $ | 6,875,000 | $ | 6,875,000 | $ | 6,875,000 | ||||
Cash Severance | $ | 8,975,000 | $ | 26,925,000 | $ | 8,975,000 | — | |||||
Stock Option / Class O LTIP Unit Vesting(2) | — | — | — | — | ||||||||
LTIP Unit/Stock Unit Vesting(3) | $ | 702,069 | $ | 13,133,415 | $ | 702,069 | $ | 702,069 | ||||
Benefits Continuation(4) | $ | 46,976 | $ | 93,951 | $ | 140,927 | — |
Stephen L. Green
Payment/Benefit | Termination without Cause or for Good Reason | Termination w/ Change in Control | Disability | Death(1) | ||||||||
Pro-Rata Bonus | $ | 2,925,000 | $ | 2,925,000 | $ | 2,925,000 | $ | 2,925,000 | ||||
Cash Severance | $ | 3,825,000 | $ | 11,475,000 | $ | 3,825,000 | — | |||||
Stock Option / Class O LTIP Unit Vesting(2) | — | — | — | — | ||||||||
LTIP Unit/Stock Unit Vesting(3) | — | — | — | — | ||||||||
Benefits Continuation(4) | $ | 33,015 | $ | 66,029 | $ | 99,044 | — |
2018 Proxy2019Proxy Statement 5553
EXECUTIVE COMPENSATION
Andrew Mathias
Payment/Benefit | Termination without Cause or for Good Reason | Termination w/ Change in Control | Disability | Death(1) | ||||||||
Pro-Rata Bonus | $ | 4,900,000 | $ | 4,900,000 | $ | 4,900,000 | $ | 4,900,000 | ||||
Cash Severance | $ | 6,225,000 | $ | 15,562,500 | $ | 6,225,000 | — | |||||
Stock Option / Class O LTIP Unit Vesting(2) | — | — | — | — | ||||||||
LTIP Unit/Stock Unit Vesting(3) | — | — | — | — | ||||||||
Benefits Continuation(4) | $ | 46,967 | $ | 93,951 | $ | 140,927 | — |
Matthew J. DiLiberto
Payment/Benefit | Termination without Cause or for Good Reason | Termination w/ Change in Control | Disability | Death(1) | ||||||||
Pro-Rata Bonus | $ | 1,550,000 | $ | 1,550,000 | $ | 1,550,000 | $ | 1,550,000 | ||||
Cash Severance | $ | 2,000,000 | $ | 4,000,000 | $ | 2,000,000 | — | |||||
Stock Option / Class O LTIP Unit Vesting(2) | — | — | — | — | ||||||||
LTIP Unit/Stock Unit Vesting(3) | $ | 706,510 | $ | 706,510 | $ | 706,510 | $ | 706,510 | ||||
Benefits Continuation(4) | $ | 44,504 | $ | 89,007 | $ | 133,511 | — |
Andrew S. Levine
Marc Holliday | ||||||||||||||||||||||||
Payment/Benefit | Termination without Cause or for Good Reason | Termination w/ Change in Control | Disability | Death(1) | Termination without Cause or for Good Reason | Termination w/ Change in Control | Disability | Death(1) | ||||||||||||||||
Pro-Rata Bonus | $ | 1,225,000 | $ | 1,225,000 | $ | 1,225,000 | $ | 1,225,000 | $ | 6,600,000 | $ | 6,600,000 | $ | 6,600,000 | $ | 6,600,000 | ||||||||
Cash Severance | $ | 1,775,000 | $ | 3,550,000 | $ | 1,775,000 | — | $ | 8,650,000 | $ | 25,950,000 | $ | 8,650,000 | — | ||||||||||
Stock Option / Class O LTIP Unit Vesting(2) | — | — | — | — | ||||||||||||||||||||
LTIP Unit/Stock Unit Vesting(3) | $ | 2,422,320 | $ | 2,422,320 | $ | 1,211,160 | $ | 1,211,160 | ||||||||||||||||
Benefits Continuation(4) | $ | 46,976 | $ | 93,951 | $ | 140,927 | — | |||||||||||||||||
Stock Option / Class O LTIP Unit Vesting(2) | — | — | — | — | ||||||||||||||||||||
LTIP Unit/Stock Unit Vesting(3) | $ | 608,283 | $ | 5,478,346 | $ | 608,283 | $ | 608,283 | ||||||||||||||||
Benefits Continuation(4) | $ | 46,865 | $ | 93,730 | $ | 140,595 | — | |||||||||||||||||
Andrew Mathias | ||||||||||||||||||||||||
Payment/Benefit | Termination without Cause or for Good Reason | Termination w/ Change in Control | Disability | Death(1) | ||||||||||||||||||||
Pro-Rata Bonus | $ | 4,700,000 | $ | 4,700,000 | $ | 4,700,000 | $ | 4,700,000 | ||||||||||||||||
Cash Severance | $ | 6,100,000 | $ | 15,250,000 | $ | 6,100,000 | — | |||||||||||||||||
Stock Option / Class O LTIP Unit Vesting(2) | — | — | — | — | ||||||||||||||||||||
LTIP Unit/Stock Unit Vesting(3) | — | — | — | — | ||||||||||||||||||||
Benefits Continuation(4) | $ | 46,865 | $ | 93,730 | $ | 140,595 | — | |||||||||||||||||
Matthew J. DiLiberto | ||||||||||||||||||||||||
Payment/Benefit | Termination without Cause or for Good Reason | Termination w/ Change in Control | Disability | Death(1) | ||||||||||||||||||||
Pro-Rata Bonus | $ | 1,800,000 | $ | 1, 800,000 | $ | 1, 800,000 | $ | 1, 800,000 | ||||||||||||||||
Cash Severance | $ | 2,325,000 | $ | 4,650,000 | $ | 2,325,000 | — | |||||||||||||||||
Stock Option / Class O LTIP Unit Vesting(2) | — | — | — | — | ||||||||||||||||||||
LTIP Unit/Stock Unit Vesting(3) | $ | 2,372,400 | $ | 2,372,400 | $ | 790,800 | $ | 790,800 | ||||||||||||||||
Benefits Continuation(4) | $ | 15,366 | $ | 30,731 | $ | 46,097 | — | |||||||||||||||||
Andrew S. Levine | ||||||||||||||||||||||||
Payment/Benefit | Termination without Cause or for Good Reason | Termination w/ Change in Control | Disability | Death(1) | ||||||||||||||||||||
Pro-Rata Bonus | $ | 1,312,500 | $ | 1,312,500 | $ | 1,312,500 | $ | 1,312,500 | ||||||||||||||||
Cash Severance | $ | 1,862,500 | $ | 3,725,000 | $ | 1,862,500 | — | |||||||||||||||||
Stock Option / Class O LTIP Unit Vesting(2) | — | — | — | — | ||||||||||||||||||||
LTIP Unit/Stock Unit Vesting(3) | $ | 948,960 | $ | 948,960 | $ | 948,960 | $ | 948,960 | ||||||||||||||||
Benefits Continuation(4) | $ | 46,865 | $ | 93,730 | $ | 140,595 | — |
(1) | As we maintained life insurance policies for the benefit of the beneficiaries of Messrs. Holliday and Green in the amount of $10million and $5million, respectively, as of |
(2) | Represents the value of the stock options or Class O LTIP units, if any, that would vest. Assumes that the per share value of the stock options or Class O LTIP units that vest equals (i) |
(3) | Represents the value of the LTIP units and notional stock units, if any, that would vest based on a price of |
(4) | Benefits continuation amounts are based on the actual expense for financial reporting purposes for the year ended |
The amounts described above do not include payments and benefits to the extent they have been earned prior to the termination of employment or change in control or are provided on a non-discriminatory basis to salaried employees upon termination of employment. These include: accrued salary and vacation pay; earned and accrued, but unpaid, bonuses; distribution of plan balances under our401(k) plan; life insurance proceeds in the event of death; and disability insurance payouts in the event of disability. All of the cash severance payments described below are to be made as lump sum payments at the time of termination; provided that, to the extent necessary to avoid the imposition of an additional tax under Section409A of the IRC, the payments are to be delayed until six monthsaftermonths after termination, during which time the payments will accrue interest at the rate of5% per annum. As a result of provisions in the named executive officers’ employment agreements, in the event that any payment or benefit to be paid or provided to an executive set forth above would have been subject to the excise tax under Sections280G of the IRC, the payments and benefits to such executive would have been reduced to the extent necessary to avoid the imposition of such excise tax, but only if such reduction would result in a greater after-tax benefit to the executive. The amounts set forth in the table above have not been adjusted to reflect any such reduction that might be applicable.
54 SL Green Realty Corp.
EXECUTIVE COMPENSATION
New Employment Agreements in Effect During 2019
Marc Holliday | Andrew Mathias | Andrew S. Levine | ||||
Term(1) | 1/18/19 – 1/17/22 | 1/1/19 – 12/31/21 | 1/1/19 – 1/1/22 | |||
Annual Salary | $1.25M | $950K | $580K | |||
Formulaic Annual Cash Bonus(2) | 50-300% base salary | 50-250% base salary | None | |||
Performance-Based LTIP Units(Target)(3) | $7.5M | $6.0M | None | |||
Time-Based LTIP Units (Target)(4) | $4.5M | $3.5M | $1.3M | |||
Other Benefits | $10M of life insurance | None | None | |||
Severance Benefits (without Change-in-Control)(5) | If the executive’s employment is terminated by us without Cause or by the executive for Good Reason during the term, the executive will be entitled to the following payments or benefits, subject to the effectiveness of a mutual release: |
Holliday/Mathias | Levine | |||
●2.0x / 1.5x the sum of base salary, maximum formulaic bonus and target value of annual time-based equity award ●Pro-rata bonus and pro-rata portion of target value of annual time-based award for partial year ●Acceleration of all unvested time-based equity awards ●Class O LTIP unit/option exercise period extended to second January 1st following termination ●24 / 18 months of benefit continuation payments | ●The sum of base salary and average annual bonus for prior two years ●The target value of the annual time-based equity awards to be granted in January 2020 and 2021, to the extent not yet granted ●Pro-rata bonus for partial year ●Acceleration of all unvested time-based equity awards ●Class O LTIP unit/option exercise period extended to second January 1st following termination ●12 months of benefit continuation payments | |||
Severance Benefits (Change-in-Control)(5) | If the executive’s employment is terminated by us without Cause or by the executive for Good Reason in connection with or within18months after a Change-in-Control during the term, the executive will be entitled to the following payments or benefits: | |||
Holliday/Mathias | Levine | |||
●3.0x / 2.5x the sum of base salary, average annual bonus for prior two years and target value of annual time-based award ●Pro-rata bonus and pro-rata portion of target value of annual time-based award for partial year ●Acceleration of all unvested time-based equity awards ●Class O LTIP unit/option exercise period extended to second January 1st following termination ●36 / 30 months of benefit continuation payments ●Section 280G modified cut-back(6) | ●2x the sum of base salary and average annual bonus for prior two years ●The target value of the annual time-based equity awards to be granted in January 2020 and 2021, to the extent not yet granted ●Pro-rata bonus for partial year ●Acceleration of all unvested time-based equity awards ●Class O LTIP unit/option exercise period extended to second January 1st following termination ●24 months of benefit continuation payments ●Section 280G modified cut-back(6) |
2019Proxy Statement 55
EXECUTIVE COMPENSATION
Marc Holliday | Andrew Mathias | Andrew S. Levine | ||||
Death/Disability(5) | If the executive’s employment is terminated by us upon death or disability during the term, the executive will be entitled to the following payments or benefits, subject (in the case of disability) to the effectiveness of a mutual release: |
Death | Disability | |||
●Pro-rata bonus for partial year ●Pro-rated target value of the annual time-based equity awards (for Levine upon termination prior to January 2021 grant) ●Acceleration of all unvested time-based equity awards ●Class O LTIP unit/option exercise period extended to second January 1st following termination ●Payments/benefits to Mr. Holliday are reduced by life insurance benefit | ●1x the sum of base salary, maximum formulaic bonus and target value of annual time-based equity award (for Holliday and Mathias) ●1x the sum of base salary and average annual bonus for prior two years (for Levine) ●Pro-rata bonus for partial year ●Pro-rated target value of the annual time-based equity awards (for Levine upon termination prior to January 2021 grant) ●Acceleration of all unvested equity awards (other than performance-based awards) ●Class O LTIP unit/option exercise period extended to second January 1st following termination ●36 months of benefit continuation/ payments | |||
Post-Change-in-Control Compensation | Upon a Change-in-Control, for pro-rata payments, and while employed for periods following a Change-in-Control, in lieu of the base salary, annual bonus, and the equity awards described above, each executive will be entitled to the following: | |||
Holliday/Mathias | Levine | |||
●Pro-rata bonus based on average annual bonus for prior two years and pro-rata portion of target value of annual time-based award for partial year prior to Change-in-Control ●Annual cash salary equal to the sum of prior base salary, prior year cash bonus and target value of annual time-based and performance-based equity awards | ●Pro-rata bonus for partial year prior to Change-in-Control based on average annual bonus for prior two years ●Annual cash salary equal to the sum of prior base salary, prior year cash bonus and, beginning in the year following the most recent grant of a time-based equity award, target value of annual time-based equity awards | |||
Restrictive Covenants | The executive agreed to the following covenants: | |||
Holliday/Mathias | Levine | |||
For Messrs. Holliday and Mathias, noncompetition with us for12months following termination (6months if employment is terminated in connection with or within18months after a Change-in-Control). Non-solicitation, non-disparagement, non-interference and litigation cooperation covenants also apply. | For Mr. Levine, noncompetition with us for6months after termination unless employment is terminated upon non-renewal of the agreement, in which case the non-compete period will not extend beyond such termination. Non-solicitation, non-disparagement, non-interference and litigation cooperation covenants also apply. |
(1) | The terms automatically renew for one year for Messrs. Holliday and Mathias unless either party provides advance written notice of non-renewal. |
56 SL Green Realty Corp.
EXECUTIVE COMPENSATION
(2) | Messrs. Holliday and Mathias are eligible to participate in an annual formulaic cash bonus program pursuant to which they will be able to earn from50-300% and50-250%, respectively, of their base salary based on the achievement of specific goals established in advance by the Committee. Mr. Levine may be awarded a bonus in an amount determined by the Committee. |
(3) | Beginning in January2019, each of Messrs. Holliday and Mathias are entitled to receive annual awards of performance-based LTIP units with the target values set forth in the table above. See “Executive Compensation—Compensation Discussion and Analysis -2019Long-Term Equity Incentive Awards - Performance-Based Equity Awards” for details regarding the structure of these awards. Each award will provide that the LTIP units will remain outstanding following a termination of employment without Cause, for Good Reason or due to death or disability, whether during or after the term of the employment agreement, or following the executive’s resignation following expiration of the term. In addition, upon any termination for Good Reason or without Cause (including as a result of non-renewal by the Company) prior to the conclusion of a performance period, operating performance (but not relative TSR performance) will be deemed to have been achieved at maximum, subject to the absolute TSR modifier, which will continue to apply in accordance with its terms. In connection with a Change-in-Control prior the conclusion of any performance period, operating performance will be deemed to have been achieved at target performance and absolute and relative TSR performance will be determined based on actual, annualized performance through the date of the Change-in-Control, but vesting will remain subject to continued employment through the original vesting date, subject to acceleration in the event of a termination of employment without Cause, for Good Reason or due to death or disability, whether during or after the term of the employment agreement, or following the executive’s resignation following expiration of the term. |
(4) | Each executive is eligible to receive an annual grant of LTIP units subject to time-based vesting conditions. The amount of the annual grant each year will be determined by the Committee based on its evaluation of executive’s performance during the prior year; provided that the value of the LTIP units to be granted for achievement of target performance during the prior year will not be less than the amounts set forth in the table above (with each LTIP unit valued using the average closing price of the common stock for the ten consecutive trading days ending on the last trading day of the prior year). For Messrs. Holliday and Mathias, one-third of each such grant will vest on January1stof each of the first three years following such grant, if and as employment continues through such dates. For Mr. Levine, each such grant will vest in equal installments on each January1stfollowing such grant during the remainder of the term of the employment agreement, if and as employment continues through such dates. The LTIP units will be subject to a no sell restriction until the earlier of three years after grant, termination of employment or a Change-in-Control. Vesting will fully accelerate in the event of the termination of executive’s employment by us without Cause, by the executive for Good Reason, due to death or disability or due to executive’s resignation following the expiration of the term of the employment agreement. Other terminations prior to time-based vesting or acceleration will result in forfeiture of all unvested amounts. |
(5) | Performance-based equity awards will be treated in accordance with their terms. See footnote (3) above for relevant terms to be included in performance-based LTIP units granted pursuant to the employment agreements. |
(6) | In the event that any payment or benefit constitutes an excess “parachute payment” under Section280G of the IRC subject to an excise tax, the executive will not be entitled to a tax gross-up payment; however, the executive’s payments and benefits would be reduced to the extent necessary to avoid such excise taxes, but only if such a reduction of pay or benefits would result in a greater after-tax benefit to the executive. |
The terms Cause, Good Reason and Change-in-Control, as used above, are specifically defined in each executive’s employment agreement. For Messrs. Holliday and Mathias, the term Cause is defined to include a non-renewal of the term of the employment agreement, provided that the cash severance multiple in such instance would be1.0x instead of2.0x for Mr. Holliday and1.5x for Mr. Mathias. The summary above is qualified in its entirety by reference to the copies of the employment agreements with our named executive officers, which have been previously filed by us with the SEC, as referenced in our Form10-K for the year ended December31,2018, and are incorporated herein by reference.
2019Proxy Statement 57
EXECUTIVE COMPENSATION
Compensation Committee Interlocks and Insider Participation
Our Compensation Committee is comprised of Lauren B. Dillard (Chair), John H. Alschuler, Edwin ThomasT. Burton, III and John S. Levy. There are no Compensation Committee interlocks and none of our employees is a member of our Compensation Committee.
Pay Ratio Disclosure Rule
Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (“PEO”). The PEO of our Company is Mr. Holliday.
For2017,For2018, the annual total compensation of Mr. Holliday, our PEO, of $17,407,821,$13,355,778, as shown in the Summary Compensation Table above, was approximately303timesapproximately194times the annual total compensation of $57,508of$68,880of a median employee calculated in the same manner. We identified the median employee using the annual base salary and target annual cash incentive compensation, as of December31,2017,December31,2018, plus any long-term equity incentive awards granted in2017forin2018for all individuals (excluding our PEO) who were employed by us on December31,2017,December31,2018, the last day of our payroll year, whether employed on a full-time or part-time basis.
As of December31,2017,754of our1,065employeesDecember31,2018,748of our1,058employees were hourly-paid employees involved in building operations, all of whom are subject to collective bargaining agreements. If these employees were not included for purposes of identifying our median employee, the annual total compensation of a median employee would be $135,857and$144,146and the annual total compensation of our PEO would be approximately128timesapproximately93times such amount.
2018 Proxy Statement58 57SL Green Realty Corp.
Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm |
The Audit Committee of the Board has appointed the accounting firm of Ernst & Young LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2018.December31,2019. Stockholder ratification of the appointment of Ernst & Young LLP is not required by law, the NYSE or the Company’s organizational documents. However, as a matter of good corporate governance, the Board has elected to submit the appointment of Ernst & Young LLP to the stockholders for ratification at the 2018 annualthe2019annual meeting. Even if the appointment is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time if the Audit Committee believes that such a change would be in the best interests of the Company and its stockholders. Ifstockholders.If our stockholders do not ratify the appointment of Ernst & Young LLP, the Audit Committee will take that fact into consideration, together with such other factors it deems relevant, in determining its next selection of an independent registered public accounting firm. Ernst & Young LLP has served as our independent registered public accounting firm since our formation in June 1997 andJune1997and is considered by our management to be well-qualified. Ernst & Young LLP has advised us that neither it nor any member thereof has any financial interest, direct or indirect, in the Company or any of our subsidiaries in any capacity.
A representative of Ernst & Young LLP will be present at the annual meeting, will be given the opportunity to make a statement at the annual meeting if he or she so desires and will be available to respond to appropriate questions.
A majority of all of the votes cast with respect to this proposal is required for the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018.December31,2019. Abstentions do not constitute a vote “for” or “against” and will not be counted as “votes cast”. Therefore, abstentions will have no effect on this proposal.
The Board unanimously recommends a vote“FOR” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm. |
Audit Committee Report |
The following report of the Audit Committee of the Board will not be deemed to be incorporated by reference in any previous or future documents filed by us with the SEC under the Securities Act of 1933,of1933, as amended, or the Securities Exchange Act of 1934,of1934, as amended, except to the extent that we specifically incorporate this report by reference in any such document.
Our Audit Committee oversees our financial reporting process on behalf of the Board, in accordance with our Audit Committee Charter. Management has the primary responsibility for the preparation, presentation and integrity of our financial statements, accounting and financial reporting principles, internal controls, and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. In fulfilling its oversight responsibilities, our Audit Committee reviewed and discussed the audited financial statements in the Annual Report on Form 10-KForm10-K for the year ended December 31, 2017 filedDecember31,2018filed by the Company with management.
Our Audit Committee reviewed and discussed with Ernst & Young LLP, our independent registered public accounting firm, the matters required to be discussed with the Audit Committee under Auditing Standard No. 1301, “Communications with Audit Committees,” as adopted by the applicable requirements of the Public Company Accounting Oversight Board.Board and the SEC. Our Audit Committee received from Ernst & Young LLP the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding communications with the Audit Committee concerning independence, and has discussed with Ernst & Young LLP their independence.
Based on the review and discussions referred to above, our Audit Committee recommended to the Board that the audited financial statements be included in the Annual Report on Form 10-KForm10-K for the year ended December 31, 2017 filedDecember31,2018filed by the Company.
582019Proxy Statement SL Green Realty Corp.59
AUDIT COMMITTEE MATTERS
The members of our Audit Committee are not engaged professionally in the practice of auditing or accounting. Committee members rely, without independent investigation or verification, on the information provided to them and on the representations made by management and our independent registered public accounting firm. Accordingly, our Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, our Audit Committee’sconsiderationsCommittee’s considerations and discussions referred to above do not assure that the audit of our financial statements has been carried out in accordance with the standards of the Public Company Accounting Oversight Board, that the financial statements are presented in accordance with accounting principles generally accepted in the U.S. or that our registered public accounting firm is in fact “independent.”independent.
Submitted by our Audit Committee
Edwin ThomasT. Burton, III (Chair)
Betsy Atkins
Lauren B. Dillard
Craig M. Hatkoff
Fee Disclosure |
Audit Fees
Fees, including out-of-pocket expenses, for audit services totaled approximately $4,060,000in fiscal year2018and $3,872,000in fiscal year2017and $3,398,000in fiscal year2016.year2017. Audit fees include fees associated with our annual audits and related reviews of our annual reports on Form10-K and quarterly reports on Form10-Q. In addition, audit fees include Sarbanes-Oxley Section404planning and testing, fees for public filingsinfilings in connection with various property acquisitions, joint venture audits, and services relating to public filings in connection with our preferred and common stock and debt offerings and certain other transactions. Our joint venture partners paid their pro rata share of any joint venture audit fees. Audit fees also include fees for accounting research and consultations.
Audit-Related Fees
Fees for audit-related services totaled approximately $70,000in2017and $68,000in2016.$71,000in2018and $70,000in2017. The audit-related services principally include fees for operating expense audits and agreed-upon procedures projects.
Tax Fees
No fees were incurredFees for tax services, including tax compliance, tax advice and tax planning in either2017or2016.totaled approximately $51,518in2018and $0in2017.
All Other Fees
There were no fees for other services not included above in either2017or2016.either2018or2017.
Our Audit Committee considers whether the provision by Ernst & Young LLP of any services that would be required to be described under “All Other Fees” would be compatible with maintaining Ernst & Young LLP’s independence from both management and the Company.
Pre-Approval Policies and Procedures of our Audit Committee |
Our Audit Committee must pre-approve all audit services and permissible non-audit services provided by our independent registered public accounting firm, except for any de minimis non-audit services. Non-audit services are considered de minimis if: (1) the aggregate amount of all such non-audit services constitutes less than five percent of the total amount of revenues we paid to our independent registered public accounting firm during the fiscal year in which they are provided; (2) we did not recognize such services at the time of the engagement to be non-audit services; and (3) such services are promptly brought to ourAuditour Audit Committee’s or any of its members’ attention and approved by our Audit Committee or any of its members who has authority to give such approval prior to the completion of the audit. None of the fees reflected above were incurred as a result of non-audit services provided by our independent registered public accounting firm pursuant to this de minimis exception. All services provided by Ernst & Young LLP in2017werein2018were pre-approved by our Audit Committee. Our Audit Committee may delegate to one or more of its members who is an independent director the authority to grant pre-approvals.
2018 Proxy Statement60 59SL Green Realty Corp.
Security Ownership of Certain Beneficial Owners and Management |
The following table sets forth the beneficial ownership of our common stock, $0.01 par$0.01par value per share, and our common stock and common units in our operating partnership as of March 31, 2018,March31,2019, unless otherwise noted, for (i) each person known to us to be the beneficial owner of more than 5%than5% of our outstanding common stock, (ii) each of our directors, (iii) each of our named executive officers who is not a director and (iv) our directors and executive officers as a group. All information in the following table is based on Schedules 13D, 13GSchedules13D,13G and/or any amendments thereto, filed with the SEC, and on information supplied to us by our directors and officers. Except as otherwise described in the notes below, the following beneficial owners have sole voting power and sole investment power with respect to all shares set forth opposite their respective names. None of our executive officers own any shares of our preferred stock except as set forth below.
As of March 31, 2018, thereMarch31,2019, the following shares and units were 90,190,440 shares outstanding.outstanding: (i)84,327,633shares of our common stock, (ii)1,801,904common units in our operating partnership (other than the units held by us) and (iii)2,458,781LTIP units (excluding unearned performance-based LTIP units, which may be earned based on the achievement of performance-based vesting hurdles).
Name** | Amount and Nature of Beneficial Ownership of Common Stock | Percent of Total | ||
The Vanguard Group(1) | 17,438,332 | 19.33% | ||
BlackRock, Inc.(2) | 9,161,081 | 10.16% | ||
State Street Corporation(3) | 5,609,292 | 6.22% | ||
Cohen & Steers, Inc.(4) | 4,761,589 | 5.28% | ||
John H. Alschuler(5) | 28,877 | * | ||
Betsy S. Atkins(6) | 8,223 | * | ||
Edwin Thomas Burton, III(7) | 39,512 | * | ||
Matthew J. DiLiberto(8) | 66,934 | * | ||
Lauren B. Dillard(9) | 6,673 | * | ||
Stephen L. Green(10) | 927,771 | * | ||
Craig M. Hatkoff | 1,365 | * | ||
Marc Holliday(11) | 922,169 | * | ||
Andrew S. Levine(12) | 137,771 | * | ||
John S. Levy(13) | 73,113 | * | ||
Andrew Mathias(14) | 1,082,189 | * | ||
All Directors and Executive Officers as a Group (11 Persons) | 3,294,598 | 3.65% |
Common Stock | Common Stock and Units | |||||||
Name** | Number | Percent of Common Stock(2) | Number of Shares and Units Beneficially Owned(1) | Percent of Common Stock and Units(2) | ||||
5% Holders | ||||||||
The Vanguard Group(3) | 13,825,215 | 16.39% | 13,825,215 | 15.61% | ||||
BlackRock, Inc.(4) | 9,130,834 | 10.83% | 9,130,834 | 10.31% | ||||
T. Rowe Price Associates, Inc.(5) | 6,946,802 | 8.24% | 6,946,802 | 7.84% | ||||
Boston Partners(6) | 6,430,873 | 7.63% | 6,430,873 | 7.26% | ||||
State Street Corporation(7) | 5,100,739 | 6.05% | 5,100,739 | 5.76% | ||||
Morgan Stanley | ||||||||
Morgan Stanley Investment Management Inc.(8) | 4,539,688 | 5.38% | 4,539,688 | 5.12% | ||||
Directors, Nominees for Director and Named Executive Officers | ||||||||
John H. Alschuler(9) | 15,286 | * | 29,594 | * | ||||
Betsy S. Atkins(10) | 9,684 | * | 11,437 | * | ||||
Edwin T. Burton, III(11) | 7,292 | * | 42,726 | * | ||||
Matthew J. DiLiberto(12) | 1,804 | * | 44,577 | * | ||||
Lauren B. Dillard(13) | — | * | 11,484 | * | ||||
Stephen L. Green(14) | — | * | 956,993 | 1.08% | ||||
Craig M. Hatkoff | 2,352 | * | 2,352 | * | ||||
Marc Holliday(15) | 111,370 | * | 1,055,660 | 1.19% | ||||
Andrew S. Levine(16) | 27,080 | * | 160,929 | * | ||||
John S. Levy(17) | 34,500 | * | 92,884 | * | ||||
Andrew Mathias(18) | 355,434 | * | 1,139,972 | 1.29% | ||||
All Directors and Executive Officers as a Group (11Persons)(19) | 564,802 | * | 3,548,608 | 3.99% |
* | Less than1%. |
** | Unless otherwise indicated, the business address is420Lexington Avenue, New York, New York10170-1881. |
(1) |
|
2019Proxy Statement 61
STOCK OWNERSHIP INFORMATION
of common units that will vary based on the value of the common units upon conversion and the conversion threshold for the Class O LTIP units. Common units are generally redeemable by the holder for cash or, at our election, on a | |
(2) | The total number of shares outstanding used in |
Based on information provided on a Schedule13G/A filed with the SEC on | |
| |
(4) | Based on information provided on a Schedule13G/A filed with the SEC on |
(5) | Based on information provided on a Schedule13G filed with the SEC on February14,2019, as of December31,2018, by T. Rowe Price Associates, Inc. T. Rowe Price Associates, Inc. reported sole voting power with respect to2,253,769shares and sole dispositive power with respect to6,931,152shares. The business address for |
(6) | Based on information provided on a Schedule13G filed with the SEC on February14,2019, as of December31,2018, by Boston Partners. Boston Partners reported sole voting power with respect to5,794,034shares, shared voting power with respect to8,782shares and sole dispositive power with respect to6,430,873shares. The business address for Boston Partners is One Beacon Street,30th Floor, |
60 SL Green Realty Corp.
STOCK OWNERSHIP INFORMATION
Based on information provided on a Schedule13G filed with the SEC on February13,2019, as of December31,2018, by State Street Corporation. State Street Corporation reported shared voting power with respect to4,601,050shares and shared dispositive power with respect to5,099,878shares. The business address for State Street Corporation is One Lincoln Street, Boston, MA02111. | |
(8) | Based on information provided on a Schedule13G filed with the SEC on February13,2019, as of December31,2018, jointly by Morgan Stanley and Morgan Stanley Investment Management Inc., a wholly owned subsidiary of Morgan Stanley. Morgan Stanley and Morgan Stanley Investment Management Inc. reported shared voting power with respect to3,304,970shares and shared dispositive power with respect to4,539,688shares. The business address for Morgan Stanley and Morgan Stanley Investment Management Inc. is1585Broadway New York, NY10036. |
(9) | Includes14,500shares of our common stock subject to options exercisable within60days of |
| |
| |
| |
(13) | Includes, only under the “Number of Shares and Units Beneficially Owned” column,11,484phantom units. |
(14) | Includes, only under the “Number of Shares and Units Beneficially Owned” column,786,645common units,167,134LTIP units and3,214phantom units. |
(15) | Includes100,000shares of our common stock subject to options exercisable within60days of |
| |
| |
| |
| |
Includes20,500shares of our common stock subject to options exercisable within60days of | |
| |
(19) | Includes an aggregate of352,302shares of common stock and212,500shares of common stock underlying exercisable stock options. Also includes, only under the “Number of Shares and Units Beneficially Owned” column,786,645common units,2,072,584LTIP units |
62 SL Green Realty Corp.
STOCK OWNERSHIP INFORMATION
Series I Preferred Stock
The following table sets forth the beneficial ownership of our Series I Cumulative Redeemable Preferred Stock, $0.01par value, as of March31,2019, for (i) each of our directors, (ii) each of our named executive officers who is not a director and (iii) our directors and executive officers as a group. None of our executive officers or directors own any shares of our Series I Cumulative Redeemable Preferred Stock except as set forth below. As of March31,2019, there were9,200,000shares of our Series I Cumulative Redeemable Preferred Stock.
Series I Cumulative Redeemable PreferredStock | ||||
Name** | Number of Shares Beneficially Owned | Percent of Outstanding | ||
Matthew J. DiLiberto | 4,000 | * | ||
Marc Holliday | 96,780 | 1.05% | ||
Andrew S. Levine | 5,000 | * | ||
All Directors and Executive Officers as a Group (11Persons) | 105,780 | 1.15% |
* | Less than1%. |
Section 16(a) Beneficial Ownership Reporting Compliance |
Section 16(a)Section16(a) of the Securities Exchange Act of 1934,of1934, as amended, requires our executive officers and directors and persons who own more than 10%than10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC and the NYSE. Officers, directors and persons who own more than 10%than10% of a registered class of our equity securities are required by SEC regulation to furnish us with copies of all Section 16(a)Section16(a) forms that they file. To our knowledge, based solely on review of the copies of such reports and any amendments thereto furnished to us during or with respect to our most recent fiscal year, all Section 16(a)Section16(a) filing requirements applicable to our executive officers, directors and persons who own more than 10%than10% of a registered class of our equity securities were satisfied.satisfied, with the exception of (i) Mr. Levine who inadvertently failed to timely file a Form4relating to a conversion of LTIP units on May8,2018, which was subsequently filed on January10,2019and (ii) Mr. Levy who inadvertently failed to timely file a Form4relating to a sale of common stock on August22,2018, which was subsequently filed on September13,2018.
2018 Proxy2019Proxy Statement 6163
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Policies and Procedures With Respect to Related Party Transactions
All related party transactions (generally, transactions involving amounts exceeding $120,000 in$120,000in which directors and executive officers or their immediate family members, or stockholders owning 5%owning5% of more of our outstanding common stock have an interest) are subject to approval or ratification in accordance with the procedures described below.
Our Nominating and Corporate Governance Committee reviews the material facts of all related party transactions and either approves or disapproves the entry into such related party transaction. If advance approval of a related party transaction is not feasible, then the related party transaction will be considered and, if our Nominating and Corporate Governance Committee determines it to be appropriate, ratified, at the next regularly scheduled meeting of our Nominating and Corporate Governance Committee. In determining whether to approve or ratify a related party transaction, our Nominating and Corporate Governance Committee takes into account, among other factors it deems appropriate, whether the related party transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the transaction.
No director may participate in any discussion or approval of a related party transaction for which he or she is a related party, except that the director must provide all material information concerning the related party transaction to our Nominating and Corporate Governance Committee.
If a related party transaction will be ongoing, our Nominating and Corporate Governance Committee may establish guidelines for our management to follow in its ongoing dealings with the related party. Thereafter, our Nominating and Corporate Governance Committee, on at least an annual basis, reviews and assesses ongoing relationships with such related party to see that our management is in compliance with our Nominating and Corporate Governance Committee’s guidelines and that such related party transaction remains appropriate.
Related party transactions are disclosed in our SEC filings.
One Vanderbilt Investment
In December 2016, we entered into agreements with entities owned and controlled by Messrs. Holliday and Mathias, pursuant to which they agreed to make an investment in our One Vanderbilt project at appraised fair market value for the interests acquired. We entered into these agreements in order to further strengthen the alignment of the interests of Messrs. Holliday and Mathias with those of our company in the successful completion and stabilization of this long-term project.
Pursuant to these agreements, the entities owned and controlled by Messrs. Holliday and Mathias agreed to purchase interests in the One Vanderbilt project that will entitle them to receive approximately 1.50% – 1.80% and 1.00% – 1.20%, respectively, of the profit generated from this project in excess of capital contributions. Fifty percent of these interests were purchased on December 31, 2016 and the remaining fifty percent were purchased on December 31, 2017. The entities owned and controlled by Messrs. Holliday and Mathias paid $1,440,000 and $960,000, respectively, which equals the fair market value of the interests acquired as of the date the investment agreements were entered into as determined by an independent third party appraisal that we obtained.
The entities owned and controlled by Messrs. Holliday and Mathias cannot monetize their interests until after the stabilization of the project, estimated to occur in 2023. Thereafter, such entities may require us to repurchase 50% of the interests within three years after stabilization and 100% following such period. In addition, the agreement calls for us to repurchase these interests in the event of a sale of One Vanderbilt or a transactional change of control of our company. We also have the right to repurchase these interests on the seven-year anniversary of the stabilization of the project or, prior to the stabilization of the project, upon the occurrence of certain separation events relating to each of Messrs. Holliday’s and Mathias’s continued service with us. The price paid upon an exercise of the various rights described above will equal the liquidation value of the interests at the time, with the value of One Vanderbilt being based on its sale price, if applicable, or fair market value as determined by an independent third party appraiser. Messrs. Holliday and Mathias generally have the right to elect whether to receive any amounts paid upon the repurchase of these interests in cash or common units of our operating partnership. In addition, upon the exercise of the rights described above, we may elect to pay the purchase price in shares of our common stock in lieu of paying in cash, subject to a cap on the maximum number of common units and shares of our common stock that we will be required to pay in these circumstances. We have agreed to provide resale registration rights to the entities owned and controlled by Messrs. Holliday and Mathias for any shares of our common stock that are issued.
62 SL Green Realty Corp.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In accordance with our policies and procedures with respect to related party transactions described above, this investment was reviewed in detail and approved by our Nominating and Corporate Governance Committee. In addition, this investment was also reviewed by the Chairman of the Board, our Lead Independent Director and the Chair of our Audit Committee as well as the other members of the Board and was approved by the Board as well as our Nominating and Corporate Governance Committee.
Cleaning/Security/Messenger and Restoration Services
Through Alliance Building Services, or Alliance, First Quality Maintenance, L.P., or First Quality, provides cleaning, extermination and related services, Classic Security LLC provides security services, Bright Star Couriers LLC provides messenger services, and Onyx Restoration Works provides restoration services with respect to certain properties owned by us. Alliance is partially owned by Gary Green, a son of Stephen L. Green, a director and the chairmanformer Chairman and current Chairman Emeritus of the Board. In addition, First Quality has the non-exclusive opportunity to provide cleaning and related services to individual tenants at our properties on a basis separately negotiated with any tenant seeking such additional services. A subsidiary through which we realize income from management, leasing and construction contracts with third parties and joint venture properties has entered into an arrangement with Alliance whereby it will receive profit participation above a certain threshold for services provided by Alliance to certain tenants at certain buildings above the base services specified in their lease agreements. Income earned from profit participation was approximately $3.9 million, $3.5 million$3.9million, $3.9million and $3.8 million$3.5million for the years ended December 31, 2017, 2016 and 2015,December31,2018,2017and2016, respectively. We also recorded expenses of approximately $22.6 million, $23.4 million$18.8million, $22.6million and $21.3 million$23.4million for the years ended December 31, 2017, 2016 and 2015,December31,2018,2017and2016, respectively, for these services (excluding services provided directly to tenants).
Management Fees
S.L. Green Management Corp., a consolidated entity, receives property management fees from an entity in which Stephen L. Green owns an interest. We received management fees from such entity of approximately $0.5 million, $0.7 million$0.6million, $0.5million and $0.5 million$0.7million for the years ended December 31, 2017, 2016 and 2015,December31,2018,2017and2016, respectively.
Marketing Services
A-List Marketing, LLC, or A-List, provided marketing services to us. Deena Wolff, a sister of Marc Holliday, our Chief Executive Officer and Chairman, is the founder of A-List. We recorded expenses of approximately $0.3 million$0.2million, $0.3million and $0.3million for each of the years ended December 31, 2017, 2016 and 2015,December31,2018,2017and2016, respectively, for these services.
Other
Amounts due from related parties at December 31, 2017 and 2016 consisted of the following (in thousands):
2017 | 2016 | |||||
Due from joint ventures | $ | 15,025 | $ | 1,240 | ||
Other | 8,014 | 14,616 | ||||
Related party receivables | $ | 23,039 | $ | 15,856 |
2018 Proxy Statement64 63SL Green Realty Corp.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Chairman Emeritus Agreement
On December21,2018, we and Stephen L. Green, the former Chairman of the Company, entered into a chairman emeritus agreement in connection with Mr. Green’s retirement as Chairman of the Company and transition into the role of Chairman Emeritus. Under the chairman emeritus agreement, Mr. Green will provide services to us as Chairman Emeritus from January17,2019until December31,2019, subject to successive one-year renewal periods. For these services, Mr. Green will receive a monthly retainer of $54,167, in addition to any fees to which Mr. Green is entitled as a non-employee director. We will also continue to provide Mr. Green with perquisites under the chairman emeritus agreement consistent with those he previously received as Chairman. In addition, Mr. Green will be entitled, to the extent eligible, to continue to participate in our group health insurance at the expense of the Company or, if Mr. Green is not eligible, monthly cash payments equal to the amount payable by Mr. Green under COBRA for continued participation in our group health insurance under COBRA.
2019Proxy Statement 65
These proxy materials are being made available in connection with the solicitation of proxies by the Board of Directors, or the Board, of SL Green Realty Corp., a Maryland corporation, for use at our 2018 annualour2019annual meeting of stockholders to be held on Thursday, May 31, 2018 at 10:00 a.m.May30,2019at10:00a.m., local time, at the Andaz Hotel, 485 5thConvene (The Club Room),237Park Avenue, (at 41st Street), 2nd Floor, New York, NY 10017,New York,10017, or at any postponement or adjournment of the annual meeting.
Questions and Answers about the Annual Meeting |
Who is entitled to vote at the annual meeting?
Holders of record of our common stock, $0.01 par$0.01par value per share, at the close of business on March 29, 2018,March29,2019, the record date for the annual meeting, are entitled to receive notice of the annual meeting and to vote at the annual meeting. If you are a holder of record of our common stock as of the record date, you may vote the shares that you held on the record date even if you sell such shares after the record date. Each outstanding share as of the record date entitles its holder to cast one vote for each matter to be voted upon and, with respect to the election of directors, one vote for each director to be elected. Stockholders do not have the right to cumulate voting for the election of directors.
What is the purpose of the annual meeting?
At the annual meeting, you will be asked to vote on the following proposals:
● | Proposal1:the election of the |
● | Proposal2:the approval of an advisory resolution approving the compensation of our named executive officers as disclosed in this proxy statement pursuant to |
● | Proposal3:the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending |
You also may be asked to consider and act upon any other matters that may properly be brought before the annual meeting and at any adjournments or postponements thereof.
What constitutes a quorum?
The presence, in person or by proxy, of holders of a majority of the total number of outstanding shares entitled to vote at the annual meeting is necessary to constitute a quorum for the transaction of any business at the annual meeting. As of the record date, there were 90,190,440 shareswere84,327,633shares outstanding and entitled to vote at the annual meeting.
Each share of our common stock outstanding on the record date is entitled to one vote on each matter properly submitted at the annual meeting and, with respect to the election of directors, one vote for each director to be elected. Abstentions and “broker non-votes” (i.e., shares represented at the meeting held by brokers, as to which instructions have not been received from the beneficial owners or persons entitled to vote such shares and with respect to which, on a particular matter, the broker does not have discretionary voting power to vote such shares) will be counted for purposes of determining whether a quorum is present for the transaction of business at the annual meeting.
What vote is required to approve each proposal?
For Proposal 1,Proposal1, a majority of all the votes cast with respect to a nominee’s election is required for such nominee to be elected to serve on the Board. This means that the number of votes cast “for” a nominee must exceed the number of votes cast “against” such nominee. Abstentions and broker non-votes are not counted as a vote cast either “for” or “against” a nominee, and therefore, will have no effect on the election of directors. For more information on the operation of our majority voting standard in director elections, see the section entitled “Our Board of Directors and Corporate Governance—Corporate Governance—Majority Voting Standard and Director Resignation Policy.”
A majority of all of the votes cast with respect to the proposal is required for approval of each of Proposals 2 and 3.
Proposals2and3. In respect of Proposals 2 and 3,Proposals2and3, abstentions and broker non-votes are not counted as votes cast, and therefore will have no effect on the votes for these proposals.
6466 SL Green Realty Corp.
OTHER INFORMATION
Can I change my vote after I submit my proxy card?
If you cast a vote by proxy, you may revoke it at any time before it is voted by:
● | filing a written notice revoking the proxy with our Secretary at our address |
● | properly signing and forwarding to us a proxy with a later date |
● | appearing in person and voting by ballot at the annual meeting |
If you attend the annual meeting, you may vote in person whether or not you previously have given a proxy, but your presence (without further action) at the annual meeting will not constitute revocation of a previously given proxy. Unless you have received a legal proxy to vote the shares, if you hold your shares through a bank, broker or other nominee, that is, in “street name,” only that bank, broker or other nominee can revoke your proxy on your behalf.
You may revoke a proxy for shares held by a bank, broker or other nominee by submitting new voting instructions to the bank, broker or other nominee or, if you have obtained a legal proxy from the bank, broker or other nominee giving you the right to vote the shares at the annual meeting, by attending the annual meeting and voting in person.
How do I vote?
Voting in Person at the Annual Meeting.If you hold your shares in your own name as a holder of record with our transfer agent, Computershare, and attend the annual meeting, you may vote in person at the annual meeting. If your shares are held by a bank, broker or other nominee, that is, in “street name,” and you wish to vote in person at the annual meeting, you will need to obtain a “legal proxy” from the bank, broker or other nominee that holds your shares of record.
Voting by Proxy.You should submit your proxy or voting instructions as soon as possible. You can vote by valid proxy received by telephone, electronically via the Internet or by mail. The deadline for voting by telephone or electronically via the Internet is11:59p.m., Eastern Daylight Time, on May30,2018.May29,2019. If voting by mail, you must:
● | indicate your instructions on the proxy |
● | date and sign the proxy |
● | promptly mail the proxy in the enclosed envelope |
● | allow sufficient time for the proxy to be received before the date of the annual meeting |
If your shares are held in “street name” such as in a stock brokerage account, by a bank or other nominee, please follow the instructions you received from your broker or with respect to the voting of your shares.
If you have any questions regarding how to authorize your proxy by telephone or via the Internet, please call MacKenzie Partners, Inc., toll-free at (800)322-2885or collect at (212)929-5500.
Even if you plan to attend the annual meeting, we recommend that you submit a proxy to vote your shares in advance so that your vote will be counted if you later are unable to attend the annual meeting.
How is my vote counted?
If you authorize your proxy to vote your shares electronically via the Internet or by telephone, or, if you received a proxy card by mail and you properly marked, signed, dated and returned it, the shares that the proxy represents will be voted in the manner specified on the proxy. If no specification is made, your shares will be voted “for” the election of the nominees for directors named in this proxy statement, “for” advisory approval of thecompensationthe compensation of our named executive officers, and “for” ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December31,2018.December31,2019. It is not anticipated that any matters other than those set forth in this proxy statement will be presented at the annual meeting. If other matters are presented, proxies will be voted in accordance with the discretion of the proxy holders.
How does the Board recommend that I vote on each of the proposals?
The Board recommends that you vote:
● | FORProposal1: the election of John H. Alschuler, Edwin T. Burton, III, Lauren B. Dillard and Stephen L. Green, Craig M. Hatkoff and Andrew W. Mathias as directors to serve on the Board for a one-year term and until their successors are duly elected and qualify |
2019Proxy Statement 67
OTHER INFORMATION
● | FORProposal2: the approval of an advisory resolution approving the compensation of our named executive officers as disclosed in this proxy statement pursuant to Item402of Regulation S-K |
● | FORProposal3: the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending |
2018Proxy Statement 65
OTHER INFORMATION
What other information should I review before voting?
Our2017annualOur2018annual report, including financial statements for the fiscal year ended December31,2017,December31,2018, is being made available to you along with this proxy statement. You may obtain, free of charge, copies of our2017annualour2018annual report and our Annual Report on Form10-K for the fiscal year ended December31,2017,December31,2018, which contains additional information about the Company, on our website at http://www.slgreen.com or by directing your requestinrequest in writing to SL Green Realty Corp.,420Lexington Avenue, New York, New York10170-1881, Attention: Investor Relations. The2017annualThe2018annual report and the Annual Report on Form10-K, however, are not part of the proxy solicitation materials, and the information found on, or accessible through, our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document we file with or furnish to the SEC.
How do I change how I receive proxy materials in the future?
For this year’s meeting, stockholders will receive paper copies of the proxy materials by mail and will not receive a Notice of Internet Availability of Proxy Materials. For future meetings, stockholders may elect to receive links to proxy materials by e-mail or to receive a paper copy of the proxy materials and a paper proxy card by mail, in each case, instead of receiving a Notice of Internet Availability of Proxy Materials by mail, as applicable. If you elect to receive proxy materials by e-mail, you will not receive proxy materials in the mail (including, if applicable, a Notice of Internet Availability of Proxy Materials). Instead, you will receive an e-mail with links to proxy materials and online voting. If you received a paper copy of the proxy materials in the mail, you can eliminate all such paper mailings (including, if applicable, a Notice of Internet Availability of Proxy Materials) in the future by electing to receive an e-mail that will provide Internet links to these documents.
Opting to receive all future proxy materials online will save us the cost of producing and mailing such documents to you and help us conserve natural resources. You can change your election by directing your request in writing to SL Green Realty Corp.,420Lexington Avenue, New York, New York10170-1881, Attention: Investor Relations, by sending a blank e-mail with the16-digit control number on your proxy card to sendmaterial@proxyvote.com, via the internet at http://www.proxyvote.com or by telephone at (800)579-7639. Your election will remain in effect until you change it.
No person is authorized on our behalf to give any information or to make any representations with respect to the proposals other than the information and the representations contained in this proxy statement, and, if given or made, such information and/or representations must not be relied upon as having been authorized.
Other Matters |
Solicitation of Proxies
We will pay the cost of solicitation of proxies. Our directors, officers and employees may solicit proxies personally, by telephone, via the Internet or by mail without additional compensation for such activities. We also will request persons, firms and corporations holding shares in their names or in the names of their nominees, which arebeneficiallyare beneficially owned by others, to send a Proxy Statement to and obtain proxies from such beneficial owners. We will reimburse such holders for their reasonable expenses. In addition, we intend to utilize the proxy solicitation services of MacKenzie Partners, Inc. at an aggregate estimated cost of $10,000plus out-of-pocket expenses.
Stockholder Proposals and Nominations
Proposals for Inclusion in our 20192020 Proxy Materials
SEC rules permit stockholders to submit proposals to be included in our proxy materials if the stockholder and the proposal satisfy the requirements specified in Rule14a-8under the Exchange Act. For a stockholder proposal to be considered for inclusion in our proxy materials for the2019annualthe2020annual meeting, the proposal must be delivered to our Secretary at the address provided below by December31,2018.December27,2019.
68 SL Green Realty Corp.
OTHER INFORMATION
Director Nominations for Inclusion in our 20192020 Proxy Materials (Proxy Access)
Our proxy access bylaw permits a stockholder (or a group of up to20stockholders) owning3% or more of our outstanding common stock continuously for at least three years to nominate and include in the Company’s proxy materials director candidates constituting up to the greater of two individuals or20% of the Board, if the nominating stockholder(s) and the nominee(s) satisfy the requirements specified in our bylaws. For the2019annualthe2020annual meeting,
66 SL Green Realty Corp.
OTHER INFORMATION
notice of a proxy access nomination must be delivered to our Secretary at the address provided below no later than December31,2018andDecember27,2019and no earlier than December1,2018.November27,2019.
Other Proposals or Nominations to be brought before our 20192020 Annual Meeting
Our bylaws permit a stockholder to propose items of business and/or nominate director candidates that are not intended to be included in our proxy materials if the stockholder complies with the procedures set forth in our bylaws. For the2019annualthe2020annual meeting, notice of such proposals or nominations must be delivered to our Secretary at the address provided below no later than March2,2019andMarch1,2020and no earlier than January31,2019.January31,2020.
If the Company moves the2019annualthe2020annual meeting to a date that is more than25days before or after the date which is the one year anniversary of this year’s annual meeting date (i.e., May31,2019)May30,2020), the Company must receive such notice no later than the close of business on the10th the10thday following the earlier of the day on which the Company makes a public announcement of the meeting date or they day on which notice of the meeting date is first distributed to stockholders.
Address for Submission of Notices and Additional Information
All stockholder nominations of individuals for election as directors or proposals of other items of business to be considered by stockholders at the2019annualthe2020annual meeting (whether or not intended for inclusion in our proxy materials) must be submitted in writing to SL Green Realty Corp.,420Lexington Avenue, New York, New York10170-1881, Attention: Andrew S. Levine, Secretary.
In addition, both the proxy access and the advance notice provisions of our bylaws require a stockholder’s notice of a nomination or other item of business to include certain information. Director nominees must also meet certain eligibility requirements. Any stockholder considering introducing a nomination or other item of business should carefully review our bylaws.
Householding of Proxy Materials
The SEC adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for proxy materials with respect to two or more stockholders sharing the same address by delivering a single proxy statement, annual report or Notice of Internet Availability of Proxy Materials, as applicable, addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are our stockholders will be “householding” our proxy materials. A single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that such broker will be “householding”communications, including the proxy materials, to your address, “householding” will continue until you are notified otherwise or until you revoke your consent.
Stockholders who currently receive only one copy of the proxy materials at their address and would like to receive additional copies and/or stockholders who no longer wish to participate in “householding” and would prefer to receive separate proxy materials in the future should direct their request either to their broker or to the Company in writing to SL Green Realty Corp.,420Lexington Avenue, New York, New York10170-1881, Attention: Investor Relations or by telephone at (212)594-2700.
Stockholders who currently receive multiple copies of the proxy materials at their address and would like to request “householding” of their future communications should direct their request either to their broker or to the Company at the address of telephone number above.
By Order of the Board of Directors
Andrew S. Levine
Secretary
New York, New York
April30,201825,2019
2018Proxy2019Proxy Statement 6769
APPENDIX A:
INFORMATION REGARDING CERTAIN
FINANCIAL MEASURES
Below are reconciliations of net income attributable to our stockholders to Normalized FFO per share and FFO per share for the yearstwelve months ended December31,2017,2016,2015,2014and2013(December31,2018,2017,2016,2015and2014(amounts in thousands, except per share data).
Year Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
FFO Reconciliation: | |||||||||||||||||||
Net income attributable to SL Green common stockholders | $ | 86,424 | $ | 234,946 | $ | 269,132 | $ | 503,104 | $ | 101,330 | |||||||||
Add: | |||||||||||||||||||
Depreciation and amortization | 403,320 | 821,041 | 560,887 | 371,610 | 324,461 | ||||||||||||||
Discontinued operations depreciation adjustments | — | — | — | 5,581 | 16,443 | ||||||||||||||
Joint venture depreciation and noncontrolling interest adjustments | 102,334 | 69,853 | 34,226 | 33,487 | 51,266 | ||||||||||||||
Net (loss) income attributable to noncontrolling interests | (11,706 | ) | 17,780 | 26,408 | 25,057 | 13,652 | |||||||||||||
Less: | |||||||||||||||||||
Gain on sale of real estate and discontinued operations, net | 73,241 | 238,116 | 190,096 | 163,059 | 14,900 | ||||||||||||||
Equity in net gain on sale of interest in unconsolidated joint venture/real estate | 16,166 | 44,009 | 15,844 | 123,253 | 3,601 | ||||||||||||||
Purchase price fair value adjustment | — | — | 40,078 | 67,446 | (2,305 | ) | |||||||||||||
Depreciable real estate reserve | (178,520 | ) | (10,387 | ) | (19,226 | ) | — | (2,150 | ) | ||||||||||
Depreciation on non-rental | |||||||||||||||||||
real estate assets | 2,191 | 2,027 | 2,036 | 2,045 | 1,509 | ||||||||||||||
Funds From Operations attributable to SL Green common stockholders and noncontrolling interests | $ | 667,294 | $ | 869,855 | $ | 661,825 | $ | 583,036 | $ | 491,597 | |||||||||
FFO attributable to the write-off of accounting related balances and the 2017 portion of the lease termination fee related to the sale of 388-390 Greenwich Street to Citigroup, Inc. in2016 | 126,905 | ||||||||||||||||||
Normalized Funds From Operations attributable to SL Green common stockholders and noncontrolling interests | $ | 742,950 | |||||||||||||||||
Diluted weighted average shares and units outstanding | 103,403 | 104,880 | 103,735 | 99,696 | 95,266 | ||||||||||||||
Normalized FFO / FFO per share | $ | 6.45 | $ | 7.08 | $ | 6.38 | $ | 5.85 | $ | 5.16 |
Twelve Months Ended December 31, | |||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
FFO Reconciliation: | |||||||||||||||||||
Net income attributable to SL Green common stockholders | $ | 232,312 | $ | 86,424 | $ | 234,946 | $ | 269,132 | $ | 503,104 | |||||||||
Add: | |||||||||||||||||||
Depreciation and amortization | 279,507 | 403,320 | 821,041 | 560,887 | 371,610 | ||||||||||||||
Discontinued operations depreciation adjustments | — | — | — | — | 5,581 | ||||||||||||||
Joint venture depreciation and noncontrolling interest adjustments | 187,147 | 102,334 | 69,853 | 34,226 | 33,487 | ||||||||||||||
Net income (loss) attributable to noncontrolling interests | 12,210 | (11,706 | ) | 17,780 | 26,408 | 25,057 | |||||||||||||
Less: | |||||||||||||||||||
(Loss) gain on sale of real estate and discontinued operations, net | (30,757 | ) | 73,241 | 238,116 | 190,096 | 163,059 | |||||||||||||
Equity in net gain on sale of interest in unconsolidated joint venture/real estate | 303,967 | 16,166 | 44,009 | 15,844 | 123,253 | ||||||||||||||
Purchase price and other fair value adjustments | 57,385 | — | — | 40,078 | 67,446 | ||||||||||||||
Depreciable real estate reserves and impairment | (227,543 | ) | (178,520 | ) | (10,387 | ) | (19,226 | ) | — | ||||||||||
Depreciation on non-rental real estate assets | 2,404 | 2,191 | 2,027 | 2,036 | 2,045 | ||||||||||||||
Funds From Operations attributable to SL Green common stockholders and noncontrolling interests | $ | 605,720 | $ | 667,294 | $ | 869,855 | $ | 661,825 | $ | 583,036 | |||||||||
FFO attributable to the early repayment of the debt at One Madison Avenue in2018 | (14,889 | ) | |||||||||||||||||
FFO attributable to the write-off of accounting related balances and the 2017 portion of the lease termination fee related to the sale of 388-390 Greenwich Street to Citigroup, Inc. in2016 | 126,905 | ||||||||||||||||||
Normalized Funds From Operations attributable to SL Green common stockholders and noncontrolling interests | $ | 620,609 | $ | 742,950 | |||||||||||||||
Diluted weighted average shares and units outstanding | 91,530 | 103,403 | 104,880 | 103,735 | 99,696 | ||||||||||||||
Normalized FFO / FFO per share | $ | 6.78 | $ | 6.45 | $ | 7.08 | $ | 6.38 | $ | 5.85 |
2018Proxy2019Proxy Statement A-1
APPENDIX A: INFORMATION REGARDING CERTAIN FINANCIAL MEASURES
Below are reconciliations of income from continuing operations before equity in net income of unconsolidated joint ventures, noncontrolling interests and discontinued operations to operating income, and combined same-store cash net operating income and same-store cash net operating income excluding lease termination income for the yearstwelve months ended December31,2017and2016(amountsDecember 31, 2018 and 2017 (amounts in thousands, except per share data)thousands).
Reconciliation of 2017 and 2016
Twelve Months Ended December31, | ||||||||
2017 | 2016 | |||||||
Operating Income and Same-store NOI Reconciliation | ||||||||
Net income | $ | 101,069 | $ | 278,911 | ||||
Equity in net gain on sale of interest in unconsolidated joint venture/real estate | (16,166 | ) | (44,009 | ) | ||||
Gain on sale of real estate, net | (73,241 | ) | (238,116 | ) | ||||
Depreciable real estate reserves | 178,520 | 10,387 | ||||||
(Gain) loss on sale of marketable securities | (3,262 | ) | 83 | |||||
Depreciation and amortization | 403,320 | 821,041 | ||||||
Interest expense, net of interest income | 257,045 | 321,199 | ||||||
Amortization of deferred financing costs | 16,498 | 24,564 | ||||||
Operating income | $ | 863,783 | $ | 1,174,060 | ||||
Equity in net income from unconsolidated joint ventures | (21,892 | ) | (11,874 | ) | ||||
Marketing, general and administrative expense | 100,498 | 99,759 | ||||||
Transaction related costs, net | (1,834 | ) | 7,528 | |||||
Investment income | (193,871 | ) | (213,008 | ) | ||||
Non-building revenue | (23,781 | ) | (4,937 | ) | ||||
Net operating income (NOI) | $ | 722,903 | $ | 1,051,528 | ||||
Equity in net income (loss) from unconsolidated joint ventures | 21,892 | 11,874 | ||||||
SLG share of unconsolidated JV depreciation and amortization | 126,456 | 83,346 | ||||||
SLG share of unconsolidated JV interest expense, net of interest income | 96,554 | 72,015 | ||||||
SLG share of unconsolidated JV amortization of deferred financing costs | 8,220 | 8,309 | ||||||
SLG share of unconsolidated JV loss on early extinguishment of debt | 3,950 | 972 | ||||||
SLG share of unconsolidated JV transaction related costs | 110 | 3,116 | ||||||
SLG share of unconsolidated JV investment income | (16,777 | ) | (16,250 | ) | ||||
SLG share of unconsolidated JV non-building revenue | (4,989 | ) | (7,179 | ) | ||||
NOI including SLG share of unconsolidated JVs | $ | 958,319 | $ | 1,207,731 | ||||
NOI from other properties/affiliates | (216,513 | ) | (466,762 | ) | ||||
Same-Store NOI | $ | 741,806 | $ | 740,969 | ||||
Ground lease straight-line adjustment | 2,096 | 2,312 | ||||||
Straight-line and free rent | (25,276 | ) | (30,231 | ) | ||||
Rental income - FAS141 | (17,144 | ) | (19,802 | ) | ||||
Joint Venture straight-line and free rent | (10,195 | ) | (15,517 | ) | ||||
Joint Venture rental income- FAS 141 | (1,852 | ) | (1,723 | ) | ||||
Same-store cash NOI | $ | 689,435 | $ | 676,008 |
Twelve Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
Operating Income and Same-store cash NOI Reconciliation: | ||||||||
Net income | $ | 270,856 | $ | 101,069 | ||||
Equity in net gain on sale of interest in unconsolidated joint venture/real estate | (303,967 | ) | (16,166 | ) | ||||
Purchase price and other fair value adjustments | (57,385 | ) | — | |||||
Loss (gain) on sale of real estate, net | 30,757 | (73,241 | ) | |||||
Depreciable real estate reserves and impairment | 227,543 | 178,520 | ||||||
Gain on sale of marketable securities | — | (3,262 | ) | |||||
Depreciation and amortization | 279,507 | 403,320 | ||||||
Interest expense, net of interest income | 208,669 | 257,045 | ||||||
Amortization of deferred financing costs | 12,408 | 16,498 | ||||||
Operating income | $ | 668,388 | $ | 863,783 | ||||
Equity in net income from unconsolidated joint ventures | (7,311 | ) | (21,892 | ) | ||||
Marketing, general and administrative expense | 92,631 | 100,498 | ||||||
Transaction related costs | 1,099 | (1,834 | ) | |||||
Investment income | (201,492 | ) | (193,871 | ) | ||||
Loan loss and other investment reserves, net of recoveries | 6,839 | — | ||||||
Non-building revenue | (22,099 | ) | (23,781 | ) | ||||
Loss on early extinguishment of debt | 17,083 | — | ||||||
Net operating income (NOI) | $ | 555,138 | $ | 722,903 | ||||
Equity in net income from unconsolidated joint ventures | 7,311 | 21,892 | ||||||
SLG share of unconsolidated JV depreciation and amortization | 187,962 | 126,456 | ||||||
SLG share of unconsolidated JV interest expense, net of interest income | 144,663 | 96,554 | ||||||
SLG share of unconsolidated JV amortization of deferred financing costs | 6,315 | 8,220 | ||||||
SLG share of unconsolidated JV loss on early extinguishment of debt | — | 3,950 | ||||||
SLG share of unconsolidated JV transaction related costs | — | 110 | ||||||
SLG share of unconsolidated JV investment income | (12,014 | ) | (16,777 | ) | ||||
SLG share of unconsolidated JV non-building revenue | (3,636 | ) | (4,989 | ) | ||||
NOI including SLG share of unconsolidated JVs | $ | 885,739 | $ | 958,319 | ||||
NOI from other properties/affiliates | (132,124 | ) | (222,715 | ) | ||||
Same-store NOI | $ | 753,615 | $ | 735,604 | ||||
Ground lease straight-line adjustment | 1,803 | 2,096 | ||||||
Joint Venture ground lease straight-line adjustment | 1,031 | 1,078 | ||||||
Straight-line and free rent | (14,747 | ) | (21,701 | ) | ||||
Amortization of acquired above and below-market leases, net | (5,425 | ) | (4,702 | ) | ||||
Joint Venture straight-line and free rent | (12,134 | ) | (14,117 | ) | ||||
Joint Venture amortization of acquired above and below-market leases, net | (5,401 | ) | (13,141 | ) | ||||
Same-store cash NOI | $ | 718,742 | $ | 685,117 | ||||
Lease termination income | (5,218 | ) | (2,215 | ) | ||||
Same-store cash NOI excluding lease termination income | $ | 713,524 | $ | 682,902 |
A-2 SL Green Realty Corp.
APPENDIX A: INFORMATION REGARDING CERTAIN FINANCIAL MEASURES
Notes:
Funds from Operations and Normalized Funds from Operations
Funds from Operations, or FFO, is a widely recognized non-GAAP financial measure of REIT performance. We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or Nareit, which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the Nareit definition, or that interpret the Nareit definition differently than we do. The revised White Paper on FFO approved by the Board of Governors of Nareit in April2002, and as subsequently amended, defines FFO as net income (loss) (computed in accordance with Generally Accepted Accounting Principles, or GAAP), excluding gains (or losses) from sales of properties, debt restructurings and real estate related impairment charges, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.
We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, particularly those that own and operate commercial office properties. We also use FFO as one of several criteria to determine performance-based bonuses for members of our senior management. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions, and extraordinary items,real estate related impairment charges, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, and interest costs, providing perspective not immediately apparent from net income. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of our financial performance or to cash flow fromoperatingfrom operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.
For certain periods, we also present Normalized FFO, defined as FFO excluding the impact of one discrete transactiontransactions (set forth in the table above) that increased FFO in2016,in2016and decreased FFO in2018, which we present to enhance the comparability of our FFO across periods.
Same-Store Cash Net Operating Income
Net Operating Income, or NOI, is a non-GAAP financial measure that is calculated as operating income before transaction related costs, gains/losses on early extinguishment of debt, marketing general and administrative expenses and non-real estate revenue. Cash NOI is calculated by subtracting free rent (net of amortization), straight-line rent, FAS141rental incomeand amortization of acquired above and below-market leases, net from NOI, while adding ground lease straight-line adjustment and the allowance for straight-line tenant credit loss.
We present NOI and Cash NOI because we believe that these measures, when taken together with the corresponding GAAP financial measures and our reconciliations, provide investors with meaningful information regarding the operating performance of our properties. When operating performance is compared across multiple periods, the investor is provided with information not immediately apparent from net income that is determined in accordance with GAAP. NOI and Cash NOI provide information on trends in the revenue generated and expenses incurred in operating our properties, unaffected by the cost of leverage, straight-line adjustments, depreciation, amortization, and other net income components. We use these metrics internally as performance measures. None of these measures is an alternative to net income (determined in accordance with GAAP) and same-store performance should not be considered an alternative to GAAP net income performance.
Same-Store refers to properties owned in the same manner during both the current and prior year, and excludesexcluding development properties prior to those properties beingthat are not stabilized for both the current and prior year.
SLG Share of Unconsolidated JV is computed by multiplying the referenced line item by the Company's percentage ownership in the respective joint ventures and may not accurately depict the legal and economic implications of holding a non-controlling interest in the joint ventures.
2018Proxy2019Proxy Statement A-3
SL GREEN REALTY CORP.
420 LEXINGTON AVE.
NEW YORK, NY 10170
AUTHORIZE YOUR PROXY BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
AUTHORIZE YOUR PROXY BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
AUTHORIZE YOUR PROXY BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||||
KEEP THIS PORTION FOR YOUR RECORDS | ||||
DETACH AND RETURN THIS PORTION ONLY |
The Board of Directors recommends you vote FOR the following: |
| ||||||||||
1. | Election of Directors | ||||||||||
Nominees: | For | Against | Abstain | ||||||||
1a. | John H. Alschuler | ☐ | ☐ | ☐ | |||||||
1b. | Edwin T. Burton, III | ☐ | ☐ | ☐ | |||||||
1c. | Lauren B. Dillard | ☐ | ☐ | ☐ | |||||||
Stephen L. Green | ☐ | ☐ | ☐ | ||||||||
1e. | Craig M. Hatkoff | ☐ | ☐ | ☐ | |||||||
1f. | Andrew W. Mathias | ☐ | ☐ | ☐ |
The Board of Directors recommends you vote FOR the following proposals: | For | Against | Abstain | |||||
2. | To approve, on a non-binding advisory basis, our executive compensation. | ☐ | ☐ | ☐ | ||||
3. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, | ☐ | ☐ | ☐ | ||||
4. | To consider and act upon any other matters that may properly be brought before the Annual Meeting and at any adjournments or postponements thereof. | |||||||
The undersigned hereby acknowledge(s) receipt of the Notice of the Annual Meeting of Stockholders, the terms of which are incorporated herein by reference, and revoke(s) any proxy or proxies heretofore given with respect to the Annual Meeting. This proxy may be revoked at any time prior to the time voting is declared closed by giving the corporate secretary of SL Green Realty Corp. written notice of revocation or by a subsequently dated proxy, or by casting a ballot at the Annual Meeting. | ||||||||
This solicitation of proxies is made by and on behalf of the Board.The validity of this proxy is governed by the Maryland General Corporation Law and applicable federal securities laws. This proxy does not revoke any prior powers of attorney except for prior proxies given in connection with the Annual Meeting. | ||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:Meeting
to be Held on May 30, 2019:The Notice and Proxy Statement and Annual Report are available at
www.proxyvote.com.
SL GREEN REALTY CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) hereby appoint(s) Stephen L. GreenMarc Holliday and Andrew S. Levine, or either of them, as proxies, each with the power to appoint his substitute and hereby authorize(s) them to represent and to vote as designated on the reverse side of this ballot all of the shares of Common Stock of SL GREEN REALTY CORP. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at the Andaz Hotel, 485 5thConvene (The Club Room), 237 Park Avenue, (at 41st Street), 2nd Floor, New York, New York 10017 at 10:00 A.M., local time on Thursday, May 31, 201830, 2019 and any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S) AND IN THE DISCRETION OF THE PROXYHOLDER ON ANY OTHER MATTER PROPERLY BROUGHT BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE BOARD OF DIRECTORS' NOMINEES LISTED ON THE REVERSE SIDE HEREOF AND FOR PROPOSALS 2 AND 3.
PLEASE MARK, SIGN AND DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.
Continued and to be signed on reverse side