UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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 Rule14a-6(e)(2)) | |||
| Definitive Proxy Statement | ||||
| ☐ | Definitive Additional Materials | |||
| ☐ | Soliciting Material Pursuant to Rule14a-12 | |||
| Prologis, Inc. | ||||
(Name of Registrant as Specified In Its Charter)
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| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
| Payment of Filing Fee (Check | ||||
| ☒ | No fee required. | |||
| ☐ | Fee paid previously with preliminary materials. | |||
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Notice of 20202022 Annual Meeting of Stockholders
March 20, 202025, 2022
To our stockholders:
I invite you to attend the 20202022 annual meeting of stockholders of Prologis, Inc. at 1:30 p.m. on April 29, 2020 at Pier 1, Bay 1, San Francisco, California 94111.May 4, 2022. Due to the COVID-19 pandemic and to support the health and well-being of our stockholders, directors and employees, our annual meeting will be held in a virtual format only. You will not be able to attend the annual meeting physically.
Items of business. The following items of business will be conducted at our 20202022 annual meeting of stockholders:
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Elect eleven directors to our Board to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. | |
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Advisory vote to approve the company’s executive compensation for | |
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Ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year | ||
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Consider any other matters that may properly come before the meeting and at any adjournments or postponements of the meeting. | |
How to Vote. You can vote your shares by proxy through the Internet, by telephone or by mail using the instructions on the proxy card or you can vote during the virtual annual meeting. Meeting Attendance. To be admitted to the annual meeting at www.virtualshareholdermeeting.com/pld2022, you must enter the control number found on your proxy card or voting instruction form or notice you previously received. You may vote during the annual meeting by following the instructions available on the meeting website during the meeting. Proxy Materials. On or about March Either in printed form by mail or electronically by email, a Notice of Annual Meeting and Internet Availability of Proxy Materials containing instructions on: (a) how to electronically access our If requested or required, printed proxy materials, which will include our On behalf of the Board of Directors, EDWARD S. NEKRITZ Chief Legal Officer, General Counsel and Secretary Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on Record Date. If you were a holder of shares of our common stock at the close of business on March 6, 2020,Record Date. If you were a holder of shares of our common stock at the close of business on March 7, 2022, you are entitled to receive this notice and to vote at the annual meeting and any adjournment(s) or postponement(s) of the annual meeting. How to Vote. You can vote your shares by proxy through the Internet, by telephone or by mail using the instructions on the proxy card. Any proxy may be revoked in the manner described in the accompanying proxy statement at any time prior to its exercise at the annual meeting.Meeting Attendance. If you plan to attend the meeting in person, you must bring proof of current ownership of our common stock to be admitted to and to attend the 2020 annual meeting.20, 2020,25, 2022, we intend to distribute to our stockholders:(i) 20202022 Proxy Statement and 20192021 Annual Report to Stockholders, which includes our 20192021 Annual Report on Form10-K; (b) how to vote; and (c) how to request printed proxy materials (if desired).(ii) 20202022 Proxy Statement, our 20192021 Annual Report on Form10-K and a proxy card.
April 29, 2020.May 4, 2022. This proxy statement and accompanying form of proxy are first being made available to you on or about March 20, 2020.25, 2022. Proxy materials are available at www.proxyvote.com.Prologis Proxy StatementPROLOGIS PROXY STATEMENT | March 20, 2020MARCH 25, 2022
This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting of the Stockholders. Please read it carefully. The following summary highlights information contained in this proxy statement. This summary does not contain all the information you should consider and you should read the entire proxy statement before voting. For more complete information regarding our 2021 performance, please review our Annual Report on Form 10-K for the year ended December 31, 2021. All company operational information in this proxy statement is for the year ended or as of December 31, 2021, unless otherwise noted. See Appendix A for definitions and discussion of non-GAAP measures and reconciliations to GAAP measures and for additional detail regarding definitions of terms as generally explained in the proxy statement. References in this proxy statement to “we,” “us,” “our,” the “company,” and “Prologis” refer to Prologis, Inc. and its subsidiaries, unless the context otherwise requires.
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| PROXY SUMMARY |
2019 Business Highlights2021 BUSINESS HIGHLIGHTS
Our business model delivers results.Business Model Delivers Long-Term Growth and Outperformance
In 2019,2021, we outperformedcontinued to stand resilient through the pandemic, outperforming both operationally and in the equity markets for yet another successful year.
| Exceptional TSR Outperformance(1) | Sector-Leading Financial Performance | |
379.5% seven-year TSR Over 1,580 bps outperformance | 18.0% net earnings and 12.3%
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| (1) | Total stockholder return (“TSR”) is calculated based on the stock price appreciation and dividends paid to show the total return to a stockholder over a period of time. TSR assumes dividends are reinvested in common stock on the day the dividend is paid. Measured in seven-year TSR. |
| (2) | MSCI US REIT Index is the “MSCI REIT |
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| (4) | The “Large-cap REIT Group” is our historical REIT compensation comparison group (American Tower Corporation, AvalonBay Communities, Inc., Boston Properties, Inc., Crown Castle International Corp., Digital Realty Trust, Inc., Equinix, Inc., Equity Residential, Public Storage, Inc., Simon Property Group, Inc., Ventas, Inc. and Welltower Inc.) The average rates of the Large-cap REIT Group are weighted by market capitalization. See footnotes to “Delivering Durable Sector-leading Growth” for further detail on the calculation of the Large-cap REIT Group average. |
For further detail, please see “Compensation Discussion and Analysis.”
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| PROXY SUMMARY |
Proxy Summary
Compensation Program Improvements
In response to stockholder feedback, we adopted various improvements to our compensation program, including:
Our compensation program rewards for performance.
| Annual Bonus Program | Long-Term Incentive (LTI) Equity Program | |
80% Corporate with full disclosure of all quantitative | New Scale Requires Above-Index Performance for Target Awards | |
with zero payout if performance is |
| (1) | To be implemented beginning with the 2022-2024 performance period to avoid implementation during an ongoing performance period. |
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| PROXY SUMMARY |
Proxy Summary
2021 ENVIRONMENTAL STEWARDSHIP, SOCIAL RESPONSIBILITY AND GOVERNANCE (ESG) HIGHLIGHTS
We Have a Long-Standing Commitment to ESG Leadership
2019 Environmental Stewardship, Social Responsibility and Governance (ESG) Highlights
We have a long-standing commitment to ESG leadership.
Global 100 #1 REIT, 13th year on Global 100 list by | #1 in ESG The top REIT ESG program | |
19 Consecutive Years A leading REIT in corporate governance | Top 10% in World Global sustainable companies recognized | |
For further detail, please see “Board of Directors and Corporate Governance”, “Environmental, Stewardship, Social Responsibility and Governance”Governance Priorities” and “Compensation Discussion and Analysis.”
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Proxy Summary
| PROXY SUMMARY |
Proposals Submitted to Vote at the 20202022 Annual Meeting
| · | We are asking our stockholders of record on March |
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| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Board of Directors and Corporate Governance
Corporate Governance
| 18 | Director Independence | |
| Board Leadership Structure | ||
| 21 | Board Committees | |
| 23 | Other Governance Matters | |
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| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Prologis Corporate Governance Tear Sheet
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| DIRECTOR COMPOSITION AND EVALUATION PROCESS
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BOARD LEADERSHIP
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· Adopted proxy access with 3/3/20/20 market standard
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RISK GOVERNANCE · Financial risk oversight: Evidenced by A3/A- credit ratings.(4) · Operational risk oversight: Annual enterprise level risk analyses with board; climate risk assessment platform; rigorous investment committee processes; local team property-level management. · Reputational risk oversight: Extensive employee learning and development platform requiring ethics, cybersecurity, Inclusion and Diversity and other training. |
| (1) | Our governance guidelines |
| (2) | One director has self-identified as African American and two directors have self-identified as West Asian/Middle Eastern/Asian American. |
| (3) | See “Additional Information” for further detail on proxy access. |
| (4) | Ratings by Moody’s/S&P. A securities rating is not a recommendation to buy, sell or hold securities and is subject to withdrawal at any time by the rating agency. |
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| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Board of Directors and Corporate Governance
PROPOSAL 1
Election of Directors (Proposal 1)
·The Board is currently |
·The Board has affirmatively determined that all of our director nominees, other than Hamid Moghadam, are independent directors in accordance with New York Stock Exchange (“NYSE”) rules, our governance guidelines and our bylaws. |
·Our bylaws provide for a majority voting standard for the election of directors. See “Additional Information—Majority Voting” for further detail. |
·We do not know of any reason why any nominee would be unable or unwilling to serve as a director, if elected. However, if a nominee becomes unable to serve or will not serve, proxies may be voted for the election of such other person nominated by the Board as a substitute or the Board may reduce the number of directors. Each of the director nominees has consented to be named in this proxy statement and to serve as a director if elected. |
·Information about each director nominee’s share ownership is presented below under “Security Ownership.” |
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·The shares represented by the proxies received will be voted for the election of each of the eleven nominees named below, unless you indicate in the proxy that your vote should be cast against any or all of the director nominees or that you abstain from voting. Each nominee elected as a director will continue in office until his or her successor has been duly elected and qualified, or until the earliest of his or her resignation, retirement or death. |
·The eleven nominees for election to the Board at the |
The Board unanimously recommends that the stockholders vote FOR the election of each nominee.
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Board of Directors and Corporate Governance
Board Evaluations and Process forFor Selecting Directors
Rigorous Board evaluation and refreshment process
| · | Our annual Board evaluation process involves assessments at the Board, Board committee and individual director levels. Through this process, the Board determines who should be nominated to stand for election based on current company and Board needs. |
| · | In this process, directors |
| · | Director interview questions are prepared based on current areas of focus as well as feedback from our stockholder outreach efforts. |
| · | Annualone-on-one director interviews are conducted by our lead independent director and chair of the Governance Committee and, every other year, by an independent third party. |
| · | The results of the director interviews are aggregated by our lead independent director, Governance Committee chair, and if applicable, the independent third party, and reported to the Governance Committee and then to our full Board. Our Board will follow up on items identified in the evaluation process. |
| · | Our Governance Committee discusses Board succession and reviews potential candidates. This process is based on the results of annual board evaluations and takes place throughout the course of the year. |
| · | Our director candidate search process actively identifies and assesses a pool of potential candidates through a variety of sources, primarily through internal references. Although the committee may retain third parties to assist in identifying potential nominees, it prefers internal references by directors who understand the needs and dynamics of the Board with a particular focus on inclusion and diversity of ideas and background. |
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Board of Directors and Corporate Governance
Director Qualifications, Skills and Experience
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Our governance guidelines |
2022 Board composition and refreshmentevaluation feedback
Key feedback from our Board evaluation process:
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| · | Recognized the strength of our CEO and management. |
| · | Determined that there were no concerns about Board independence or longer tenured directors. |
| · | Recognized the benefits of our Essentials business and appreciated our risk management of the company. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 8 |
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Regular Board refreshment
| · | The Board is committed to regular refreshment to maintain an optimal balance of different perspectives, skills and |
| · | The Board was completely refreshed and rebuilt at the time of the Merger in 2011. The Merger essentially created a new company with a new operating and corporate platform. At that time, all directors underwent intensive review to determine which directors would best fit the newly created combined company. |
| · | Each director selected in this rebuilding process was onboarded as a new director to the newly established company. These directors were required to perform in a new governance environment, with new structures, processes, committees, charters and guidelines. |
| · | We have continued to refresh the Board since the Merger. David O’Connor onboarded as a new director in 2015, Olivier Piani in 2017, Cristina Bita and Philip Hawkins in 2018, and Avid Modjtabai in 2020. (In 2020, Mr. Hawkins took a position as executive chairman of a U.S. industrial real estate portfolio company and, as a result, decided to step down from our |
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BOARD COMPOSITION AND DIVERSITY
Distribution of Tenure(1)
5 | new | |
| (1) | The entire Board was rebuilt in 2011 at the time of the merger (the “Merger”) between AMB Property Corporation and |
| (2) | Includes Philip Hawkins, who joined our Board in 2018 and stepped down from our Board in 2020 to assume an executive chairman position at a U.S. industrial real estate company. |
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Director Qualifications, Skills and Experience
Board composition and diversity
| · | Our board diversity policy centers on our commitment to maintaining Board diversity in thought, background and experience—a mix of gender, ethnic background, geographic origin and professional experience that supports our business strategy and the current needs of the Board. As such, the Governance Committee focuses on identifying and nominating qualified and diverse director candidates with commensurate experience and background and each of our director nominees was chosen on this basis. For information about our director nominees and our business, strategy and goals, please see “Director Nominees” and “Compensation Discussion and Analysis.” |
| · | In making its nominations, the Governance Committee also assessed each director nominee by key characteristics, including courage to voice opinions, integrity, experience, accountability, good judgment, supportiveness in working with others and willingness to commit the time needed to satisfy the requirements of Board and committee membership. |
PROLOGIS BOARD DIVERSITY
PROLOGIS PROXY STATEMENT | MARCH 25, 2022
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Board Qualifications
Director skills and experience support our business strategy.strategy
| · | We have deep experience on our Board covering all components of our business model. The Board believes a balance of perspectives from other industries is critical to well-rounded oversight and insight into the perspectives of our customers covering a wide range of industries. |
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91% 100% 99% 55%
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| (1) | Includes development, operations, real estate investments and fund management. |
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Board of Directors and Corporate Governance
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Hamid R. Moghadam
 | Hamid R. Moghadam
· Other public directorships: None |
Mr. Moghadam, 65, has been our Chief Executive Officer since the end of December 2012 and was our Co-Chief Executive Officer from June 2011 to December 2012. He is the co-founder of AMB Property Corporation and was AMB’s Chief Executive Officer from November 1997 (from the end of December 2012 and was ourCo-Chief Executive Officer from June 2011 to December 2012. He is theco-founder of AMB Property Corporation and was AMB’s Chief Executive Officer from November 1997 (the time of AMB’s initial public offering) to June 2011 when AMB merged with the Trust.
Other relevant qualifications. Mr. Moghadam is on the board of the Stanford Management Company and formerly served as its chairman. He is a former trustee of Stanford University and previously served on the Executive Committee of the Board of Directors of the Urban Land Institute. Mr. Moghadam holds Bachelor’s and Master’s degrees in engineering from the Massachusetts Institute of Technology and a Master of Business Administration from the Graduate School of Business at Stanford University.
Board Committees:
Executive
Other public directorships:
None
Irving F. Lyons III
 | Irving F. Lyons III
· Other public directorships: Equinix, Inc. and Essex Property Trust, Inc. |
Mr. Lyons, 72, has been a principal with Lyons Asset Management, a private equity firm, since January 2005. In 2004, Mr. Lyons retired from the Trust where he served as chief investment officer from 1997 until his retirement. He joined the Trust in 1993 and served as president from 1999 to 2001 and vice chairman from 2001 to 2004. Mr. Lyons is a member of the boards of Equinix, Inc., a global data center operator, and Essex Property Trust, Inc., a real estate investment trust investing in apartment communities. Mr. Lyons previously served as chairman of the board of BRE Properties, Inc.
Other relevant qualifications. Mr. Lyons joined the Trust when King & Lyons, an industrial real estate management and development company, was acquired by the Trust in 1993. Mr. Lyons had been the managing general partner in that firm since its inception in 1979 and was one of its principals at the time of the acquisition. Mr. Lyons holds a Master in Business Administration from Stanford University and a Bachelor of Science in industrial engineering and operations research from the University of California at Berkeley.
Board Committees:
Executive
Other public directorships:
Equinix, Inc. and Essex
Property Trust, Inc.
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| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Cristina G. Bita
 | Cristina G. Bita
· Other public directorships: None |
Ms. Bita, 43, is a Vice President of Finance at Google and serves as the Business Finance Officer for Google’s Devices and Services and Global Marketing organizations. Ms. Bita leads global finance activities for consumer hardware, consumer paid services as well as for the company’s marketing investments globally. Bita is a widely recognized leader who has held several finance leadership roles over the course of her 15+ year career at Google that also included Sales and Business Development, Consumer Products, Platforms and Ecosystems, G&A, Technical Infrastructure and Enterprise. She has also served as the Chair of the Google Sustainability Board. Prior to Google, Ms. Bita held various positions at Siemens/Osram in the Business Unit Controllership and Corporate FP&A groups.
Other relevant qualifications. Ms. Bita holds a Master of Science in Finance from the Boston College Wallace E. Carroll School of Management and a Bachelor of Science in Business Administration (Accounting) from Salem State University. Ms. Bita is also a Certified Management Accountant (CMA).
Board Committees:
Audit
Other public directorships:
None
George L. Fotiades
 | George L. Fotiades
·Other |
Mr. Fotiades, 68, served as President and Chief Executive Officer of Cantel Medical Corp., a provider of infection prevention and control products, from 2019 until his retirement in 2021. Mr. Fotiades was an operating partner at Five Arrows Capital Partners (Rothschild Merchant Banking) from April 2017 until March 2019. From April 2007 to April 2017, Mr. Fotiades was a partner, healthcare investments at Diamond Castle Holdings LLP, a private equity firm. Mr. Fotiades was chairman of Catalent Pharma Solutions, Inc., a provider of advanced technologies for pharmaceutical, biotechnology and consumer health companies, from June 2007 to February 2010. Mr. Fotiades is Chairman of the board of AptarGroup, Inc., a global dispensing systems company. He previously served on the boards of Cantel Medical Corp. and Alberto-Culver Company, a consumer products company specializing in hair and skincare products.
Other relevant qualifications. Mr. Fotiades was previously the president and chief operating officer of Cardinal Health, Inc. and also served as president and chief executive officer of Cardinal’s Pharmaceutical Technologies and Services segment. Mr. Fotiades also served as president of Warner-Lambert’s consumer healthcare business, as well as in other senior positions at Bristol-Myers Squibb, Wyeth, and Procter & Gamble. Mr. Fotiades holds a Master of Management from The Kellogg School of Management at Northwestern University and a Bachelor of Arts from Amherst College.
Board Committees:
Compensation (Chair)
Other public directorships:
AptarGroup, Inc. and Cantel Medical Corp.
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 | Lydia H. Kennard · Director since August 2004 · Board Committees: Governance · Other public directorships: Freeport-McMoRan Copper & Gold Inc., Healthpeak Properties, Inc. (formerly known as HCP Inc.) and AECOM |
Ms. Kennard, 67, is the founder and chief executive officer of KDG Construction Consulting, a provider of project and construction management services, a principal of KDG Aviation, an aviation focused real estate operating and development company, the owner of KDG Holdings, Inc., parent of Quality Engineering Solutions, Inc., a pavement management analytics and construction inspection company, and a principal with 1031 N. Brand Boulevard, Glendale, LLC, and 690 N. 2nd Street, Reno, LLC, both single-purpose real estate entities. Ms. Kennard is a member of the boards of Freeport-McMoRan Copper & Gold Inc., a natural resource company, Healthpeak Properties, Inc., a healthcare real estate investment trust, and AECOM, an infrastructure consulting firm. Ms. Kennard was previously a member of the boards of URS Corporation, a provider of engineering, construction and technical services, and Intermec, Inc., an automated identification and data collection company.
Other relevant qualifications. Ms. Kennard served as Chief Executive Officer of Los Angeles World Airports, a system of airports comprising Los Angeles International, Ontario International Airport, Palmdale Regional and Van Nuys General Aviation Airports from 1999 to 2003 and again from 2005 to 2007. From 1994 to 1999, she served as the system’s deputy executive for design and construction. Ms. Kennard holds a Juris Doctor degree from Harvard University, a Master’s degree in city planning from the Massachusetts Institute of Technology, and a Bachelor of Science in urban planning and management from Stanford University.
 | Avid Modjtabai · Director since February 2020 · Other public directorships: Avnet, Inc. |
Ms. Modjtabai, 60, served as the Senior Executive Vice President and head of the Payments, Virtual Solutions and Innovation Group at Wells Fargo from 2016 to her retirement in March 2020. Prior to that, she served in various leadership roles at Wells Fargo, including Group head for Wells Fargo Consumer Lending from 2011 to 2016, Chief Information Officer and head of Technology and Operations Group from 2008 to 2011, Chief Information Officer and head of technology from 2007 to 2008, and Director of Human Resources from 2005 to 2007. Ms. Modjtabai is a member of the board of Avnet, Inc., a global technology solutions provider.
Other relevant qualifications. Ms. Modjtabai holds a Master in Business Administration in finance from Columbia University and a Bachelor of Science in industrial engineering from Stanford University.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022
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| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Lydia H. Kennard
 | David P. O’Connor
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Other public directorships: Regency Centers Corporation
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Avid ModjtabaiMr. O’Connor, 57, is a private investor, managing partner of High Rise Capital Partners, LLC, a private real estate investment firm, and a non-executive co-chairman of HighBrook Investors LLC. He was the co-founder and senior managing partner of High Rise Capital Management LP, a real estate securities hedge fund manager that operated from 2001 to 2011. Mr. O’Connor is a member of the board of Regency Centers Corporation, a publicly traded real estate investment trust specializing in shopping centers. He previously served on the boards of Songbird Estates plc, the former majority owner of Canary Wharf in London, UK and Paramount Group, Inc., a publicly traded real estate investment and management company specializing in office buildings.
Other relevant qualifications. Mr. O’Connor was previously a principal, co-portfolio manager and investment committee member of European Investors, Inc., a large dedicated real estate investment trust investor, from 1994 to 2000. Mr. O’Connor received a Master of Science in real estate from New York University and holds a Bachelor of Science degree from the Boston College Wallace E. Carroll School of Management.
 | Olivier Piani
·Other |
Mr. Piani, 68, is the chief executive officer and founder of OP Conseils, a consulting company in real estate and finance that Mr. Piani started in January 2016. Mr. Piani is also a senior consultant with Ardian, a major European private equity group. From September 2008 to December 2015, Mr. Piani was chief executive officer of Allianz Real Estate, the real estate and asset management investment platform for the Allianz Group.
Other relevant qualifications. From 1998 to 2008, Mr. Piani built the pan-European platform for GE Capital Real Estate spanning seven different countries. Prior to joining GE in 1998, Mr. Piani was chief executive officer of UIC-Sofal, a real estate bank. From 1982 to 1995, Mr. Piani held various leadership positions in the Paribas Group in Paris, New York and London. Mr. Piani is a graduate of Paris Ecole Superieure de Commerce de Paris and received a Master of Business Administration in finance from Columbia University and a Bachelor of Science in industrial engineering from Stanford University.
Other public directorships:Avnet, Inc.
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| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
David P. O’Connor
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Other public directorships: None
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Olivier PianiMr. Skelton, 72, retired in 2009 as president and chief executive officer of Symphony Asset Management, a subsidiary of Nuveen Investments, Inc., an investment management firm. After his retirement in 2009 and until 2013, Mr. Skelton was a co-founder and managing partner of Resultant Capital Partners, an investment management firm.
Other relevant qualifications. Prior to founding Symphony Asset Management in 1994, Mr. Skelton was with Wells Fargo Nikko Investment Advisors from 1984 to 1993, where he served in a variety of capacities, including chief research officer, vice chairman, co-chief investment officer and chief executive officer of Wells Fargo Nikko Investment Advisors Limited in London. Previously, Mr. Skelton was also an assistant professor of finance at the University of California at Berkeley, Walter A. Haas School of Business. Mr. Skelton holds a Ph.D. in mathematical economics and finance and a Master of Business Administration from the University of Chicago.
 | Carl B. Webb
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Other public directorships: Hilltop Holdings Inc.
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Mr. Webb, 72, is currently a co-managing member of Ford Financial Fund II, L.P. and Ford Financial Fund III, L.P., private equity firms focusing on equity investments in financial services, a position he has held since February 2012 and March 2019, respectively. Mr. Webb has served as chairman of the Mechanics Bank board since April 2015. From June 2008 until December 2012, Mr. Webb was a senior partner of Ford Management, L.P. Mr. Webb was also the chief executive officer and a board member of Pacific Capital Bancorp and chairman of Santa Barbara Bank and Trust from August 2010 until December 2012. Mr. Webb has also served as a consultant to Hunter’s Glen/Ford, Ltd., a private investment partnership, since November 2002. Additionally, Mr. Webb is a member of the board of Hilltop Holdings Inc., a publicly traded financial services holding company.
Other relevant qualifications. Mr. Webb previously served on the boards of Plum Creek Timber Company, M & F Worldwide Corp. and Triad Financial SM LLC, where he was co-chairman from July 2007 to October 2009 and served as interim president and chief executive officer from August 2005 to June 2007. Since 1983, Mr. Webb held executive positions at banking institutions, including Golden State Bancorp, Inc. and its subsidiary, California Federal Bank, FSB, First Madison Bank, FSB, First Gibraltar Bank, FSB and First National Bank at Lubbock. Mr. Webb holds a Bachelor of Business Administration from West Texas A&M University and a graduate banking degree from Southwestern Graduate School of Banking at Southern Methodist University.
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| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Jeffrey L. Skelton
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Carl B. Webb
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Board of Directors and Corporate Governance
William D. Zollars
· Other public directorships: Cerner Corporation |
Mr. Zollars, 74, retired from YRC Worldwide, Inc., a global transportation service provider, in July 2011 where he served as chairman, president and chief executive officer from 1999 until his retirement. He was president of Yellow Transportation, Inc. from 1996 to 1999. Mr. Zollars is the chairman of the board of Cerner Corporation, a supplier of healthcare information technology solutions, healthcare devices and related services. Mr. Zollars also serves on the U.S. Postal Service Board of Governors. He is a former director of healthcare information technology solutions, healthcare devices and related services, and CIGNA Corporation, a global health service organization.
Other relevant qualifications. Mr. Zollars was previously a senior vice president of Ryder Integrated Logistics, a division of Ryder System, Inc. and he spent 24 years in various executive positions, including eight years in international locations, at Eastman Kodak. Mr. Zollars holds a Bachelor of Arts in economics from the University of Minnesota.
Board Committees:
Governance, Compensation
Other public directorships:
Cerner Corporation andCIGNA Corporation
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Board of Directors and Corporate Governance
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
We require that a majority of the Board be independent in accordance with NYSE rules. To determine whether a director is independent, the Board must affirmatively determine that there is no direct or indirect material relationship between the company and the director.
91% of the Board is independent.
| · | The Board has determined that all our directors other than our chairman, Mr. Moghadam, are independent. |
The Board reached this determination after considering all relevant facts and circumstances, reviewing director questionnaires and considering transactions and relationships, if any, between us, our affiliates, our executive officers and their affiliates, and each of the directors, members of each of their immediate families and their affiliates.
Audit, Governance and Talent and Compensation Committees are 100% independent.
| · | The Board has also determined that all members of the Audit, Governance and Talent and Compensation Committees of the Board are independent in accordance with NYSE and Securities and Exchange Commission (“SEC”) rules. |
Our governance guidelines do not specify a leadership structure for the Board, allowing the Board the flexibility to choose the best option for the company as circumstances warrant. The Board believes that strong independent leadership ensures effective oversight over the company. Such independent oversight is maintained through:
| · | our lead independent director; |
| · | our independent directors; |
| · | the Audit, Governance and Talent and Compensation Committees, which are all comprised entirely of independent directors; |
| · | annual review of the Board leadership structure and effectiveness of oversight through the Board evaluation process; and |
| · | strong adherence to our governance guidelines. |
All of our independent directors have the ability to provide input for meeting agendas and are encouraged to raise topics for discussion by the Board. In addition, the Board and each Board committee has complete and open access to any member of management.
Each committee has the authority to retain independent legal, financial and other advisors as they deem appropriate without consulting or obtaining the approval of any member of management. The Board also holds regularly scheduled executive sessions of only independent directors in order to promote free and open discussion among the independent directors.
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Chairman and CEO assessment
Our chairman and CEO and our lead independent director act together in a system of checks and balances, providing both strong oversight and operational insight.
Our CEO, Mr. Moghadam, serves as chairman of the Board. The lead independent director role is focused on ensuring independent oversight of the company. Mr. Moghadam’s roles as both CEO and chairman enable him to act as a bridge between management and the Board, ensuring that the Board understands our business when making its decisions.
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Board of Directors and Corporate Governance
Mr. Moghadam has the breadth of experience to execute our unique business plan and to provide special insights to the Board.
Very few have experience running a public company with extensive global operations and substantial strategic capitalStrategic Capital and development businesses. Mr. Moghadamco-founded the company and has served on the Board since the company’s initial public offering in November 1997. As one of our founders, Mr. Moghadam has extensive knowledge and expertise in the real estate and REIT industries, as well as history and knowledge of our company.
Considering all of these factors, the Board believes that a structure that combines the roles of CEO and chairman, along with an independent lead director, independent chairs for each of the Board committees and independentnon-employee directors, provides the best leadership for the company at this time and places the company in a competitive position to provide long-term value to our stockholders.
Lead independent director
If the offices of chairman and CEO are held by the same person or if the chairman is otherwise not independent, the independent members of the Board will annually elect an independent director to serve in a lead capacity. The lead independent director is generally expected to serve for more than one year. Mr. Lyons has been selected as the lead independent director by our Governance Committee and the independent members of our Board and has served in that capacity for nearly nine years.Board.
The lead independent director coordinates the activities of the other independent directors and performs other duties and responsibilities as determined by the Board.
The specific responsibilities of the lead independent director are currently as follows:
Executive Sessions/ Committee Meetings |
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Meetings of Independent Directors |
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| Board Evaluations |
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Liaison with Chairman and CEO |
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Board Processes and Information |
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Communications with Stockholders |
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| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Pursuant to the Maryland General Corporation Law and our bylaws, our business, property and affairs are managed under the direction of the Board. Members of the Board are kept informed of our business through our executive management team.
The four standing committees of the Board are: Audit, Governance, Talent and Compensation (the “Compensation Committee”) and Executive Committee (the “Executive Committee”). The Board has determined that each member of the Audit, Governance and Compensation Committees is an independent director in accordance with NYSE and SEC rules.
The current membership information for our Board committees is presented below.
Each committee has a charter which generally states the purpose of the committee and outlines the committee’s structure and responsibilities. The committees, other than the Executive Committee, must review their charter on an annual basis.
PROLOGIS BOARD COMMITTEES
Audit Committee
Members: Carl Webb (Chair), Cristina Bita, Olivier Piani, J. Michael Losh and Avid Modjtabai (appointed in February 2020)and Olivier Piani
Number of Meetings in 2019:2021: 9
| · | Oversees the financial accounting and reporting processes of the company |
| · | Responsible for the appointment, compensation and oversight of our public accountants |
| · | Monitors: (i) the integrity of our financial statements; (ii) our compliance with legal and regulatory requirements; (iii) our public accountant’s qualifications and independence; and (iv) the performance of our internal audit function and public accountants |
| · | Oversees financial and cybersecurity risks relating to the company |
| · | All committee members are designated by the Board as “audit committee financial experts” in accordance with SEC regulations and meet the independence, experience and financial literacy requirements of the NYSE and Section 10A of the Securities Exchange Act of 1934, as amended |
Talent and Compensation Committee
Members: George Fotiades (Chair), David O’Connor and William Zollars
Number of Meetings in 2019:2021: 5
| · | Discharges the Board’s responsibilities relating to compensation of directors and executives and produces an annual report on executive compensation for inclusion in the proxy statement |
| · | Approves and evaluates our director and officer compensation plans, policies and programs |
| · | Reviews and recommends to the Board corporate goals and objectives relative to the compensation of our CEO |
| · | Evaluates our CEO’s performance in light of corporate goals and objectives, and sets the CEO’s compensation level based on this evaluation, including incentive and equity-based compensation plans |
| · | Sets the amount and form of compensation for the executive officers who report to the CEO |
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| · | Makes recommendations to the Board (including recommendations for non-employee directors) on general compensation practices, including incentive and equity-based compensation plans, and adopts, administers and makes awards under annual and long-term incentive compensation and equity-based compensation plans, including any amendments to the awards under any such plans, and reviews and monitors awards under such plans |
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Board of Directors and Corporate Governance
Reviews and approves any new employment agreements, change in control agreements and severance or similar termination payments proposed to be made to the CEO or any other executive officer of the company |
| · | Confirms that relevant reports are made to the Board or in periodic filings as required by governing rules and regulations of the SEC and NYSE |
| · | Reviews and discusses with management |
| · | Participates in succession planning for key executives |
| · | Focuses on risks relating to remuneration of our officers and employees and administers our equity compensation plans, our nonqualified deferred compensation arrangements and our 401(k) plan |
| · | Advises management in human capital strategies and practices, attracting, developing and retaining key employees, including annual review of |
Board Governance and Nomination Committee
Members: Jeffrey Skelton (Chair), Lydia Kennard and William Zollars
Number of Meetings in 2019:2021: 3
| · | Reviews and makes recommendations to the Board on Board organization and succession matters |
| · | Assists the full Board in evaluating the effectiveness of the Board and its committees |
| · | Reviews and makes recommendations for committee appointments to the Board |
| · | Identifies individuals qualified to become Board members consistent with any criteria approved by the Board and proposes to the Board a slate of nominees for election to the Board |
| · | Assesses and makes recommendations to the Board on corporate governance matters |
| · | Develops and recommends to the Board a set of corporate governance principles applicable to the company |
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| · | Reviews the adequacy of our governance guidelines on an annual basis and focuses on reputational and corporate governance risks |
| · | Reviews company political lobbying activity and spending |
Executive Committee
Members: Jeffrey Skelton (Chair), Irving Lyons III and Hamid Moghadam
Number of Meetings in 2019:2021: 0
| · | Acts only if action by the Board is required, the Board is unavailable and the matter is time-sensitive |
| · | Has all of the powers and authority of the Board, subject to such limitations as the Board, the committee’s charter and/or applicable law, rules and regulations may from time to time impose |
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| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Board’s role in risk oversight
Risk awareness is embedded throughout our operations, underpinned by an integrated framework for identifying, assessing and managing risk.
The Board has the primary responsibility for overseeing risk management of the company. Oversight for certain specific risks falls under the responsibilities of our Board committees.
| · | The Audit Committee focuses on financial and cybersecurity risks relating to the |
| · | The Compensation Committee focuses on risks relating to human capital management, talent retention and remuneration of our officers and |
| · | The Governance Committee focuses on reputational, |
These committees regularly advise the full Board of their risk oversight activities.
Critical components of our risk oversight framework include regular communication among the Board, our management executive committee and our risk management infrastructure to identify, assess and manage risk.
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Identifying, Managingmanaging and Assessing Risksassessing risks
Our risk oversight framework includes:
| · | Board engagement with executive and risk management teams including multi-dimensional risk reviews, risk assessment mapping andone-on-one interviews between each director and our risk management team |
| · | Executive management committee meetings focused on strategic risks |
| · | A structured approach to capital deployment vetted through weekly investment committee meetings, including assessments of ESG, resilience and natural disaster/weather/climate change risks |
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Board of Directors and Corporate Governance
Management of one of the strongest balance sheets in the REIT industry achieved by lowering our financial risk and foreign currency exposure |
| · | Rigorous internal and third-party audits assessing the company’s controls and procedures |
| · | Centralized team dedicated to managing risk globally and staying closely engaged with Prologis’ teams at the individual market level |
Climate risk
We assess natural hazard and climate risk across our portfolio. Our risk management team works to ensure we have sufficient insurance coverage and protection for our buildings. We also partner with a global reinsurance company to evaluate future climate scenarios and determine which actions we should take. This evaluation is based on underwriting data, a significant improvement over the traditional catastrophe modeling and flood zone data used by many other organizations. Based on this evaluation, we take a range of actions which can include improving the physical resilience of our buildings, reviewing and improving disaster response plans, and other measures. Because of our long-term planning, resilience measures and diverse portfolio footprint, we believe our climate change risk is well-managed.
Cybersecurity
Our Chief Technology Officer and our Vice President of IT Governance oversee our information security program. They report to the audit committee/board at least annually and also conduct annual information security compliance training. The Prologis Information Security Policy is governed by the NIST Cybersecurity Framework (CSF) and includes mandatory
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annual training for all employees. Prologis’ cybersecurity posture is reviewed and benchmarked against its peers through regular participation in a third-party security benchmarking survey. Our IT infrastructure is externally audited as part of our Sarbanes Oxley audit process and our controls include information security standards. Also, we maintain standalone cybersecurity insurance. To our knowledge, we have not experienced a material breach in information security.
CEO and management succession planning
The Board is responsible for ensuring that we have a high-performing management team in place. The Board, with the assistance of the Compensation Committee, regularly conducts a detailed review of management development and succession planning activities to ensure that top management positions, including the CEO position, can be filled without undue interruption.
Our succession planning process istwo-tiered to ensure orderly succession. One tier contemplates succession planning in the case of an emergency during which one or more members of our current management are unable to perform their duties. The second tier involves long-term planning to identify and develop talent with potential to step in as our future management team. As part of our longer term succession planning, we made changes in 2019 to our organizational architecture to prepare the company for the next chapter in its evolution. Executive roles were reorganized to drive our platform initiatives focusing on customer centricity and extracting value beyond our real estate while allowing for growth opportunities for the next generation of potential leaders. As an example, Mr. Olinger was instrumental in positioning his successor, Mr. Timothy Arndt, with key global leadership responsibilities to prepare Mr. Arndt for the role of CFO after Mr. Olinger’s retirement. Mr. Arndt will assume the position of CFO on April 1, 2022.
Communications with directors
We appreciate your input. Our lead independent director (or any of our other directors) are accessible to our stockholders for engagement as appropriate. You can communicate with any of the directors, individually or as a group, by writing to them in care of Edward S. Nekritz, Secretary, Prologis, Inc., Pier 1, Bay 1, San Francisco, California 94111. Each communication intended for the Board and received by the secretary that is related to the operation of the company and is not otherwise commercial in nature will be forwarded to the specified party following its clearance through normal security procedures. The directors will be advised of any communications that were excluded through normal security procedures as appropriate and they will be made available to any director who wishes to review them.
Director attendance
The Board held ninefour meetings in 2019,2021, including telephonic meetings, and all of the directors attended 75% or more of the aggregate number of Board and applicable committee meetings on which he or she served during 20192021 (held during the periods they served). Each director standing for election in 20202022 is expected to attend the annual meeting of stockholders, either in personvirtually or telephonically, absent cause. All of our directors attended the annual meeting last year, in personvirtually or telephonically.
Director compensation
Please see “Director Compensation” and the table titled “Directors“Director Compensation for Fiscal Year 2019.2021.”
Stock ownership guidelines and prohibition on hedging/pledging
Our directors must comply with our stock ownership guidelines which require the director to maintain an ownership level in our common stock equal to five times the annual cash retainer (a total of $600,000 as of December 31, 2019)2021). Shares
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Board of Directors and Corporate Governance
included as owned by directors for purposes of the guidelines include common stock owned, vested or unvested equity
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awards (restricted stock, restricted stock units, shares and share units deferred under the terms of the Director Deferred Fee Plan or the applicablenon-qualified deferred compensation plan, deferred share units and dividend equivalent units) and operating partnership or other partnership units exchangeable or redeemable for common stock. Until such time as the ownership thresholds are met, we will require directors to retain and hold 50% of any net shares of our common stock issued to our directors under our equity compensation plans.
Additionally, our insider trading policy prohibits our directors and employees from hedging the economic risk of ownership of our common stock and from pledging shares of our common stock.
All of our directors and executive officers are currently in compliance with the stock ownership guidelines and the prohibition on hedging and pledging our common stock.
Independent compensation consultant
The Compensation Committee directly engagesengaged an outside compensation consulting firm, Frederic W. Cook & Co., Inc. (“FW Cook”)Pay Governance, to assist the committee in assessing our compensation programs for our Board, our CEO and other members of executive management. FW Cook
Pay Governance reports directly to the Compensation Committee. FW CookPay Governance receives no compensation from the company other than for its work in advising the Compensation Committee and maintains no other economic relationships with the company. FW CookPay Governance interacts directly with members of our management only on matters under the Compensation Committee’s oversight.
FW CookPay Governance conducted a comprehensive competitive review of the compensation program for our executive officers and ournon-employee directors in 2019,April 2021 and executive officers in December 2021, which was used by the Compensation Committee to assist it in making compensation recommendations to the Board. Our CEO makes separate recommendations to the Compensation Committee concerning the form and amount of the compensation of our executive officers (excluding his own compensation). FW Cook has also assisted the
The Compensation Committee in evaluating the design of certain outperformance compensation plans implemented in 2012.
Annually, the Compensation Committee considersconsidered the independence of FW CookPay Governance in light of the rules regarding compensation committee advisor independence mandated under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”).Act. The Compensation Committee reviewed factors, facts and circumstances regarding compensation consultant independence, including a letter from FW CookPay Governance addressing FW Cook’sPay Governance and their consulting team’s independent status with respect to the following factors: (i) other services provided to us by FW Cook;Pay Governance; (ii) fees we pay to FW CookPay Governance as a percentage of their total revenues; (iii) FW Cook’sPay Governance’s policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship between FW CookPay Governance or members of their consulting team that serves the Compensation Committee and a member of the Compensation Committee; (v) any shares of our stock owned by FW CookPay Governance or members of their consulting team that serves the Compensation Committee; and (vi) any business or personal relationships between our executive officers and FW CookPay Governance or members of their consulting team that serves the Compensation Committee. After discussing these factors, facts and circumstances, the Compensation Committee affirmed the independent status of FW CookPay Governance and concluded that there are no conflicts of interest with respect to FW Cook.Pay Governance.
Compensation Committee interlocks and insider participation
No member of the Compensation Committee (i) was, during the year ended December 31, 2019,2021, or had previously been, an officer or employee of the company or (ii) had any material interest in a transaction with the company or a business relationship with, or any indebtedness to, the company. No interlocking relationships existed during the year ended December 31, 2019,2021, between any member of the Board or the Compensation Committee and an executive officer of the company.
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Board of Directors and Corporate Governance
Code of Ethics and Business Conduct and Governance Guidelines
The Board has adopted a code of ethics and business conduct that applies to all employees and directors. The Board has formalized policies, procedures and standards of corporate governance that are reflected in our Governance Guidelines.
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Our Code of Ethics and Business Conduct outlines in great detail the key principles of ethical conduct expected of our employees, officers and directors, including matters related to conflicts of interest, use of company resources, fair dealing, and financial reporting and disclosure. The code establishes formal procedures for reporting illegal or unethical behavior to the company’s internal ethics committee. These procedures permit employees to report any concerns, including concerns about the company’s accounting, internal accounting controls or auditing matters, on a confidential or anonymous basis if desired. Employees may contact the ethics committee by email, in writing, byweb-based report or by calling a toll-free telephone number. Any significant concerns are reported to the Audit Committee in accordance with the code.
Simultaneous Board service
Our director overboarding policy in our governance guidelines requirerequires that, if a director serves on three or more public company boards simultaneously, including our Board, a determination is made by our Board as to whether such simultaneous service impairs the ability of such member to effectively serve the company. Messrs. Fotiades, Losh,Mr. Lyons and Zollars and Ms. Kennard currently serve on at least three public company boards, including our Board. In each case, our Board has determined that such simultaneous board service does not impair the Board member’s ability to be an effective member of our Board. None of our directors currently serve on more than three public company boards (including our Board) other than Mr. Losh, who is not standing forre-election to our Board.
Certain relationships and related party transactions
We do not have any related party transactions to report under relevant SEC rules and regulations. According to our Articles of Incorporation, the Board may authorize any agreement or other transaction with any party even though one or more of our directors or officers may be a party to such an agreement or is an officer, director, stockholder, member or partner of the other party if: (i) the existence of the relationship is disclosed or known to the Board, and the contract or transaction is authorized, approved or ratified by the affirmative vote of not less than a majority of the disinterested directors, even if they constitute less than a quorum of the Board; (ii) the existence is disclosed to the stockholders entitled to vote, and the contract or transaction is authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote (excluding shares owned by any interested director or officer or the organization in which such person is a director or has a material financial interest); or (iii) the contract or transaction is fair and reasonable to the company.
We recognize that transactions between us and related parties can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations other than the company’s best interests and the best interests of our stockholders. Related parties may include our directors, executives, significant stockholders and immediate family members and affiliates of such persons.
Accordingly, several provisions of our code of ethics and business conduct are intended to help us avoid the conflicts and other issues that may arise in transactions between us and related parties, prescribing that:
| · | employees will not engage in conduct or activity that may raise questions as to the company’s honesty, impartiality or |
| · | employees shall not hold financial interests that conflict with, or leave the appearance of conflicting with, the performance of their assigned duties; |
| · | employees shall act impartially and not give undue preferential treatment to any private organization or individual; and |
| · | employees should avoid actual conflicts or the appearance of conflicts of interest. |
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Board of Directors and Corporate Governance
These provisions of our code of ethics and business conduct may be amended, modified or waived by the Board or the Governance Committee, subject to the disclosure requirements and other provisions of the rules and regulations of the SEC and the NYSE.
No waivers of our code of ethics and business conduct were granted in 2019.2021.
Although we do not have detailed written procedures concerning the waiver of the application of our code of ethics and business conduct or the review and approval of transactions with directors or their affiliates, our directors would consider all relevant facts and circumstances in considering any such waiver or review and approval.
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Executive Officers
| EXECUTIVE OFFICERS |
Biographies of our executive officers as of March 2020,2022, other than Mr. Moghadam, are presented below. Information for Mr. Moghadam is included above under “Board of Directors and Corporate Governance.” All of our executive officersMessrs. Moghadam, Olinger, Reilly, Anderson and Nekritz are treated as named executive officers (each an “NEO”) for purposes of this proxy statement.
Thomas S. Olinger: Chief Financial Officer
Mr. Olinger, 53,55, has been our chief financial officer since May 2012 and was our chief integration officer from June 2011 to May 2012. Mr. Olinger was the chief financial officer of AMB from March 2007 to June 2011. Prior to joining AMB in February 2007, Mr. Olinger was the vice president and corporate controller at Oracle Corporation, an enterprise software company and provider of computer hardware products and services. Prior to his employment with Oracle, Mr. Olinger was an accountant and partner at Arthur Andersen LLP, where he served as the lead partner on our account from 1999 to 2002. Since January 2011, Mr. Olinger has served as a director of American Assets Trust, a real estate investment trust investing in office, retail and residential properties. Mr. Olinger holds a Bachelor of Science in finance from the Kelley School of Business at Indiana University.
Mr. Olinger will retire as our Chief Financial Officer on April 1, 2022 and will remain with the company until the end of 2022 as part of the transition plan. Mr. Arndt will become our Chief Financial Officer on April 1, 2022.
Eugene F. Reilly: Chief Investment Officer
Mr. Reilly, 58, was appointed60, has been our chief investment officer insince March 2019. Mr. Reilly was our CEO, the Americas, from June 2011 until March 2019, and he served as president, the Americas, as well as a number of other executive positions, at AMB from October 2003 until the Merger in June 2011. Mr. Reilly serves on the technical committee of FIBRA Prologis, a publicly traded Mexican REIT that is sponsored and managed by the company. Prior to joining AMB in October 2003, Mr. Reilly was chief investment officer of Cabot Properties, Inc., a private equity industrial real estate firm of which he was also a founding partner. From August 2009 until December 2015, Mr. Reilly served as a director of Strategic Hotels and Resorts, an owner and asset manager ofhigh-end hotels and resorts. Mr. Reilly holds an A.B. degree in economics from Harvard College.
Edward S. Nekritz:Gary E. Anderson: Chief LegalOperating Officer General Counsel and Secretary
Mr. Nekritz, 54,Anderson, 56, has been our chief legal officer, general counsel and secretary since the Merger in June 2011. Mr. Nekritz was general counsel of the Trust from December 1998 to June 2011 and secretary of the Trust from March 1999 to June 2011. Mr. Nekritz serves on the technical committee of FIBRA Prologis. Prior to joining the Trust in September 1995, Mr. Nekritz was an attorney with Mayer, Brown & Platt (now Mayer Brown LLP). Mr. Nekritz holds a Juris Doctor degree from the University of Chicago Law School and an A.B. degree in government from Harvard College.
Gary E. Anderson: Chief Operating Officer
Mr. Anderson, 54, was appointed our chief operating officer insince March 2019. Mr. Anderson was our CEO, Europe and Asia, from June 2011 until March 2019. Mr. Anderson held various positions with the Trust from August 1994 to June 2011, including head of the Trust’s global fund business from March 2009 to June 2011 and president of the Trust’s European operations from November 2006 to March 2009. Prior to joining the Trust, Mr. Anderson held various positions with Security Capital Group Incorporated, a diversified real estate investment company. Mr. Anderson holds a Master of Business Administration in finance and real estate from the Anderson Graduate School of Management at the University of California at Los Angeles and a Bachelor of Arts in marketing from Washington State University.
Edward S. Nekritz: Chief Legal Officer, General Counsel and Secretary
Mr. Nekritz, 56, has been our chief legal officer, general counsel and secretary since the Merger in June 2011. Mr. Nekritz was general counsel of the Trust from December 1998 to June 2011 and secretary of the Trust from March 1999 to June 2011. Mr. Nekritz serves on the technical committee of FIBRA Prologis. Prior to joining the Trust in September 1995, Mr. Nekritz was an attorney with Mayer, Brown & Platt (now Mayer Brown LLP). Mr. Nekritz holds a Juris Doctor degree from the University of Chicago Law School and an A.B. degree in government from Harvard College.
Michael S. Curless: Chief Customer Officer
Mr. Curless, 56, was appointed58, has been our chief customer officer insince March 2019. Mr. Curless was our chief investment officer from June 2011 until March 2019. Mr. Curless was chief investment officer of the Trust from September 2010 to June 2011, and he was with the Trust in various capacities from August 1995 through February 2000. Mr. Curless was president and a principal at Lauth, a privately held national construction and development firm, from March 2000 until rejoining the Trust in September 2010. Prior thereto, he was a marketing director with the Trammell Crow Company. Mr. Curless holds a Master of Business Administration in finance and marketing and a Bachelor of Science in finance from the Kelley School of Business at Indiana University.
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Environmental Stewardship, Social Responsibility and Governance
Prologis ESG Value Creation
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Environmental Stewardship, Social Responsibility and Governance
ENVIRONMENTAL STEWARDSHIP AT PROLOGIS
Future-Proofing Our Building Design to Stay Ahead of Customer Needs
Our customers turn to us for modern, sustainable buildings in today’s fast-evolving logistics landscape.
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Environmental Stewardship, Social Responsibility and Governance
Customer-Focused LED Lighting and Solar Solutions
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Prologis LED Essentials: Using our scale to benefit our customers
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Environmental Stewardship, Social Responsibility and Governance
Prologis SolarSmart: Making renewable energy easy and accessible to customers
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Environmental Stewardship, Social Responsibility and Governance
ESG Real Estate Innovations – Our UK Team in Action
Prologis DIRFT III DC2: Saving energy and reducing customer costs
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Environmental Stewardship, Social Responsibility and Governance
SOCIAL RESPONSIBILITY AT PROLOGIS
Relationships Strengthen Our Business
Long-term partnerships that pay off
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Environmental Stewardship, Social Responsibility and Governance
Prologis Labor Solutions: Innovating to Solve our Customers’ Pain Points
Prologis Community Workforce Initiative: Awin-win for us, our customers and our communities
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Environmental Stewardship, Social Responsibility
Approach to ESG Priorities
At Prologis, our environmental, social and Governancegovernance (ESG) priorities are important factors in the implementation of our business strategy. We support innovation and inclusion; reduce our environmental impact, including our emissions; and strengthen our relationships with customers, employees and communities.
This integrated approach impacts every aspect of our company. Every day, Prologis’ approximately 2,000 employees work to: Define the Future of Logistics; Anticipate Stakeholder Needs; and Manage Risks and Opportunities.
Our Multifaceted Approach to Labor: Training, Technology Investments and Real Estate Solutions
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In the spotlight: Our Japan team tackling the labor challenge
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Environmental Stewardship, Social Responsibility and Governance
GOVERNANCE AT PROLOGIS
Strong Oversight Ensures the Resilience of Our Business
Good governance runs deep throughout our organization
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Environmental Stewardship, Social Responsibility and Governance
Global Risk Management: Oversight at All Levels over Risk and Safety
Actively managing risk to serve our customers and protect our business
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Environmental Stewardship, Social Responsibility and Governance
Advancing Our ESG Leadership
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 | of Logistics |  | Stakeholder Needs |  | Manage Risks and Opportunities | |||||||
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| We have the scale and resources to set the benchmark for logistics real estate. We explore leading-edge logistics technologies and look for ways to help our customers address a wide range of challenges, from meeting environmental goals to workforce training. | Strong, integrated risk oversight at every level of our company protects business value and delivers results for our stakeholders. This is the foundation of good governance. | |||||||||||
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| ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRIORITIES |
We Define the Future of Logistics
With an innovative culture and an intense focus on our customers, we set the benchmark for logistics real estate. Examples include:
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· Through our Community Workforce Initiative (CWI) we trained more than 7,000 people in logistics support in 2021. This includes on-line or in-person courses—certified by the Association of Supply Chain Management (ASCM)—in areas such as equipment training, inventory and warehouse management and environmental impact of the industry. For more information, please see “Developing Future Logistics Talent,” below. |
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DEVELOPING FUTURE LOGISTICS TALENT
Our Community Workforce Initiative is an example of how we are advancing our industry and committing ourselves as partners to the communities we serve. The vision for the program is to develop an abundance of diverse, qualified and engaged talent while revitalizing career pathways and creating economic opportunity.
It includes an online workforce development platform that helps our customers by enabling members of the transportation, distribution and logistics workforce to build the skills they need to advance.
Since it was launched in 2018, more than 13,000 people across 15 markets have participated in CWI.
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| ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRIORITIES |
We Anticipate Stakeholder Needs How do we meet the needs of our employees, our customers and the communities we serve? We manage human capital and foster a workplace culture of respect and inclusion. We address our customers' challenges, including those brought on by global supply chain issues. We find new ways to connect with and serve the communities where we do business. Examples of our recent efforts include: Our employee engagement survey indicated that 88% of Prologis employees are engaged, as indicated by their positive response to the five questions comprising our engagement driver index, including "I am proud to work for this company." For the first time, we published a summary of our EEO-1 data on the Prologis website to provide transparency on our successes and challenges in inclusion and diversity. Our "net promoter" score of 66 far exceeds the B2B average of 40, indicating our customers are very likely to recommend Prologis to a colleague. Every build-to-suit development completed in 2021 incorporated sustainable elements, from rooftop solar and LED lighting to electric vehicle charging stations and zero-emissions status. This responds to customer and community needs, investor priorities and regulatory requirements for more efficient lower-emission buildings. With our PARKlife" program, we create a range of services and amenities to support our customers, their employees and the community at large. These include green spaces and fitness trails, art installations, green transportation programs, maintenance and security.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 30 |
| ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRIORITIES |
We Manage Risks and Opportunities
Strong, integrated risk management protects business value and delivers results for our stakeholders. This includes assessing environmental and climate-related risks as well as risks from seismic activity. A global health & safety committee establishes policies and practices to enhance protections for our employees and contractors. Our Customer Advisory Board provides third-party validation with insights into existing and emerging risks and opportunities in our industry.
We continuously anticipate market, regulatory and environmental changes to protect the financial, reputational and operational resilience of our company. Examples include:
| · | We have one of the strongest balance sheets in the industry, with $5.0 billion in liquidity. |
| · | In 2021, Prologis’ LEED Volume Program was re-approved by the US Green Building Council (USGBC) at the higher LEED v4 standard, the first for the U.S. logistics real estate sector. This program leverages our scale to procure certifications in a cost and time efficient manner. Under the program, Prologis will achieve improvements in sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality. |
| · | Our Disaster Preparedness and Recovery Plan and our Global Business Continuity and Emergency Response Plan are crucial to protecting our operations and those of our customers from a wide range of risks. These plans ensure employee safety, operational continuity and continuous support for our customers. In 2021, more than 50 natural hazard events affected our portfolio. These included unprecedented floods in China, Germany and Belgium; the Texas Freeze; and other severe events throughout the United States. Due to planning and risk mitigation measures in place, interruptions to customer activities were avoided in nearly all cases. |
| · | We use GIS climate risk mapping software to assess climate risk across our portfolio, and partner with a global reinsurance company to evaluate future climate scenarios based on underwriting data—a significant advancement over the traditional catastrophe modeling and flood zone data. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 31 |
| ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRIORITIES |
A Sustainable Flagship: Park Moissy 2 DC1
Zero-carbon, community-oriented design
Park Moissy 2 DC1 in Paris, France is a flagship example of sustainable logistics. It shows that when we test the boundaries of what is possible, we can significantly reduce energy use, protect and even enhance local biodiversity, and create a facility with attributes that benefit the surrounding neighborhood and broader community.
We work to incorporate community input and emissions reductions into building design wherever feasible. And we have committed that every new development or redevelopment across the Prologis portfolio will achieve a sustainable building certification. In 2021, we added nearly 25 MSF of sustainable certified space to our portfolio. Key sustainable attributes can be categorized as follows:
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 32 |
| ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRIORITIES |
Our ESG Goals and Progress
| Goal | Target year | 2021 Progress/Performance | ||||||||
Environmental Performance | ||||||||||
| Reduced emissions by 37% as of year-end 2020 | |||||||||
Install 400 MW of solar capacity | 2025 | Installed 285MW as of year-end 2021 | ||||||||
Achieve sustainable building certifications for 100% of new development and redevelopment projects | Annual | Includes projects approved in June 2021 or later. These projects will achieve certification once built and stabilized. | ||||||||
Install LED lighting across 100% of our | 2025 |
57% of portfolio | ||||||||
Social Performance | ||||||||||
| 2025 | Trained 13,039 participants | ||||||||
Achieve 75,000 hours of volunteer time to | 2025 |
the end of 2021 | ||||||||
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Ensure 100% of employees complete ethics training | ||||||||||
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218% 100% 15% growth(3) 100% of protfolio 40% top 10% 24% growth 30% growth 46% growth
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Environmental Stewardship, Social Responsibility
2021 Awards and Honors
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 34 |
| ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRIORITIES |
ESG Governance
Our leaders drive ESG performance
ESG oversight is integrated into our management processes across the full breadth of our operations. Our leaders are responsible for integrating ESG principles into the work of their teams. In the last year, Prologis has invested in expanding ESG talent and infrastructure by adding new officer-level positions responsible for ESG implementation including a chief energy and sustainability officer, focusing on customer solutions and sustainability as a service; a vice president of global ESG, focusing on global ESG strategy; and several regional and functional ESG leaders who will focus on aspects such as Inclusion & Diversity, electric vehicle charging, government and community affairs and ESG-related data systems and processes.
We have also incorporated ESG metrics including solar, LED lighting (since 2018) and Inclusion and Diversity (since 2017) into our compensation plan and have added additional ESG metrics to our 2022 bonus scorecard, including sustainable development, CWI and corporate governance metrics.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 35 |
| ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRIORITIES |
Further Information on our ESG Performance and Approach
At Prologis, our ESG priorities influence our long-term success: Defining the Future of Logistics; Anticipating Stakeholder Needs; and Managing Risks and Opportunities.
We welcome your feedback and ideas on how to improve the value of this disclosure: sustainability@prologis.com.
ESG report and Executive Summary Our next ESG report and Executive Summary, to be published later in 2022, will provide more detail on our priorities, opportunities and achievements in ESG. Corporate website In addition, our corporate website provides ESG related information, updates and data. This website is also where we publish our responses to ESG frameworks such as GRI, SASB, TCFD, CDP, PRI mapping and more.
Prologis Leading By Example
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| COMPENSATION DISCUSSION AND ANALYSIS |
Compensation Discussion and Analysis
Compensation Discussion & Analysis
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Compensation Discussion and Analysis
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All company operational information in CD&Athis Compensation Discussion and Analysis is for the year ended or as of December 31, 2019,2021, unless otherwise noted. See Appendix A for definitions and discussion ofnon-GAAP measurements and reconciliations to the most directly comparable GAAP measures and for additional detail regarding definitions of terms as generally explained in CD&A.this Compensation Discussion and Analysis. The Compensation Committee reviews management’s performance against key company performance measures, such as Core FFO per share, discussed below. See “2019 Compensation Decisions: Annual Base Salary and Bonus Opportunity” for more information about our key performance measures and targets.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 37 |
| COMPENSATION DISCUSSION AND ANALYSIS |
COMPENSATION SUMMARY
Our Compensation Program Pays When Stockholders Win
| · | Paying for performance is our central compensation tenet. |
| – | 100% of our CEO’s compensation is at-risk and contingent on performance. |
| – | In line with our established practice of conducting extensive stockholder outreach and responding to feedback with concrete action, we made our long-term incentive program even more rigorous by requiring above-index performance to earn LTI awards at target. We also adopted a variety of improvements to other program features. |
| · | Outperformance compensation is paid only when stockholders receive significant above-market returns as measured by objective, formulaic hurdles. |
| – | Outperformance compensation extends deep into our organization beyond NEOs, helping us attract and retain key talent in an increasingly competitive market. Our evolving business requires expertise from industries beyond real estate such as finance, private equity and technology. |
| · | Our NEO compensation reflects the performance of our entire global business that generates value for our stockholders. This includes our Strategic Capital business, which accounts for nearly half of our real estate portfolio. Strategic Capital comprises two public and seven private ventures, which our NEOs manage in addition to the rest of our business. |
| WHAT SETS PROLOGIS APART? | ||||||||
Unique strategy proven to drive superior returns Powerful platform that delivers durable, sector-leading growth. |
| Strategic Capital ventures Prologis |
| Global customer-centric operations Unparalleled scale enables Essentials solutions and innovations that benefit customers and reward our stockholders. | ||||
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 38 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Letter from the Talent and Compensation Committee
To Our Stockholders:
Prologis achieved tremendous success in 2021. We surpassed 1 billion square feet in our portfolio and achieved an occupancy rate of 97.7% globally, both all-time company records. Our 2021 TSR of 72.3% outpaced the S&P 500 index by 43.7%. We continued to receive third-party recognition for our ESG efforts, including being named one of the Global 100 Most Sustainable Corporations in the World for the thirteenth time. Our Community Workforce Initiative reached more than 13,000 trainees in total, building a pipeline of skilled logistics workers for our customers while revitalizing career pathways in the communities where we operate. Institutional Investor, a financial research institution, recognized Prologis as one of its most honored companies for the fourth year in a row and named our co-founder and CEO, Hamid R. Moghadam, who has led the company for over 35 years, its #1 REIT CEO for the second consecutive year.
For many years, we have proactively sought stockholder input regarding our executive compensation, governance, and other matters and made improvements in direct response to such feedback. Prologis is a unique, multi-faceted business. The program improvements we have implemented are designed to incentivize performance in support of the pivotal components of our global business, drive value creation for stockholders, and mitigate the risk of talent departure.
In light of our strong 2021 performance, we were disappointed in the low level of support for our Say-on-Pay proposal at our last annual meeting. The Committee takes the result of our Say-on-Pay vote extremely seriously and viewed the result of last year’s vote as a direction to redouble our commitment to stockholder engagement and paying for performance.
Following last year’s Say-on-Pay vote, we engaged with 78% of our top 100 stockholders. George Fotiades, Chair of our Committee, and Bud Lyons, the Board’s lead independent director, participated in a number of meetings to listen to feedback directly from stockholders. We also engaged with proxy advisory firms to understand their views on how to improve our compensation program.
During these discussions, we were pleased to hear that stockholders appreciate Prologis’ consistent financial outperformance and believe that the pay-for-performance design and implementation of our compensation program supports this outperformance. As in past years, our conversations with stockholders gave us direction on how we can further improve our compensation program. In response to feedback we heard from stockholders, we adopted a more rigorous payout scale in our long-term incentive program, added more transparency in our annual bonus program, increased the weighting of quantitative metrics (including more prominent ESG-related goals) in the annual bonus program, and completely eliminated certain NEO perquisites. The Committee and full Board are confident that these changes are directly responsive to the feedback we heard from stockholders in engagement conversations.
The continued evolution of our business requires talent recruitment from competitive industries beyond real estate. This led us to refine our compensation comparison peer group in 2021. We reduced the overall number of peers and selected peers of appropriate size that more accurately reflect the other key business and talent markets in which we now compete, namely finance and tech. Although we reconstituted our peer group, we did not increase pay levels in 2021 based on the new peer group. Consistent with our pay-for-performance philosophy, we continue to position core compensation within the competitive band of median pay of the refined group while requiring significant long-term stockholder value creation to earn outperformance compensation.
We deeply value our relationship with our stockholders and look forward to future opportunities for continued dialogue and improvement. Thank you for your candid and insightful feedback during our outreach efforts and for the opportunity to demonstrate our commitment to responsibly serve your best interests.
| George L. Fotiades (Chair) | David P. O’Connor | William D. Zollars | ||
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PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 39 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Stockholder Outreach + Compensation Program Improvements
Say-on-Pay responsiveness
| · | We review our compensation program at every Talent and Compensation Committee (“Compensation Committee” or “the Committee”) meeting throughout the year. Voting results and feedback from our stockholders are crucial to our continual assessment of our compensation programs, decisions, and policies. |
| · | We received an average Say-on-Pay vote of over 80% support in the three years prior to our 2021 annual meeting. However, at our 2021 annual meeting, 52.17%(1) of stockholders voted in favor of our 2020 executive compensation. We take the results of our Say-on-Pay vote very seriously. As a direct response to that vote, we amplified our historically robust, proactive stockholder outreach efforts. In total, we connected with 78% of our top 100 stockholders.(2) The Chair of our Compensation Committee and the Board’s lead independent director participated directly in a number of meetings with stockholders. |
| · | Based on the initial stockholder feedback we received, we developed a list of potential compensation program improvements. We then conducted a second extensive outreach campaign to present our potential changes and gauge stockholder reactions. The feedback we heard from stockholders and our responsive compensation program improvements are detailed on the following pages. |
| · | Additionally, stockholder feedback influenced the development of our revised peer group, as discussed on pages 52-53. |
| (1) | Calculated using a denominator adding the total number of votes cast for our Say-on-Pay proposal and votes cast against it. Calculated using a denominator that includes abstentions and broker non-votes, the percentage is 48.27%. |
| (2) | Calculated by outstanding shares of common stock of our top 100 stockholders. Our top 100 stockholders hold 80% of our outstanding shares. Engagement covered 60% of total shares outstanding and included outreach conducted after our 2021 annual meeting to March |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 40 |
| COMPENSATION DISCUSSION AND ANALYSIS |
2021 STOCKHOLDER FEEDBACK | OUR RESPONSE | |||
Appreciated Our Outreach and Responsiveness:In light of our Say-on-Pay voting result, our stockholders appreciated our continued outreach and responsiveness to their feedback. While stockholders support the strong pay-for-performance orientation of our program, they requested additional rigor and transparency. |  | Assessed Program to Enhance Rigor and Transparency: The Compensation Committee carefully considered our 2021 Say-on-Pay result and conducted a comprehensive review of our program to identify potential areas of improvement. The Committee modified our LTI awards, annual bonus program, and disclosure, as discussed below. The Committee also eliminated NEO financial planning and parking perquisites. | ||
Scrutinized Payout Levels for LTI Awards: Stockholders appreciated that our LTI program aligns pay directly with TSR. However, some requested greater rigor, such as requiring above-index performance to receive target LTI award value. | | Higher Performance Standards for LTI Awards: The Committee modified LTI equity awards such that there is no payout if our annualized TSR is less than 500 bps below the index. This eliminated discretion to pay awards in the event of such performance. The Committee also modified the payout scale such that at-target payouts require annualized TSR performance of 100 bps above the benchmark index, as opposed to the previous standard of at-target payout for performance at the index. | ||
Preferred Less Discretion and More Quantitative Metrics in our Annual Bonus Program: Stockholders requested a heavier weighting for quantitative measures used to determine payouts in our annual bonus program. | | Reduced Discretion in Annual Bonus Program: The Compensation Committee shifted the weighting of bonus metrics so that the quantitative corporate score is weighted 80% and individual performance is weighted only 20% for all NEOs. This weighting previously applied only to our CEO. | ||
Requested More Visibility into Our Compensation Decisions: Stockholders requested more visibility into our compensation determinations, such as calculations for our annual bonus awards. They also requested simplified disclosure to better understand our program (such as for PPP) and a discussion of the Committee’s compensation goals and rationale for the program’s structure. | | Enhanced Disclosure on Our Program and Discussion of Pay Determinations: We expanded disclosures on various elements of our program, such as the quantitative targets used for bonus awards. We also developed enhanced explanations of our program (focusing on PPP per feedback) and our underlying rationale for our program’s structure in this Compensation Discussion & Analysis. | ||
Favored Greater Prominence of Quantitative ESG Targets in Our Incentive Programs: Stockholders noted their appreciation for our longstanding commitment to ESG. They requested that our bonus metrics reflect that dedication by including measurable ESG goals with a heavier weighting and more disclosure on the rationale for the ESG metrics we select. | | Added Emphasis on Quantitative ESG Metrics and Rationale for Their Selection: We added rigorous, quantifiable ESG goals to our bonus program and increased the weighting of these ESG goals in our bonus determination process. We also provided disclosure on why we selected these particular ESG metrics and how we measure progress. | ||
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 41 |
| COMPENSATION DISCUSSION AND ANALYSIS |
2021 STOCKHOLDER FEEDBACK | OUR RESPONSE | |||
Acknowledged No True Peers as Our Business Evolves: Stockholders recognize that our global business continues to expand beyond that of a typical real estate company, as seen in our Strategic Capital business and increasing emphasis on tech-enabled customer solutions. They understand the associated difficulty of selecting peers for our compensation comparison group that are appropriate in size and scope. | | Refined Peer Group to Better Reflect Complexity of Business and Comparative Size of Revenues: Our Compensation Committee refined our peer group to better reflect the growth and increasing complexity of our global business, as well as our need to tap employee talent markets beyond real estate to successfully operate our business. The Committee also ensured that all peers in the refined group were appropriate in size from a revenue standpoint. | ||
Detail on compensation program improvements
As discussed above, in response to our 2021 Say-on-Pay vote and related stockholder feedback, our Compensation Committee approved the following improvements to our executive compensation program:
1. | Annual Bonus Program |
| · | Increased the quantitative corporate score weighting to 80% for all NEOs: |
| – | This weighting, which places more emphasis on the quantitative corporate score, now applies to all NEOs (it already applied to our CEO). The other NEOs were previously subject to a 60% corporate score / 40% individual performance weighting. |
| – | This weighting applied to bonus payments made in 2022 for performance achieved in 2021. |
| · | Disclosed all quantitative corporate score bonus metrics: |
| – | We enhanced the discussion of our annual bonus program to include comprehensive disclosure of all quantitative targets used to determine our corporate score (which can be found on pages 60-62). |
| · | Increased weighting of quantitative, measurable ESG metrics in our annual Bonus Scorecard: |
| – | ESG metrics will account for 10%of our overall corporate score for bonus payments made in 2023 for performance achieved in 2022. |
| – | See the following page for additional detail on the quantitative ESG bonus metrics we adopted and our rationale for selecting these metrics. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 42 |
| COMPENSATION DISCUSSION AND ANALYSIS |
1. | Annual Bonus Program, continued |
QUANTITATIVE ESG BONUS METRICS IN OUR 2022 BONUS SCORECARD (10% WEIGHTING OVERALL)
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 43 |
| COMPENSATION DISCUSSION AND ANALYSIS |
2. | Long-Term Incentive (LTI) Program |
| · | No payout will occur if performance is less than 500 bps below index TSR: This eliminates any discretion to make payouts in the annual LTI award program below this threshold. |
| · | Increased the rigor of the LTI payout scale: Target payout (100% of award) is achieved only when we outperform the index by at least 100 bps. See table below for enhanced payout scale. |
| · | We also expanded the payout scale to cap the maximum payout at 200% of target payout for 500+ bps outperformance, consistent with market standards for upside payout opportunities. |
| · | See page 64 for a discussion of the benchmark index we use to calculate LTI equity awards. |
3. | Perquisites |
| · | Previously, the company paid for financial planning services and parking for all NEOs. We eliminated both of these benefits beginning in 2021, further reducing already minimal NEO perquisites. |
| (1) | To be implemented beginning with the 2022-2024 performance period to avoid implementation during an ongoing performance period. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022
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Compensation Discussion and Analysis
2019 Compensation and Stockholder Outreach Highlights
Our compensation program pays when stockholders win.
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| · | In response to stockholder feedback in recent years, we continuously enhanced our program. The timeline below lists some notable compensation and governance enhancements we have adopted based on feedback from our stockholders. |
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| COMPENSATION DISCUSSION AND ANALYSIS |
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| – | Customer-focused development: Our business model begins with our customers, who require well-located logistics space in the world’s busiest consumption markets. We build logistics facilities globally where our customers need to be, as 68% of our top 25 customers lease space from us across multiple continents. |
| – | Strategic Capital: Strategic Capital is an important differentiator. This arm of our business provides a |
| – | Solutions, services and products: We offer an array of solutions, products, and services to our |
| – | ESG: Our leadership in |
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| COMPENSATION DISCUSSION AND ANALYSIS |
Our unique business model is designed to meet our customers’ evolving needs.
Consistent track record of above-market performance
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Compensation Discussion and Analysis
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Our business model is designed for durable growth.
| · | Our forward-thinking strategy delivers results: We have long recognized our customers’ need for logistics facilities around the endpoint of consumption. We focus our new construction where the supply chain is moving: markets with large, dense populations, growing consumer affluence and high barriers to entry. We are simultaneously expanding our complementary products and services to help our customers get ahead of the supply chain evolution and e-commerce expansion. Our industry leading ESG program has positioned us to continue to succeed as sustainability increasingly becomes a point of emphasis. Our foresight in these areas and ability to execute on our forward-looking strategy has resulted in sustained, reliable returns for our stockholders. |
| · | Responsible growth: The interplay of |
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Compensation Discussion and Analysis
Our business model allows us to utilize our global scale.
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BENEFITS OF OUR SCALE
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Compensation Discussion and Analysis
Our business model delivers proven long-term success.
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| (1) | Compound annual growth rates were calculated for the |
| (2) | Core FFO per share is anon-GAAP measure. Please see Appendix A for a discussion and reconciliations to the most directly comparable GAAP measure. See Appendix A for a calculation of the compound annual growth rate of our Core FFO per share. |
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| (4) | Calculated using our common stock prices and |
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Compensation Discussion and Analysis
| COMPENSATION DISCUSSION AND ANALYSIS |
STRONGDELIVERING DURABLE, SECTOR-LEADING GROWTH RELATIVE TO PEERS(1)
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STRATEGIC CAPITAL IN NUMBERS
Unrivaled scale and scope in logistics real estate
NO OTHER LOGISTICS REIT PROVIDES A TRUE COMPARISON
Unlocking the advantages of scale for our customers
Refined Compensation Comparison Group Rationale and methodology We refined our peer comparison group in 2021 to reflect stockholder feedback, select peers of appropriate size, and align with the following considerations about our continued growth and ongoing business transformation:
Total size of Strategic Capital, a critical component of our business, must be considered in peer group selection
Compensation comparison group for 2021:
Compensation did not increase in response to the peer group changes The Compensation Committee did not increase the compensation amount of any NEO in 2021 in response to the refinement of our peer group. This includes both core and outperformance compensation.
Summary of Compensation Elements
We position core compensation around the peer group median; outperformance compensation is paid only for significant above-market performance
As part of its 2021 compensation program review, the Compensation Committee considered whether our largely formulaic pay-for-performance program is working as designed to generate long-term returns for our stockholders. During that review, the Committee took special note of our CEO’s leadership and
2021 Core Compensation - Base Salary and Bonus Opportunity CEO base salary continues at $1; NEO base salaries reflect their duties
Bonus structure supports our top strategic priorities How we select our bonus metrics and
Portfolio Operations metrics are the most heavily weighted:
2021 bonus assessment results
CATEGORY-BY-CATEGORY METRIC RESULTS
DEPLOYMENT AND
2021 ANNUAL BONUS PAYMENTS All 2021 NEO bonuses were settled in equity and not paid in cash.
2021 Core Compensation - Annual LTI Equity Awards Annual LTI equity awards are 100% based on performance and not guaranteed
Annual LTI equity award benchmark index is an appropriate balance of logistics and large cap REITs
LTI EQUITY AWARDS FOR THE 2021 PERFORMANCE YEAR (GRANTED IN 2022)(1)
Prior year: annual LTI equity awards for the 2020 performance year (granted in 2021)
100% of CEO’s compensation paid in equity
SUMMARY OF CEO CORE COMPENSATION FOR 2021 PERFORMANCE YEAR
CEO core compensation directly correlates with stockholder return
CORRELATION OF CEO CORE COMPENSATION WITH RELATIVE TSR
2021 Outperformance Compensation
2021 Outperformance Compensation – POP Rewards significant relative TSR outperformance and incentivizes long-term retention
HOW IT WORKS continued Prologis Outperformance Plan (POP)
Stockholders’ share of POP value creation: 99.8% of the value generated above the POP measurement index for the 2019-2021 performance period
2021 CEO POP Compensation $
CEO POP AWARDS(1) ARE A SMALL FRACTION OF TOTAL VALUE CREATED FOR STOCKHOLDERS BY EXCEEDING THE POP MEASUREMENT INDEX(2)
CEO POP awards were only 0.04% of value generated for stockholders by exceeding POP measurement index
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| (1) | CEO POP award for the 2019-2021 performance period and the holdback awards for the |
| (2) | We calculate our outperformance by comparing the aggregate dollar value of our actual TSR versus the aggregate value of our TSR had it tracked the TSR of the MSCI REIT Index over the same period of time. The aggregate dollar value of our TSR is generally the sum of (i) the increase in value of existing and newly issued shares, plus (ii) cumulative dividends including reinvestment. Please see |
| (3) | The |
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| COMPENSATION DISCUSSION AND ANALYSIS |
2021 Outperformance Compensation Discussion and Analysis– PPP
Rewards significant operating outperformance of our Strategic Capital ventures
| · | Incentivizes Strategic Capital outperformance, a key driver of competitive advantage: Strategic Capital is a high-margin business that accelerates our growth responsibly. The assets held in our Strategic Capital business yield higher returns than the assets we own directly because Strategic Capital generates additional income from management fees as well as “promotes” when applicable ventures perform exceptionally well. As discussed in the following pages, PPP awards are paid exclusively out of the promote fees that Prologis receives, meaning that such awards are available only when substantial value is created for our stockholders through our Strategic Capital business. |
| · | Strategic Capital investors support the need for PPP: Our Strategic Capital investors want a compensation program tied directly to the success of the funds in which they invest. |
| · | PPP is a critical recruitment tool: We need a compensation program component tied specifically to our Strategic Capital business to attract the best talent from the finance industry, private real estate companies, and other similar business sectors. PPP resembles the profit-sharing structures typically seen in private equity firms, which aligns our compensation with the expectations of the talent we recruit to Strategic Capital from the private equity industry. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 72 |
| COMPENSATION DISCUSSION AND ANALYSIS |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 73 |
| COMPENSATION DISCUSSION AND ANALYSIS |
| · | PPP awards are highly variable based on promotes: The chart below demonstrates that while PPP awards are paid only when Strategic Capital outperformance justifies payment, PPP award timing and amounts are highly variable depending on promote timing. The value of promotes earned by Prologis in any given year, and therefore the amount of PPP awards paid, depends on the availability of promote calculation opportunities and the timing of performance periods across our Strategic Capital ventures (as well as whether we achieve the performance hurdle). |
| · | Average annual PPP awards better accounts for variability: Average annual PPP awards over multiple years provides a clearer understanding of the true size of our PPP program because of variance in the availability of promote earning opportunities in our Strategic Capital business and the cadence of performance periods. |
AVERAGE ANNUAL PPP AWARDS BETTER REFLECT PROGRAM SIZE
We created an average of $1.1B in value for our stockholders in years when PPP hurdles were met
| (1) | See footnotes to “CEO PPP Awards are a Small Fraction of Total Value Created for Stockholders When We Achieved PPP Hurdles.” |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 74 |
| COMPENSATION DISCUSSION AND ANALYSIS |
$1.2 billion309M in value created for stockholders when PPP compensation was paid.paid
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| Prologis 2021 promote / PPP |
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| – | Prologis’ net promote |
Prologis also earned a total of $185 million in management and other fees from the ventures that paid promotes to Prologis in 2021. |
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CEO PPP AWARDSARE A SMALL FRACTION OF TOTAL VALUE CREATED FOR STOCKHOLDERS WHEN WE ACHIEVED PPP HURDLES(1)
CEO PPP awards were only 1.4% of the total value created for stockholders when we achieved the promote hurdles
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| (1) | The “total value created for stockholders when we achieved |
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Compensation Discussion and Analysis
2019 Compensation Decisions: Annual Base Salary and Bonus Opportunity
CEO base salary reduced to $1; No increases made to other NEO base salaries
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Compensation Discussion and Analysis
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100% 6% 40% 25% 10% 25%
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Compensation Discussion and Analysis
Our bonus structure allows for prudent decisions—downward discretion reduced 2019 bonuses despite strong operational performance.
How we select our bonus metrics and set our targets
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Compensation Discussion and Analysis
The Compensation Committee’s approach to our 2019 bonus allocation
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Corporate score and NEO bonus assessments
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Portfolio Operations WEIGHTED AT 40% ABOVE TARGET OVERALL
| Portfolio Operations | Threshold performance 50% of Target Bonus | Target Performance 100% of Target Bonus | Stretch Performance 200% of Target Bonus | Actual 2019 Performance | ||||||||||||||||||
Core FFO per share (excluding promotes)(1)(2) |
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SSNOI Growth(1)(2) |
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Rent Change on Rollover(1)(3) |
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| 22.0% |
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| 24.0% |
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| 23.6% |
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Compensation Discussion and Analysis
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Deployment and Development Stabilizations WEIGHTED AT 25% ABOVE TARGET OVERALL
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Strategic Capital WEIGHTED AT 10% ABOVE TARGET OVERALL
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Compensation Discussion and Analysis
Procurement, Ancillary Revenues, Five Drivers of Competitive Advantage and G&A/AUM WEIGHTED AT 25% BELOW TARGET OVERALL
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To drive customer-centricity, Mr. Curless developed our customer NPS (net promoter score) program and action plan. Mr. Nekritz advanced our ESG platform, resulting in top ESG rankings. He alsorolled-out our Community Workforce Initiative in new markets and established a national workforce partnership to scale program and develop an online training curriculum. Acceleratingyear-end and quarter closings, Mr. Olinger drove continuous improvement in our accounting processes.
While noting our progress, the Compensation Committee also considered the timing expectations for the company’s platform initiatives and exercised downward discretion to impact our NEOs’ individual bonus scores accordingly.
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Balance Sheet Considerations
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Compensation Discussion and Analysis
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OVERALL CORPORATE SCORE 120% OF TARGET ABOVE TARGET OVERALL
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2019 ANNUAL BONUS DECISIONS
| 2019 Bonus* | ||||||||||||||||
| NEO | 2019 Target Bonus Value | % Target** | Amount | |||||||||||||
Hamid Moghadam | $1,500,000 | 120% | $1,800,000 | |||||||||||||
Thomas Olinger | $750,000 | 100% | $750,000 | |||||||||||||
Eugene Reilly | $750,000 | 153% | $1,150,000 | |||||||||||||
Edward Nekritz | $750,000 | 123% | $925,000 | |||||||||||||
Gary Anderson | $750,000 | 123% | $925,000 | |||||||||||||
Michael Curless | $750,000 | 100% | $750,000 | |||||||||||||
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Compensation Discussion and Analysis
2019 Compensation Decisions: Annual LTI Equity Awards
Annual LTI equity awards are 100% based on performance and not guaranteed.
HOW IT WORKS
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Annual LTI Equity Award Formula
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100% based on performance
■ 50% of target LTI equity awards is tied directly to our three-year annualized TSR performance against a weighted index of a combination of the Cohen & Steers REIT Index and comparison groups of domestic and global logistics REITs.
■ The other 50% is awarded based on a qualitative assessment of performance at threshold levels. The intent is to award the 50% if threshold levels are met, but awards can be less than 50%.
■ Annual LTI equity award amounts are determined using the linear payout scale set forth to the right (with interpolation between levels).
■ The mix between relative TSR and the qualitative component is consistent with our peer average.
No guaranteed minimum
Vesting: 4 years |
EQUITY AMOUNTS ABOVE 50% OF TARGET
Based on our 3-year TSR vs the weighted 3-year TSR index of logistics and large cap REITs
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PLD 3-Year TSR Basis Points Above/Below Weighted Index TSR | Total Annual LTI Equity Award as % of Target Value | |||||||||||||||||
| >500 bps and above | 150% | |||||||||||||||||
| +400 bps | 140% | |||||||||||||||||
| +300 bps | 130% | |||||||||||||||||
| +200 bps | 120% | |||||||||||||||||
| +100 bps | 110% | |||||||||||||||||
| 0 | 100% | |||||||||||||||||
| -100 bps | 90% | |||||||||||||||||
| -200 bps | 80% | |||||||||||||||||
| -300 bps | 70% | |||||||||||||||||
| -400 bps | 60% | |||||||||||||||||
| <=-500 bps | Qualitative component up to 50% | |||||||||||||||||
 | Based on performance and not guaranteed | |||||||||||||||||
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Compensation Discussion and Analysis
Annual LTI equity award benchmarks are a balance of logistics and large cap REITs.
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22.5% 13.7%
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Compensation Discussion and Analysis
LTI EQUITY AWARDS FOR THE 2019 PERFORMANCE YEAR (GRANTED IN 2020)(1)
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NEO | 2019 Target Award Value | % Target | $ | |||||||||
Hamid Moghadam | $8,250,000 | 150% | $12,375,000 | |||||||||
Thomas Olinger | $2,100,000 | 136% | $ 2,850,000 | |||||||||
Eugene Reilly | $2,600,000 | 154% | $ 4,000,000 | |||||||||
Edward Nekritz | $2,100,000 | 150% | $ 3,150,000 | |||||||||
Gary Anderson | $2,100,000 | 150% | $ 3,150,000 | |||||||||
Michael Curless | $1,900,000 | 150% | $ 2,850,000 | |||||||||
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Annual LTI equity awards for the 2018 performance year (granted in 2019)
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CEO equity grant in lieu of cash salary
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2019 Compensation Decisions: Outperformance Plans
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Compensation Discussion and Analysis
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Compensation Discussion and Analysis
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Compensation Discussion and Analysis
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Compensation Discussion and Analysis
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Compensation Discussion and Analysis
Other Compensation Elements and Considerations
LTIP Units
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NEO waivers of retirement eligibility benefits
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Senior-level benefits
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Change-in-control benefits
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75
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Compensation Discussion and Analysis
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Other considerations
COMPENSATION
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Risk mitigation
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Compensation Discussion and Analysis
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Stock ownership guidelines
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Hedging and pledging policies
All hedging and pledging of common stock are prohibited: Our insider trading policy prohibits all NEOs, employees and directors from hedging or pledging shares of our common stock. All of our NEOs and directors are currently in compliance with this prohibition.
Compensation recoupment (clawback) policy
The Board has adopted a compensation clawback policy, which provides that in the event of a substantial restatement of our previously issued financial statements, a review will be undertaken by the Board of performance-based compensation awarded to certain officers that was attributable to our financial performance during the time periods restated. If the Board determines that an officer was improperly compensated and that it is in our best interests to recover or cancel such compensation, the Board will pursue all reasonable legal remedies to recover or cancel such performance-based compensation. The policy further provides that if the Board learns of any misconduct by certain officers that caused the restatement, the Board shall take such action as it deems necessary to remedy the misconduct, prevent its recurrence and, if appropriate, based on all relevant facts and circumstances, punish the wrongdoer. Such punishment by the Board could include dismissal, legal action for breach of fiduciary duty or such other action to enforce the officer’s obligations to us as may fit the facts surrounding the particular case. In determining the appropriate punishment, the Board may take into account punishments imposed by third parties. The Board’s power to determine the appropriate punishment for the wrongdoer is in addition to, and not in replacement of, remedies imposed by such third parties.
Equity grant policy and program administration
Awards are administered by our human resources and stock plan administration departments. Grants are made generally in the first quarter of the year, after promotion, at the time of new hire or in accordance with PPP. Equity grant dates are not scheduled based on the timing of the release of material non-public information.
We discontinued the issuance of stock option awards after February 2011.
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Compensation Discussion and Analysis
Impact of accounting and tax treatment
To the extent reasonable and allowable, executive compensation will be deductible by the company for federal income tax purposes. However, the Compensation Committee may design compensation program components that are not deductible. In addition, the Internal Revenue Service recently released proposed regulations under section 162(m), which may limit the future deductibility of certain executive compensation amounts. Because we intend to qualify as a REIT under the Internal Revenue Code, we generally distribute 100% of our net taxable income each year, and as a result do not pay U.S. federal income tax. As such, we do not expect the possible loss of executive compensation deductions to have a material impact on us. We intend that executive compensation comply with 409A of the Internal Revenue Code, which may impose additional taxes on our NEOs for Section 409A. In addition, we expense base salaries and annual bonus awarded in the year they are earned. In accordance with ASC Topic 718, we expense the value of equity awards granted over the vesting period of such grants.
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Compensation Discussion and Analysis
TalentOther Compensation Elements and Compensation Committee ReportConsiderations
We, the members of the Talent and Compensation Committee, have reviewed and discussed CD&A set forth above with the management of the company and, based on such review and discussion, have recommended to the Board that this CD&A be included in this proxy statement and, through incorporation by reference of this proxy statement, the company’s Annual Report on Form 10-K for the year ended December 31, 2019.
Talent and Compensation Committee:
George L. Fotiades (Chair)
David P. O’Connor
William D. Zollars
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Summary Compensation Table
Summary Compensation Table for Fiscal Year 2019*
| Year | Salary(1) | Bonus(1)(2)(3) | Stock Awards(3)(4)(5) | Non-Equity Incentive Plan Compensation(5) | All Other Compensation(6) | Total | ||||||||||||||||||||||
Name and Principal Position (a) | (b) | ($) (c) | ($) (d) | ($) (e) | ($) (g) | ($) (i) | ($) (j) | |||||||||||||||||||||
Hamid Moghadam Chief Executive Officer | 2019 | $1 | $1,800,000 | $28,499,922 | — | $ 83,515 | $ | 30,383,438 | ||||||||||||||||||||
| 2018 | $1,000,000 | $1,800,000 | $25,313,854 | — | $ 87,546 | $ | 28,201,400 | |||||||||||||||||||||
| 2017 | $1,000,000 | $2,062,500 | $16,203,727 | — | $ 85,900 | $ | 19,352,127 | |||||||||||||||||||||
Thomas Olinger Chief Financial Officer | 2019 | $ 600,000 | $ 750,000 | $7,787,616 | $1,812,766 | $ 43,565 | $ | 10,993,947 | ||||||||||||||||||||
| 2018 | $ 600,000 | $ 862,500 | $6,990,744 | $1,334,760 | $ 43,135 | $ | 9,831,139 | |||||||||||||||||||||
| 2017 | $ 600,000 | $ 993,750 | $4,710,651 | $ 612,949 | $ 43,940 | $ | 6,961,290 | |||||||||||||||||||||
Eugene Reilly Chief Investment Officer | 2019 | $ 600,000 | $1,150,000 | $8,537,585 | $1,812,766 | $ 41,867 | $ | 12,142,218 | ||||||||||||||||||||
| 2018 | $ 600,000 | $ 975,000 | $7,740,763 | $1,334,760 | $ 40,167 | $ | 10,690,690 | |||||||||||||||||||||
| 2017 | $ 600,000 | $1,046,250 | $5,223,773 | $ 612,949 | $ 34,633 | $ | 7,517,605 | |||||||||||||||||||||
Edward Nekritz Chief Legal Officer and General Counsel | 2019 | $ 600,000 | $ 925,000 | $7,787,616 | $1,812,766 | $ 41,405 | $ | 11,166,787 | ||||||||||||||||||||
| 2018 | $ 600,000 | $ 900,000 | $6,990,744 | $1,334,760 | $ 40,915 | $ | 9,866,419 | |||||||||||||||||||||
| 2017 | $ 600,000 | $1,038,750 | $4,721,901 | $ 612,949 | $ 37,718 | $ | 7,011,318 | |||||||||||||||||||||
Gary Anderson Chief Operating Officer | 2019 | $ 600,000 | $ 925,000 | $7,787,616 | $1,812,766 | $ 44,552 | $ | 11,169,934 | ||||||||||||||||||||
| 2018 | $ 600,000 | $ 900,000 | $6,990,744 | $1,334,760 | $ 40,915 | $ | 9,866,419 | |||||||||||||||||||||
| 2017 | $ 600,000 | $1,046,250 | $4,723,776 | $ 612,949 | $ 37,718 | $ | 7,020,693 | |||||||||||||||||||||
Michael Curless Chief Customer Officer | 2019 | $ 600,000 | $ 750,000 | $7,487,614 | $1,812,766 | $ 42,290 | $ | 10,692,670 | ||||||||||||||||||||
| 2018 | $ 600,000 | $ 900,000 | $6,690,772 | $1,334,760 | $ 43,135 | $ | 9,568,667 | |||||||||||||||||||||
| 2017 | $ 600,000 | $1,008,750 | $4,514,412 | $ 612,949 | $ 41,925 | $ | 6,778,036 | |||||||||||||||||||||
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Summary Compensation Table
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Name | Year(i) | Annual Cash Bonus Award(ii) | Amount Exchanged(iii) | 25% Premium on Exchange(iv) | Exchanged Equity Value(v) | # of Shares or Units(vi) | ||||||
Mr. Moghadam | 2019 | $1,800,000 | $1,800,000 | — | $1,800,000 | 19,094 | ||||||
| 2018 | $1,800,000 | $1,800,000 | — | $1,800,000 | 25,337 | |||||||
| 2017 | $2,062,500 | $2,062,500 | $515,625 | $2,578,125 | 42,740 | |||||||
Mr. Olinger | 2019 | $ 750,000 | $ 750,000 | — | $ 750,000 | 7,956 | ||||||
| 2018 | $ 862,500 | $ 862,500 | — | $ 862,500 | 12,141 | |||||||
| 2017 | $ 993,750 | $ 993,750 | $248,438 | $1,242,188 | 20,593 | |||||||
Mr. Reilly | 2019 | $1,150,000 | $1,150,000 | — | $1,150,000 | 12,199 | ||||||
| 2018 | $ 975,000 | $ 975,000 | — | $ 975,000 | 13,724 | |||||||
| 2017 | $1,046,250 | $1,046,250 | $261,563 | $1,307,813 | 21,681 | |||||||
Mr. Nekritz | 2019 | $ 925,000 | $ 925,000 | — | $ 925,000 | 9,812 | ||||||
| 2018 | $ 900,000 | $ 900,000 | — | $ 900,000 | 12,668 | |||||||
| 2017 | $1,038,750 | $1,038,750 | $259,688 | $1,298,438 | 21,525 | |||||||
Mr. Anderson | 2019 | $ 925,000 | $ 925,000 | — | $ 925,000 | 9,812 | ||||||
| 2018 | $ 900,000 | $ 900,000 | — | $ 900,000 | 12,668 | |||||||
| 2017 | $1,046,250 | $1,046,250 | $261,563 | $1,307,813 | 21,681 | |||||||
Mr. Curless | 2019 | $ 750,000 | $ 750,000 | — | $ 750,000 | 7,956 | ||||||
| 2018 | $ 900,000 | $ 900,000 | — | $ 900,000 | 12,668 | |||||||
| 2017 | $1,008,750 | $1,008,750 | $252,188 | $1,260,938 | 20,904 |
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Summary Compensation Table
Annual LTI Equity Incentive Awards:
Under our annual LTI equity award program, we generally grant equity awards in the first quarter for the performance period ended in the previous year. For example, the annual awards in column (e) for 2019 were granted in February 2019 but were based on a performance period that ended in 2018. The amount of each NEO’s annual award is based on performance criteria and the award is also subject to continued employment.
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Mr. Moghadam—174,197 LTIP Units valued at $12,374,955
Mr. Olinger—44,341 LTIP Units valued at $3,149,985
Mr. Reilly—54,898 LTIP Units valued at $3,899,954
Mr. Nekritz—44,341 LTIP Units valued at $3,149,985
Mr. Anderson—44,341 LTIP Units valued at $3,149,985
Mr. Curless—40,118 LTIP Units valued at $2,849,983
The number of LTIP Units was determined using the closing price of our common stock on the award grant date of February 11, 2019 ($71.04). This is the value used for accounting purposes to expense the grant.
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Mr. Moghadam—205,155 LTIP Units valued at $12,374,950
Mr. Olinger—52,221 LTIP Units valued at $3,149,971
Mr. Reilly—64,655 LTIP Units valued at $3,899,990
Mr. Nekritz—52,221 LTIP Units valued at $3,149,971
Mr. Anderson—52,221 LTIP Units valued at $3,149,971
Mr. Curless—47,248 LTIP Units valued at $2,849,999
The number of LTIP Units was determined using the closing price of our common stock on the award grant date of February 9, 2018 ($60.32). This is the value used for accounting purposes to expense the grant.
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Mr. Moghadam—164,637 LTIP Units valued at $8,249,960
Mr. Olinger—41,907 LTIP Units valued at $2,099,960
Mr. Reilly—51,885 LTIP Units valued at $2,599,957
Mr. Nekritz—41,907 LTIP Units valued at $2,099,960
Mr. Anderson—41,907 LTIP Units valued at $2,099,960
Mr. Curless—37,916 LTIP Units valued at $1,899,971
The number of LTIP Units was determined using the closing price of our common stock on the award grant date of February 10, 2017 ($50.11). This is the value used for accounting purposes to expense the grant.
Information on how we value equity awards is included in the narrative discussion that follows the Grants of Plan-Based Awards in Fiscal Year 2019 table below. Also see “Compensation Discussion and Analysis.”
POP:
The values in column (e) include the NEO’s allocation of the estimated compensation pool value awarded under POP. This value is included in the NEO’s compensation even though there is no assurance that the value of the allocation will ever be realized by the NEO.
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POP and the exchange of the compensation pool allocation for POP LTIP Units are discussed below in the narrative that follows the “Grants of Plan-Based Awards in Fiscal Year 2019” table.
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Summary Compensation Table
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Additional information on the allocations of PPP compensation pools and how they are valued is included in the narrative that follows the “Grants of Plan-Based Awards in Fiscal Year 2019” table.
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401(k) Plan Match | Financial Planning Services(a) | Parking(a) | Other(b) | Totals(c) | ||||||||
Mr. Moghadam | 2019 | — | $63,275 | $7,740 | $12,500 | $83,515 | ||||||
| 2018 | $8,250 | $61,496 | $7,800 | $10,000 | $87,546 | |||||||
| 2017 | $8,100 | $60,000 | $7,800 | $10,000 | $85,900 | |||||||
Mr. Olinger | 2019 | $8,250 | $17,655 | $5,160 | $12,500 | $43,565 | ||||||
| 2018 | $8,250 | $17,165 | $5,220 | $12,500 | $43,135 | |||||||
| 2017 | $8,100 | $16,765 | $5,220 | $13,855 | $43,940 | |||||||
Mr. Reilly | 2019 | $8,250 | $17,655 | $1,418 | $14,544 | $41,867 | ||||||
| 2018 | $8,250 | $17,165 | $2,252 | $12,500 | $40,167 | |||||||
| 2017 | $8,100 | $16,765 | $ 518 | $ 9,250 | $34,633 | |||||||
Mr. Nekritz | 2019 | $8,250 | $17,655 | $3,000 | $12,500 | $41,405 | ||||||
| 2018 | $8,250 | $17,165 | $3,000 | $12,500 | $40,915 | |||||||
| 2017 | $8,100 | $16,765 | $ 353 | $12,500 | $37,718 | |||||||
Mr. Anderson | 2019 | $8,250 | $17,655 | $3,000 | $15,647 | $44,552 | ||||||
| 2018 | $8,250 | $17,165 | $3,000 | $12,500 | $40,915 | |||||||
| 2017 | $8,100 | $16,765 | $ 353 | $12,500 | $37,718 | |||||||
Mr. Curless | 2019 | $8,250 | $17,655 | $3,885 | $12,500 | $42,290 | ||||||
| 2018 | $8,250 | $17,165 | $5,220 | $12,500 | $43,135 | |||||||
| 2017 | $8,100 | $16,765 | $5,220 | $11,840 | $41,925 |
|
|
|
|
|
|
|
|
Grants of Plan-Based Awards
Grants of Plan-Based Awards in Fiscal Year 2019*
Estimated Future Payouts Under Equity Incentive Plan Awards
| ||||||||||||||||||||
Name (a)
| Grant Date
| Target (g)
| Maximum ($) (h)
| All Other (i)
| Grant Date Fair ($) (l)
| |||||||||||||||
Annual and PPP Grants: | ||||||||||||||||||||
Hamid Moghadam | 01/02/19 | (1) | $ | 3,180,000 | $ | 15,000,000 | — | $ | 3,180,000 | |||||||||||
| 03/08/19 | (2) | — | — | 174,197 | $ | 12,374,955 | ||||||||||||||
| 03/15/19 | (3) | — | — | 42,965 | $ | 3,002,394 | ||||||||||||||
| 12/19/19 | (3) | — | — | 106,745 | $ | 9,666,827 | ||||||||||||||
| 12/19/19 | (3) | — | — | 3,054 | $ | 275,746 | ||||||||||||||
Thomas Olinger | 01/02/19 | (1) | $ | 1,272,000 | $ | 6,000,000 | — | $ | 1,272,000 | |||||||||||
| 03/08/19 | (2) | — | — | 44,341 | $ | 3,149,985 | ||||||||||||||
| 03/15/19 | (3) | — | — | 11,171 | $ | 780,629 | ||||||||||||||
| 12/19/19 | (3) | — | — | 27,753 | $ | 2,513,312 | ||||||||||||||
| 12/19/19 | (3) | — | — | 794 | $ | 71,690 | ||||||||||||||
Eugene Reilly | 01/02/19 | (1) | $ | 1,272,000 | $ | 6,000,000 | — | $ | 1,272,000 | |||||||||||
| 03/08/19 | (2) | — | — | 54,898 | $ | 3,899,954 | ||||||||||||||
| 03/15/19 | (3) | — | — | 11,171 | $ | 780,629 | ||||||||||||||
| 12/19/19 | (3) | — | — | 27,753 | $ | 2,513,312 | ||||||||||||||
| 12/19/19 | (3) | — | — | 794 | $ | 71,690 | ||||||||||||||
Edward Nekritz | 01/02/19 | (1) | $ | 1,272,000 | $ | 6,000,000 | — | $ | 1,272,000 | |||||||||||
| 03/08/19 | (2) | — | — | 44,341 | $ | 3,149,985 | ||||||||||||||
| 03/15/19 | (3) | — | — | 11,171 | $ | 780,629 | ||||||||||||||
| 12/19/19 | (3) | — | — | 27,753 | $ | 2,513,312 | ||||||||||||||
| 12/19/19 | (3) | — | — | 794 | $ | 71,690 | ||||||||||||||
|
|
Grants of Plan-Based Awards
Estimated Future Payouts Under Equity Incentive Plan Awards
| ||||||||||||||||||||
Name (a)
| Grant Date
| Target (g)
| Maximum ($) (h)
| All Other (i)
| Grant Date Fair ($) (l)
| |||||||||||||||
Gary Anderson | 01/02/19 | (1) | $ | 1,272,000 | $ | 6,000,000 | — | $ | 1,272,000 | |||||||||||
| 03/08/19 | (2) | — | — | 44,341 | $ | 3,149,985 | ||||||||||||||
| 03/15/19 | (3) | — | — | 11,171 | $ | 780,629 | ||||||||||||||
| 12/19/19 | (3) | — | — | 27,753 | $ | 2,513,312 | ||||||||||||||
| 12/19/19 | (3) | — | — | 794 | $ | 71,690 | ||||||||||||||
Michael Curless | 01/02/19 | (1) | $ | 1,272,000 | $ | 6,000,000 | — | $ | 1,272,000 | |||||||||||
| 03/08/19 | (2) | — | — | 40,118 | $ | 2,849,983 | ||||||||||||||
| 03/15/19 | (3) | — | — | 11,171 | $ | 780,629 | ||||||||||||||
| 12/19/19 | (3) | — | — | 27,753 | $ | 2,513,312 | ||||||||||||||
| 12/19/19 | (3) | — | — | 794 | $ | 71,690 | ||||||||||||||
|
|
|
|
|
|
Discussion of Summary Compensation Table and the Grants of Plan-Based Awards
Narrative Discussion to the Summary Compensation Table for Fiscal Year 2019 and the Grants of Plan-Based Awards in Fiscal Year 2019 Table
Equity compensation plans
At our annual meeting on May 3, 2012, our stockholders approved and adopted the Prologis, Inc. 2012 Long-Term Incentive Plan (the “2012 LTIP”). The 2012 LTIP enables our executive officers, employees, directors and consultants to participate in the ownership of the company and allows us to attract and retain our executive officers, other employees and directors, as well as provide incentives to such persons to maximize our company performance.
In addition, we have other equity compensation plans under which equity awards were outstanding as of December 31, 2019:
|
|
All future equity awards will be granted from the 2012 LTIP (or its successor plan) and we will no longer grant any awards from the AMB Plans or the Trust Plans. The available shares of common stock reserved for issuance under the AMB Plans and the Trust Plans as of May 3, 2012 were added to the share reserve of the 2012 LTIP. All outstanding awards under the AMB Plans and the Trust Plans will remain outstanding until they vest, expire or are forfeited by the participant. As of December 31, 2019, we had 4.6 million shares of common stock remaining available for future issuance under our plans and 10.4 million shares of common stock subject to outstanding unvested awards.
The 2012 LTIP does not expire but no further awards can be granted under the plan after the tenth anniversary date of the plan’s approval. The 2012 LTIP does not permitre-pricing of stock options without stockholder approval. Participants, includingnon-employee directors, in the 2012 LTIP may receive stock options, stock appreciation rights and full value awards, including dividend equivalents. Only employees may receive incentive stock options under the 2012 LTIP; however, we have not granted incentive stock options in the past and currently do not intend to grant stock options of any kind.
For further detail, please see “Equity Compensation Plans” below.
Equity award terms
We currently intend to grant LTIP Units and RSUs for annual LTI equity and PPP awards. Restricted stock awards were last granted in 2012, and stock options were last granted in 2011. In addition, we provided certain executives with opportunities to earn awards under POP. Beginning in 2014, we offered to certain executives the option to elect to receive LTIP Units in lieu of RSUs that may be granted to them under our compensation program. The general terms of our equity awards outstanding at December 31, 2019 are as follows:
RSUs
Each RSU is convertible into one share of common stock upon vesting. The RSUs granted prior to the 2018 annual grant cycle generally vest ratably over a continued service period of three years, such that the awards vest 34% after the first
|
|
Discussion of Summary Compensation Table and the Grants of Plan-Based Awards
year, 33% after the second year and 33% after the third year. RSUs granted since the 2018 annual grant cycle vest ratably over a period of four years, such that 25% of the award vests each year of the four-year period. Going forward, we intend to grant RSUs for annual LTI equity awards and PPP awards with four-year vesting periods. RSUs granted in accordance with the 2018 POP amendment will have a seven-year cliff vesting period (i.e., the entire award vests on a specified future date) after the end of the initial three-year performance period. RSUs have no voting rights. Certain awards, such as special grants due to hiring or retention considerations, may have different vesting terms, including cliff vesting terms. Equity granted to NEOs as a part of the bonus exchange for 2016 and 2017 generally have a three-year vesting period, such that the bonus exchange awards vest 40% after the first year, 40% after the second year and 20% after the third year. As we eliminated the premium for bonus exchange starting in 2018, equity received by the NEOs in 2020 and 2019 in exchange for their 2019 and 2018 bonus did not include a premium and were fully vested upon issuance. Generally, RSUs earn dividend equivalents (either cash or equity) over the vesting period under the same payment terms as dividends paid on our common stock. RSUs are valued based on the closing price of our common stock on the grant date.
LTIP Units
| · | LTIP Units are profits interests in Prologis, L.P., our operating partnership. Certain executives, including NEOs, may elect to receive LTIP Units in lieu of RSUs. Our NEOs elected to receive all of their equity awards granted in 2021 in LTIP Units, further aligning NEO and stockholder interests. |
| · | LTIP Units were structured to be generally economically equivalent to RSUs and generally have the same vesting terms as RSUs. |
| · | All LTIP Units have a two-year mandatory holding period from the date of issuance, in addition to any applicable vesting periods. |
NEO waivers of retirement eligibility benefits
| · | For any equity awards granted starting in 2017, Mr. Moghadam voluntarily waived any vesting benefits related to meeting retirement-eligibility thresholds under our incentive plan. Vesting under such awards will continue after he terminates employment as long as he continues in a substantial role with the company or its affiliates. Our other NEOs executed a similar waiver applicable to equity awards granted after September 2018. |
| · | To demonstrate their commitment to our company, our NEOs executed these waivers voluntarily without receiving any benefit in exchange. |
| · | Had the NEOs not waived such provisions, they would be entitled to certain benefits such as the acceleration of vesting of their equity awards upon termination of employment after they meet the retirement-eligibility thresholds under our compensation plans. |
| · | In 2020, the Compensation Committee amended the NEO waivers (to the extent such provisions did not already apply to such awards) to allow for continued vesting of certain awards if an NEO performs approved services for the company or community work after termination. The amendment did not change the NEOs’ waivers of their retirement-eligibility benefits. |
Senior-level benefits
| · | In addition to benefits provided to all other U.S. employees, such as our 401(k) plan, health care and welfare coverage, paid time-off, life and accident insurance and short and long-term disability programs, we offer our NEOs the following senior-level benefits: |
| – | Deferred compensation plans |
| – | Retiree medical benefits—upon retirement and having served as a member of the management executive committee (our CEO and certain direct reports) for five consecutive years, executives may continue health coverage under our plans at their own expense |
| – | Personal use of leased corporate aircraft interest by our CEO if the Company is reimbursed |
| – | Previously, the company paid for financial planning services and parking for all NEOs. We eliminated both of these benefits beginning in 2021, further reducing already minimal NEO perquisites. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 76 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Change-in-control benefits
| · | Our NEOs’ benefits include competitive severance in connection with a change in control to serve the best interests of stockholders during a threatened or actual change in control by: |
| – | Providing for continuity of our management team’s services |
| – | Increasing objectivity of our management team in analyzing a proposed change in control and advising the Board if such proposal is in the best interests of stockholders |
| · | Such benefits apply on a double-trigger basis (change in control has occurred and NEO’s employment status is impacted) and consist of: |
| – | Cash severance payments that are a multiple of salary and/or cash bonus opportunity levels (generally, two times salary and bonus for NEOs)(1) |
| – | Accelerated vesting of unvested equity awards, available through change-in-control agreements or long-term equity incentive plans |
Risk mitigation
| · | Annual Compensation Committee risk assessments of our compensation program: The Compensation Committee monitors the risk profile with respect to compensation policies and practices. No material risks were found. |
| · | Quarterly reports to Board on company performance against business plan and strategic objectives: The Board provides oversight to ensure that our compensation structure is not driving the company to take excessive operational risks. |
| · | Internal management controls: Controls and procedures ensure operations are completed in line with governance standards to ensure that excessive risks are not taken, including a series of checks and balances with respect to the commitment of capital. |
| · | Real estate risk management: Real estate risk management processes monitor key risks associated with our real estate assets, such as levels of occupancy, non-income-producing assets, leverage, foreign currency exposure and other factors. |
| · | Recoupment policy: This policy is a mechanism to claw back compensation in the event of a financial restatement. |
| · | Stock ownership guidelines: These guidelines align management interests with stockholders. |
Stock ownership guidelines
| · | All NEOs and directors are in compliance. |
| · | The guidelines require stock ownership of at least $10 million for our CEO or a multiple of annual base salary for other officers (3x base salary for other NEOs; and 1x base salary for senior vice presidents, managing directors and regional presidents). The guidelines require share ownership for our directors of 5x the annual Board retainer. |
| · | Stock eligible under the guidelines includes common stock, vested, unvested (provided that any unvested equity awards counted must be full value awards subject only to time-based vesting and must in no way be contingent upon the achievement of any performance requirement) and deferred equity awards (except stock options), associated dividend equivalents, earned LTIP Units and partnership units exchangeable into our common stock. The guidelines require retention of 50% of net shares received under our equity plans upon certain events until ownership thresholds are met. |
| (1) | In 2019, the Compensation Committee amended and restated our CEO’s change-in-control agreement to reflect our CEO’s salary decrease to $1, such that change-in-control benefits would continue to apply on a double-trigger basis and are intended to approximate the same benefits as in the original agreement. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 77 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Hedging and pledging policies
All hedging and pledging of common stock are prohibited: Our insider trading policy prohibits all NEOs, employees and directors from hedging or pledging shares of our common stock. All our NEOs and directors are currently in compliance with this prohibition.
Compensation recoupment (clawback) policy
The Board has adopted a compensation clawback policy, which provides that in the event of a substantial restatement of our previously issued financial statements, a review will be undertaken by the Board of performance-based compensation awarded to certain officers that was attributable to our financial performance during the time periods restated. If the Board determines that an officer was improperly compensated and that it is in our best interests to recover or cancel such compensation, the Board will pursue all reasonable legal remedies to recover or cancel such performance-based compensation. The policy further provides that if the Board learns of any misconduct by certain officers that caused the restatement, the Board shall take such action as it deems necessary to remedy the misconduct, prevent its recurrence and, if appropriate, based on all relevant facts and circumstances, punish the wrongdoer. Such punishment by the Board could include dismissal, legal action for breach of fiduciary duty or such other action to enforce the officer’s obligations to us as may fit the facts surrounding the particular case. In determining the appropriate punishment, the Board may take into account punishments imposed by third parties. The Board’s power to determine the appropriate punishment for the wrongdoer is in addition to, and not in replacement of, remedies imposed by such third parties.
In addition, if the Compensation Committee determines that a present or former employee has used for profit or disclosed to unauthorized persons confidential or trade secrets of us or any of our affiliates, breached any contract with or violated any fiduciary obligation to us or any of our affiliates, or engaged in any conduct which the committee determines is injurious to us or any of our affiliates, the committee may cause that employee to forfeit his or her outstanding awards under the 2020 Long Term Incentive Plan (“2020 LTIP”). In addition, in exercise of its powers and authorities under the 2020 LTIP, it is the committee’s policy to determine that a participant is in good standing in the course of administering the 2020 LTIP. If a participant is not in good standing, the committee (or its delegate) may cause the participant’s awards, whether vested or unvested, to be forfeited.
Equity grant policy and program administration
Awards are administered by our human resources and stock plan administration departments. Grants are made generally in the first quarter of the year, after promotion, at the time of new hire or in accordance with PPP. Equity grant dates are not scheduled based on the timing of the release of material non-public information.
We discontinued the issuance of stock option awards after February 2011.
Impact of accounting and tax treatment
To the extent reasonable and allowable, executive compensation will be deductible by the company for federal income tax purposes. However, the Compensation Committee may design compensation program components that are not deductible. In addition, in December 2020, the Internal Revenue Service released final regulations under 162(m), which may limit the future deductibility of certain executive compensation amounts. Because we intend to qualify as a REIT under the Internal Revenue Code, we generally distribute 100% of our net taxable income each year, and as a result do not pay U.S. federal income tax. As such, we do not expect the possible loss of executive compensation deductions to have a material impact on us. We intend that executive compensation comply with 409A of the Internal Revenue Code, which may impose additional taxes on our NEOs for Section 409A. In addition, we expense base salaries and annual bonus awarded in the year they are earned. In accordance with ASC Topic 718, we expense the value of equity awards granted over the vesting period of such grants.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 78 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Talent and Compensation Committee Report
We, the members of the Talent and Compensation Committee, have reviewed and discussed the Compensation Discussion and Analysis set forth above with the management of the company and, based on such review and discussion, have recommended to the Board that this Compensation Discussion and Analysis be included in this proxy statement and, through incorporation by reference of this proxy statement, the company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Talent and Compensation Committee:
George L. Fotiades (Chair)
David P. O’Connor
William D. Zollars
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 79 |
| SUMMARY COMPENSATION TABLE |
Summary Compensation Table for Fiscal Year 2021*
Name and Principal Position (a) | Year (b) | Salary(1) ($) (c) | Bonus(1)(2)(3) ($) (d) | Stock ($) (e) | Non-Equity ($) (g) | All Other (i) | Total ($) (j) | |||||||||||||||||||||
Hamid Moghadam | 2021 | $ | 1 | $ | 2,625,000 | $ | 22,263,989 | — | $ | 12,500 | $ | 24,901,490 | ||||||||||||||||
Chief Executive Officer | 2020 | $ | 1 | $ | 1,500,000 | $ | 32,851,741 | — | $ | 80,935 | $ | 34,432,677 | ||||||||||||||||
| 2019 | $ | 1 | $ | 1,800,000 | $ | 28,499,922 | — | $ | 83,515 | $ | 30,383,438 | |||||||||||||||||
Thomas Olinger | 2021 | $ | 600,000 | $ | 1,312,500 | $ | 5,491,318 | $ | 608,204 | $ | 25,500 | $ | 8,037,522 | |||||||||||||||
Chief Financial Officer | 2020 | $ | 600,000 | $ | 750,000 | $ | 7,942,733 | $ | 2,121,982 | $ | 48,985 | $ | 11,463,700 | |||||||||||||||
| 2019 | $ | 600,000 | $ | 750,000 | $ | 7,787,616 | $ | 1,812,766 | $ | 43,565 | $ | 10,993,947 | ||||||||||||||||
Eugene Reilly | 2021 | $ | 696,539 | $ | 1,837,500 | $ | 6,847,295 | $ | 608,204 | $ | 25,500 | $ | 10,015,038 | |||||||||||||||
Chief Investment Officer | 2020 | $ | 600,000 | $ | 750,000 | $ | 9,668,732 | $ | 2,121,982 | $ | 48,050 | $ | 13,188,764 | |||||||||||||||
| 2019 | $ | 600,000 | $ | 1,150,000 | $ | 8,537,585 | $ | 1,812,766 | $ | 41,867 | $ | 12,142,218 | ||||||||||||||||
Gary Anderson | 2021 | $ | 648,269 | $ | 1,535,625 | $ | 6,397,331 | $ | 608,204 | $ | 25,500 | $ | 9,214,929 | |||||||||||||||
Chief Operating Officer | 2020 | $ | 600,000 | $ | 750,000 | $ | 8,818,700 | $ | 2,121,982 | $ | 48,445 | $ | 12,339,127 | |||||||||||||||
| 2019 | $ | 600,000 | $ | 925,000 | $ | 7,787,616 | $ | 1,812,766 | $ | 44,552 | $ | 11,169,934 | ||||||||||||||||
Edward Nekritz | 2021 | $ | 648,269 | $ | 1,478,750 | $ | 6,097,318 | $ | 608,204 | $ | 25,500 | $ | 8,858,041 | |||||||||||||||
Chief Legal Officer and | 2020 | $ | 600,000 | $ | 750,000 | $ | 8,818,700 | $ | 2,121,982 | $ | 48,445 | $ | 12,339,127 | |||||||||||||||
General Counsel | 2019 | $ | 600,000 | $ | 925,000 | $ | 7,787,616 | $ | 1,812,766 | $ | 41,405 | $ | 11,166,787 | |||||||||||||||
| * | Columns (f) and (h) have been omitted from this table because they are not applicable. |
| (1) | No salary or bonus amounts were deferred under our nonqualified deferred compensation plans in any year (see the narrative discussion that follows the Nonqualified Deferred Compensation in Fiscal Year 2021 table below). Amounts deferred under the Prologis 401(k) Savings Plan (“401(k) Plan”) at the election of the NEO from salary and/or bonus payments are included in the amounts presented in columns (c) or (d) and are as follows: |
| · | Mr. Olinger, Mr. Reilly, Mr. Anderson and Mr. Nekritz: $26,000 in 2021, $26,000 in 2020 and $25,000 in 2019. |
| (2) | Bonuses earned for a fiscal year are paid in the subsequent fiscal year (e.g., the bonuses in column (d) earned for performance in 2021 were paid in the first quarter of 2022). |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 80 |
| SUMMARY COMPENSATION TABLE |
| (3) | The value of equity awards received is equal to 100% of the cash bonus exchanged and, as no exchange premium applied, such awards were fully vested upon issuance on March 13, 2020, March 3, 2021, and February 24, 2022, respectively. The amount in column (d) includes the actual bonus awarded to the NEO participating in the bonus exchange regardless of whether cash or stock awards were received. |
Name | Year(i) | Annual Cash Bonus Award(ii) | Amount Exchanged(iii) | Exchanged Equity Value(iv) | # of Shares or Units(v) | |||||||||||||||
Mr. Moghadam |
| 2021 |
|
| $2,625,000 |
|
| $2,625,000 |
| $ | 2,625,000 |
|
| 17,108 |
| |||||
| 2020 |
|
| $1,500,000 |
|
| $1,500,000 |
| $ | 1,500,000 |
|
| 14,034 |
| ||||||
| 2019 |
|
| $1,800,000 |
|
| $1,800,000 |
| $ | 1,800,000 |
|
| 19,094 |
| ||||||
Mr. Olinger |
| 2021 |
|
| $1,312,500 |
|
| $1,312,500 |
| $ | 1,312,500 |
|
| 8,554 |
| |||||
| 2020 |
|
| $ 750,000 |
|
| $ 750,000 |
| $ | 750,000 |
|
| 7,017 |
| ||||||
| 2019 |
|
| $ 750,000 |
|
| $ 750,000 |
| $ | 750,000 |
|
| 7,955 |
| ||||||
Mr. Reilly |
| 2021 |
|
| $1,837,500 |
|
| $1,837,500 |
| $ | 1,837,500 |
|
| 11,976 |
| |||||
| 2020 |
|
| $ 750,000 |
|
| $ 750,000 |
| $ | 750,000 |
|
| 7,017 |
| ||||||
| 2019 |
|
| $1,150,000 |
|
| $1,150,000 |
| $ | 1,150,000 |
|
| 12,199 |
| ||||||
Mr. Anderson |
| 2021 |
|
| $1,535,625 |
|
| $1,535,625 |
| $ | 1,535,625 |
|
| 10,008 |
| |||||
| 2020 |
|
| $ 750,000 |
|
| $ 750,000 |
| $ | 750,000 |
|
| 7,017 |
| ||||||
| 2019 |
|
| $ 925,000 |
|
| $ 925,000 |
| $ | 925,000 |
|
| 9,812 |
| ||||||
Mr. Nekritz |
| 2021 |
|
| $1,478,750 |
|
| $1,478,750 |
| $ | 1,478,750 |
|
| 9,637 |
| |||||
| 2020 |
|
| $ 750,000 |
|
| $ 750,000 |
| $ | 750,000 |
|
| 7,017 |
| ||||||
| 2019 |
|
| $ 925,000 |
|
| $ 925,000 |
| $ | 925,000 |
|
| 9,812 |
| ||||||
| (i) | This is the year that the bonus is presented in the Summary Compensation Table. Bonuses for each year were awarded in the first quarter of the following year. |
| (ii) | Represents the bonus awarded to the NEO before the bonus exchange election. |
| (iii) | This column reflects the value of the bonus award that the NEO has elected to exchange. All NEOs elected to exchange 100% of their bonuses for 2021, 2020 and 2019. Accordingly, the NEOs exchanged the bonus amounts reflected in column (iii) for equity, and received the remainder of their bonus amounts, if any, in cash. |
| (iv) | Represents the total equity award granted to the NEO under the bonus exchange calculated based on the closing price of our common stock on the date the bonus is awarded. For all years presented, each NEO elected to receive the equity award in the form of LTIP Units. |
| (v) | Information on how we value equity awards is included in the narrative discussion that follows the Grants of Plan-Based Awards in Fiscal Year 2021 table below. |
| (4) | Includes equity compensation contingent on performance paid in lieu of salary. The Compensation Committee determined that the maximum value ($999,999) of Mr. Moghadam’s equity compensation contingent on 2020 performance in lieu of 2020 salary would be paid as company performance was greater than target using our corporate score assessed against our annual bonus plan metrics. 2021 LTIP Units issued on March 3, 2021 (approved by the Compensation Committee on February 2, 2021), were 9,356 LTIP Units valued at $999,969. |
| (5) | Amounts represent the value of equity awards granted in each year including awards granted under our annual LTI equity award program, awards granted under PPP, the allocation of the POP compensation pool to the NEO for the applicable performance period and awards granted to Mr. Moghadam contingent on performance in lieu of salary. |
Annual LTI Equity Incentive Awards:
Under our annual LTI equity award program, we generally grant equity awards in the first quarter for the performance period ended in the previous year. For example, the annual awards in column (e) for 2021 were granted in February 2021 but were based on a performance period that ended in 2020. The amount of each NEO’s annual award is based on performance criteria and the award is also subject to continued employment.
| · | 2021 LTIP Units issued on March 3, 2021 (approved by the Compensation Committee on February 2, 2021), were: |
Mr. Moghadam—115,784 LTIP Units valued at $12,374,994
Mr. Olinger—29,472 LTIP Units valued at $3,149,967
Mr. Reilly—36,489 LTIP Units valued at $3,899,944
Mr. Anderson—32,279 LTIP Units valued at $3,449,980
Mr. Nekritz—29,472 LTIP Units valued at $3,149,967
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 81 |
| SUMMARY COMPENSATION TABLE |
The number of LTIP Units was determined using the closing price of our common stock on the award grant date of February 2, 2021 ($106.88). This is the value used for accounting purposes to expense the grant.
| · | 2020 LTIP Units issued on March 13, 2020 (approved by the Compensation Committee on January 17, 2020), were: |
Mr. Moghadam—131,271 LTIP Units valued at $12,374,917
Mr. Olinger—30,232 LTIP Units valued at $2,849,971
Mr. Reilly—42,431 LTIP Units valued at $3,999,970
Mr. Anderson—33,414 LTIP Units valued at $3,149,938
Mr. Nekritz—33,414 LTIP Units valued at $3,149,938
The number of LTIP Units was determined using the closing price of our common stock on the award grant date of January 17, 2020 ($94.27). This is the value used for accounting purposes to expense the grant.
| · | 2019 LTIP Units issued on March 8, 2019 (approved by the Compensation Committee on February 11, 2019), were: |
Mr. Moghadam—174,197 LTIP Units valued at $12,374,955
Mr. Olinger—44,341 LTIP Units valued at $3,149,985
Mr. Reilly—54,898 LTIP Units valued at $3,899,954
Mr. Anderson—44,341 LTIP Units valued at $3,149,985
Mr. Nekritz—44,341 LTIP Units valued at $3,149,985
The number of LTIP Units was determined using the closing price of our common stock on the award grant date of February 11, 2019 ($71.04). This is the value used for accounting purposes to expense the grant.
Information on how we value equity awards is included in the narrative discussion that follows the Grants of Plan-Based Awards in Fiscal Year 2021 table below. Also see “Compensation Discussion and Analysis.”
POP:
The values in column (e) include the NEO’s allocation of the estimated compensation pool value awarded under POP. This value is included in the NEO’s compensation even though there is no assurance that the value of the allocation will ever be realized by the NEO.
| · | 2021 (2021-2023 Performance Period): Values of the allocation as of the date of the allocation (January 4, 2021) were: Mr. Moghadam ($4,545,000), Mr. Olinger ($1,212,000), Mr. Reilly ($1,818,000), Mr. Anderson ($1,818,000) and Mr. Nekritz ($1,818,000). |
| · | 2020 (2020-2022 Performance Period): Values of the allocation as of the date of the allocation (January 2, 2020) were: Mr. Moghadam ($4,320,000), Mr. Olinger ($1,152,000), Mr. Reilly ($1,728,000), Mr. Anderson ($1,728,000) and Mr. Nekritz ($1,728,000). |
| · | 2019 (2019-2021 Performance Period): Values of the allocation as of the date of the allocation (January 2, 2019) were: Mr. Moghadam ($3,180,000) and all other NEOs (each $1,272,000). |
POP and the exchange of the compensation pool allocation for POP LTIP Units are discussed below in the narrative that follows the “Grants of Plan-Based Awards in Fiscal Year 2021” table.
| (6) | Awards in the form of cash and/or equity awards were granted to participating employees, including all of the NEOs, in March 2021, December 2021, March 2020, September 2020, March 2019, November 2019 and December 2019 under PPP. The value of the equity portion of the award is included in column (e) based on the fair value on the grant date of the equity awards. The cash portion of the award is included in column (g). Because it is not possible to determine whether any incentive fees or promotes will be received in future years, only awards resulting from compensation pools that have funded are included in the compensation of the NEOs. All PPP awards paid in 2021, 2020 and 2019 vest over four years. |
| · | PPP awards paid in 2021: All of Mr. Moghadam’s 2021 PPP awards were paid in the form of equity (in aggregate, 29,622 LTIP Units or $4,344,026). For each of the other NEOs, 35% of the 2021 PPP awards were in the form of cash (in aggregate $608,204). Mr. Olinger, Mr. Reilly, Mr. Anderson and Mr. Nekritz received 65% of their 2021 PPP awards in the form of equity (in aggregate, 7,701 LTIP Units or $1,129,351). The LTIP Units were valued at $102.11, $162.56 and $161.39 per share, the closing price of our common stock on the grant date (March 18, 2021, December 15, 2021, and December 20, 2021, respectively). |
| · | PPP awards paid in 2020: All of Mr. Moghadam’s 2020 PPP awards were paid in the form of equity (in aggregate, 151,213 LTIP Units or $15,156,902). For each of the other NEOs, 35% of the 2020 PPP awards were in the form of cash (in aggregate $2,121,982). Mr. Olinger, Mr. Reilly, Mr. Anderson and Mr. Nekritz received 65% of their 2020 PPP awards in the form of equity (in aggregate, 39,315 LTIP Units or $3,940,762). The LTIP Units were valued at $88.27 and $101.74 per share, the closing price of our common stock on the grant date (March 2, 2020, and August 19, 2020, respectively). |
| · | PPP awards paid in 2019: All of Mr. Moghadam’s 2019 PPP awards were paid in the form of equity (in aggregate, 152,764 LTIP Units or $12,944,967). For each of the other NEOs, 35% of the 2019 PPP awards were in the form of cash (in aggregate $1,812,766). Mr. Olinger, Mr. Reilly, Mr. Anderson and Mr. Nekritz received 65% of their 2019 PPP awards in the form of equity (in aggregate, 39,718 LTIP Units or $3,365,631). The LTIP Units were valued at $69.88, $90.29 and $90.56 per share, the closing price of our common stock on the grant date (March 1, 2019, November 22, 2019, and December 5, 2019, respectively). |
Additional information on the allocations of PPP compensation pools and how they are valued is included in the narrative that follows the “Grants of Plan-Based Awards in Fiscal Year 2021” table.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 82 |
| SUMMARY COMPENSATION TABLE |
| (7) | The amounts in column (i) represent the other compensation amounts paid to each of the NEOs in 2021, 2020 and 2019. These amounts include the following items: |
|
|
| 401(k) Plan Match | Financial Planning Services(a) | Parking(a) | Other(b) | Totals(c) | ||||||||||||||||||
Mr. Moghadam |
| 2021 |
|
| — |
|
| — |
|
| — |
|
| $12,500 |
| $ | 12,500 |
| ||||||
| 2020 |
|
| — |
|
| $66,500 |
|
| $1,935 |
|
| $12,500 |
| $ | 80,935 |
| |||||||
| 2019 |
|
| — |
|
| $63,275 |
|
| $7,740 |
|
| $12,500 |
| $ | 83,515 |
| |||||||
Mr. Olinger |
| 2021 |
| $ | 13,000 |
|
| — |
|
| — |
|
| $12,500 |
| $ | 25,500 |
| ||||||
| 2020 |
| $ | 17,100 |
|
| $18,095 |
|
| $1,290 |
|
| $12,500 |
| $ | 48,985 |
| |||||||
| 2019 |
| $ | 8,250 |
|
| $17,655 |
|
| $5,160 |
|
| $12,500 |
| $ | 43,565 |
| |||||||
Mr. Reilly |
| 2021 |
| $ | 13,000 |
|
| — |
|
| — |
|
| $12,500 |
| $ | 25,500 |
| ||||||
| 2020 |
| $ | 17,100 |
|
| $18,095 |
|
| $ 355 |
|
| $12,500 |
| $ | 48,050 |
| |||||||
| 2019 |
| $ | 8,250 |
|
| $17,655 |
|
| $1,418 |
|
| $14,544 |
| $ | 41,867 |
| |||||||
Mr. Anderson |
| 2021 |
| $ | 13,000 |
|
| — |
|
| — |
|
| $12,500 |
| $ | 25,500 |
| ||||||
| 2020 |
| $ | 17,100 |
|
| $18,095 |
|
| $ 750 |
|
| $12,500 |
| $ | 48,445 |
| |||||||
| 2019 |
| $ | 8,250 |
|
| $17,655 |
|
| $3,000 |
|
| $15,647 |
| $ | 44,552 |
| |||||||
Mr. Nekritz |
| 2021 |
| $ | 13,000 |
|
| — |
|
| — |
|
| $12,500 |
| $ | 25,500 |
| ||||||
| 2020 |
| $ | 17,100 |
|
| $18,095 |
|
| $ 750 |
|
| $12,500 |
| $ | 48,445 |
| |||||||
| 2019 |
| $ | 8,250 |
|
| $17,655 |
|
| $3,000 |
|
| $12,500 |
| $ | 41,405 |
| |||||||
| (a) | In 2019 and 2020, we provided financial planning services and parking, if applicable, to certain employees, including the NEOs, based on their position with the company. In 2021, we eliminated financial planning and parking benefits for our NEOs. |
| (b) | For 2021 includes: matching charitable contributions by the company’s charitable foundation. |
For 2020 includes: matching charitable contributions by the company’s charitable foundation. |
For 2019 includes: (i) matching charitable contributions by the company’s charitable foundation and (ii) anniversary gift for Mr. Reilly and Mr. Anderson. |
Our charitable foundation will match the amount of charitable contributions to qualifying organizations made by our directors and all of our employees. The annual maximum amount of matching contributions in one year applicable to our NEOs is $12,500, not including amounts matched under special matching initiatives related to specific events, such as natural disasters. Matching contributions available in a particular year that are not used may be carried over to the subsequent year. Amounts reported represent charitable contributions of our charitable foundation that were paid directly to outside organizations during the calendar year to match qualifying contributions made by the NEOs during that year and can also include amounts carried over from previous years. |
| (c) | No perquisite amounts are reported in any year for any of the NEOs as the aggregate amount of the incremental costs of any perquisites for an individual NEO does not exceed $10,000 in any year. In 2021, 2020 and 2019, a leased corporate aircraft was used for non-business purposes by Mr. Moghadam. The incremental costs to the company for Mr. Moghadam were de minimis and reimbursed by him. These amounts are not included for Mr. Moghadam in 2019, 2020 and 2021 because the total of perquisites did not exceed $10,000. In 2020, a leased corporate aircraft was used for non-business purposes by Mr. Olinger. The incremental costs to the company for Mr. Olinger were de minimis and reimbursed by him. These amounts are not included for Mr. Olinger in 2020 because the total of perquisites did not exceed $10,000. In 2021, a leased corporate aircraft was used for non-business purposes by Mr. Reilly and Mr. Anderson. The incremental costs to the company for Mr. Reilly and Mr. Anderson were de minimis and reimbursed by them. These amounts are not included for Mr. Reilly and Mr. Anderson in 2021 because the total perquisites did not exceed $10,000. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 83 |
| GRANTS OF PLAN-BASED AWARDS |
Grants of Plan-Based Awards in Fiscal Year 2021*
| Estimated Future Payouts Under Equity Incentive Plan Awards
| ||||||||||||||||||||
Name (a) | Grant Date (b) | Target (g) | Maximum ($) (h) | All Other Stock Awards: Number of (#) (i) | Grant Date Fair Value of Stock ($) (l) | |||||||||||||||
Hamid Moghadam | 01/04/21 | (1) | $ | 4,545,000 | $ | 15,000,000 | — | $ | 4,545,000 | |||||||||||
| 03/03/21 | (2) | — | — | 115,784 | $ | 12,374,994 | ||||||||||||||
| 03/03/21 | (3) | — | — | 9,356 | $ | 999,969 | ||||||||||||||
| 03/18/21 | (4) | — | — | 7,736 | $ | 789,923 | ||||||||||||||
| 12/29/21 | (4) | — | — | 21,886 | $ | 3,554,103 | ||||||||||||||
Thomas Olinger | 01/04/21 | (1) | $ | 1,212,000 | $ | 4,000,000 | — | $ | 1,212,000 | |||||||||||
| 03/03/21 | (2) | — | — | 29,472 | $ | 3,149,967 | ||||||||||||||
| 03/18/21 | (4) | — | — | 2,011 | $ | 205,343 | ||||||||||||||
| 12/29/21 | (4) | — | — | 5,690 | $ | 924,008 | ||||||||||||||
Eugene Reilly | 01/04/21 | (1) | $ | 1,818,000 | $ | 6,000,000 | — | $ | 1,818,000 | |||||||||||
| 03/03/21 | (2) | — | — | 36,489 | $ | 3,899,944 | ||||||||||||||
| 03/18/21 | (4) | — | — | 2,011 | $ | 205,343 | ||||||||||||||
| 12/29/21 | (4) | — | — | 5,690 | $ | 924,008 | ||||||||||||||
Gary Anderson | 01/04/21 | (1) | $ | 1,818,000 | $ | 6,000,000 | — | $ | 1,818,000 | |||||||||||
| 03/03/21 | (2) | — | — | 32,279 | $ | 3,449,980 | ||||||||||||||
| 03/18/21 | (4) | — | — | 2,011 | $ | 205,343 | ||||||||||||||
| 12/29/21 | (4) | — | — | 5,690 | $ | 924,008 | ||||||||||||||
Edward Nekritz | 01/04/21 | (1) | $ | 1,818,000 | $ | 6,000,000 | — | $ | 1,818,000 | |||||||||||
| 03/03/21 | (2) | — | — | 29,472 | $ | 3,149,967 | ||||||||||||||
| 03/18/21 | (4) | — | — | 2,011 | $ | 205,343 | ||||||||||||||
| 12/29/21 | (4) | — | — | 5,690 | $ | 924,008 | ||||||||||||||
| * | Columns (c) through (f), (j) and (k) have been omitted from this table because they are not applicable. Does not include bonus exchanged for equity (valued at 100% of the bonus) paid in 2022 for the 2021 performance year or paid in 2021 for the 2020 performance year. See footnote 3 to the Summary Compensation Tables for fiscal years 2021 and 2022. |
| (1) | Represents the allocation of the estimated POP compensation pool in January 2021 for the 2021-2023 performance period. Since POP rewards only extraordinary performance, there is no Threshold value. Notwithstanding the values of allocations shown in this table, there can be no assurance that the company’s performance at the end of an applicable performance period will result in any payment under POP. The amount in column (h) represents the NEO’s allocation of the maximum pool value for the 2021-2023 Performance Period of $100.0 million. The value in column (l) is the grant-date fair value of the NEO’s allocation based on a valuation of the future compensation pool using a Monte Carlo simulation as of the grant date to estimate a fair value for accounting purposes, estimated at $30.3 million. We used the grant date fair value of the award as an estimate of target value because payments under the award ultimately will be based on performance relative to the MSCI REIT Index over the performance period. Please see discussion regarding POP below. Awards under POP may be paid in either cash or equity (with an additional seven-year cliff vesting requirement on 80% of the applicable award and no additional vesting on 20% of the applicable award). The Compensation Committee has determined that the awards for the 2021-2023 Performance Period will be paid in equity, if at all. POP LTIP Units for the 2021-2023 performance period were issued on December 13, 2021. |
| (2) | Represents the annual long-term equity incentive awards for the performance year ended in 2020 that were granted in 2021. These awards were approved by the Compensation Committee on February 2, 2021, at which time the NEO elected to receive the award in the form of LTIP Units. The LTIP Units were issued on March 3, 2021, and vest ratably over a four-year period. The value in column (l) represents the award in column (i) valued at $106.88 per share, which was the closing price of our common stock on February 2, 2021. This value is used for accounting purposes to expense the grant. Annual long-term equity incentive awards for the performance year ended in 2021 were granted by the Compensation Committee in February 2022 and are not included in this table. See “Compensation Discussion and Analysis.” |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 84 |
| GRANTS OF PLAN-BASED AWARDS |
| (3) | Represents equity compensation contingent on 2020 performance in lieu of 2020 salary and granted in 2021. The Compensation Committee determined that the maximum value of this award ($999,999) would be paid as company performance was greater than target using our corporate score assessed against our annual bonus plan metrics. The LTIP Units were issued on March 3, 2021, and vest ratably over a four-year period. The value in column (l) represents the award in column (i) valued at $106.88 per share, which was the closing price of our common stock on February 2, 2021, the date the Compensation Committee approved the award. This value is used for accounting purposes to expense the grant. |
| (4) | The NEO was awarded a compensation opportunity through participation in PPP. PPP compensation pools were determined in March 2021 and December 2021 after incentive fees, or promotes, were earned and paid to us by six of our co-investment ventures. As a result, the NEOs each earned PPP awards related to these promotes. Mr. Moghadam’s entire award was paid in the form of equity, and the remaining NEOs’ awards were paid in the form of cash (35%) and equity (65%). Mr. Olinger, Mr. Reilly, Mr. Anderson and Mr. Nekritz elected to receive the equity portion of their award in the form of LTIP Units. The LTIP Units were issued in March 2021 and December 2021 and vest ratably over a four-year period. The values of the LTIP Units granted are included in column (l) of this table based on the fair value of $102.11 per share for the March 2021 grant, $162.56 and $161.39 per share for the December 2021 grants which were the closing prices of our common stock on March 18, 2021, December 15, 2021 and December 20, 2021, respectively (the dates the Compensation Committee granted the awards). This value is used for accounting purposes to expense the grant. See “Compensation Discussion and Analysis.” |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 85 |
| DISCUSSION OF SUMMARY COMPENSATION TABLE AND THE GRANTS OF PLAN-BASED AWARDS |
Narrative Discussion to the Summary Compensation Table for Fiscal Year 2021 and the Grants of Plan-Based Awards in Fiscal Year 2021 Table
Equity compensation plans
At our annual meeting on April 29, 2020, our stockholders approved and adopted the Prologis, Inc. 2020 Long-Term Incentive Plan (the “2020 LTIP”). The 2020 LTIP enables our executive officers, employees, directors and consultants to participate in the ownership of the company and allows us to attract and retain our executive officers, other employees and directors, as well as provide incentives to such persons to maximize our company performance.
In addition, we have other equity compensation plans under which equity awards were outstanding as of December 31, 2021:
| · | the Amended and Restated 2002 Stock Option and Incentive Plan and the Third Amended and Restated 1997 Stock Option and Incentive Plan, collectively, the “AMB Plans,” which were both approved by our stockholders; |
| · | the Prologis 2012 Long-Term Incentive Plan (the “2012 LTIP”), which was approved by our stockholders; and |
| · | the ProLogis 2006 Long-Term Incentive Plan, the ProLogis 2000 Share Option Plan for Outside Trustees and the ProLogis 1997 Long-Term Incentive Plan, collectively, the “Trust Plans,” which were assumed by us under the Merger agreement with all outstanding awards converted based on the Merger exchange ratio. The Trust Plans were approved by shareholders of the Trust. |
All future equity awards will be granted from the 2020 LTIP (or its successor plan) and we will no longer grant any awards from the 2012 LTIP, the AMB Plans or the Trust Plans. The available shares of common stock reserved for issuance under the 2012 LTIP, AMB Plans and the Trust Plans as of April 29, 2020, were added to the share reserve of the 2020 LTIP. All outstanding awards under the 2012 LTIP, AMB Plans and the Trust Plans will remain outstanding until they vest, expire or are forfeited by the participant. At December 31, 2021, we had 33.8 million shares reserved or available for issuance under our plans, including 4.6 million shares of common stock to be issued upon vesting of awards previously granted and 23.2 million shares of common stock remaining available for future issuance under our plans.
The 2020 LTIP does not expire but no further awards can be granted under the plan after the tenth anniversary date of the plan’s approval. The 2020 LTIP does not permit re-pricing of stock options without stockholder approval. Participants, including non-employee directors, in the 2020 LTIP may receive stock options, stock appreciation rights and full value awards, including dividend equivalents. Only employees may receive incentive stock options under the 2020 LTIP; however, we have not granted incentive stock options in the past and currently do not intend to grant stock options of any kind.
For further detail, please see “Equity Compensation Plans” below.
Equity award terms
We currently intend to grant LTIP Units and RSUs for annual LTI equity and PPP awards. Restricted stock awards were last granted in 2012, and stock options were last granted in 2011. In addition, we provided certain executives with opportunities to earn awards under POP. Beginning in 2014, we offered to certain executives the option to elect to receive LTIP Units in lieu of RSUs that may be granted to them under our compensation program. The general terms of our equity awards outstanding at December 31, 2021, are as follows:
RSUs
Each RSU is convertible into one share of common stock upon vesting. RSUs granted since the 2018 annual grant cycle vest ratably over a period of four years, such that 25% of the award vests each year of the four-year period. Going forward, we intend to grant RSUs for annual LTI equity awards and PPP awards with four-year vesting periods. RSUs granted in accordance with the 2018 POP amendment will have a seven-year cliff vesting period (i.e., the entire award vests on a specified future date) after the end of the initial three-year performance period. RSUs have no voting rights. Certain awards, such as special grants due to hiring or retention considerations, may have different vesting terms, including cliff
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 86 |
| DISCUSSION OF SUMMARY COMPENSATION TABLE AND THE GRANTS OF PLAN-BASED AWARDS |
vesting terms. Equity received by the NEOs in exchange for their bonus are fully vested upon issuance. Generally, RSUs earn dividend equivalents (either cash or equity) over the vesting period under the same payment terms as dividends paid on our common stock. RSUs are valued based on the closing price of our common stock on the grant date.
LTIP Units
Certain participants in the 20122020 LTIP can elect to receive LTIP Units instead of RSUs. LTIP Units have similar terms to RSUs with respect to vesting provisions, voting rights and dividends. LTIP Units are different from POP LTIP Units granted under POP (as discussed below). LTIP Units are structured with the intent that the units will generally be economically equivalent to the RSUs that would be issued for the applicable awards and generally have the same vesting terms as the RSUs that are granted. Under certain conditions, an LTIP Unit is convertible into a common unit and then redeemable for one share of our common stock, or at our option, cash. Among other conditions, LTIP Units cannot be converted until they are vested and a waiting period of two years from the date of issuance is complete. Like RSUs, LTIP Units earn cash distributions equal to the dividend paid on our common stock. After vesting and other conditions are met, LTIP Units remain outstanding until such time as the holder of the LTIP Units elects to convert.
For any equity awards granted starting in 2017, including issuances of LTIP Units, Mr. Moghadam has waived any vesting benefits related to meeting retirement-eligibility thresholds under our incentive plan. Our other NEOs executed a similar waiver applicable to equity awards granted after September 2018. In accordance with a 2020 amendment to such waivers, vesting under such awards will continue after the NEOs terminate employment as long as the NEO performs approved community work or services for the company. The 20192020 amendment did not impact the NEOs’ waiver of their retirement-eligibility benefits.
POP
Please see “Compensation Discussion and Analysis” for a discussion of the general structure of POP and how it fits into our overall compensation program.
Under POP, NEOs are allocated a percentage of a potential compensation pool for each performance period (the “POP Allocations”). We made POP Allocations to the NEOs in 20192021 for the 2019-20212021-2023 performance period, in 20182020 for the 2018-20202020-2022 performance period and in 20172019 for the 2017-20192019-2021 performance period.
The POP Allocations are valued using a Monte Carlo simulation as of the grant date. POP Allocations were structured with the intent that the allocations have no economic value to the participants unless and until performance criteria are met and an award is paid for the applicable performance period.
For the 2021-2023 and 2020-2022 performance periods, the Compensation Committee made POP Allocations to the NEOs such that 15% of the compensation pool will be paid to Mr. Moghadam, 6% of the compensation pool will be paid to each of Mr. Reilly, Mr. Anderson and Mr. Nekritz and 4% of the compensation pool will be paid to Mr. Olinger if such awards are earned. For the 2019–2021 and 2018–2020 performance period,periods, the Compensation Committee made POP Allocations to the NEOs such that 15% of the compensation pool will be paid to Mr. Moghadam and 6% of the compensation pool will be paid to each of the other NEOs if such awards are earned. In allocating the percentage of the compensation pools to the NEOs, the Compensation Committee took into consideration external market data concerning the typical ratio of CEO compensation to that of other NEOs and employees. The Compensation Committee generally allocated a smaller portion of the total compensation pool to the NEOs relative to the other participants than is typical in the outperformance plans of other companies the committee reviewed at the inception of the plan. The compensation pool for each performance period covered approximately 100 participants at the beginning of each performance period.
|
|
Discussion of Summary Compensation Table and the Grants of Plan-Based Awards
Earned POP awards can be paid in either cash or equity. The Compensation Committee has determined that the awards will be paid, if at all, in equity. Earned POP awards cannot be paid unless and until absolute TSR becomes positive. Any earned POP award will expire seven years after the end of the performance period if absolute TSR does not become positive within that period.
POP LTIP Units. Certain members of the executive management team, including the NEOs, elected to exchange their POP Allocations for special LTIP Units (the “POP LTIP Units”) as defined under the operating partnership agreement of Prologis, L.P., as amended and/or restated from time to time.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 87 |
| DISCUSSION OF SUMMARY COMPENSATION TABLE AND THE GRANTS OF PLAN-BASED AWARDS |
The POP LTIP Units are structured with the intent that the units will be comparable economically to the awards under POP. A participant electing to receive the POP LTIP Units will receive the same percentage of the pool as if the participant had not participated in the exchange. Like other forms of awards under the plan, the POP LTIP Units will have no economic value to the participants until and unless the performance criteria are achieved at the end of a performance period and other conditions are met. Once the Compensation Committee determines whether the performance criteria have been met, the POP LTIP Units will be forfeited to the extent not earned based on the terms of POP. To the extent an award is earned, aan NEO will retain the number of POP LTIP Units equal in economic value to the percentage of the performance pool originally allocated to the NEO at the beginning of the applicable performance period. Any POP LTIP Units in excess of such amount will be forfeited. Additional LTIP Units will be issued to true up the original number of POP LTIP units issued for the performance period to the extent such original issuance was insufficient to cover the value of the earned award.
Upon the satisfaction of certain conditions, including achievement of the relevant performance criteria, each POP LTIP Unit may be convertible into a common unit of the operating partnership and then redeemable for one share of our common stock, or cash at our option.
As has become standard tax structuring for profits interests that only vest if performance hurdles are met, the POP LTIP Units are entitled to distributions during the performance period equal to 10% of our common stock dividend. However, contrary to most performance-based programs at other REITs, we are requiring participants to make a significant,non-refundable capital contribution for the POP LTIP Units they receive. This feature is intended to make POP LTIP Units comparable economically to POP Allocations to applicable participants. This structure is designed so that participants receive no additional compensation as a result of the exchange of POP Allocations into POP LTIP Units. This creates downside risk for participants if the performance hurdles are not achieved causing the forfeiture of the capital invested in their POP LTIP Units.
As such, the issuance of POP LTIP Units in exchange for POP Allocations does not affect the compensation amounts for the NEOs in the Summary Compensation Table or in the Grants of Plan-Based Awards Table. The exchange of the POP LTIP Units for POP Allocations does not result in incremental fair value for accounting purposes and does not change the total compensation of the NEOs. As a result, the issuance of the POP LTIP Units in exchange for POP Allocations does not change the presentation of the value of the POP Allocations in the Summary Compensation Table or in the Grants of Plan-Based Awards Table.
As discussed in CD&A,the Compensation Discussion and Analysis, the POP compensation pool only funds if and to the extent our three-year, compound annualized TSR exceeds the three-year compound annualized TSR of the MSCI REIT Index by 100 basis points.
| · | 2016-2018 performance period:This performance period began on January 1, 2016, and ended on December 31, 2018, and included 110 participants at its start. The grant-date fair value of the potential compensation pool on June 3, 2016, the date POP Allocations were awarded, was $26.6 million, determined using a Monte Carlo simulation. Variables used in the simulation under a risk-neutral premise include: (i) expected volatility of our common stock of 23%; (ii) expected volatility of the MSCI REIT Index of 18%; and (iii) correlation between our common stock and the MSCI REIT Index of 89%. The potential compensation pool was capped at $115.0 million, which was 0.5% of our equity market capitalization at December 31, 2015. Awards for the 2016-2018 performance period were determined by the Compensation Committee on January 9, 2019, resulting in pool funding of |
|
|
Discussion of Summary Compensation Table and the Grants of Plan-Based Awards
2017-2019 performance period: This performance period began on January 1, 2017, and ended on December 31, 2019, and included 112 participants at its start. The grant-date fair value of the potential compensation pool on January 3, 2017, the date POP Allocations were awarded, was $20.4 million, determined using a Monte Carlo simulation. Variables used in the simulation under a risk-neutral premise include: (i) expected volatility of our common stock of 25%; (ii) |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 88 |
| DISCUSSION OF SUMMARY COMPENSATION TABLE AND THE GRANTS OF PLAN-BASED AWARDS |
expected volatility of the MSCI REIT Index of 19%; and (iii) correlation between our common stock and the MSCI REIT Index of 88%. The potential compensation pool was capped at $142.1 million, which was 0.5% of our equity market capitalization at December 31, 2016. Awards for the 2017-2019 performance period were determined by the Compensation Committee on January 15, 2020, resulting in pool funding of $142.1 million. Of the total pool, $75.0 million was paid to participants, including the NEOs, in 2020 in the form of equity subject to subject to the holding and vesting requirements as described |
| · | 2018-2020 performance period: This performance period began on January 1, 2018, |
| · | 2019-2021 performance period: This performance period began on January 1, 2019, |
| · | 2020-2022 performance period: This performance period began on January 1, 2020, and will end on December 31, 2022, and included 114 participants at its start. The value of the potential compensation pool on January 2, 2020, the date POP Allocations were awarded, was $28.8 million, determined using a Monte Carlo simulation. Variables used in the simulation under a risk-neutral premise include: (i) expected volatility of our common stock of 19%; (ii) expected volatility of the MSCI REIT Index of 13%; and (iii) correlation between our common stock and the MSCI REIT Index of 81%. The potential compensation pool was capped at $100.0 million. As of December 31, |
| · | 2021-2023 performance period: This performance period began on January 1, 2021, and will end on December 31, 2023, and included 111 participants at its start. The value of the potential compensation pool on January 4, 2021, the date POP Allocations were awarded, was $30.3 million, determined using a Monte Carlo simulation. Variables used in the simulation under a risk-neutral premise include: (i) expected volatility of our common stock of 32%; (ii) expected volatility of the MSCI REIT Index of 29%; and (iii) correlation between our common stock and the MSCI REIT Index of 82%. The potential compensation pool was capped at $100.0 million. As of December 31, 2021, the projected value of this compensation pool was $100.0 million. |
In 2018, our NEOs voluntarily elected to apply long-term cliff vesting to 80% of any awards earned for the 2016-2018 and 2017-2019 performance periods. Under their election, 20% of amounts earned under applicable hurdles will be paid at the time applicable hurdles are met. A holding requirement will apply to these amounts until the sixth year after the beginning
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 89 |
| DISCUSSION OF SUMMARY COMPENSATION TABLE AND THE GRANTS OF PLAN-BASED AWARDS |
of the performance period. 80% of amounts earned under applicable hurdles will be subject to cliff vesting until the tenth year after the beginning of the performance period.
In the case of the 2016-2018 performance period, for example, Mr. Moghadam was paid an initial award of $11.3 million. 20% of the $11.3 million award was paid to him in LTIP units in January 2019. A holding period appliesapplied to this amount until 2022 (the sixth year after the beginning of the performance period). LTIP units comprising 80% of the $11.3 million are subject to cliff vesting until 2026 (ten years after the beginning of the performance period). As we exceeded the MSCI REIT Index threshold at the end of 2019, 2020 and 2021, Mr. Moghadam was paid 20% of the $2 million holdback award in LTIP units in January 2020, 2021 and 2022, respectively, when the award wasawards were approved by the Compensation Committee. A holding period appliesapplied to this amountthese amounts until 2022. LTIP units comprising 80% of the $2 million isholdback award paid in January 2020, 2021 and 2022 are subject to cliff vesting until 2026. The same vesting construct will be applied to each of the $2 million awards that can be paid at the end of 2020 and 2021 if the additional performance hurdles are met, subjecting 80% of such awards to cliff vesting until 2026. See discussion of POP for the 2018-2020 performance period in “Compensation Discussion and Analysis” for further details.
PPP Allocations
Please see “Compensation Discussion and Analysis” for a discussion of the general structure of PPP and how it fits into our overall compensation program.
Under PPP, NEOs receive an allocation representing their share of a potential compensation pool (the “PPP Allocations”) that, if funded, will be awarded to the NEO in a percentage of equity with any remainder in cash. The equity portion of the
|
|
Discussion of Summary Compensation Table and the Grants of Plan-Based Awards
earned award would be paid in RSUs or LTIP Units with a four-year vesting period (or three-year vesting period for awards granted prior to the 2018 annual grant cycle).period. The PPP Allocations have no value unless and until an incentive fee or promote is received and the Compensation Committee grants the applicable PPP award. No awards or values are reported as of the date of the PPP Allocations because it is not possible to determine whether any incentive fees or promotes will be received in future years from a particular venture. For accounting purposes, the cash awards will be expensed when earned and paid to participants and the equity awards are expensed over the vesting period.
For each applicable venture prior to February 2020, the Compensation Committee made PPP Allocations to the NEOs such that 15% of the compensation pool will be paid to Mr. Moghadam and 6% of the compensation pool will be paid to each of the other NEOsMr. Olinger, Mr. Reilly, Mr. Anderson and Mr. Nekritz if such awards are earned. Starting in February 2020, to reflect shifting responsibilities, the committee reduced PPP Allocations for Mr. Olinger to 4% with respect to the future promotes of certain new ventures. In determining the PPP Allocations to the NEOs, the Compensation Committee utilized a similar rationale as with the POP Allocations discussed above.
PPP compensation pools were funded in 2019, 20182021, 2020 and 2017.2019. The value of a PPP award earned by aan NEO is reported as compensation in the year the award is paid to the NEO on the date of determination by the Compensation Committee. The cash awards earned by the NEOs in 2019, 2018,2021, 2020 and 20172019 under PPP are included as“Non-Equity Incentive Plan Compensation” in the Summary Compensation Table for Fiscal Year 20192021 for the respective year. The equity awards (LTIP Units) are included as “Stock Awards” in the Summary Compensation Table for Fiscal Year 20192021 for the respective year.
Stock options
We discontinued the issuance of stock options prior to the Merger in June 2011. Stock options outstanding are all vested and exercisable. Stock options granted generally vested ratably over a continued service period of three years, however, certain stock options previously granted as a result of the bonus exchange vested over aone-year period (25% per quarter). Stock options were granted with an exercise price equal to the closing price of our common stock on the grant date. The exercise price for any outstanding stock option may not be decreased after the grant date except for reductions approved by our stockholders or if there is an overall adjustment to our outstanding shares, such as an adjustment triggered by a stock split. Stock options expire on the tenth anniversary of the grant date.
|
90
|
Outstanding Equity Awards
| OUTSTANDING EQUITY AWARDS |
Outstanding Equity Awards at FiscalYear-End
(DECEMBER 31, 2019)2021)*
| Stock Awards(1) | Stock Awards(1)
| |||||||||||||||||||||||||||||||
Name (a) | Number of Shares or Units of Stock That Have Not Vested (#) (g) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) (h) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested (#) (i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j) | Number of Shares or Units of Stock That Have Not Vested (#) (g) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) (h) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested (#) (i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j) | ||||||||||||||||||||||||
Hamid Moghadam | 65,854 | (2) | $ | 5,870,226 |
| 51,288 | (2) | $ | 8,634,848 |
| ||||||||||||||||||||||
| 25,245 | (3) | $ | 2,250,339 | |||||||||||||||||||||||||||||
| 1,265 | (4) | $ | 112,762 | |||||||||||||||||||||||||||||
| 76,552 | (5) | $ | 6,823,845 | |||||||||||||||||||||||||||||
| 153,866 | (6) | $ | 13,715,615 | |||||||||||||||||||||||||||||
| 25,644 | (7) | $ | 2,285,906 | |||||||||||||||||||||||||||||
| 23,700 | (8) | $ | 2,112,618 | |||||||||||||||||||||||||||||
| 3,646 | (9) | $ | 325,004 | |||||||||||||||||||||||||||||
| 174,197 | (10) | $ | 15,527,921 | |||||||||||||||||||||||||||||
| 42,965 | (11) | $ | 3,829,900 | |||||||||||||||||||||||||||||
| 109,799 | (12) | $ | 9,787,483 | |||||||||||||||||||||||||||||
| 144,276 | (16) | $ | 12,860,763 | |||||||||||||||||||||||||||||
| 53,833 | (17) | — | (17) | |||||||||||||||||||||||||||||
| 171,520 | (18) | — | (18) | |||||||||||||||||||||||||||||
| 168,615 | (19) | — | (19) | |||||||||||||||||||||||||||||
| 168,350 | (20) | — | (20) | |||||||||||||||||||||||||||||
| 7,900 | (3) | $ | 1,330,044 |
| |||||||||||||||||||||||||||
| 1,215 | (4) | $ | 204,557 |
| |||||||||||||||||||||||||||
| 87,098 | (5) | $ | 14,663,819 |
| |||||||||||||||||||||||||||
| 21,482 | (6) | $ | 3,616,710 |
| |||||||||||||||||||||||||||
| 54,898 | (7) | $ | 9,242,627 |
| |||||||||||||||||||||||||||
| 106,408 | (8) | $ | 17,914,851 |
| |||||||||||||||||||||||||||
| 12,667 | (9) | $ | 2,132,616 |
| |||||||||||||||||||||||||||
| 100,742 | (10) | $ | 16,960,923 |
| |||||||||||||||||||||||||||
| 125,140 | (11) | $ | 21,068,570 |
| |||||||||||||||||||||||||||
| 7,736 | (12) | $ | 1,302,433 |
| |||||||||||||||||||||||||||
| 21,886 | (13) | $ | 3,684,727 |
| |||||||||||||||||||||||||||
| 177,964 | (16) | $ | 29,962,019 |
| |||||||||||||||||||||||||||
| 125,092 | (17) | $ | 21,060,489 |
| |||||||||||||||||||||||||||
| 120,408 | (18) | $ | 20,271,891 |
| |||||||||||||||||||||||||||
| 11,722 | (19) |
| — | (19) | |||||||||||||||||||||||||||
| 15,154 | (20) |
| — | (20) | |||||||||||||||||||||||||||
| 168,350 | (21) |
| — | (21) | |||||||||||||||||||||||||||
| 145,264 | (22) |
| — | (22) | |||||||||||||||||||||||||||
| 99,866 | (23) |
| — | (23) | |||||||||||||||||||||||||||
Thomas Olinger | 19,366 | (2) | $ | 1,726,285 |
| 13,055 | (2) | $ | 2,197,940 |
| ||||||||||||||||||||||
| 6,563 | (3) | $ | 585,026 | |||||||||||||||||||||||||||||
| 328 | (4) | $ | 29,238 | |||||||||||||||||||||||||||||
| 39,165 | (6) | $ | 3,491,168 | |||||||||||||||||||||||||||||
| 12,355 | (7) | $ | 1,101,325 | |||||||||||||||||||||||||||||
| 44,341 | (10) | $ | 3,952,557 | |||||||||||||||||||||||||||||
| 11,171 | (11) | $ | 995,783 | |||||||||||||||||||||||||||||
| 28,547 | (12) | $ | 2,544,680 | |||||||||||||||||||||||||||||
| 19,903 | (13) | $ | 1,774,153 | |||||||||||||||||||||||||||||
| 6,162 | (14) | $ | 549,281 | |||||||||||||||||||||||||||||
| 948 | (15) | $ | 84,505 | |||||||||||||||||||||||||||||
| 57,710 | (16) | $ | 5,144,269 | |||||||||||||||||||||||||||||
| 21,533 | (17) | — | (17) | |||||||||||||||||||||||||||||
| 68,608 | (18) | — | (18) | |||||||||||||||||||||||||||||
| 67,446 | (19) | — | (19) | |||||||||||||||||||||||||||||
| 67,340 | (20) | — | (20) | |||||||||||||||||||||||||||||
| 22,170 | (5) | $ | 3,732,541 |
| |||||||||||||||||||||||||||
| 5,585 | (6) | $ | 940,291 |
| |||||||||||||||||||||||||||
| 14,272 | (7) | $ | 2,402,834 |
| |||||||||||||||||||||||||||
| 22,674 | (8) | $ | 3,817,395 |
| |||||||||||||||||||||||||||
| 3,293 | (9) | $ | 554,409 |
| |||||||||||||||||||||||||||
| 26,193 | (10) | $ | 4,409,853 |
| |||||||||||||||||||||||||||
| 29,472 | (11) | $ | 4,961,906 |
| |||||||||||||||||||||||||||
| 2,011 | (12) | $ | 338,572 |
| |||||||||||||||||||||||||||
| 5,690 | (13) | $ | 957,968 |
| |||||||||||||||||||||||||||
| 2,054 | (14) | $ | 345,811 |
| |||||||||||||||||||||||||||
| 316 | (15) | $ | 53,202 |
| |||||||||||||||||||||||||||
| 71,185 | (16) | $ | 11,984,707 |
| |||||||||||||||||||||||||||
| 50,035 | (17) | $ | 8,423,893 |
| |||||||||||||||||||||||||||
| 48,163 | (18) | $ | 8,108,723 |
| |||||||||||||||||||||||||||
| 4,689 | (19) |
| — | (19) | |||||||||||||||||||||||||||
| 6,063 | (20) |
| — | (20) | |||||||||||||||||||||||||||
| 67,340 | (21) |
| — | (21) | |||||||||||||||||||||||||||
| 38,737 | (22) |
| — | (22) | |||||||||||||||||||||||||||
| 26,631 | (23) |
| — | (23) | |||||||||||||||||||||||||||
|
91
|
Outstanding Equity Awards
| OUTSTANDING EQUITY AWARDS |
| Stock Awards(1) | Stock Awards(1)
| |||||||||||||||||||||||||||||||
Name (a) | Number of Shares or Units of Stock That Have Not Vested (#) (g) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) (h) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested (#) (i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j) | Number of Shares or Units of Stock That Have Not Vested (#) (g) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) (h) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested (#) (i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j) | ||||||||||||||||||||||||
Eugene Reilly | 22,846 | (2) | $ | 2,036,492 |
| 16,163 | (2) | $ | 2,721,203 |
| ||||||||||||||||||||||
| 6,563 | (3) | $ | 585,026 | |||||||||||||||||||||||||||||
| 328 | (4) | $ | 29,238 | |||||||||||||||||||||||||||||
| 19,903 | (5) | $ | 1,774,153 | |||||||||||||||||||||||||||||
| 48,491 | (6) | $ | 4,322,488 | |||||||||||||||||||||||||||||
| 13,008 | (7) | $ | 1,159,533 | |||||||||||||||||||||||||||||
| 6,162 | (8) | $ | 549,281 | |||||||||||||||||||||||||||||
| 948 | (9) | $ | 84,505 | |||||||||||||||||||||||||||||
| 54,898 | (10) | $ | 4,893,608 | |||||||||||||||||||||||||||||
| 11,171 | (11) | $ | 995,783 | |||||||||||||||||||||||||||||
| 28,547 | (12) | $ | 2,544,680 | |||||||||||||||||||||||||||||
| 57,710 | (16) | $ | 5,144,269 | |||||||||||||||||||||||||||||
| 21,533 | (17) | — | (17) | |||||||||||||||||||||||||||||
| 68,608 | (18) | — | (18) | |||||||||||||||||||||||||||||
| 67,446 | (19) | — | (19) | |||||||||||||||||||||||||||||
| 67,340 | (20) | — | (20) | |||||||||||||||||||||||||||||
| 2,054 | (3) | $ | 345,811 |
| |||||||||||||||||||||||||||
| 316 | (4) | $ | 53,202 |
| |||||||||||||||||||||||||||
Edward Nekritz | 19,553 | (2) | $ | 1,742,954 | ||||||||||||||||||||||||||||
| 6,563 | (3) | $ | 585,026 | |||||||||||||||||||||||||||||
| 328 | (4) | $ | 29,238 | |||||||||||||||||||||||||||||
| 19,903 | (5) | $ | 1,774,153 | |||||||||||||||||||||||||||||
| 39,165 | (6) | $ | 3,491,168 | |||||||||||||||||||||||||||||
| 12,915 | (7) | $ | 1,151,243 | |||||||||||||||||||||||||||||
| 6,162 | (8) | $ | 549,281 | |||||||||||||||||||||||||||||
| 948 | (9) | $ | 84,505 | |||||||||||||||||||||||||||||
| 44,341 | (10) | $ | 3,952,557 | |||||||||||||||||||||||||||||
| 11,171 | (11) | $ | 995,783 | |||||||||||||||||||||||||||||
| 28,547 | (12) | $ | 2,544,680 | |||||||||||||||||||||||||||||
| 57,710 | (16) | $ | 5,144,269 | |||||||||||||||||||||||||||||
| 21,533 | (17) | — | (17) | |||||||||||||||||||||||||||||
| 68,608 | (18) | — | (18) | |||||||||||||||||||||||||||||
| 67,446 | (19) | — | (19) | |||||||||||||||||||||||||||||
| 67,340 | (20) | — | (20) | |||||||||||||||||||||||||||||
| 27,448 | (5) | $ | 4,621,145 |
| |||||||||||||||||||||||||||
| 5,585 | (6) | $ | 940,291 |
| |||||||||||||||||||||||||||
| 14,272 | (7) | $ | 2,402,834 |
| |||||||||||||||||||||||||||
| 31,823 | (8) | $ | 5,357,720 |
| |||||||||||||||||||||||||||
| 3,293 | (9) | $ | 554,409 |
| |||||||||||||||||||||||||||
| 26,193 | (10) | $ | 4,409,853 |
| |||||||||||||||||||||||||||
| 36,489 | (11) | $ | 6,143,288 |
| |||||||||||||||||||||||||||
| 2,011 | (12) | $ | 338,572 |
| |||||||||||||||||||||||||||
| 5,690 | (13) | $ | 957,968 |
| |||||||||||||||||||||||||||
| 71,185 | (16) | $ | 11,984,707 |
| |||||||||||||||||||||||||||
| 50,035 | (17) | $ | 8,423,893 |
| |||||||||||||||||||||||||||
| 48,163 | (18) | $ | 8,108,723 |
| |||||||||||||||||||||||||||
| 4,689 | (19) |
| — | (19) | |||||||||||||||||||||||||||
| 6,063 | (20) |
| — | (20) | |||||||||||||||||||||||||||
| 67,340 | (21) |
| — | (21) | |||||||||||||||||||||||||||
| 58,105 | (22) |
| — | (22) | |||||||||||||||||||||||||||
| 39,946 | (23) |
| — | (23) | |||||||||||||||||||||||||||
Gary Anderson |
| 13,055 | (2) | $ | 2,197,940 |
| ||||||||||||||||||||||||||
| 2,054 | (3) | $ | 345,811 |
| |||||||||||||||||||||||||||
| 316 | (4) | $ | 53,202 |
| |||||||||||||||||||||||||||
| 22,170 | (5) | $ | 3,732,541 |
| |||||||||||||||||||||||||||
| 5,585 | (6) | $ | 940,291 |
| |||||||||||||||||||||||||||
| 14,272 | (7) | $ | 2,402,834 |
| |||||||||||||||||||||||||||
| 25,060 | (8) | $ | 4,219,102 |
| |||||||||||||||||||||||||||
| 3,293 | (9) | $ | 554,409 |
| |||||||||||||||||||||||||||
| 26,193 | (10) | $ | 4,409,853 |
| |||||||||||||||||||||||||||
| 32,279 | (11) | $ | 5,434,492 |
| |||||||||||||||||||||||||||
| 2,011 | (12) | $ | 338,572 |
| |||||||||||||||||||||||||||
| 5,690 | (13) | $ | 957,968 |
| |||||||||||||||||||||||||||
| 71,185 | (16) | $ | 11,984,707 |
| |||||||||||||||||||||||||||
| 50,035 | (17) | $ | 8,423,893 |
| |||||||||||||||||||||||||||
| 48,163 | (18) | $ | 8,108,723 |
| |||||||||||||||||||||||||||
| 4,689 | (19) |
| — | (19) | |||||||||||||||||||||||||||
| 6,063 | (20) |
| — | (20) | |||||||||||||||||||||||||||
| 67,340 | (21) |
| — | (21) | |||||||||||||||||||||||||||
| 58,105 | (22) |
| — | (22) | |||||||||||||||||||||||||||
| 39,946 | (23) |
| — | (23) | |||||||||||||||||||||||||||
|
92
|
Outstanding Equity Awards
| OUTSTANDING EQUITY AWARDS |
| Stock Awards(1) | ||||||||||||||||
Name (a) | Number of Shares or Units of Stock That Have Not Vested (#) (g) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) (h) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested (#) (i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j) | ||||||||||||
Gary Anderson | 19,553 | (2) | $ | 1,742,954 | ||||||||||||
| 6,563 | (3) | $ | 585,026 | |||||||||||||
| 328 | (4) | $ | 29,238 | |||||||||||||
| 19,903 | (5) | $ | 1,774,153 | |||||||||||||
| 39,165 | (6) | $ | 3,491,168 | |||||||||||||
| 13,008 | (7) | $ | 1,159,533 | |||||||||||||
| 6,162 | (8) | $ | 549,281 | |||||||||||||
| 948 | (9) | $ | 84,505 | |||||||||||||
| 44,341 | (10) | $ | 3,952,557 | |||||||||||||
| 11,171 | (11) | $ | 995,783 | |||||||||||||
| 28,547 | (12) | $ | 2,544,680 | |||||||||||||
| 57,710 | (16) | $ | 5,144,269 | |||||||||||||
| 21,533 | (17) | — | (17) | |||||||||||||
| 68,608 | (18) | — | (18) | |||||||||||||
| 67,446 | (19) | — | (19) | |||||||||||||
| 67,340 | (20) | — | (20) | |||||||||||||
Michael Curless | 16,805 | (2) | $ | 1,497,998 | ||||||||||||
| 6,563 | (3) | $ | 585,026 | |||||||||||||
| 328 | (4) | $ | 29,238 | |||||||||||||
| 19,903 | (5) | $ | 1,774,153 | |||||||||||||
| 35,436 | (6) | $ | 3,158,765 | |||||||||||||
| 12,542 | (7) | $ | 1,117,994 | |||||||||||||
| 6,162 | (8) | $ | 549,281 | |||||||||||||
| 948 | (9) | $ | 84,505 | |||||||||||||
| 40,118 | (10) | $ | 3,576,119 | |||||||||||||
| 11,171 | (11) | $ | 995,783 | |||||||||||||
| 28,547 | (12) | $ | 2,544,680 | |||||||||||||
| 57,710 | (16) | $ | 5,144,269 | |||||||||||||
| 21,533 | (17) | — | (17) | |||||||||||||
| 68,608 | (18) | — | (18) | |||||||||||||
| 67,446 | (19) | — | (19) | |||||||||||||
| 67,340 | (20) | — | (20) | |||||||||||||
| Stock Awards(1)
| ||||||||||||||||
Name (a) | Number of Shares or Units of Stock That Have Not Vested (#) (g) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) (h) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested (#) (i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j) | ||||||||||||
Edward Nekritz |
| 13,055 | (2) | $ | 2,197,940 |
| ||||||||||
| 2,054 | (3) | $ | 345,811 |
| |||||||||||
| 316 | (4) | $ | 53,202 |
| |||||||||||
| 22,170 | (5) | $ | 3,732,541 |
| |||||||||||
| 5,585 | (6) | $ | 940,291 |
| |||||||||||
| 14,272 | (7) | $ | 2,402,834 |
| |||||||||||
| 25,060 | (8) | $ | 4,219,102 |
| |||||||||||
| 3,293 | (9) | $ | 554,409 |
| |||||||||||
| 26,193 | (10) | $ | 4,409,853 |
| |||||||||||
| 29,472 | (11) | $ | 4,961,906 |
| |||||||||||
| 2,011 | (12) | $ | 338,572 |
| |||||||||||
| 5,690 | (13) | $ | 957,968 |
| |||||||||||
| 71,185 | (16) | $ | 11,984,707 |
| |||||||||||
| 50,035 | (17) | $ | 8,423,893 |
| |||||||||||
| 48,163 | (18) | $ | 8,108,723 |
| |||||||||||
| 4,689 | (19) |
| — | (19) | |||||||||||
| 6,063 | (20) |
| — | (20) | |||||||||||
| 67,340 | (21) |
| — | (21) | |||||||||||
| 58,105 | (22) |
| — | (22) | |||||||||||
| 39,946 | (23) |
| — | (23) | |||||||||||
| * |
|
Outstanding Equity Awards
| Columns |
|
| (1) | Dollar amounts are based on the closing price of our common stock on December 31, |
| (2) | LTIP Units: vested on March 7, |
| (3) | LTIP Units: will vest on |
| (4) | LTIP Units: will vest on |
| (5) | LTIP Units: vested on |
| (6) | LTIP Units: vested on March |
|
|
|
|
|
LTIP Units: will vest in equal amounts on each December 19, |
| (8) |
|
|
| (9) |
|
| (10) | LTIP Units: will vest in equal amounts on each September 9, 2022, 2023 and 2024. |
| (11) | LTIP Units: vested on March 3, 2022 (25%), and remainder will vest in equal amounts on each March 3, 2023, 2024 and 2025. |
| (12) | LTIP Units: vested on March 18, 2022 (25%), and remainder will vest in equal amounts on each March 18, 2023, 2024 and 2025. |
| (13) | LTIP Units: will vest in equal amounts on each December |
| (14) | RSUs: will vest on June 19, 2022. |
| (15) | RSUs: will vest on December 6, 2022. |
| (16) | LTIP Units: units issued for the 2016-2018 POP Performance Period will vest on January 1, 2026. |
| (17) | LTIP Units: units issued for the 2017-2019 POP Performance Period will vest on January 1, 2027. |
| (18) | LTIP Units: units issued for the 2018-2020 POP Performance Period will vest on January 1, 2028. |
| (19) | For the 2016-2018 Performance Period, column (i) represents the number of POP LTIP Units issued to the NEO in exchange for the POP Allocation originally allocated to the NEO approved on June 3, 2016. These units may be earned if applicable performance hurdles are met |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 93 |
| OUTSTANDING EQUITY AWARDS |
| with respect to the holdback award amounts for the 2016-2018 Performance Period. On January 18, 2022, Mr. Moghadam and each other NEO earned 13,018 and 5,207 POP LTIP units, respectively, related to the final holdback tranche. See the narrative discussion of POP LTIP Units that follows the Grants of Plan-Based Awards Table for 2021. |
| (20) | For the 2017-2019 Performance Period, column (i) represents the number of POP LTIP Units issued to the NEO in exchange for the POP Allocation originally allocated to the NEO approved on January 3, 2017. |
|
For the 2019-2021 Performance Period, column (i) represents the number of POP LTIP Units issued to the NEO in exchange for the POP Allocation to the NEO under POP approved on January 2, 2019. No value is presented in column (j) because awards under POP have no threshold value. Actual awards will not be determined or paid until the end of the three-year performance period. As of December 31, |
| (22) | For the 2020-2022 Performance Period, column (i) represents the number of POP LTIP Units issued to the NEO in exchange for the POP Allocation to the NEO under POP approved on January 2, 2020. No value is presented in column (j) because awards under POP have no threshold value. Actual awards will not be determined or paid until the end of the three-year performance period. As of December 31, 2021, the projected value of the compensation pool for the |
| (23) | For the 2021-2023 Performance Period, column (i) represents the number of POP LTIP Units issued to the NEO in exchange for the POP Allocation to the NEO under POP approved on January 4, 2021. No value is presented in column (j) because awards under POP have no threshold value. Actual awards will not be determined or paid until the end of the three-year performance period. As of December 31, 2021, the projected value of the compensation pool for the 2021-2023 Performance Period was $100.0 million. See the narrative discussion of LTIP Units that follows the Grants of Plan-Based Awards Table for 2021. |
|
94
|
Option Exercises and Stock Vested
| OPTION EXERCISES AND STOCK VESTED |
Option Exercises and Stock Vested in Fiscal Year 20192021*
| Option Awards | Stock Awards | Stock Awards
| ||||||||||||||||||||||
Name (a) | Number of Shares Acquired on Exercise (#) (b) | Value Realized on Exercise ($) (c) | Number of Shares Acquired on Vesting (#) (d) | Value Realized on Vesting ($) (e) | Number of Shares Acquired on Vesting (#) (d) | Value Realized on Vesting ($) (e) | ||||||||||||||||||
Hamid Moghadam | — | — | 358,117 | (1)(2) | $ | 25,118,699 | (1)(2) | 317,342 | (1)(2) | $ | 34,684,132 | (1)(2) | ||||||||||||
Thomas Olinger | 5,200 | (1)(3) | 312,512 | (1)(3) | 115,372 | (1)(3) | $ | 7,998,848 | (1)(3) | 91,339 | (1)(3) | $ | 9,767,411 | (1)(3) | ||||||||||
Eugene Reilly | — | — | 127,094 | (1)(4) | $ | 8,862,977 | (1)(4) | 100,356 | (1)(4) | $ | 10,755,203 | (1)(4) | ||||||||||||
Gary Anderson | 92,353 | (1)(5) | $ | 9,970,864 | (1)(5) | |||||||||||||||||||
Edward Nekritz | — | — | 116,880 | (1)(5) | $ | 8,151,325 | (1)(5) | 92,322 | (1)(6) | $ | 9,967,846 | (1)(6) | ||||||||||||
Gary Anderson | — | — | 116,608 | (1)(6) | $ | 8,132,275 | (1)(6) | |||||||||||||||||
Michael Curless | — | — | 110,323 | (1)(7) | $ | 7,695,110 | (1)(7) | |||||||||||||||||
| * | Columns (b) and (c) have been omitted from this table because they are not applicable. |
| (1) | Under certain conditions, an LTIP Unit is convertible into a common unit of the operating partnership which can then be redeemed into one share of our common stock (or cash at our election). Among other conditions, LTIP Units cannot be converted until they are vested and after the completion of a requisite waiting period from the date of issuance. See “Narrative Discussion to the Summary Compensation Table for Fiscal Year |
| (2) | Represents the vesting of LTIP Units as presented below: |
|
|
|
|
|
|
38,276 units with a value of |
|
| · | 59,837 units with a value of $5,826,329, issued on March 7, 2018, vested on March 7, |
|
| · | 35,470 units with a value of $3,592,756 issued on March 13, 2020, vested on March 13, 2021; |
| · | 10,741 units with a value of $1,103,960, issued on March 15, 2019, vested on March 15, 2021; |
| · | 4,223 units with a value of $450,932, issued on March 27, 2020, vested on March 27, 2021; |
| · | 7,900 units with a value of $968,066, issued on July 6, 2018, vested on July 6, |
|
| · | 1,215 units with a value of $195,834, issued on December 17, 2018, vested on December 17, |
|
|
| · | 6,873 units with a value of $671,355, issued on December 11, 2017, vested on January 15, 2021; |
| · | 30,103 units with a value of $2,940,461, issued on December 1, 2018, vested on January 15, 2021. |
| (3) | Represents the vesting of LTIP Units as presented below: |
|
|
|
|
|
|
|
|
|
| · |
|
|
2,054 |
8,731 units with a value of $1,176,240, issued on September 9, 2020, vested on September 9, 2021; |
| · | 316 |
| · |
|
|
| · | 2,749 units with a value of $268,522, issued on December 11, 2017, vested on January 15, 2021; |
| · | 12,041 units with a value of $1,176,165, issued on December 1, 2018, vested on January 15, 2021. |
| (4) | Represents the vesting of LTIP Units as presented below: |
|
|
|
|
|
95
|
Option Exercises and Stock Vested
| OPTION EXERCISES AND STOCK VESTED |
|
|
|
|
2,054 units with a value of |
8,731 units with a value of $1,176,240, issued on September 9, 2020, vested on September 9, 2021; |
| · | 316 units with a value of |
|
|
| · | 2,749 units with a value of $268,522, issued on December 11, 2017, vested on January 15, 2021; |
| · | 12,041 units with a value of $1,176,165, issued on December 1, 2018, vested on January 15, 2021. |
| (5) | Represents the vesting of LTIP Units as presented below: |
|
|
|
|
|
|
|
|
| · | 17,391 units with a value of $1,693,361, issued on March 7, 2018, vested on March 7, |
11,085 units with a value of $1,063,606, issued on March 8, 2019, vested on March 8, 2021; |
| · | 8,354 units with a value of $846,177, issued on March 13, 2020, vested on March 13, 2021; |
| · | 2,793 units with a value of $287,065, issued on March 15, 2019, vested on March 15, 2021; |
| · | 1,098 units with a value of $117,244, issued on March 27, 2020, vested on March 27, 2021; |
| · | 2,054 units with a value of |
8,731 units with a value of $1,176,240, issued on September 9, 2020, vested on September 9, 2021; |
| · | 316 units with a value of |
|
|
| · | 2,749 units with a value of $268,522, issued on December 11, 2017, vested on January 15, 2021; |
| · | 12,041 units with a value of $1,176,165, issued on December 1, 2018, vested on January 15, 2021. |
| (6) | Represents the vesting of LTIP Units as presented below: |
|
|
|
|
|
|
|
|
| · | 17,360 units with a value of $1,690,343, issued on March 7, 2018, vested on March 7, |
11,085 units with a value of $1,063,606, issued on March 8, 2019, vested on March 8, 2021; |
| · | 8,354 units with a value of $846,177, issued on March 13, 2020, vested on March 13, 2021; |
| · | 2,793 units with a value of $287,065, issued on March 15, 2019, vested on March 15, 2021; |
| · | 1,098 units with a value of $117,244, issued on March 27, 2020, vested on March 27, 2021; |
| · | 2,054 units with a value of |
8,731 units with a value of $1,176,240, issued on September 9, 2020, vested on September 9, 2021; |
| · | 316 units with a value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96
|
Nonqualified Deferred Compensation
NONQUALIFIED DEFERRED COMPENSATION |
Nonqualified Deferred Compensation in Fiscal Year 2019*2021*
Name (a) | Plans | Executive Contributions in Last FY ($) (b) | Aggregate Earnings In Last FY ($) (d) | Aggregate Withdrawals/ Distributions ($) (e) | Aggregate Balance at Last FYE ($) (f) | Plans | Executive Contributions in Last FY ($) (b) | Aggregate Earnings In Last FY ($) (d) | Aggregate Withdrawals/ Distributions ($) (e) | Aggregate Balance at Last FYE ($) (f) | ||||||||||||||||||||||||||
Hamid Moghadam | AMB NQ Plans & 2012 NQDC Plan | — | $ | 33,252,230 | (1) | — | $ | 98,016,930 | AMB NQ Plans & 2012 NQDC Plan | — | $ | 73,806,777 | (1) | — | $ | 186,245,191 | ||||||||||||||||||||
| Notional Account NQDC Plan(2) | — | $ | 26,365,601 | — | $ | 56,804,660 | Notional Account NQDC Plan(2) | — | $ | 13,291,609 | — | $ | 80,571,905 | |||||||||||||||||||||||
Thomas Olinger | AMB NQ Plans & 2012 NQDC Plan | — | $ | 953,971 | (1) | — | $ | 2,870,155 | AMB NQ Plans & 2012 NQDC Plan | — | $ | 2,077,541 | (1) | — | $ | 5,323,541 | ||||||||||||||||||||
Eugene Reilly | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Gary Anderson | — | — | — | — | ||||||||||||||||||||||||||||||||
Edward Nekritz | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Gary Anderson | — | — | — | — | ||||||||||||||||||||||||||||||||
Michael Curless | — | — | — | — | ||||||||||||||||||||||||||||||||
| * | Column (c) has been omitted from this table because it is not applicable. |
| (1) | Represents earnings that are computed based on the specific investment options that are elected by the NEO, as described in the narrative discussion that follows these footnotes. Primarily these earnings consist of the dividends paid on the shares of our common stock deferred by the NEO and the change in the market value of those shares. These amounts are not included in the NEO’s total compensation presented in the Summary Compensation Table for Fiscal Year |
| (2) | Participants in our nonqualified deferred compensation plans prior to the Merger received alump-sum payment, triggered by the Merger, equal to the value of their account balance in June 2011. After the Merger, we established a new nonqualified deferred compensation plan that is discussed in further detail below. Under this Notional Account NQDC Plan, an initial account credit value was established for the NEO. Participants in the Notional Account NQDC are credited with the excess in value, if any, of their Notional Earnings Account (representing the initial account credit value plus the cumulative earnings or losses associated with the underlying, hypothetical investments, if any) over the initial account credit value. The amount in column (f) represents the excess of the participant’s notional earnings account value over the initial account credit value as of December 31, |
|
|
Nonqualified Deferred Compensation
Narrative Discussion to Nonqualified Deferred Compensation in Fiscal Year 20192021 Table
2012 NQDC Plan
Effective 2012, we established a nonqualified deferred compensation plan (the “2012 NQDC Plan”). The 2012 NQDC Plan allows certain eligible employees andnon-employee directors of the company and our participating subsidiaries to elect to defer up to 100% of their eligible compensation, such as annual salary, bonus, equity awards and directors’ fees, that were earned and vested on or after January 1, 2012. The deferred compensation under the 2012 NQDC Plan is our unsecured obligation and amounts deferred are held in a rabbi trust. Participants select from various investment options available under the plan to earn investment credits on their elective deferrals. There are no guaranteed returns for any of the investment options or for any participants in the plans. The amount of earnings that a participant receives depends on the participant’s investment elections related to cash balances in the account and, with respect to shares of our common stock that have been deferred, the dividends earned on that stock and the change in market value of the stock during the period. The 2012 NQDC Plan offers a variety of investment choices with respect to cash contributions. Our common stock is not an investment option available with respect to deferrals of cash compensation. The NEOs did not elect to defer any of their 20192021 compensation (salary, bonus or equity awards) under the 2012 NQDC Plan.
If a participant elects to defer the receipt of an equity award, the underlying common stock is held in the rabbi trust, which cannot be reinvested in any other investment option. Cash dividends earned on these shares of our common stock after deferral are credited with earnings and losses based on specific investment options, other than our common stock, that are selected by the participant. Distributions under these plans are made in a lump sum payment upon termination of
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 97 |
| NONQUALIFIED DEFERRED COMPENSATION |
employment, or service as anon-employee director, or in the event of a change in control or death of a participant. With respect to equity awards deferred bynon-employee directors, participants may elect to receive distributions prior to termination of service.
We have reserved the right under the 2012 NQDC Plan to make discretionary matching contributions to participant accounts from time to time. No such discretionary contributions have been made. The participants’ elective deferrals and matching contributions, if any, are fully vested at all times. We pay all of the administrative costs associated with the 2012 NQDC Plan. Generally, the compensation that is deferred istax-deferred until it is distributed to the participant. However, amounts deferred are subject to FICA and Medicare employee and employer taxes in accordance with statutory requirements.
In December 2014, the 2012 NQDC Plan was amended, primarily to allow for LTIP Units to be issued in lieu of other deferred compensation upon a distribution event.
AMB NQ Plans
Prior to the Merger, we maintained two nonqualified deferred compensation plans: (i) the Amended and Restated AMB 2005 Nonqualified Deferred Compensation Plan (the “2005 NQ Plan”) and (ii) the Amended and Restated Nonqualified Deferred Compensation Plan (the “2002 NQ Plan”) (together, the “AMB NQ Plans”). The AMB NQ Plans allowed our directors and certain eligible employees to defer certain compensation, including the receipt of restricted stock awards and, in the case of the 2002 NQ Plan, gains from exercise of stock options, received under our equity compensation plans. The AMB NQ Plans provided that upon a change in control, such as the Merger in June 2011, participants would receive alump-sum payment equal to the vested account balance. Such distributions were made in 2011.
Compensation subject to deferral elections made under the AMB NQ Plans prior to the Merger with respect to compensation earned in 2011 and beyond was not subject to the distributions under the AMB NQ Plans triggered by the Merger. Mr. Moghadam has deferred certain gains resulting from the exercise of stock options under the 2002 NQ Plan. In addition, Mr. Moghadam and Mr. Olinger have deferred shares of our common stock received upon vesting of certain equity awards under the 2005 NQ Plan.
|
|
Nonqualified Deferred Compensation
The deferred compensation under the AMB NQ Plans is our unsecured obligation and amounts deferred are held in a rabbi trust. Participants select from various investment options available under the plans to receive investment credit on their elective deferrals. There are no guaranteed returns for any of the investment options or for any participants in the plans. The amount of earnings that a participant receives depends on the participant’s investment elections related to cash balances in the account and, with respect to deferred shares of our common stock, the dividends earned on the stock and the change in market value of the stock during the period. Cash dividends earned on shares of our common stock after deferral are credited earnings and losses based on specific investment options, other than our common stock, selected by the participant. Distributions under these plans are made in either a lump sum payment or installments. Participants can elect a specific distribution date in accordance with Section 409A of the Internal Revenue Code or, if no election is made, the amounts will be distributed upon termination of the participant’s employment with us. Distributions are also made in the event of change in control or a participant’s death or disability.
In December 2014, the 2005 NQ Plan was amended, primarily to allow for LTIP Units to be issued in lieu of other deferred compensation upon a distribution event under the plan.
Notional Account NQDC Plan
The Notional Account NQDC Plan was adopted in conjunction with the Merger with the purpose of providing the opportunity for certain participants of the AMB NQ Plans to continue to receive tax deferred earnings with respect to taxes on distributions triggered by the Merger.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 98 |
| NONQUALIFIED DEFERRED COMPENSATION |
Each participant in the AMB NQ Plans who continued to be employed by us after the Merger or continued as anon-employee director after the Merger received an initial account credit in a notional earnings account under the Notional Account NQDC Plan. Mr. Moghadam and Mr. Olinger participate in the Notional Account NQDC Plan. The initial account credit value for a participant was equal to the deemed amount of the tax liability on the distributions they received in 2011 that were triggered by the Merger. The initial account credit value is either invested in our common stock or hypothetically invested in measurement funds selected by the participant, which do not include our common stock. Measurement funds are used for measurement purposes only and planthe Notional Account NQDC Plan participants do not have rights in or to the underlying hypothetical investments.
A notional earnings account is credited with hypothetical earnings or charged with hypothetical losses associated with the underlying hypothetical investments in measurement funds. Upon a distribution event under the plan,Notional Account NQDC Plan, the participant is entitled to the excess, if any, of the value in the notional earnings account (representing the value of the initial account credit plus cumulative earnings or losses associated with the underlying hypothetical investments, if any) over the initial account credit value.
In December 2014, the Notional Account NQDC Plan was amended, primarily to allow for LTIP Units to be issued in lieu of other deferred compensation upon a distribution event under such plan.
In September 2020, the Compensation Committee approved a form of amendment to the Notional Account NQDC Plan, which allows for the conversion of a notional stock account under such plan into an account structure intended to operate more similarly to accounts under our 2012 NQDC Plan. The value of a current notional stock account was to be determined using the stock price on the day of conversion. The account value upon conversion can be invested all or in part in investment options available under the Notional Account NQDC Plan, including our common stock or cash. This amendment became effective as of April 2021.
Mr. Moghadam’s initial account credit value was in the amount of $25,798,616. A rabbi trust was created to hold shares of our common stock and cash in the amount of Mr. Moghadam’s initial account credit balance. WeAt the inception of the Notional Account NQDC Plan, we issued 803,945 shares of our common stock to the rabbi trust representing Mr. Moghadam’s initial account credit value. The number of shares was determined based on the price of our common stock at the time, $32.09 per share. Mr. Moghadam iswas entitled to direct the voting of these shares and, as such, they arewere reflected as beneficially owned by him in the stock ownership table presented below.him. Mr. Moghadam iswas not entitled to receive these shares upon distribution of his notional earnings account under the plan.Notional Account NQDC Plan. Upon a distribution event under the plan,Notional Account NQDC Plan, Mr. Moghadam iswas entitled to the excess, if any, of the value in the notional earnings account (representing the value of the initial account credit plus cumulative earnings or losses associated with the underlying common stock, if any) over the initial account credit value. Upon the April 2021 amendment to the Notional Account NQDC Plan, Mr. Moghadam’s notional stock account was valued per the amendment and the account value was invested in an investment measurement fund available under such plan. As a result, Mr. Moghadam is no longer entitled to direct the voting of the 803,945 shares of our common stock in the Notional Account NQDC Plan’s rabbi trust.
Mr. Olinger’s initial account credit value was hypothetically invested in measurement funds selected by him. The initial account credit value for Mr. Olinger was $122,697.
In December 2014, the Notional Account NQDC Plan was amended, primarily to allow for LTIP Units to be issued in lieu of other deferred compensation upon a distribution event under the plan.
|
99
|
Nonqualified Deferred Compensation
| NONQUALIFIED DEFERRED COMPENSATION |
Investment funds and returns for 20192021
The participants in our nonqualified deferred compensation plans can elect measurement funds that are generally the same investment funds that are available to participants in our 401(k) Plan, with the exception of investments in our company stock. Our company stock is not an available investment option under the nonqualified deferred compensation plans.Plan. These investment funds are shown below with the returns earned by these investment funds in 2019:2021:
Vanguard Treasury M/M Fund | 2.14 | % | Metropolitan West High Yield Bond I | 12.55 | % | |||||
PIMCO Real Return/Institutional | 8.52 | % | Vanguard Interm. Term Bond Index Inst. | 10.20 | % | |||||
Vanguard Short-Term Bond Index Admiral | 4.86 | % | Vanguard Balanced Index Fund (Instl) | 21.79 | % | |||||
Vanguard Target Retirement Income | 13.16 | % | Vanguard Target Retirement 2015 | 14.81 | % | |||||
Vanguard Target Retirement 2020 | 17.63 | % | Vanguard Target Retirement 2025 | 19.63 | % | |||||
Vanguard Target Retirement 2030 | 21.07 | % | Vanguard Target Retirement 2035 | 22.44 | % | |||||
Vanguard Target Retirement 2040 | 23.86 | % | Vanguard Target Retirement 2045 | 24.94 | % | |||||
Vanguard Target Retirement 2050 | 24.98 | % | Vanguard Target Retirement 2055 | 24.98 | % | |||||
Vanguard Target Retirement 2060 | 24.96 | % | Vanguard Target Retirement 2065 | 24.96 | % | |||||
American Beacon Small Cap Value I | 23.50 | % | American Funds Growth Fund of Am.R6 | 28.54 | % | |||||
American Funds Wash. Mutual Inv R6 | 25.93 | % | Vanguard Growth Index Fund (Inst) | 37.26 | % | |||||
Vanguard Institutional Index | 31.46 | % | Vanguard Small Cap Growth Index (Inst) | 32.77 | % | |||||
VanguardMid-cap Index | 31.04 | % | Artisan International Institutional | 29.46 | % | |||||
Vanguard Total Intl Stock Index Admiral | 21.56 | % | Invesco Global Real Estate R5 | 22.90 | % | |||||
Vanguard Treasury M/M Fund | 0.01% | American Funds Growth Fund of AM R6 | 19.69% | |||||||
American Funds Washington Mutual R6 | 28.90% | Fidelity 500 Index Fund | 28.69% | |||||||
Vanguard Growth Index Fund Inst. | 27.27% | Fidelity Mid Cap Index Fund | 22.56% | |||||||
American Beacon Small Cap Value | 28.21% | Vanguard Target Retirement 2015 | 5.78% | |||||||
Vanguard Target Retirement 2020 | 8.17% | Vanguard Target Retirement 2025 | 9.80% | |||||||
Vanguard Target Retirement 2030 | 11.38% | Vanguard Target Retirement 2035 | 12.96% | |||||||
Vanguard Target Retirement 2040 | 14.56% | Vanguard Target Retirement 2045 | 16.16% | |||||||
Vanguard Target Retirement 2050 | 16.41% | Vanguard Target Retirement 2055 | 16.44% | |||||||
Vanguard Target Retirement 2060 | 16.44% | Vanguard Target Retirement 2065 | 16.46% | |||||||
Vanguard Small Cap Growth Index | 5.70% | Artisan International Inst. | 9.25% | |||||||
Fidelity Total International Index Fund | 8.47% | Invesco Global Real Estate Fund R5 | 25.76% | |||||||
Vanguard Balanced Index Fund Inst. | 14.20% | Vanguard Target Retirement Inc | 5.25% | |||||||
Vanguard Total International Bond Index Fund Admiral | -2.22% | Vanguard Total World Stock Index Fund | 18.23% | |||||||
Fidelity ST Bond Index Fund | -1.12% | Fidelity US Bond Index Fund | -1.79% | |||||||
Metropolitan High Yield Bond | 3.62% | PIMCO Real Return Inst. | 5.67% | |||||||
Prologis Stock | 72.33% |
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100
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Potential Payments Upon Termination or Change in Control
| POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL |
Potential Payments Upon Termination
or Change in Control
We have change in control and noncompetition agreements (the “CIC Agreements”) with our NEOs. The CIC Agreements are subject to automaticone-year extensions. Some form of benefits (cash payments and/or acceleration of vesting of unvested equity awards) are provided to our NEOs: (i) in the CIC Agreements; (ii) under the equity award agreements; or (iii) under the terms of POP. These benefits are available under the following scenarios: (1) death; (2) disability; (3) retirement (as defined and under certain circumstances); and (4) termination without cause or termination by employee for good reason within two years of a change in control (as defined)defined in the CIC Agreements).
In the event of a change in control, the CIC Agreements provide for severance benefits on a “double-trigger” basis with severance benefits payable only upon termination of employment (which is, generally, termination without cause or termination by employee for good reason as such term isterms are defined in the CIC Agreements), within two years following the change in control. Under the CIC Agreements, in consideration for the rights to receive such severance payments, the NEO is subject to confidentiality obligations during employment and after termination,non-competition obligations during the term of employment andnon-solicitation obligations for two years after the date of termination. A change of control, as defined in the CIC Agreements, generally occurs upon: (i) the consummation of a transaction, approved by our stockholders, to merge or consolidate the company with another entity, sell or otherwise dispose of all or substantially all of its assets or adopt a plan of liquidation; provided, however, that a change in control shall not occur if a transaction results in 50% or more of the beneficial ownership of the voting power of the company or other relevant entity being held by the same persons (although not necessarily in the same proportion) who held the voting power of the company immediately prior to the transaction (except that upon the completion of the transaction, employees or employee benefit plans of the company may be a new holder of such beneficial ownership); (ii) the beneficial ownership of securities representing 50% or more of the combined voting power of the company is acquired, other than from the company, by any person (with certain exceptions); or (iii) at any time during any period of two consecutive years, board members at the beginning of such period cease to constitute at least a majority of the Board (unless the election or the nomination for election of each new director was approved by a vote of at leasttwo-thirds of the directors still in office at the time of such election or nomination who were directors at the beginning of such period).
Potential payments due to the NEOs under the scenarios listed above are presented in the table below based on the assumption that a termination occurred as of December 31, 2019.2021. The acceleration of vesting of unvested equity awards benefit is estimated using the closing stock price of our common stock on December 31, 20192021, of $89.14$168.36 per share. Under our company policy, each of our employees would be paid for their earned and unused vacation benefits upon termination under any termination scenario, so the value of this benefit is not included in the amounts below. Because the termination scenarios are as of December 31, 2019,2021, the NEOs would have completed the performance year such that they would receive their annual bonus and their annual long-term equity incentive award for the 20192021 performance year. Therefore, these payments are not considered to be severance benefits and such amounts are not included in the amounts presented.
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101
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Potential Payments Upon Termination or Change in Control
| POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL |
Name of Executive/Type of Benefit | Death | Disability | After Change in Control: Termination without Cause or Voluntary Termination for Good Reason(1) | |||||||||
Hamid Moghadam | ||||||||||||
Cash severance (salary and bonus)(2) | $ | 1,500,000 | — | $ | 5,000,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 87,733 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6)(7) | $ | 120,164,882 | $ | 120,164,882 | $ | 120,164,882 | ||||||
Total Estimated Value | $ | 121,664,882 | $ | 120,164,882 | $ | 125,252,615 | ||||||
Thomas Olinger | ||||||||||||
Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 104,843 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 39,843,269 | $ | 39,843,269 | $ | 39,843,269 | ||||||
Total Estimated Value | $ | 40,193,269 | $ | 39,843,269 | $ | 42,648,112 | ||||||
Eugene Reilly | ||||||||||||
Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 89,968 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 41,984,056 | $ | 41,984,056 | $ | 41,984,056 | ||||||
Total Estimated Value | $ | 42,334,056 | $ | 41,984,056 | $ | 44,774,024 | ||||||
Edward Nekritz | ||||||||||||
Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 104,833 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 39,909,857 | $ | 39,909,857 | $ | 39,909,857 | ||||||
Total Estimated Value | $ | 40,259,857 | $ | 39,909,857 | $ | 42,714,690 | ||||||
Gary Anderson | ||||||||||||
Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 104,833 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 39,918,147 | $ | 39,918,147 | $ | 39,918,147 | ||||||
Total Estimated Value | $ | 40,268,147 | $ | 39,918,147 | $ | 42,722,980 | ||||||
Michael Curless | ||||||||||||
Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 112,924 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 38,922,810 | $ | 38,922,810 | $ | 38,922,810 | ||||||
Total Estimated Value | $ | 39,272,810 | $ | 38,922,810 | $ | 41,735,734 | ||||||
Name of Executive/Type of Benefit | Death | Disability | After Change in Control: Termination without Cause or Voluntary Termination for Good Reason(1) | |||||||||
Hamid Moghadam |
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Cash severance (salary and bonus)(2) | $ | 1,500,000 | — | $ | 5,000,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 58,335 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6)(7) | $ | 207,761,625 | $ | 207,761,625 | $ | 207,761,625 | ||||||
Total Estimated Value | $ | 209,261,625 | $ | 207,761,625 | $ | 212,819,960 | ||||||
Thomas Olinger |
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Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 100,298 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 65,514,244 | $ | 65,514,244 | $ | 65,514,244 | ||||||
Total Estimated Value | $ | 65,864,244 | $ | 65,514,244 | $ | 68,314,542 | ||||||
Eugene Reilly |
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Cash severance (salary and bonus)(2) | $ | 750,000 | — | $ | 3,500,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 84,335 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 71,647,819 | $ | 71,647,819 | $ | 71,647,819 | ||||||
Total Estimated Value | $ | 72,397,819 | $ | 71,647,819 | $ | 75,232,154 | ||||||
Gary Anderson |
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Cash severance (salary and bonus)(2) | $ | 527,500 | — | $ | 3,055,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 100,298 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 68,388,538 | $ | 68,388,538 | $ | 68,388,538 | ||||||
Total Estimated Value | $ | 68,916,038 | $ | 68,388,538 | $ | 71,543,836 | ||||||
Edward Nekritz |
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Cash severance (salary and bonus)(2) | $ | 495,000 | — | $ | 2,990,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 100,298 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 67,915,951 | $ | 67,915,951 | $ | 67,915,951 | ||||||
Total Estimated Value | $ | 68,410,951 | $ | 67,915,951 | $ | 71,006,249 | ||||||
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Potential Payments Upon Termination or Change in Control
| (1) | Cause is generally defined in the CIC Agreements as: (i) the willful and continued failure by the executive to substantially perform specified duties; (ii) the engaging in conduct that is demonstrably injurious to the company (monetarily or otherwise); or (iii) the engaging in egregious misconduct involving serious moral turpitude. Termination by employee for good reason, as generally defined in the CIC Agreements, can occur should we: (i) change the executive’s duties such that they are inconsistent with the position held prior to the change in control and results in a material diminution in the executive’s authority, duties or responsibilities; (ii) material reduction in the executive’s annual base compensation after the change in control; (iii) relocate the executive’s place of employment more than 50 miles from the current location or require the executive to be based anywhere other than where the executive was based prior to the change in control without the executive’s written consent resulting in a material change to geographic location; or (iv) not comply with the provisions of the agreements or arrangements pertaining to the officer’s compensation and benefits. |
| (2) | Under the death and disability scenarios contained in the CIC Agreements, the NEO would receive a cash severance payment equal to his annual base salary plus the annual bonus amount that he received or was entitled to receive for the most recent annual period (target level for |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 102 |
| POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL |
| of salary) as of December 31, |
| (3) | In the change in control scenario contained in the CIC Agreements, the NEO would receive a cash payment equal to the cost of continuation of health insurance coverage in place at the date of termination for 24 months. Additionally, the CIC Agreements provide for the payment of an amount equal to two times the company’s matching contribution under the 401(k) Plan ($ |
| (4) | The CIC Agreements provide for the reduction of any payments to which the NEO is entitled after a change in control should such payments constitute a “parachute payment” (as defined in Section 280G of the Internal Revenue Code). Such payments shall be either (a) reduced (but not below zero) so that the aggregate present value of the payment shall be $1.00 less than three times the officer’s “base amount” (also as defined in Section 280G of the Internal Revenue Code) so that no portion of the payment will be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code or (b) paid in full, whichever produces the better netafter-tax result for the NEO (taking into account any applicable excise tax under Section 4999 and any applicable income taxes). Under the scenarios for |
| (5) | The estimates for each scenario reflect the value that would be realized as of December 31, |
Under the death and disability scenarios, awards under POP would not be paid until the end of the applicable performance period and the actual awards paid would be based on performance for the entire performance period. Under these scenarios, the value of the POP Allocation to each NEO (and the POP LTIP Units exchanged for such POP Allocations) for the 2016-2018 performance period, 2017-2019 performance period, 2018-2020 performance period, 2019-2021 performance period, 2020-2022 performance period and |
As of December 31, |
As of December 31, |
As of December 31, 2021, the value of the aggregate compensation pool for the 2018-2020 performance period is $100.0 million. Awards for the 2018-2020 performance period were determined by the Compensation Committee on January 15, 2021. The portion of that award that vested immediately in January 2021 is excluded from the death, disability and change in control amounts (as the participant would have been paid this portion regardless of death, disability or a change in control). The portion of the award that is subject to cliff vesting that would accelerate upon termination are included in the death, disability and change in control amounts. |
As of December 31, 2021, the value of the aggregate compensation pool for the 2019-2021 performance period is $100.0 million. Awards for the 2019-2021 performance period were determined by the Compensation Committee on January 18, 2022. The portion of that award that vested immediately in January 2022 is excluded from the death, disability and change in control amounts (as the participant would have |
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103
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Potential Payments Upon Termination or Change in Control
| POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL |
| been paid this portion regardless of death, disability or a change in control). The portion of the award that is subject to cliff vesting that would accelerate upon termination are included in the death, disability and change in control amounts. |
Under the change in control scenario, the Compensation Committee would determine the size of the compensation pool and pay awards according to the applicable POP agreements. |
| (6) | Any applicable retirement benefit with respect to equity compensation has been waived by our NEOs. Therefore, no acceleration benefit is reported for a retirement scenario except as stated below with respect to Mr. Moghadam. |
| (7) | Mr. Moghadam had |
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104
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CEO Pay Ratio
| CEO PAY RATIO |
We provide fair and equitable compensation to our employees through a combination of competitive base pay, incentives, retirement plans and other benefits. As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO, Mr. Moghadam:
For 2019,2021, our last completed fiscal year:
| · | the annual total compensation of the employee identified at the median of our company as of December 31, |
| · | the annual total compensation of our CEO, as reported in the Summary Compensation Table included in this Proxy Statement, was |
Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees was 258218 to 1.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
Pay ratios within our industry will also differ and may not be comparable depending on the size, scope, global breadth and structure of the company.
To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of the “median employee,” the methodology and the material assumptions, adjustments and estimates that we used were as follows:
| · | We identified our median compensated employee as of December 31, |
| · | To identify the median employee, we calculated compensation of our employees using their |
| · | As of December 31, |
| · | We did not exclude any employees from our employee population. We excluded a limited number of temporary agency employees, whose compensation is determined by the agency and who are not considered our employees for purposes of the pay ratio calculation. |
| · | We annualized the base pay and cash incentive bonus for |
| · | Foreign salaries were converted to U.S. dollars at the December 31, |
| · | No cost of living adjustments were utilized in the compensation calculation. |
| · | Once the median employee was identified, we calculated the total compensation for our median employee for |
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105
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Advisory Vote to Approve the Company’s Executive Compensation
| ADVISORY VOTE TO APPROVE THE COMPANY’S EXECUTIVE COMPENSATION |
PROPOSAL 2
Advisory Vote to Approve the Company’s Executive Compensation for 2019 (Proposal 2)2021
The Dodd-Frank Act allows our stockholders to vote to approve, on an advisory(non-binding) basis, the compensation of our NEOs as disclosed in this proxy statement in accordance with SEC rules.
The compensation of our NEOs is discussed above under “Executive Compensation.” Our executive compensation programs are designed to attract, motivate and retain our NEOs, who are critical to our success. Under these programs, our NEOs are rewarded for the achievement of specific annual, long-term and strategic goals and the realization of increased stockholder value. Please read CD&Athe Compensation Discussion and Analysis for additional details about our executive compensation programs, including information about the compensation of our NEOs for 2019.2021.
This proposal, commonly known as a“say-on-pay”Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our NEOs’ compensation that is described in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this proxy statement. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the annual meeting:
“RESOLVED, that the company’s stockholders approve, on an advisory basis, the company’s 20192021 executive compensation, as discussed and disclosed in the company’s proxy statement for the 20202022 annual meeting of stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Executive Compensation Tables and related narratives.”
You may vote for, vote against or abstain from voting to approve the above resolution on the company’s executive compensation for 2019.2021. Assuming a quorum is present, to be approved by the stockholders, the number of votes cast “For” the proposal must receiveexceed the affirmative votenumber of a majority of the shares of common stock having voting power present in person or by proxy at the annual meeting. Abstentions and brokernon-votes are considered voting power present in person or by proxy and thus will have the same effect assuch votes cast “Against” the proposal. Abstentions and broker non-votes, if any, will have no effect on the outcome of the vote on this proposal.
As an advisory vote, this proposal is not binding on the company. However, the Compensation Committee values the opinions of our stockholders and reviews and considers the voting results when making executive compensation decisions. The company currently intends to hold an advisory vote on its executive compensation on an annual basis.
The Board unanimously recommends that the stockholders vote, on an advisory basis, "FOR"FOR the approval of our 20192021 executive compensation, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission.
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106
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| DIRECTOR COMPENSATION |
Director Compensation
Director Compensation
| 109 | ||||
| 110 | Director Compensation for Fiscal Year 2021 | |||
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107
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Director Compensation
| DIRECTOR COMPENSATION |
Non-employee directors are compensated with a mix of cash and equity-based compensation, with a higher percentage of the overall mix in equity-based compensation. An employee who also serves as a member of the Board, such as Mr. Moghadam, does not receive additional compensation for service on the Board.
In May 2019, FW CookApril 2021, Pay Governance conducted a competitive review of ournon-employee director compensation to ensure that our compensation levels are competitive, and the structure of the program is consistent with corporate governance best practices. The Compensation Committee has targetedThis analysis compared ournon-employee director compensation at the medianto a general industry group (1) and to a REIT group composed of the S&P 200 (consistent with our size relative to these companies) but not to exceed the 90th percentile of a comparison group of 11large-cap REITs. These REITs are the same companies that are largest publicly traded REITS in the comparisonUnited States.(2) This analysis was conducted prior to our refinement of the peer group that is used to evaluate executive compensation and arethat is listed above under “Compensation Discussion and Analysis.”
FW Cook’sPay Governance’s review found that (i) ournon-employee director compensation is betweenjust above the 75th and 90th percentile of the comparison group and between the median and 75th percentile of the S&P 200, assuming a 5% increase in competitive director compensation in 2019 and (ii) the mix between the cash and equity components of ournon-employee director compensation (39% in cash and 61% in equity) was consistent with median competitive practice.
The Compensation Committee recommended no increases to director compensation. The recommendations were approved by the full Board.
Compensation applicable to service on the Board by ournon-employee directors for 20192021 (starting in July 2019)2021) was as follows:
| · | Annual cash retainer: $120,000 |
| · | Annual equity awards: Valued on the grant date at $190,000 |
| – | In the form of deferred share units (“DSUs”), each convertible into one share of our common stock, that will vest upon the earlier of one year from the grant date or the date of the next annual meeting. After vesting, receipt of the underlying common stock is deferred until at least three years from the grant date. The DSUs earn dividend equivalent units (“DEUs”) while they are outstanding. |
| · | Lead independent director retainer: $50,000 |
| · | Annual retainer for serving as chair of a committee: |
| – | Audit: $30,000 |
| – | Compensation: $25,000 |
| – | Governance: $20,000 |
| – | Executive: None |
| · | Excess meeting fee: Meeting fee of $1,500 for each meeting attended in excess of a combined 20 Board and committee meetings per year. |
The equity component of the compensation paid to our directors is awarded under the terms of the 20122020 LTIP. See the narrative discussion that follows the Grants of Plan-Based Awards for Fiscal Year 20192021 table above under “Executive Compensation.” In addition, we reimburse our directors for reasonable travel costs incurred to attend the meetings of the Board and its committees.
| (1) | The general industry group is comprised of Advanced Micro Devices, Inc., Altria Group, Inc., Anthem, Inc., Bank Of New York Mellon, Becton Dickinson, Blackrock, Inc., Booking Holdings, Inc., Capital One Financial, CIGNA Corporation, Crown Castle International Corp., CSX Corporation, Dominion Energy, Inc., Equinix, Inc., Estée Lauder Companies, Exelon Corporation, FedEx Corporation, Fidelity National Information, Fiserv, Inc., HCA Healthcare, Inc., Intuit, Inc., Intuitive Surgical, Inc., Mondelez International, Inc., PNC Financial Services Group, S&P Global, Inc., ServiceNow, Inc., Stryker Corporation, Target Corporation, TJX Companies, Inc., Truist Financial Corporation and Zoetis, Inc. |
| (2) | The REIT group is comprised of American Tower Corporation, AvalonBay Communities, Inc., Boston Properties, Inc., Crown Castle International Corp., Digital Realty Trust, Inc., Equinix, Inc., Equity Residential, Public Storage, Inc., Simon Property Group, Inc., Ventas, Inc. and Welltower Inc. |
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108
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Director Compensation
| DIRECTOR COMPENSATION |
Nonqualified Deferred Compensation Plans for Directors
2012 NQDC Plan and AMB NQ Plans
Ms. Bita and Messrs. Fotiades Losh and Webb elected to defer receipt of their annual retainers and other fees earned, as applicable, in 2019.2021. The compensation earned by these directors has been converted into phantom shares in a hypothetical fee deferral account, under the terms of the 2012 NQDC Plan. The footnotes to the Director Compensation for Fiscal Year 20192021 table below contain information on the amount of deferrals applicable to these directors.
In 2012, Mr. Fotiades deferred his annual cash retainer into a cash account under the 2012 NQDC Plan. As of December 31, 2019,2021, Mr. Fotiades’ balance in the cash account under the 2012 NQDC Plan was $223,865,$357,460, including a gain in 20192021 of $54,924.$64,945.
See discussion of our deferred compensation plans in the narrative that follows the Nonqualified Deferred Compensation in Fiscal Year 20192021 table above under “Executive Compensation.”
Under the Notional Account NQDC Plan, Mr. Losh and Ms. Kennard received an initial account credit value in a notional earnings account equal to the amount of the deemed tax liability on the distributions theyshe received in 2011 triggered by the Merger. The initial account credit value is hypothetically invested in measurement funds selected by the participant, which do not include our company stock. Measurement funds are used for measurement purposes only and plan participants do not have rights in or to the underlying hypothetical investments. Notional earnings accounts are credited with hypothetical earnings or charged with hypothetical losses associated with the underlying hypothetical investments. Upon theirher retirement from the Board, Mr. Losh and Ms. Kennard areis entitled to the excess, if any, of the value in theirher notional earnings account (representing the value of the initial account credit plus cumulative earnings or losses associated with the underlying hypothetical investments, if any) over theirher initial account credit value.
The initial account credit values for Mr. Losh and Ms. Kennard were $469,558 and $98,047, respectively.was $98,047. As of December 31, 2019,2021, the value of the notional earnings account exceeded the initial account credit value for Mr. LoshMs. Kennard by $777,571,$130,513, including an increase attributable to 20192021 of $280,970, and for Ms. Kennard by $61,162, including an increase attributable to 2019 of $28,089.$31,136.
See discussion of our deferred compensation plans in the narrative that follows the Nonqualified Deferred Compensation in Fiscal Year 20192021 table above under “Executive Compensation.”
ProLogis Deferred Fee Plan for Trustees
This plan, which was assumed by us in the Merger, allowed members of the Trust’s board to receive their fees currently or elect to defer the receipt of their fees until after their board service ended. Deferrals were in the form of cash or Trust common shares. For those choosing shares, fees earned were credited to hypothetical fee deferral accounts based on the closing price of the common shares as of the date of the deferral. Under the Merger agreement, the Trust common shares in the deferral account were converted to our common stock using the Merger exchange ratio. Each share in the hypothetical account represents one share of our common stock and earns dividends under the same terms as dividends
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Director Compensation
paid on our common stock. Upon retirement from the Board, the participant will be issued the shares of common stock included in their hypothetical fee deferral account pursuant to specific deferral elections, which generally delay payment until the next fiscal year after service on the Board ends. No additional deferrals could be made under this plan after December 31, 2011.
Mr. Fotiades participated in this plan at the time of the Merger. As of December 31, 2019,2021, including amounts earned as dividends, Mr. Fotiades had a balance of 24,52625,651 shares in his hypothetical fee deferral account.
Mr. Zollars has a hypothetical fee deferral account associated with prior service on the Trust’s board but was not a participant in this plan at the time of the Merger. Mr. Zollars’ balance (796 shares as of December 31, 2019) is being distributed to him in ten annual installments through 2020.
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Director Compensation
| DIRECTOR COMPENSATION |
Director Compensation for Fiscal Year 2019*2021*
| Name (a) | Fees Earned or Paid in Cash(1) ($) (b) | Stock Awards ($) (c) | All Other Compensation ($) (g) | Total(1) ($) (h) | Fees Earned or Paid in Cash(1) ($) (b) | Stock Awards ($) (c) | All Other Compensation ($) (g) | Total(1) ($) (h) | ||||||||||||||||||||||||
Cristina Bita | $120,000 | $189,965 | (3) | — | (5) | $309,965 | $120,000 | (2) | $189,985 | (3) | $4,500 | (4) | $314,485 | |||||||||||||||||||
George Fotiades | $145,000 | (2) | $189,965 | (3) | $12,500 | (5) | $347,465 | $145,000 | (2) | $189,985 | (3) | $12,000 | (4) | $346,985 | ||||||||||||||||||
Philip Hawkins | $120,000 | $189,965 | $12,500 | (5) | $322,465 | |||||||||||||||||||||||||||
Lydia Kennard | $120,000 | $189,965 | (3)(4) | $12,500 | (5) | $322,465 | $120,000 | $189,985 | (3) | $12,500 | (4) | $322,485 | ||||||||||||||||||||
J. Michael Losh | $130,037 | (2) | $189,965 | (3) | $12,500 | (5) | $332,502 | |||||||||||||||||||||||||
Irving Lyons III | $170,000 | $189,985 | (3) | $12,500 | (4) | $372,485 | ||||||||||||||||||||||||||
Irving Lyons III | $170,000 | $189,965 | (3) | $12,500 | (5) | $372,465 | ||||||||||||||||||||||||||
Avid Modjtabai | $120,000 | $189,985 | (3) | $5,000 | (4) | $314,985 | ||||||||||||||||||||||||||
David O’Connor | $120,000 | $189,965 | (3) | $12,500 | (5) | $322,465 | $120,000 | $189,985 | (3) | $12,500 | (4) | $322,485 | ||||||||||||||||||||
Olivier Piani | $120,000 | $189,965 | (3) | — | (5) | $309,965 | $120,000 | $189,985 | (3) | — | (4) | $309,985 | ||||||||||||||||||||
Jeffrey Skelton | $140,000 | $189,965 | (3)(4) | $12,500 | (5) | $342,465 | $140,000 | $189,985 | (3) | $12,500 | (4) | $342,485 | ||||||||||||||||||||
Carl Webb | $139,960 | (2) | $189,965 | (3) | $12,500 | (5) | $342,425 | $150,000 | (2) | $189,985 | (3) | $12,500 | (4) | $352,485 | ||||||||||||||||||
William Zollars | $120,000 | $189,965 | (3) | $12,500 | (5) | $322,465 | $120,000 | $189,985 | (3) | $5,000 | (4) | $314,985 | ||||||||||||||||||||
| * | Columns (d), (e) and (f) have been omitted from this table because they are not applicable. |
| (1) | The compensation structure for the Board is described in the narrative discussion that precedes this table. Mr. Moghadam is an employee of the company and does not receive additional compensation associated with his service on the Board. |
| (2) | Directors may elect to defer their compensation under the 2012 NQDC Plan. Under this plan, the cash compensation is converted into phantom shares that are held in a hypothetical fee deferral account under the terms of the 2012 NQDC Plan. As of December 31, |
· Ms. Bita: (2020-2021): | 2,288 shares (including 33 DEUs earned in 2021) | |||||
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Based on their individual elections, each of the directors’ phantom shares will be distributed to them upon termination of service on the Board. See the discussion above and also the narrative discussion that follows the Nonqualified Deferred Compensation in Fiscal Year |
| (3) | Represents the grant date fair value of |
We awarded DSUs under similar terms to our directors in |
Prior to the Merger, we granted restricted stock to our directors, and the Trust granted DSUs to members of its board. The restricted stock had aone-year vesting period and directors could elect to defer the awards after vesting under the AMB NQ Plans discussed above. The DSUs granted by the Trust were immediately vested but were required to be deferred until after the director’s service ended. The DSUs held by those trustees who joined our Board after the Merger were assumed by us under the Merger agreement, were converted based on the Merger exchange ratio, and continue to be deferred. These DSUs earn DEUs while they are outstanding. |
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Director Compensation
| DIRECTOR COMPENSATION |
DSUs and associated accrued DEUs outstanding as of December 31, |
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Receipt of all shares deferred until service on the Board ends, except 2,188 shares to be distributed in April 2023; 1,657 shares to be distributed in June 2025 | |||||
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· Ms. Modjtabai | 3,845 shares (1,657 shares unvested) 2,188 shares to be distributed in | |||||
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Receipt of all remaining shares deferred until service on the Board ends | |||||
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· Mr. Skelton: | 6,454 shares (1,657 shares unvested) 2,609 shares to be distributed in May | |||||
· Mr. Webb: | 6,454 shares (1,657 shares unvested) 2,609 shares to be distributed in May | |||||
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· Mr. Zollars: | 6,454 shares (1,657 shares unvested) 2,609 shares to be distributed in May | |||||
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The Prologis Foundation will match the amount of charitable contributions to qualifying organizations made by our directors and all of our employees. Amounts reported represent charitable contributions of our charitable foundation that were paid directly to outside organizations to match qualifying contributions made by the director. The annual maximum amount of matching contributions in one year applicable to our directors is $12,500. Matching contributions in a particular year that are not used may be carried over to the subsequent year. |
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Security Ownership
| SECURITY OWNERSHIP |
The number of shares of our common stock beneficially owned, as of the datedates indicated in the footnotes below, by each person known to us to be the beneficial owner of more than five percent, or more, in the aggregate, of our outstanding common stock as of the datedates indicated in the footnotes below is as follows:
Name and Address(1)
| Number of Shares Beneficially Owned
| % of Outstanding Shares of Common Stock
| Number of Shares Beneficially Owned | % of Outstanding Shares of Common Stock | ||||||||||||
The Vanguard Group, Inc.(2) 100 Vanguard Blvd. Malvern, PA 19355 | [ ] | [ ]% | 95,857,871 | 12.96% | ||||||||||||
BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10022 | 62,127,266 | 9.8% | 77,044,162 | 10.4% | ||||||||||||
State Street Corporation(4) State Street Financial Center One Lincoln Street Boston, MA 02111 | 41,002,005 | 6.49% | 47,020,804 | 6.36% | ||||||||||||
| (1) | Entities included have filed a Schedule 13G representing that the shares of common stock they are reporting were acquired and are held in the ordinary course of business, were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of Prologis and were not acquired and are not held in connection with or as a participant in any transaction having such purpose or effect. |
| (2) | Information regarding beneficial ownership of our common stock by The Vanguard Group, Inc. (“Vanguard”) |
| (3) | Information regarding beneficial ownership of our common stock by entities related to BlackRock, Inc. is included herein based on a Schedule 13G/A filed with the SEC on |
| (4) | Information regarding beneficial ownership of our common stock by entities related to State Street Corporation is included herein based on a Schedule 13G filed with the SEC on February |
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Security Ownership
| SECURITY OWNERSHIP |
The following table shows the number of shares of our common stock beneficially owned, as of March 6, 2020,7, 2022, by: (i) our CEO; (ii) our chief financial officer; (iii) our other NEOs currently employed by us;NEOs; (iv) each of our directors; and (v) our directors and all of our executive officers as a group.
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Security Ownership
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Generally, the director has deferred receipt of the underlying common stock until his service on the Board ends. See “Director Compensation—Director Compensation for Fiscal Year 2019.”]
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Mr. Fotiades’ phantom stock will be distributed to him in January of the year following his termination from the Board. See “Director Compensation—Director Compensation for Fiscal Year 2019.”]
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Generally, these awards are payable to the director when his or her service on the Board ends. See “Director Compensation—Director Compensation for Fiscal Year 2019.”]
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Equity Compensation Plans
We currently grant equity awards only under the 2012 LTIP. However, we do have awards outstanding that were granted under the AMB Plans and the Trust Plans. All future equity awards will be granted from the 2020 LTIP (as defined below) if Proposal 3 is approved. The available shares of common stock reserved for issuance under the AMB Plans and the Trust Plans as of May 3, 2012, the date our stockholders approved the 2012 LTIP, were added to the share reserve of the 2012 LTIP. All outstanding awards under the AMB Plans and the Trust Plans will remain outstanding until they vest, expire, or are forfeited by the participant. The 2012 LTIP does not expire but no further awards can be granted under the plan after the tenth anniversary date of the plan approval. Information about our equity compensation plans as of December 31, 2019 is as follows:
Plan Category (a) | # of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (b) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (c) | # of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (b)) (d) | |||||||||
Equity compensation plans approved by security holders(1)(2) | 6,458,765 | $ | 30.85 | 4,555,149 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
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The following table sets forth the number of stock options and full value awards (RSUs and RSAs) granted and PSAs earned over the last three years by us for the periods presented, as applicable. In addition, the table provides the weighted average number of shares of common stock outstanding in the year indicated.
| Full-Value Awards | ||||||||||||||||||||||||
Fiscal Year | Stock Options Granted | Time-Based RSUs/LTIP Units Granted | Performance-Based RSUs/LTIP Units Earned | Total | Weighted Average Shares and OP Units | Annual Share Usage Rate (“Burn Rate”) | ||||||||||||||||||
2019 |
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| 1,871,000 |
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| 1,203,000 |
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| 3,074,000 |
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2018 |
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| 2,107,000 |
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2017 |
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Equity Compensation Plans
Approval of Prologis, Inc 2020 Long-Term Incentive Plan (Proposal 3)
On [ ], 2020, the Board, upon the recommendation of the compensation committee, adopted the Prologis, Inc. 2020 Long-Term Incentive Plan (the “2020 LTIP”), subject to approval by our stockholders. The Board adopted the 2020 LTIP to ensure that we can continue to grant equity and equity-based awards, which are an integral part of our compensation program, and so that we can continue to attract and retain employees and other persons providing services to us and our affiliates, attract and retain as outside directors the highly competent individuals upon whose judgment, initiative, leadership and continued efforts the success of we depend, to motivate participants in the 2020 LTIP, by means of appropriate incentives, to achieve long-range goals; to provide incentive compensation opportunities that are competitive with those of other corporations and real estate investment trusts, and to further identify 2020 LTIP participants’ interests with those of our other stockholders through compensation that is based on the value of our common stock, all to promote the long-term financial interest of us and our affiliates, including the growth in value of our equity and enhancement of long-term stockholder return.
Subject to the approval of our stockholders at the annual meeting, the 2020 LTIP will become effective as of the date of the annual meeting and no awards can be made under the 2020 LTIP until it is approved by our stockholders. If the 2020 LTIP is approved, no further awards will be granted under our current Prologis, Inc. 2012 Long-Term Incentive Plan (the “2012 LTIP”) or any of our prior long-term incentive plans (the “Prior Plans”). As described below, however, any shares that are available for issuance under the 2012 LTIP as of the approval date or shares subject to awards under the 2012 LTIP or the Prior Plans as of the approval date that are forfeited, expire or are terminated without issuance of shares of common stock (including awards that are settled in cash) or shares subject to Full Value Awards (described below) that are tendered or withheld in payment of the taxes payable with respect to the grant, vesting or settlement of the award, shall thereafter be available for further grants under the 2020 LTIP. Shares tendered to pay the exercise price or taxes upon exercise of a stock option or stock appreciation right (“SAR”) will not again be available under the 2020 LTIP. The 2020 LTIP will continue in effect until terminated by the Board but in no event may awards be granted under the 2020 LTIP after theten-year anniversary of the approval date that it is approved by our stockholders (the “approval date”).
A summary of the 2020 LTIP is set forth below. The summary, however, is qualified in its entirety by the full text of the 2020 LTIP which is attached as Appendix B.
Securities Authorized for Issuance under Equity Compensation Plans
As of December 31, 2019, 4,555,149 shares of our common stock remained available for grant under the 2012 LTIP and 10,360,520 shares of our common stock were issuable pursuant to outstanding awards under the 2012 LTIP and the Prior Plans.
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Equity Compensation Plans
A metric used to measure the cumulative impact of our equity compensation programs is overhang (equity awards outstanding, but not exercised, plus equity awards available to grant, divided by total common shares outstanding plus limited partnership units, that are convertible into shares of our common stock on aone-for-one basis, as of the end of the year). Our overhang as of [December 31, 2019] is provided below.
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The number of shares of common stock that may be issued pursuant to equity awards granted under the 2020 LTIP is [ ] plus the aggregate number of shares of common stock available for issuance (and not subject to outstanding awards) under the 2012 LTIP as of the Approval Date. This represents an increase of approximately [ ] shares from the number of shares available for issuance under the 2012 LTIP prior to the approval date. Following approval of the 2020 LTIP, no awards will be made under the 2012 LTIP.
Our Board is submitting the 2020 LTIP as a single proposal to our stockholders for approval at the annual meeting. Stockholder approval of the 2020 LTIP is required by the rules of the NYSE.
A summary of the material provisions of the 2020 LTIP is set forth below and a complete copy is set forth in Appendix B.
Assuming a quorum is present, to be approved by the stockholders, the proposal must receive the affirmative vote of a majority of the shares of common stock present in person or by proxy at the annual meeting, as well as a majority of the votes cast. Abstentions and broker non-votes, if any, are considered shares present in person or by proxy and thus will have the same effect as votes cast “Against” the proposal.
The Board unanimously recommends that the stockholders vote "FOR" the approval of the Prologis, Inc. 2020 Long-term Incentive Plan.
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Equity Compensation Plans
Key Features of the 2020 LTIP
The Board believes that the 2020 LTIP promotes the interests of our stockholders by aligning the interests of participants in the 2020 LTIP with those of our stockholders and by including features that support good pay practices. These key features include the following (all of which are discussed in greater detail below):
Administration.The 2020 LTIP is administered by a committee that is comprised solely of independent,non-employee directors.
Individual Award Limits; Limits on Outside Director Compensation.Although no longer required for compliance with Section 162(m) of the Internal Revenue Code, the 2020 LTIP continues to include limits on the amount of awards that can be granted to eligible individuals during a specified period. In addition, the 2020 LTIP provides for limits on the amount of compensation that can be paid tonon-employee directors (“Outside Directors”) during a specified period.
No repricing of Options and SARs.All stock options (“Options”) and SARs granted under the 2020 LTIP must have an exercise price at least equal to the fair market value of a share of our common stock on the date of grant. The 2020 LTIP expressly prohibits repricing of Options and SARs. The prohibitions on repricing include a reduction in the exercise price of an outstanding Option or SAR, surrender of an outstanding Option or SAR to us as consideration for the grant of a replacement Option or SAR with a lower exercise price or the grant of a Full Value Award (described below), or surrender of an outstanding Option or SAR to us in consideration for a cash payment if, at the time of such surrender, the exercise price of the Option or SAR is greater than the then current fair market value of a share of common stock. The foregoing restrictions do not apply in the case of adjustments in connection with certain corporate events or adjustments approved by our stockholders.
Payment of Dividends and Dividend Equivalents.The 2020 Plan provides that no dividends or dividend equivalent rights will be paid or settled on performance-based awards that have not been earned based on the performance criteria established.
No Evergreen Provisions.The 2020 LTIP not contain “evergreen” provisions. Instead, the 2020 LTIP provides for a fixed number of shares of common stock that may be issued and our stockholders must approve any increase in that number of shares.
Recoupment/Misconduct.Awards under the 2020 LTIP are subject to our recoupment and clawback policies. In addition, if the Committee (as defined below) determines that a present or former employee has used for profit or disclosed to unauthorized persons, confidential or trade secrets of us or any of our affiliates, breached any contract with or violated any fiduciary obligation to us or any of our affiliates, or engaged in any conduct which the Committee determines is injurious to us or any of our affiliates, the Committee may cause that employee to forfeit his or her outstanding awards under the Plan. In addition, in exercise of its powers and authorities under the 2020 LTIP, it is the Committee’s policy to determine that a participant is in good standing at the time of his or her termination; if a participant is not in good standing, the Committee (or its delegate) may cause the participant’s awards, whether vested or unvested, to be forfeited.
Change in Control.The definition of Change in Control under the 2012 Plan requires consummation of the transaction (rather than just the signing of an agreement or an announcement of the possible transaction). Change in Control benefits under the 2012 LTIP require a “double trigger” (occurrence of the Change in Control and termination of employment within a specified period).
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Equity Compensation Plans
Summary of the Terms of the 2020 LTIP
The following is a summary of the principal features of the 2020 LTIP. The 2020 LTIP is attached hereto as Appendix B and is hereby incorporated into this proxy statement by reference. Stockholders are urged to read the actual text of the 2020 LTIP in its entirety.
Types of Awards
The grant of a benefit or award under the 2020 LTIP is referred to as an “Award.” The types of Awards that may be granted under the 2020 LTIP are incentive stock options (“ISOs”),non-qualified stock options (“NQOs”, which together with ISOs, are referred to collectively as “Options”), SARs, and “Full Value Awards” (including restricted stock, restricted stock units, deferred stock units, performance stock and performance stock units and awards with respect to partnership interests which are convertible into, exchangeable for or redeemable in shares of common stock), each as described in more detail below. Substitute Awards are shares of our common stock issued in assumption of, or in substitution or exchange for, an award previously granted, or the right or obligation to make a future award, in all cases by a company acquired by us or our affiliates.
Administration of the 2020 LTIP
The authority to control and manage the operation and administration of the 2020 LTIP generally will be vested in a committee of the Board (the “Committee”) that is selected by the Board and must consist of at least two members of the Board (or such greater number required by applicable law) who are independent for purposes of applicable stock exchange listing requirements. If the Committee does not exist, or for any other reason determined by the Board, the Board may take any action under the 2020 LTIP that would otherwise be the responsibility of the Committee. In any event, the “Committee” with respect to Outside Directors is the Board.
Participation
The persons eligible to receive Awards under the 2020 LTIP (“Eligible Individuals”) are employees of us and our subsidiaries, consultants or other persons providing services to us or our subsidiaries and members of the Board; provided that ISOs may only be granted to an employee of us or certain of our corporate subsidiaries. Subject to the terms of the 2020 LTIP, the Committee determines from among the Eligible Individuals who will receive Awards, the number of shares of common stock subject to the Awards, the exercise price of an Award (if applicable), and other terms of the Awards.
As of [ ], 2020, there were approximately [ ] persons who would be considered Eligible Individuals for purposes of the 2020 LTIP, although under our existing policies there are only about [ ] employees and Outside Director participants in the 2020 LTIP. The consideration to be received by us for the granting of Awards under the 2020 LTIP is service to us or our affiliates. An Eligible Individual who is granted an Award under the 2020 LTIP is referred to as a “Participant” in the 2020 LTIP.
Available Shares and Share Information; Limitations on Awards
If approval of the 2020 LTIP is obtained, the total number of shares of common stock that will be available for issuance under the 2020 LTIP will be equal to [ ] plus the aggregate number of shares of common stock available for issuance (and not subject to outstanding awards) under our 2012 LTIP as of the Approval Date.
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Equity Compensation Plans
Shares of common stock covered by an Award will only be counted as used to the extent they are actually used. Any shares of common stock that are subject to an Award under the 2020 LTIP (or the 2012 LTIP or any Prior Plan) that is forfeited, expires or is terminated without issuance of shares of common stock (including shares that are attributable to Awards that are settled in cash) and shares that are tendered or withheld for payment of the taxes with respect to the grant, vesting or settlement of Full Value Awards (whether granted under the Plan, the 2012 LTIP, or any Prior Plan) shall thereafter be available for future grants under the 2020 LTIP. Shares withheld in payment of the exercise price of an Option or to pay taxes upon exercise of an Option or SAR (whether granted under the Plan, the 2012 LTIP or any Prior Plan) will not thereafter be available for future grants under the LTIP. Shares subject to Substitute Awards will not reduce the number of shares of common stock available for issuance under the Plan (and shares subject to a Substitute Award that is forfeited, expires or is terminated or settled in cash will not again be available for issuance under the 2020 LTIP). Upon stock settlement of SARs, the gross number of shares of common stock subject to the SARs originally granted shall be counted as issued for purposes of the limitations on shares available for issuance under the 2020 LTIP, regardless of the number of shares of common stock actually issued upon such stock settlement. To the extent provided by the Committee, any Award under the 2020 LTIP may be settled in cash rather than shares of common stock.
The maximum number of shares that may be delivered under the 2020 LTIP pursuant to ISOs is [ ]. The following limits will also apply: (1) with respect to the grant of an Award to any one individual in any one calendar year, no more than 1,500,000 shares of common stock may be subject to Options or SARs and no more than 1,500,000 shares of common stock may be subject to Full Value Awards. In the case of any Full Value Award, if the Award is denominated in common stock but an equivalent amount of cash is delivered in lieu of the shares, the foregoing individual limits will be applied based on the methodology used by the Committee to convert the number of shares of common stock to cash (or if the Award is denominated in cash but an equivalent amount of common stock is delivered in lieu of the cash, the foregoing individual limits will be applied based on the methodology used by the Committee to convert the cash to common stock) and if the delivery of shares of common stock or cash is deferred until after the common stock or cash has been earned, any adjustment in the amount delivered to reflect actual or deemed earnings or other investment experience during the deferral period will be disregarded.
The 2020 LTIP also provides that the sum of any cash compensation or other compensation and the value of any Awards granted to an Outside Director as compensation for services as an Outside Director during the annual period between regular annual meetings of our stockholders may not exceed $1,000,000. The Committee may make exceptions to this limit for individual Outside Directors in exceptional circumstances, as the Committee may determine in its sole discretion, provided that the Outside Director receiving such additional compensation may not participate in the decision to award such compensation.
The shares with respect to which Awards may be made under the 2020 LTIP will be shares of common stock currently authorized but unissued or currently held or, to the extent permitted by applicable law, subsequently acquired by us as treasury shares, including shares of common stock purchased in the open market or in private transactions.
As of [ ], 2020, we had an aggregate of [ ] shares of common stock outstanding. The closing price per share of common stock on [ ], 2020, as reported by the NYSE, was $ [ ].
Adjustments to Shares Available
In the event of a stock dividend, stock split, reverse stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation,split-up,spin-off, exchange of shares, sale of assets or subsidiaries, combination, or other corporate event that affects the common stock such that the Committee determines, in its sole discretion, that an adjustment is warranted in order to preserve the benefits or prevent the enlargement of benefits of Awards under the 2020 LTIP, the Committee shall, in the manner it determines equitable in its sole discretion, (a) adjust the number and kind of shares which may be delivered under the 2020 LTIP (including adjustments to the number and kind of shares that may be granted to an individual during any specified time), (b) adjust the number and kind of shares subject to outstanding Awards, (c) adjust the exercise price of outstanding Options and SARs, and (d) make any other adjustments that the Committee determines to be equitable (which may include, without limitation, (i) replacement of Awards with other awards which the Committee determines have comparable value and which are based on stock of a company resulting from the transaction, and (ii) cancellation of the Award in return for cash payment of the current value of the Award,
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Equity Compensation Plans
determined as though the Award is fully vested at the time of payment, provided that in the case of an Option or SAR, the amount of such payment may be the excess of value of the shares of common stock subject to the Option or SAR at the time of the transaction over the exercise price).
Options and SARs
The grant of an “Option” under the 2020 LTIP entitles the Participant to purchase shares of common stock at an exercise price established by the Committee. The Committee also will determine whether an Option is an ISO or an NQO, provided that an Option will be deemed to be an NQO unless it is specifically designated by the Committee as an ISO and/or to the extent it does not otherwise satisfy the requirements for an ISO. A SAR entitles the Participant to receive, in cash or shares of common stock, value equal to the excess of: (i) the fair market value of a specific number of shares of common stock at the time of exercise, over (ii) an exercise price established by the Committee.
The “exercise price” of each Option and SAR granted is established by the Committee or determined by a method established by the Committee at the time the Option or SAR is granted; provided, however, that the exercise price may not be less than 100% of the fair market value of a share of common stock on the date of grant (or, if greater, the par value of a share of common stock).
The exercise price for any outstanding Option or SAR may not be decreased after the date of grant nor may an outstanding Option or SAR granted under the 2020 LTIP be surrendered to us as consideration for the grant of a replacement Option or SAR with a lower exercise price or a Full Value Award (except for either adjustments related to corporate events or reductions in exercise price approved by our stockholders). Unless approved by our stockholders, no Option or SAR granted under the 2020 LTIP may be surrendered to us in consideration for a cash payment if, at the time of surrender, the exercise price of the Option or SAR is greater than the then current fair market value of a share of common stock.
An Option and SAR may, but need not, be granted in tandem. If an Option is granted in tandem with a SAR, the exercise price of both the Option and the SAR will be the same, and the exercise of the corresponding tandem SAR or Option will cancel with corresponding tandem SAR or Option with respect to such share. If a SAR is granted in tandem with an Option, but is granted after the grant of an Option, or if an Option is in tandem with a SAR but is granted after the grant of a SAR, the later granted tandem Award will have the same exercise price as the earlier granted Award, but in no event less than the fair market value of a share of common stock at the time of such grant.
The expiration date with respect to an Option or SAR will be established by the Committee at the time of the grant, but will not be later than the earliest to occur of theten-year anniversary of the date on which the Option or SAR is granted or the following dates (unless otherwise determined otherwise by the Committee): (a) if the Participant’s termination occurs by reason of death, disability or retirement, the first anniversary of the termination date, (b) if the Participant’s termination occurs for reasons other than retirement, death, disability or cause, the three month anniversary of the termination date, and (c) if the Participant’s termination occurs for reasons of cause, on the day preceding the Participant’s termination date.
Options and SARs may be subject to such other terms and conditions, not inconsistent with the 2020 LTIP, as determined by the Committee.
Full Value Awards
A “Full Value Award” is a grant of one or more shares of common stock or a right to receive one or more shares of common stock in the future (including restricted stock, restricted stock units, deferred stock units, performance stock and performance stock units and awards with respect to partnership interests which are convertible into, exchangeable for or redeemable in shares of common stock). Such grants may be in consideration of a Participant’s previously performed services or surrender of other compensation that may be due, contingent on the achievement of performance or other objectives (including completion of service) during a specified period, subject to a risk of forfeiture or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the Participant or
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Equity Compensation Plans
achievement of performance or other objectives, and/or may be granted for other purposes and shall be subject to such conditions, restrictions and contingencies, as determined by the Committee, including provisions relating to dividend or dividend equivalent rights and deferred payment or settlement. Notwithstanding the foregoing, no dividends or dividend equivalent rights will be paid or settled on performance-based awards that have not been earned based on the performance criteria established.
Grants of Full Value Awards may be made under other arrangements or plans that are treated as subplans of the 2020 LTIP (including, but not limited to, the Prologis, Inc. Promote Plan and the Prologis, Inc. 2016 Outperformance Plan both as amended and/or restated from time to time) and, in such case, Awards under such subplans shall be treated as the grant of an Award under the 2020 LTIP.
Restrictions on Shares; Misconduct
The Committee, in its discretion, may impose such restrictions on shares of common stock acquired pursuant to the 2020 LTIP, whether pursuant to the exercise of an Option or SAR, settlement of a Full Value Award or otherwise, as it determines to be desirable, including, without limitation, restrictions relating to disposition of the shares and forfeiture restrictions based on service, performance, common stock ownership by the Participant, conformity with the Company’s recoupment, compensation recovery, or clawback policies and such other factors as the Committee determines to be appropriate. Without limiting the generality of the foregoing, unless otherwise specified by the Committee, any awards under the Plan and any shares of common stock issued pursuant to the Plan shall be subject to the Company’s compensation recovery, clawback, and recoupment policies as in effect from time to time.
If the Committee determines that a present or former employee or Outside Director has used for profit or disclosed to unauthorized persons, confidential or trade secrets of us or any of our affiliates, breached any contract with or violated any fiduciary obligation to us or any of our affiliates, or engaged in any conduct which the Committee determines is injurious to us or any of our affiliates the Committee may cause that person to forfeit his or her outstanding Awards under the 2020 LTIP. In addition, in exercise of its powers and authorities under the 2020 LTIP, it is the Committee’s policy to determine that a Participant is in good standing at the time of his or her termination; if a Participant is not in good standing, the Committee (or its delegate) may cause the Participant’s awards, whether vested or unvested, to be forfeited.
Transferability
Awards under the 2020 LTIP are not transferable except as designated by the Participant by will or by the laws of descent and distribution or, unless otherwise provided by the Committee, pursuant to a qualified domestic relations order (within the meaning of the Internal Revenue Code and applicable rules thereunder). To the extent that the Participant who receives an Award under the 2020 LTIP has the right to exercise such Award, the Award may be exercised during the lifetime of the Participant only by the Participant. Awards, however, may be transferred to or for the benefit of the Participant’s family (including, without limitation, to a trust or partnership for the benefit of a Participant’s family) or to a charity selected by the Participant, subject to such procedures as the Committee may establish. In no event shall an ISO be transferable to the extent that such transferability would violate the requirements applicable to such Option under section 422 of the Internal Revenue Code.
Withholding
We have the right to deduct from any and all payments made under the 2020 LTIP or to require the Participant, through payroll withholding, cash payment, or otherwise, to make adequate provision for, the U.S. federal, state, and local, and/or foreign taxes (including any social insurance tax or contribution obligations) (“Taxes”), if any, required by law to be withheld by us or an affiliate with respect to an Award or the shares or cash acquired pursuant thereto or such other amount that we or an affiliate determine that is not prohibited by law but in no event more than the maximum Taxes.
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Equity Compensation Plans
Foreign Participants
The Committee may grant Awards to eligible persons who are foreign nationals or residents of a foreign jurisdiction on such terms and conditions different from those specified in the 2020 LTIP Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the 2020 LTIP Plan. In furtherance of such purposes, the Committee may make such modifications, amendments, procedures and subplans as may be necessary or advisable to facilitate or comply with provisions of laws in other countries or jurisdictions in which we or an affiliate operates or has employees.
Amendment or Termination
The Board may, at any time, amend or terminate the 2020 LTIP, and the Board or the Committee may amend any award agreement thereunder, provided that no amendment or termination may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely affect the rights of any Participant or beneficiary under any Award granted under the 2020 LTIP prior to the date such amendment is adopted. Notwithstanding the foregoing, (i) no revision of the 2020 LTIP will be made without stockholder approval, if such stockholder approval would be required for such revision under the rules of the NYSE or stockholder approval is otherwise required by applicable law, regulation or stock exchange rule, and (ii) except in connection with adjustments made on account of corporate events (as described above), changes to the prohibitions on repricing of Options and SARs shall be subject to the approval of our stockholders. Adjustments in connection with corporate events and amendments required to comply with Internal Revenue Code Section 409A are not subject to the prohibition on amendments without Participant consent.
Change in Control
In the event that (a) a Participant is employed on the date of a Change in Control and the Participant’s employment or service, as applicable, is terminated by us or the successor to us (or an affiliate which is his or her employer) for reasons other than cause (as defined in the 2020 LTIP) within 24 months following the Change in Control, or (b) the 2020 LTIP is terminated by us or our successor following a Change in Control without provision for the continuation of outstanding Awards hereunder, all Options, SARs and related Awards which have not otherwise expired shall become immediately exercisable and all other Awards shall become fully vested. If, upon a Change in Control, awards in other shares or securities are substituted for outstanding Awards, and immediately following the Change in Control the Participant becomes employed by (if the Participant was an employee immediately prior to the Change in Control) or a Board member of (if the Participant was an Outside Director immediately prior to the Change in Control) the entity into which we are merged, or the purchaser of substantially all of the our assets, or a successor to such entity or purchaser, the Participant shall not be treated as having terminated employment or service for purposes of these provisions until such time as the Participant terminates employment or service with the merged entity or purchaser (or successor), as applicable.
Performance-Based Compensation
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the amount that a publicly-traded corporation may deduct for compensation paid to the principal executive officer, the principal financial officer or one of the company’s other three most highly compensated executives. Prior to 2020, “Performance-Based Compensation,” as defined under Internal Revenue Service rules and regulations, was excluded from this $1 million limitation. The Tax Reform and Jobs Act of 2017 (the “Act”) eliminated the ability of companies to rely on the “Performance-Based“ Compensation exception and the $1 million limitation on deductibility generally was expanded to include all named executive officers (including the principal financial officer). We do believe, however, that certain Awards granted under the 2020 LTIP prior to the changes made by the Act will continue to qualify for the Performance-Based Compensation exception, subject in all cases to the Committee’s ability to modify Awards.
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Equity Compensation Plans
Tax Effects
The following is a brief summary of the U.S. federal income tax rules relevant to Awards under the 2020 LTIP, based upon the Internal Revenue Code as currently in effect. These rules are highly technical and subject to change in the future, and the discussion does not purport to be a complete description of the tax aspects of the 2020 LTIP. Moreover, the following summary relates only to U.S. federal income tax treatment, and the state, local and foreign tax consequences may be substantially different.
ISOs
Generally, the grant of an ISO will not result in taxable income to the Participant or a deduction for us. The exercise of an ISO will not result in taxable income to the Participant or a deduction for us provided that the Participant was, without a break in service, an employee of us and its eligible corporate subsidiaries during the period beginning on the date of the grant of the ISO and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the Participant is disabled, as that term is defined in the Internal Revenue Code).
The excess of the fair market value of the shares of common stock at the time of the exercise of an ISO over the exercise price is an adjustment that is included in the calculation of the Participant’s alternative minimum taxable income for the tax year in which the ISO is exercised. For purposes of determining the Participant’s alternative minimum tax liability for the year of disposition of the shares of common stock acquired pursuant to the ISO exercise, the Participant will have a basis in those shares of common stock equal to the fair market value of the shares of common stock at the time of exercise.
If the Participant does not sell or otherwise dispose of the shares of common stock within two years from the date of the grant of the ISO or within one year after receiving the transfer of such shares of common stock, then, upon disposition of such shares of common stock, any amount realized in excess of the exercise price will be taxed to the Participant as capital gain, and us will not be entitled to any deduction for Federal income tax purposes. The Participant will recognize a capital loss to the extent that the amount realized is less than the exercise price.
If the foregoing holding period requirements are not met, the Participant will generally realize ordinary income, and a corresponding deduction will be allowed to us, at the time of the disposition of the shares of common stock, in an amount equal to the lesser of (a) the excess of the fair market value of the shares of common stock on the date of exercise over the exercise price, or (b) the excess, if any, of the amount realized upon disposition of the shares of common stock over the exercise price. If the amount realized exceeds the value of the shares of common stock on the date of exercise, any additional amount will be capital gain. If the amount realized is less than the exercise price, the Participant will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized upon the disposition of the shares of common stock.
The exercise of an ISO through the exchange of previously acquired stock will generally be treated in the same manner as such an exchange would be treated in connection with the exercise of an NQO; that is, as anon-taxable, like-kind exchange as to the number of shares of common stock given up and the identical number of shares of common stock received under the Option. That number of shares of common stock will take the same basis and, for capital gain purposes, the same holding period as the shares of common stock that are given up. However, such holding period will not be credited for purposes of theone-year holding period required for the new shares of common stock to receive ISO treatment. common stock received in excess of the number of shares of common stock given up will have a new holding period and will have a basis of zero or, if any cash was paid as part of the exercise price, the excess shares of common stock received will have a basis equal to the amount of the cash. If a disqualifying disposition (a disposition before the end of the applicable holding period) occurs with respect to any of the shares of common stock received from the exchange, it will be treated as a disqualifying disposition of the shares of common stock with the lowest basis.
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Equity Compensation Plans
If the exercise price of an ISO is paid with shares of common stock acquired through a prior exercise of an ISO, gain will be realized on the shares of common stock given up (and will be taxed as ordinary income) if those shares of common stock have not been held for the minimum ISO holding period (two years from the date of grant and one year from the date of transfer), but the exchange will not affect the tax treatment, as described in the immediately preceding paragraph, of the shares of common stock received.
NQOs
Generally, the grant of an NQO will not result in taxable income to the Participant or a deduction for us. Except as described below, the Participant will realize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the shares of common stock acquired over the exercise price for those shares of common stock, and we will be entitled to a corresponding deduction. Gains or losses realized by the Participant upon disposition of such shares of common stock will be treated as capital gains and losses, with the basis in such shares of common stock equal to the fair market value of the shares of common stock at the time of exercise.
The exercise of an NQO through the delivery of previously acquired common stock will generally be treated as anon-taxable, like-kind exchange as to the number of shares of common stock surrendered and the identical number of shares of common stock received under the Option. That number of shares of common stock will take the same basis and, for capital gains purposes, the same holding period as the shares of common stock that are given up. The value of the shares of common stock received upon such an exchange that are in excess of the number given up will be includible as ordinary income to the Participant at the time of the exercise. The excess shares of common stock will have a new holding period for capital gain purposes and a basis equal to the value of such shares of common stock determined at the time of exercise.
SARs
Generally, a Participant will not realize any taxable income upon the grant of a SAR and we will not be entitled to a deduction. Upon the exercise of the SAR, the Participant will recognize ordinary income in an amount equal to the amount of cash and/or the fair market value, at the date of such exercise, of the shares of common stock received by the Participant as a result of such exercise. We will generally be entitled to a deduction in the same amount as the ordinary income realized by the Participant.
Full Value Awards
The federal income tax consequences of a Full Value Award will depend on the type of award. The tax treatment of the grant of shares of common stock depends on whether the shares are subject to a substantial risk of forfeiture (determined under Internal Revenue Code rules) at the time of the grant. If the shares are subject to a substantial risk of forfeiture, the Participant will not recognize taxable income at the time of the grant and when the restrictions on the shares lapse (that is, when the shares are no longer subject to a substantial risk of forfeiture), the Participant will recognize ordinary taxable income in an amount equal to the fair market value of the shares at that time and we will be entitled to a corresponding deduction. If the shares are not subject to a substantial risk of forfeiture or if the Participant elects to be taxed at the time of the grant of such shares under Internal Revenue Code Section 83(b), the Participant will recognize taxable income at the time of the grant of shares in an amount equal to the fair market value of such shares at that time, determined without regard to any of the restrictions and we will be entitled to a corresponding deduction. If the shares are forfeited before the restrictions lapse, the Participant will be entitled to no deduction on account thereof. The Participant’s tax basis in the shares is the amount recognized by him or her as income attributable to such shares. Gain or loss recognized by the Participant on a subsequent disposition of any such shares is capital gain or loss if the shares are otherwise capital assets.
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Equity Compensation Plans
In the case of other Full Value Awards, such as restricted stock units or performance stock units, the Participant generally will not have taxable income and we will not be entitled to a deduction upon the grant of the award. Participants will generally recognize ordinary income and we will be entitled to a corresponding deduction when the award is settled. At that time, the Participant will recognize taxable income equal to the cash or the then fair market value of the shares issuable in payment of such award, and such amount will be the tax basis for any shares received.
Internal Revenue Code Section 409A
Certain awards under the 2020 LTIP may be considered a deferral of compensation for purposes of Section 409A of the Internal Revenue Code, which imposes additional requirements on a nonqualified deferred compensation plan. Generally, if a nonqualified deferred compensation plan fails to meet the requirements of Section 409A of the Internal Revenue Code, or is not operated in accordance with those requirements, all amounts deferred under the nonqualified deferred compensation plan for the taxable year and all preceding taxable years, by or for any Participant with respect to whom the failure relates, are includible in the gross income of the Participant for the taxable year to the extent not subject to a substantial risk of forfeiture and not previously included in gross income. If a deferred compensation amount is required to be included in income under Section 409A of the Internal Revenue Code, the amount may be subject to interest (at a penalty rate) and is subject to an excise tax, in addition to regular income tax. The interest imposed is equal to the interest at the underpayment rate plus one percentage point, imposed on the underpayments that would have occurred had the compensation been includible in income for the taxable year when first deferred, or if later, when not subject to a substantial risk of forfeiture. The excise tax is equal to 20% of the compensation required to be included in gross income.
Awards under the 2020 LTIP that are subject to Section 409A of the Internal Revenue Code are intended to comply with the requirements of Section 409A of the Internal Revenue Code. We intend to grant awards that are either exempt from or in compliance with Section 409A of the Internal Revenue Code. However, we can provide no assurance that such an award will be exempt or comply with Section 409A of the Internal Revenue Code or that the tax consequences described above will not apply.
New Plan Benefits
Because benefits under the 2020 LTIP will depend on future action and fair market value of the common stock at various future dates, it is not possible to determine at this time all of the benefits that might be received by employees, directors and others if the 2020 LTIP is approved by stockholders.
Registration of Common Stock issued under the 2020 LTIP
If the 2020 LTIP is approved, by stockholders, shares of common stock covered by the 2020 LTIP will be registered under the Securities Act of 1933, as amended. Such registration will, in most cases, permit the unrestricted resale in the public market of shares issued pursuant to the 2020 LTIP.
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Equity Compensation Plans
Approval of an Amendment to our Articles of Incorporation to Increase the Number of Authorized Shares of Common Stock (Proposal 4)
The Board has approved, subject to stockholder approval, an amendment to our Articles of Incorporation that would increase the number of authorized shares of common stock by 1,000,000,000 shares bringing the total authorized shares of common stock to 2,000,000,000 shares.
Article IV of our Articles of Incorporation sets the total number of shares of common stock that we have the authority to issue at 1,000,000,000. As of [ , 2020], there were approximately [ ] shares of common stock outstanding.
In addition, as of [ ], 2020 there were [ ] million shares reserved for issuance under our equity plans (including shares subject to outstanding awards of [ ] million shares) and [ ] million shares reserved for issuance upon conversion of operating partnership units and limited partnership units. The total shares of common stock outstanding and reserved for issuance as of [ ], 2020 was [ ] million.
The Board believes that it is important to have a sufficient number of authorized but unissued shares available to provide flexibility to act quickly to take advantage of favorable market conditions and opportunities for strategic transactions. For example, in August 2018, we issued approximately 96.2 million shares of common stock in connection with our merger transaction with DCT Industrial Trust. In February 2020, we issued approximately 107.0 million shares of common stock in connection with our merger transaction with Liberty Property Trust.
The amendment to the Articles of Incorporation, if approved and adopted by the stockholders, will substitute the following paragraph for the first paragraph of Article IV:
“The total number of shares of all classes of stock that the Corporation shall have authority to issue is 2,100,000,000, consisting of 2,000,000,000 shares of common stock, par value $0.01 per share (the “common stock”), and 100,000,000 shares of preferred stock, par value $0.01 per share (the “Preferred Stock”), which may be issued in one or more classes as described in Paragraph C of this Article IV. The aggregate par value of all of the Corporation’s authorized shares having par value is $21,000,000. The common stock and each class of the Preferred Stock shall each constitute a separate class of stock of the Corporation.”
You may vote for, vote against, or abstain from voting on approving and adopting the amendment to our Articles of Incorporation to increase the number of shares of common stock that we have the authority to issue. Assuming a quorum is present, the affirmative vote in person or by proxy oftwo-thirds of the outstanding shares of common stock is required to approve and adopt the amendment to the Articles of Incorporation. Abstentions and brokernon-votes are considered voting power present in person or by proxy and thus will have the same effect as votes “Against” the proposal.
[If shareholders do not approve the increase it might preclude or delay the company from pursuing future strategic acquisitions that are essential to the company’s future growth and success.]
The Board unanimously recommends that the stockholders vote "FOR" the approval of the amendment to our articles of incorporation to increase the number of authorized shares of common stock.
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Audit Matters
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Audit Matters
The purpose of the Audit Committee is to be an informed, vigilant and effective overseer of our financial accounting and reporting processes consistent with risk mitigation appropriate in the circumstances. The committee is directly responsible for the appointment, compensation and oversight of our independent registered public accounting firm. The committee is comprised of the five directors named below. Each member of the committee is independent as defined by SEC and NYSE rules. In addition, the Board has determined that each member of the Audit Committee is an audit committee financial expert and is financially literate in accordance with applicable NYSE and SEC rules. Management is responsible for the company’s internal controls and the financial reporting process. The company’s independent registered public accounting firm is responsible for performing an independent audit of the company’s consolidated financial statements and the effectiveness of the company’s internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), and issuing reports thereon. The Audit Committee is responsible for overseeing the conduct of these activities. The committee’s function is more fully described in its charter which has been approved by the Board. The charter can be viewed, together with any future changes, on our website at http://ir.prologis.com/governance.
We have reviewed and discussed the company’s audited financial statements for the fiscal year ended December 31, 2019 and unaudited financial statements for the quarterly periods ended March 31, June 30 and September 30, 2019 with management and KPMG LLP, the company’s independent registered public accounting firm. We also reviewed and discussed management’s assessment of the effectiveness of the company’s internal controls over financial reporting. The committee has discussed with KPMG LLP the matters that are required to be discussed by Auditing Standard No. 1301, Communication With Audit Committees, issued by the PCAOB. KPMG LLP has provided to the company the written disclosures and the letter required by applicable PCAOB requirements regarding their communications with the Audit Committee concerning independence, and the Audit Committee has discussed with KPMG LLP its independence. The committee also concluded that KPMG LLP’s performance ofnon-audit services to us and our affiliates, aspre-approved by the committee and described in the next section, does not impair KPMG LLP’s independence.
Based on the considerations referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report onForm 10-K for 2019. The foregoing report is provided by the following independent directors, who constitute the committee.
Audit Committee:
Carl B. Webb (Chair)
Cristina G. Bita
Shares Beneficially Owned
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Name(1) | Number of of Common Stock as of March 7, 2022(2) | Number of Shares of Common Stock That May Be Acquired by May 6, 2022 (3)(4)(5)(6)(7) | Total Ownership** | % of Outstanding Shares of Common Stock(8) | % of Outstanding Shares of Common Stock and Units(9) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NEOs: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hamid Moghadam(10) | 2,133,278 | 937,417 | 3,070,695 | 0.41 | % | 0.41 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas Olinger(11) | 42,204 | 471,182 | 513,386 | * | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Eugene Reilly(12) | 2,811 | 237,217 | 240,028 | * | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gary Anderson | 1,917 | 88,975 | 90,892 | * | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Edward Nekritz | 1,834 | 587,952 | 589,786 | * | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Directors: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cristina Bita | 3,176 | 2,609 | 5,785 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
George Fotiades | 22,710 | — | 22,710 | * | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lydia Kennard | 32,773 | 2,609 | 35,382 | * | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Irving Lyons III(13) | 67,816 | — | 67,816 | * | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Avid Modjtabai | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4,035 | — | 4,035 | * | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Olivier Piani
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey Skelton | 54,540 | 2,609 | 57,149 | * | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carl Webb | 81,705 | 2,609 | 84,314 | * | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 16,956 | 2,609 | 19,565 | * | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act, as amended, requires our directors, certain officers and certain beneficial owners of our common stock to file reports of holdings and transactions in our common stock with the SEC and the NYSE. Based on our records and other information available to us, we believe that, in
Annual Report to Stockholders and Corporate Governance Documents We will provide copies of our annual report to requesting stockholders, free of charge, by contacting Investor Relations, Prologis, Inc., Pier 1, Bay 1, San Francisco, California 94111, telephone(415) 394-9000. Our Code of Ethics and Business Conduct, Governance Guidelines and our Audit, Compensation and Governance Committee charters can be viewed on our website at http://ir.prologis.com/governance. In addition, copies of our Code of Ethics and Business Conduct, Governance Guidelines, our Audit, Compensation and Governance Committee charters and our bylaws can be obtained by any stockholder, free of charge, upon written request to Edward S. Nekritz, Secretary, Prologis, Inc., Pier 1, Bay 1, San Francisco, California 94111. March San Francisco, California
Please refer to our annual and quarterly financial statements filed with the Securities and Exchange Commission onForms 10-K and10-Q and other public reports for further information about us and our business. Annualized TSR is calculated based on the stock price appreciation and dividends paid to show a total return to a stockholder over a period of time. This calculation assumes dividends are reinvested into the stock on the day the dividend is paid. We annualize TSR by converting the total return of the stock at the end of a prescribed time period to an annualized basis. Asset Management Feesrepresents the third-party share of asset management and transactional fees from both consolidated and unconsolidatedco-investment ventures. Assets Under Management (“AUM”) represents the estimated fair value of the real estate we own or manage through both our consolidated and unconsolidated entities. We calculate AUM by adding Investment Capacity and the third-party investors’ share of the estimated fair value of the assets in theco-investment ventures to our share of total market capitalization (calculated as market equity plus our share of total debt).
Calculation of Per Share Amounts (in thousands, except per share amounts):
See definition of Core FFO below in “Funds from Operations attributable to common stockholders and unitholders.” Compound Annual Growth Rate,also referred to as CAGR, is used to determine the annual growth rate over a specified period of time longer than one year. The compound annual growth is calculated by dividing the ending value by the beginning value and multiplying the result to the power of one divided by the number of years in the calculation and then subtracting one from the result. We determined the TheDow Jones Sustainability Indices (“DJSI”)are global sustainability indices offered cooperatively by RobecoSAM and S&P Dow Jones Indices, tracking the stock performance of companies in terms of economic, environmental and social criteria.
Estimated Value Creationrepresents the value that we expect to create through our development and leasing activities. We calculate Estimated Value Creation by estimating the Stabilized NOI that the property will generate and applying a stabilized capitalization rate applicable to that property. Estimated Value Creation is calculated as the amount by which the value exceeds our TEI and does not include any fees or promotes we may earn. Estimated Value Creation for our value-added properties that are sold includes the realized economic gain. Estimated Weighted Average Margin is calculated on developed properties as the Value Creation less estimated closing costs and taxes, if any, on properties expected to be sold or contributed, divided by the TEI. Fee Related Earnings (“FRE”) is a non-GAAP financial measure and component of NAV. It is used to assess the performance of our strategic capital business and enables management and investors to estimate the corresponding fair value. FRE is calculated as the third-party share of asset management fees and transactional fees from our consolidated and unconsolidated co-investment ventures, net of direct and allocated related expenses. As non-GAAP financial measures, FRE has certain limitations as an analytical tool and may vary among real estate and asset management companies. Funds from Operations attributable to common stockholders and unitholders (“FFO”). FFO is anon-GAAP financial measure that is commonly used in the real estate industry. The most directly comparable GAAP measure to FFO is net earnings.
The National Association of Real Estate Investment Trusts (“NAREIT” or “Nareit”) defines FFO as earnings computed under GAAP to exclude historical cost depreciation and gains and losses from the sales, along with impairment charges, of previously depreciated properties. We also exclude the gains on revaluation of equity investments upon acquisition of a controlling interest and the gain recognized from a partial sale of our investment, as these are similar to gains from the
sales of previously depreciated properties. We exclude similar adjustments from our unconsolidated entities and the third parties’ share of our consolidatedco-investment ventures. Our FFO Measures. Our FFO measures begin with NAREIT’s definition and we make certain adjustments to reflect our business and the way that management plans and executes our business strategy. While not infrequent or unusual, the additional items we adjust for in calculatingFFO, as modified by Prologis,andCore FFO, both as defined below, are subject to significant fluctuations from period to period. Although these items may have a material impact on our operations and are reflected in our financial statements, the removal of the effects of these items allows us to better understand the core operating performance of our properties over the long term. These items have both positive and negative short-term effects on our results of operations in inconsistent and unpredictable directions that are not relevant to our long-term outlook. We calculate our FFO measures, as defined below, based on our proportionate ownership share of both our unconsolidated and consolidated ventures. We reflect our share of our FFO measures for unconsolidated ventures by applying our average ownership percentage for the period to the applicable reconciling items on anentity-by-entity basis. We reflect our share for consolidated ventures in which we do not own 100% of the equity by adjusting our FFO measures to remove the noncontrolling These FFO measures are used by management as supplemental financial measures of operating performance and we believe that it is important that stockholders, potential investors and financial analysts understand the measures management uses. We do not use our FFO measures as, nor should they be considered to be, alternatives to net earnings computed under GAAP, as indicators of our operating performance, as alternatives to cash from operating activities computed under GAAP or as indicators of our ability to fund our cash needs. We analyze our operating performance FFO, as modified by Prologis attributable, to common stockholders and unitholders (“FFO, as modified by Prologis”). To arrive at FFO, as modified by Prologis, we adjust the NAREIT-defined FFO measure to exclude the impact of foreign currency-related items and deferred tax, specifically:
We use FFO, as modified by Prologis, so that management, analysts and investors are able to evaluate our performance against other REITs that do not have similar operations or operations in jurisdictions outside the U.S.
Core FFO attributable to common stockholders and unitholders (“Core FFO”). In addition to FFO, as modified by Prologis,we also useCore FFO. To arrive atCore FFO,we adjustFFO, as modified by Prologis, to exclude the following recurring and nonrecurring items that we recognized directly inFFO, as modified by Prologis:
We use Core FFO, including by segment and region, to: (i) assess our operating performance as compared to other real estate companies; (ii) evaluate our performance and the performance of our properties in comparison with expected results and results of previous periods; (iii) evaluate the performance of our management; (iv) budget and forecast future results to assist in the allocation of resources; (v) provide guidance to the financial markets to understand our expected operating performance; and (vi) evaluate how a specific potential investment will impact our future results. Limitations on the use of our FFO measures. While we believe our modified FFO measures are important supplemental measures, neither NAREIT’s nor our measures of FFO should be used alone because they exclude significant economic components of net earnings computed under GAAP and are, therefore, limited as an analytical tool. Accordingly, these are only a few of the many measures we use when analyzing our business. Some of the limitations are:
We compensate for these limitations by using our FFO measures only in conjunction with net earnings computed under GAAP when making our decisions. This information should be read with our complete Consolidated Financial Statements prepared under GAAP. To assist investors in compensating for these limitations, we reconcile our modified FFO measures to our net earnings computed under GAAP as follows (in millions).
General and Administrative Expenses (“G&A”). Generally our property management personnel perform the property-level management of the properties in our owned and managed portfolio, which include properties we consolidate and those we manage that are owned by the unconsolidatedco-investment ventures. We allocate the costs of our property management function to the properties we consolidate (included in rental expenses) and the properties owned by the unconsolidatedco-investment ventures (included in strategic capital expenses) by using the square feet owned by the respective portfolios. Strategic capital expenses also include the direct expenses associated with the asset management of the unconsolidatedco-investment ventures provided by our employees who are assigned to our strategic capital
Global Customer Retention.The square footage of all leases commenced during the period that are rented by existing tenants divided by the square footage of all expiring andin-place leases during the reporting period. The square footage of tenants that default orbuy-out prior to expiration of their lease and short-term leases of less than one year, are not included in the calculation. GRESB (“Global Real Estate Sustainability Benchmark”) assesses the sustainability performance of real estate and infrastructure portfolios and assets worldwide. Investment Capacity is our estimate of the gross real estate
LED lighting.
Liquidity is equal to the sum of the current availability of our consolidated credit facilities ($
Loan-to-Market Value,or debt as a percentage of gross market capitalization, is anon-GAAP measure used by us to analyze the leverage risk in our debt risk portfolio. We make adjustments to reflect our economic ownership in each entity in which we invest, whether consolidated or unconsolidated. The following table presents the calculation ofLoan-to-Market Value for the years ended December 31 (in thousands).
Nareit(or NAREIT) is the
Net Operating Income (“NOI”) is anon-GAAP financial measure used to evaluate our operating performance and represents rental revenue less rental expenses.
Net Promoteincludes actual REITis defined as a Same Store. Our same store metrics arenon-GAAP financial measures, which are commonly used in the real estate industry and expected from the financial community, on both a net effective and cash basis. We evaluate the performance of the operating properties we own and manage using a “same store” analysis because the population of properties in this analysis is consistent from period to period, which allows us and investors to analyze our ongoing business operations. We determine our same store metrics on property NOI, which is calculated as rental revenue less rental expense for the applicable properties in the same store population for both consolidated and unconsolidated properties based on our ownership interest, as further defined below. We define our same store population for the three months ended December 31, We evaluate the results of our same store portfolio on a quarterly basis. The following table summarizes same store NOI and the change from the prior period for the four quarters of
The following is a reconciliation of our consolidated rental revenues, rental recoveries, rental expenses and property NOI for the full year, as included in the Consolidated Statements of Income and within Note 19 to the Consolidated Financial Statements, in our annual reports on Form10-K for year ended December 31,
Stabilization is defined as the earlier of when a property that was developed has been completed for one year, is contributed to a co-investment venture following completion or is 90% occupied. Stabilized NOIis equal to the estimated twelve months of potential gross rental revenue (base rent, including above or below market rents plus operating expense reimbursements) multiplied by 95% to adjust income to a stabilized vacancy factor of 5%, minus estimated operating expenses. Total Expected Investment (“TEI”)represents total estimated cost of development or expansion, including land, development and leasing costs. TEI is based on current projections and is subject to change. Total Stockholder Return (“TSR”)is calculated based on the stock price appreciation and dividends paid to show a total return to a stockholder over a period of time. This calculation assumes dividends are reinvested into the stock on the day the dividend is paid. Value Creation represents the estimated value that we expect to create through our development and leasing activities. We calculate Value Creation by estimating the Stabilized NOI that the property will generate and applying a stabilized capitalization rate applicable to that property. Value Creation is calculated as the amount by which the value exceeds our TEI and does not include any fees or promotes we may earn. Value Creation for our Value-Added Properties that are sold includes the realized economic gain. WELL Building Standard is a design standard for buildings that promotes health and wellness. The WELL Building Standard was developed and is overseen by the International WELL Building Institute™ (IWBI™).
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