UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by the
Registrant
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ
Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to
Rule 14a-12
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(Name of Registrant as Specified in
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ
No
fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing.
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(1)
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Amount previously paid:
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(2)
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Form, Schedule or Registration Statement No.:
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DEVELOPERS
DIVERSIFIED REALTY CORPORATION
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders
of Developers Diversified Realty Corporation, an Ohio
corporation (the Company), will be held at the
Companys corporate headquarters, 3300 Enterprise Parkway,
Beachwood, Ohio 44122, on May 13, 2008, at 9:00 a.m.,
local time, for the following purposes:
1. To elect nine directors, each to serve until the next
annual meeting of shareholders and until a successor has been
duly elected and qualified;
2. To approve the 2008 Developers Diversified Realty
Corporation Equity-Based Award Plan;
3. To approve an amendment to the Companys Amended
and Restated Articles of Incorporation, as amended, to adopt a
majority vote standard in uncontested elections of directors;
4. To approve an amendment to the Companys Amended
and Restated Articles of Incorporation, as amended, to change
the par value of the common shares of the Company from without
par value to $0.10 par value per share;
5. To ratify the selection of PricewaterhouseCoopers LLP as
the Companys independent accountants for the
Companys fiscal year ending December 31,
2008; and
6. To transact such other business as may properly come
before the meeting.
Only shareholders of record at the close of business on
March 20, 2008, will be entitled to notice of and to vote
at the Annual Meeting or any adjournment of the Annual Meeting.
Shareholders are urged to complete, date and sign the enclosed
proxy and return it in the enclosed envelope.
By order of the Board of Directors,
Joan U. Allgood
Secretary
Dated: April 3, 2008
YOUR VOTE
IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON MAY 13, 2008
The Proxy Statement, Annual Report to Shareholders and Proxy
Card are available at www.proxydocs.com/ddr.
TABLE
OF CONTENTS
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1
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4
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6
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13
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44
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45
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46
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56
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57
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57
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58
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59
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59
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A-1
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B-1
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C-1
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ii
DEVELOPERS
DIVERSIFIED REALTY CORPORATION
PROXY
STATEMENT
Why
did you send me this proxy statement?
Developers Diversified Realty Corporation (the
Company) sent you this proxy statement and the
enclosed proxy card because the Companys Board of
Directors is soliciting your proxy to vote at the 2008 Annual
Meeting of Shareholders. This proxy statement summarizes
information you need to know in order to vote at the Annual
Meeting. The Annual Meeting will be held at the Companys
corporate headquarters, 3300 Enterprise Parkway, Beachwood, Ohio
44122, on May 13, 2008, at 9:00 a.m., local time.
However, you do not need to attend the Annual Meeting to vote
your shares. Instead, you may simply complete, date, sign and
return the enclosed proxy card.
The Company will begin mailing this proxy statement, the
attached Notice of Annual Meeting of Shareholders and the
enclosed proxy card on or about April 3, 2008, to all
shareholders entitled to vote. Shareholders who owned the
Companys common shares at the close of business on
March 20, 2008, the record date for the Annual Meeting, are
entitled to vote. On the record date, there were 119,757,095
common shares outstanding. The Company is also enclosing its
2007 annual report to shareholders, which includes the
Companys financial statements, with this proxy statement.
Who is
soliciting my proxy?
This solicitation of proxies is made by and on behalf of the
Companys Board of Directors. The Company will bear the
cost of the solicitation of proxies. In addition to the
solicitation of proxies by mail, certain employees of the
Company may solicit proxies by telephone, facsimile or email.
Those employees will not receive any additional compensation for
their participation in the solicitation. The Company retained
Georgeson, Inc., at an estimated cost of $10,500, plus
reimbursement of expenses, to assist in the solicitation of
proxies from brokers, nominees, institutions and individuals.
How
many votes do I have?
You are entitled to one vote for each of the Companys
common shares that you owned on the record date. The enclosed
proxy card indicates the number of shares that you owned on the
record date.
If written notice is given by any shareholder to the President,
any Vice President or the Secretary of the Company at least
48 hours before the Annual Meeting that the shareholder
desires that cumulative voting be used for the election of
directors, and if an announcement of the giving of that notice
is made when the Annual Meeting is convened by the Chairman, the
President or the Secretary or by or on behalf of the shareholder
giving such notice, then each shareholder will have the right to
cumulate the voting power that the shareholder possesses in the
election of directors. This means that each shareholder will be
able to give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of shares
owned by such shareholder, or to distribute the
shareholders votes on the same principle among two or more
candidates, as the shareholder may elect.
If voting for the election of directors is cumulative, the
persons named in the enclosed proxy card will vote the shares
represented by proxies given to them in such manner so as to
elect as many of the nominees named in this proxy statement as
possible.
How do
I vote by proxy?
Whether or not you plan to attend the Annual Meeting, the
Company urges you to complete, sign and date the enclosed proxy
card and return it in the envelope provided. Returning the proxy
card will not affect your right to attend the Annual Meeting.
If you properly complete your proxy card and send it to the
Company in time to vote, your proxy (meaning one of the
individuals named in the proxy card) will vote your shares as
you have directed. If you sign the proxy card but
1
do not make specific choices, your proxy will vote your shares
as recommended by the Board of Directors to elect the director
nominees listed in Proposal One: Election of
Directors and in favor of Proposals Two, Three, Four
and Five.
If any other matter is presented at the Annual Meeting, your
proxy will vote your shares in accordance with his or her best
judgment. As of the date of this proxy statement, the Company is
not aware of any matter to be acted on at the Annual Meeting
other than those matters described in this proxy statement.
May I
revoke my proxy?
You may revoke your proxy at any time before it is exercised by
giving written notice to the Company at its principal executive
offices located at 3300 Enterprise Parkway, Beachwood, Ohio
44122, by submitting to the Company a duly executed proxy
bearing a later date or by giving notice to the Company in open
meeting. It is important to note that your presence at the
Annual Meeting, without any further action on your part, will
not revoke your previously granted proxy.
What
constitutes a quorum?
The presence at the Annual Meeting, either in person or by
proxy, of the holders of a majority of the aggregate number of
common shares outstanding on the record date will represent a
quorum permitting the conduct of business at the meeting.
Proxies received by the Company marked as abstentions or broker
non-votes will be included in the calculation of the number of
shares considered to be present at the meeting for purposes of
determining a quorum.
What
vote is required to approve each proposal assuming that a quorum
is present at the Annual Meeting?
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Proposal One: Election of Directors
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The nine nominees receiving the greatest number of votes
FOR election will be elected as directors. If you do
not vote for a particular nominee, if your shares are held in
street name by a broker or nominee indicating on a
proxy that it does not have the authority to vote on
Proposal One or if you indicate Withhold
Authority for a particular nominee on your proxy card,
then your vote will not count either for or against the nominee.
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Proposal Two: To approve the 2008 Developers Diversified
Realty Corporation Equity-Based Award Plan
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The affirmative vote of a majority of the votes cast at the
meeting is required for approval of this proposal. If your
shares are held in street name by a broker or
nominee indicating on a proxy that it does not have authority to
vote on Proposal Two, then it will not count as a vote for or a
vote against Proposal Two. If you abstain from voting, then it
will have the same effect as a vote against Proposal Two.
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Proposal Three: To approve an amendment to the Companys
Amended and Restated Articles of Incorporation to adopt a
majority vote standard in uncontested elections of directors
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The affirmative vote of a majority of the issued and outstanding
common shares of the Company is required for approval of this
proposal. If you abstain from voting or if your shares are held
in street name by a broker or nominee indicating on
a proxy that it does not have authority to vote on Proposal
Three, then it will have the same effect as a vote against
Proposal Three.
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Proposal Four: To approve an amendment to the Companys
Amended and Restated Articles of Incorporation to change the par
value of the Companys common shares from without par value
to $0.10 par value per share
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The affirmative vote of a majority of the issued and outstanding
common shares of the Company is required for approval of this
proposal. If you abstain from voting or if your shares are held
in street name by a broker or nominee indicating on
a proxy that it does not have authority to vote on Proposal
Four, then it will have the same effect as a vote against
Proposal Four.
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Proposal Five: Ratification of the Selection of
PricewaterhouseCoopers LLP as the Companys Independent
Accountants
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Although the Companys independent registered public
accounting firm may be selected by the Audit Committee of the
Board of Directors without shareholder approval, the Audit
Committee will consider the affirmative vote of a majority of
the votes cast by shareholders at the Annual Meeting to be a
ratification by the shareholders of the selection of
PricewaterhouseCoopers LLP as the Companys independent
registered public accounting firm. If your shares are held in
street name by a broker or nominee indicating on a
proxy that it does not have authority to vote on Proposal Five,
then it will not count as a vote for or a vote against Proposal
Five. If you abstain from voting, it will have the same effect
as a vote against Proposal Five.
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3
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of common shares of the Company as of
February 20, 2008, except as otherwise disclosed in the
notes below, by (a) each person who is known by the Company
to own beneficially more than 5% of the outstanding common
shares of the Company based on a review of filings with the
Securities and Exchange Commission (the SEC),
(b) the Companys directors, (c) the individuals
named in the Summary Compensation Table on page 28 and
(d) the Companys executive officers and directors as
a group. Except as otherwise described in the following notes,
the following beneficial owners have sole voting power and sole
investment power with respect to all common shares set forth
opposite their respective names.
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Number of
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Common Shares
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Percentage
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Beneficially Owned
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Ownership
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FMR LLC
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13,796,281
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(1)
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11.5
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82 Devonshire Street
Boston, Massachusetts 02109
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Cohen & Steers, Inc.
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9,522,305
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(2)
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8.0
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280 Park Avenue,
10
th
Floor
New York, New York 10017
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The Vanguard Group Inc.
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9,107,945
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(3)
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7.6
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100 Vanguard Blvd.
Malvern, Pennsylvania 19355
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Barclays Global Investors, NA
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7,279,497
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(4)
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6.1
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45 Fremont Street
San Francisco, California 94105
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Scott A. Wolstein
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2,127,707
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(5)(6)(7)
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1.8
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Timothy J. Bruce
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115,776
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(6)(8)
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*
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Daniel B. Hurwitz
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325,014
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(6)(7)(9)
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*
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David M. Jacobstein
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195,057
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(6)(10)
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*
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David J. Oakes
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58,333
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(11)
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*
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William H. Schafer
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162,349
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(6)(7)(12)
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*
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Dean S. Adler
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3,415
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(6)(13)
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*
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Terrance R. Ahern
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18,415
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(6)(13)(14)
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*
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Robert H. Gidel
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22,783
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(15)
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Victor B. MacFarlane
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13,279
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(6)(13)(16)
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Craig Macnab
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77,954
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(6)(7)(13)(17)
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Scott D. Roulston
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1,919
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(13)(18)
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Barry A. Sholem
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25,174
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(19)
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William B. Summers, Jr.
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6,408
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All Current Executive Officers and Directors as a Group
(17 persons)
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3,266,793
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(20)
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2.7
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%
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Less than 1%
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(1)
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Information for common shares owned as of December 31,
2007, is based on a report on Schedule 13G/A filed with the
SEC on February 14, 2008 by FMR LLC, a parent holding
company, and Edward C. Johnson 3d, an individual. Members of
Mr. Johnsons family may be deemed to form a
controlling group with respect to FMR LLC under the Investment
Company Act of 1940. According to the information provided in
the report, Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR LLC and an investment adviser
registered under the Investment Advisers Act of 1940, is the
beneficial owner of 12,465,432 shares. FMR LLC and
Mr. Johnson each have sole dispositive power with respect
to these 12,465,432 shares. Strategic Advisers, Inc., a
wholly-owned subsidiary of FMR LLC and an investment adviser
registered under the Investment Advisers Act of 1940, is the
beneficial owner of 811 shares, and Pyramis Global
Advisors, LLC, an
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indirect wholly-owned subsidiary of FMR LLC and an investment
adviser registered under the Investment Advisers Act of 1940, is
the beneficial owner of 84,330 shares. FMR LLC and
Mr. Johnson each have sole dispositive power with respect
to and sole voting power over these shares. Pyramis Global
Advisors Trust Company, an indirect-wholly owned subsidiary
of FMR LLC and a bank as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended (the
Securities Exchange Act), is the beneficial owner of
568,708 shares. FMR LLC and Mr. Johnson each have sole
dispositive power with respect to and sole voting power over
these shares. Fidelity International Limited, approximately 47%
of the voting power of which is owned by partnerships controlled
by Mr. Johnsons family and a qualified institution
under
Rule 13d-1(b)(1)
under the Securities Exchange Act, does not have dispositive or
voting control of the common shares owned by this entity. No one
persons interest in the common shares of the Company is
more than 5% of the total outstanding common shares of the
Company.
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(2)
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Information for common shares owned as of December 31,
2007, is based on a report on Schedule 13G filed with the
SEC on February 14, 2008 by Cohen & Steers, Inc,
an investment adviser registered under the Investment Advisers
Act of 1940. According to the information provided in the
report, Cohen & Steers Capital Management, Inc, a
wholly-owned subsidiary of Cohen & Steers, Inc., an
investment adviser registered under the Investment Advisers Act
of 1940, has sole voting power over 8,622,031 common shares and
sole dispositive power with respect to 9,492,470 common shares,
and Cohen & Steers Europe S.A., a wholly-owned
subsidiary of Cohen & Steers, Inc., an investment
adviser registered under the Investment Advisers Act of 1940,
has sole voting power over 22,542 common shares and sole
dispositive power with respect to 29,835 common shares.
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(3)
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Information for common shares owned as of December 31,
2007, is based on a report on Schedule 13G filed with the
SEC on February 27, 2008 by The Vanguard Group Inc., an
investment adviser registered under the Investment Advisers Act
of 1940. According to the information provided in the report,
The Vanguard Group Inc. has sole voting power over 9,107,945
common shares and sole dispositive power with respect to 133,033
common shares, and Vanguard Fiduciary Trust Company, a
wholly-owned subsidiary of The Vanguard Group Inc., an
investment adviser registered under the Investment Advisers Act
of 1940, has sole voting power over 36,660 common shares and
sole dispositive power with respect to 36,660 common shares.
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(4)
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Information for common shares owned as of December 31,
2007, is based on a report on Schedule 13G filed with the
SEC on January 10, 2008 by Barclays Global Investors, NA.,
a bank as defined in Section 3(a)(6) of the Securities
Exchange Act, Barclays Global Fund Advisors, an investment
adviser registered under the Investment Advisers Act of 1940,
Barclays Global Investors Ltd., a bank as defined in Section
3(a)(6) of the Securities Exchange Act, and Barclays Global
Investor Canada Limited, an investment adviser registered under
the Investment Advisers Act of 1940, and Barclays Global
Investors Japan Limited, an investment adviser registered under
the Investment Advisers Act of 1940. According to the
information provided in the report, Barclays Global Investors,
NA. has sole voting power over 2,654,858 common shares and sole
dispositive power with respect to 3,567,261 common shares;
Barclays Global Fund Advisors has sole voting power over
3,000,547 common shares and sole dispositive power with respect
to 3,000,547 common shares; Barclays Global Investors, Ltd. has
sole voting power over 467,486 common shares and sole
dispositive power with respect to 497,582 common shares;
Barclays Global Investors Japan Limited has sole voting power
over 169,664 common shares and sole dispositive power with
respect to 169,664 common shares; and Barclays Global Investor
Canada Limited power has sole voting power over 44,443 common
shares and sole dispositive power with respect to 44,443 common
shares. Also according to the Schedule 13G, the shares
reported are held by such entities in trust accounts for the
economic benefit of the beneficiaries of those accounts.
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(5)
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Includes 209,423 common shares subject to options currently
exercisable or exercisable within 60 days. Does not include
614,728 common shares owned by Wolstein Business Enterprises,
L.P., a family limited partnership, because Mr. Wolstein
does not have dispositive or voting control of the common shares
owned by this entity.
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(6)
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Does not include 416,186 stock units credited to
Mr. Wolsteins account when he elected to defer the
gain attributable to the exercise of stock options pursuant to
the Companys equity deferred compensation plans. Does not
include 188,313; 32,708; 89,416; 1,029; 1,362; 1,029; 695;
3,482; and 7,252 stock units credited to the accounts of
Messrs. Wolstein, Jacobstein, Hurwitz, Adler, Ahern,
MacFarlane, Macnab, Schafer and Bruce, respectively, when such
individuals elected to defer the vesting of restricted common
shares pursuant to
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the Companys equity deferred compensation plans. The stock
units represent the right to receive common shares at the end of
the deferral period, but do not confer current dispositive or
voting control of any common shares.
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(7)
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Includes 1,824,961; 119,574; 32,163; and 16,576 common shares
pledged as security by Messrs. Wolstein, Schafer, Hurwitz
and Macnab, respectively.
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(8)
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Includes 94,199 common shares subject to options currently
exercisable or exercisable within 60 days.
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(9)
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Includes 91,513 common shares subject to options currently
exercisable or exercisable within 60 days.
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(10)
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Includes 148,578 common shares subject to options currently
exercisable or exercisable within 60 days.
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(11)
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Includes 33,333 common shares subject to options currently
exercisable or exercisable within 60 days.
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(12)
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Includes 37,712 common shares subject to options currently
exercisable or exercisable within 60 days.
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(13)
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Does not include 16,913; 15,593; 9,469; 8,037; and
4,119 units credited to the accounts of Messrs. Adler,
Ahern, MacFarlane, Macnab and Roulston pursuant to the
Companys directors deferred compensation plans. Each
unit is the economic equivalent of one common share, but does
not confer current dispositive or voting control of any common
shares.
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(14)
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Includes 15,000 common shares subject to options currently
exercisable or exercisable within 60 days.
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(15)
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Includes 3,000 common shares owned by a partnership in which
Mr. Gidel and his wife each have a one-half interest.
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(16)
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Includes 10,000 common shares subject to options currently
exercisable or exercisable within 60 days.
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(17)
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Includes 75,324 common shares as to which Mr. Macnab shares
voting and dispositive power with his wife.
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(18)
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Includes 1,207 common shares held in an individual retirement
account.
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(19)
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Includes 16,000 common shares subject to options currently
exercisable or exercisable within 60 days.
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(20)
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Includes 94,554 common shares subject to options currently
exercisable or exercisable within 60 days owned by
executive officers not named in the table and 77,235 common
shares pledged as security by executive officers not named in
the table, in addition to the information set forth in the
footnotes above regarding each individual directors and
executive officers holdings.
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PROPOSAL ONE:
ELECTION OF DIRECTORS
At the Annual Meeting, unless you specify otherwise, the common
shares represented by your proxy will be voted to re-elect
Messrs. Adler, Ahern, Gidel, MacFarlane, Macnab, Roulston,
Sholem, Summers and Wolstein. The nine nominees receiving the
most votes will be elected as directors. If elected, each
nominee will serve as a director until the next annual meeting
of shareholders and until his successor is duly elected and
qualified.
If written notice is given by any shareholder to the President,
any Vice President or the Secretary of the Company at least
48 hours before the Annual Meeting that the shareholder
desires that cumulative voting be used for the election of
directors, and if an announcement of the giving of that notice
is made when the Annual Meeting is convened by the Chairman, the
President or the Secretary or by or on behalf of the shareholder
giving that notice, then each shareholder will have the right to
cumulate the voting power that the shareholder possesses in the
election of directors. This means that each shareholder will be
able to give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of shares
owned by such shareholder, or to distribute the
shareholders votes on the same principle among two or more
candidates, as the shareholder may elect.
If voting for the election of directors is cumulative, the
persons named in the enclosed proxy card will vote the common
shares represented by proxies given to them in such manner so as
to elect as many of the nominees as possible.
If for any reason any of the nominees is not a candidate when
the election occurs (which is not expected), then the Board of
Directors intends that proxies will be voted for the election of
a substitute nominee designated by the Board of Directors as
recommended by the Nominating and Corporate Governance
Committee. The following information is furnished with respect
to each person nominated for election as a director.
6
Nominees
for Election at the Annual Meeting
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Period of
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Service as
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Name and Age
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Principal Occupation
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Director
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Dean S. Adler
51
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Chief Executive Officer, Lubert-Adler Partners, L.P. (real
estate investments)
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5/97-Present
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Terrance R. Ahern
52
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Co-Founder and Principal, The Townsend Group (institutional real
estate consulting)
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5/00-Present
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Robert H. Gidel
56
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President, Ginn Development Company, LLC (real estate
investments)
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5/00-Present
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Victor B. MacFarlane
56
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Managing Principal, Chairman and Chief Executive Officer,
MacFarlane Partners (real estate investments)
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5/02-Present
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Craig Macnab
52
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Chief Executive Officer, National Retail Properties (real estate
investment trust)
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3/03-Present
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Scott D. Roulston
50
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Chief Executive Officer, Fairport Asset Management (investment
advisor)
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5/04-Present
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Barry A. Sholem
56
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Partner, MDS Capital, L.P. (venture capital company)
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5/98-Present
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William B. Summers, Jr.
57
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Retired
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5/04-Present
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Scott A. Wolstein
55
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Chairman of the Board of Directors of the Company and Chief
Executive Officer of the Company
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11/92-Present
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Dean S. Adler
is currently the Chief Executive
Officer of Lubert-Adler Partners, L.P.
(Lubert-Adler), a private equity real estate
investment company which he co-founded in 1997. Lubert-Adler
currently manages over $4 billion in equity and
$15 billion in assets in five real estate funds. It
recently commenced a new $2.5 billion fund. Lubert-Adler is
a key member of Independence Capital Partners, a family of
investment funds totaling over $10 billion in equity.
Mr. Adler is an attorney and a certified public accountant.
Mr. Adler currently serves on several boards of directors,
including Bed Bath & Beyond, Inc., Chrysler Financial
Board of Managers, LNR Property Corporation and Electronics
Boutique, Inc., as well as several advisory boards.
Mr. Adler also serves on several community and
philanthropic boards.
Terrance R. Ahern
is a Co-Founder and Principal of
The Townsend Group, an institutional real estate consulting firm
formed in 1986, which represents primarily tax-exempt clients,
such as public and private pension plans, endowment, foundation
and multi-manager investments. Mr. Ahern is a past member
of the Board of Directors of the Pension Real Estate Association
(PREA) and the Board of Governors of the National
Association of Real Estate Investment Trusts
(NAREIT). Prior to founding The Townsend Group,
Mr. Ahern was a Vice President of a New York-based real
estate investment firm and was engaged in the private practice
of law.
Robert H. Gidel
has been President of Ginn
Development Company, LLC, one of the largest privately held
developers of resort communities and private clubs in the
Southeast, since July 2007. Prior to joining Ginn Development
Company, LLC, Mr. Gidel was the Managing Partner of Liberty
Partners, LP, a partnership that invests in real estate and
finance focused operating companies, since 1998. Mr. Gidel
is a past Chairman of the Board of Directors of LNR Property
Holdings, a private multi-asset real estate company. Until
January 2007, he was a member of the Board of Directors and lead
director of Global Signal Inc., a REIT, of which he was chairman
of the governance committee and a member of the compensation
committee. He has been a trustee of Fortress Registered
Investment Trust and a director of Fortress Investment
Fund II, LLC since 1999, both of which are registered
investment companies. From 1998 until 2005, Mr. Gidel was
the independent member of the investment committee of the Lone
Star Funds (I, II, III, IV and V).
Victor B. MacFarlane
is Managing Principal,
Chairman and Chief Executive Officer of MacFarlane Partners,
which he founded in 1987 to provide real estate investment
management services to institutional investors.
Mr. MacFarlane has 29 years of real estate experience.
He serves on the Board of Directors of the Robert Toigo
Foundation, the Real Estate Executive Council, the Initiative
for a Competitive Inner City, Stanford Hospital &
7
Clinics and The Dignity Fund. He also serves on the policy
advisory board of the Fisher Center for Real Estate at the
University of California, Berkeley. He is a member and trustee
of the Urban Land Institute; a member and former director of
PREA; and a member of the International Council of Shopping
Centers, the Chief Executives Organization and the World
Presidents Organization.
Craig Macnab
became the Chief Executive Officer
and a Director of National Retail Properties, a publicly traded
real estate investment trust, in February 2004. Mr. Macnab
was the Chief Executive Officer, President and a Director of JDN
Realty Corporation (JDN) from 2000 to 2003, when JDN
was acquired by the Company. Prior to joining JDN,
Mr. Macnab was a consultant from 1999 through April 2000.
Scott D. Roulston
has been the Chief Executive
Officer of Fairport Asset Management, a registered investment
advisor providing investment management and wealth management
services and an affiliate of Wealth Trust LLC, since
December 2007. From 2004 to 2007, he was Managing Partner and
Director of Fairport Asset Management, LLC, and from 2001 to
2004, he was the firms Chief Executive Officer. From 1990
until 2001, Mr. Roulston was the President and Chief
Executive Officer of Roulston & Company, until it
merged with The Hickory Group in 2001 to form Fairport
Asset Management, LLC.
Barry A. Sholem
became a partner of MSD Capital,
L.P., a venture capital company, and head of its real estate
fund in July 2004. From 1995 until August 2000, Mr. Sholem
was the Chairman of Donaldson, Lufkin & Jenrette, Inc.
Real Estate Capital Partners, a $2 billion real estate fund
that invested in a broad range of real estate-related assets,
which he formed in January 1995, and, from August 2000 to
November 2003, he was a Managing Director of Credit Suisse First
Boston. Mr. Sholem is currently active in the Urban Land
Institute (RCMF Council), the International Council of Shopping
Centers, the University of California, Berkeley Real Estate
Advisory Board and the Business Roundtable.
William B. Summers, Jr.
was the Non-Executive
Chairman of McDonald Investments Inc., an investment banking,
brokerage and investment advisory firm, from 2000 until retiring
in 2006. From 1994 until 1998, Mr. Summers was the
President and Chief Executive Officer of McDonald Investments
Inc., and from 1998 until 2000, Mr. Summers was the
Chairman and Chief Executive Officer of McDonald Investments,
Inc. Mr. Summers is also currently a director of
Greatbatch, Inc. and RPM International, Inc.
Scott A. Wolstein
has been the Chief Executive
Officer and a Director of the Company since its organization in
1992. Mr. Wolstein has been Chairman of the Board of
Directors of the Company since May 1997. Prior to the
organization of the Company, Mr. Wolstein was a principal
and executive officer of Developers Diversified Group, the
Companys predecessor. He graduated cum laude from both the
Wharton School at the University of Pennsylvania and the
University of Michigan Law School. Following law school,
Mr. Wolstein was associated with the law firm of Thompson
Hine & Flory. Mr. Wolstein is currently a member
of the Board of Governors and Executive Committee of NAREIT;
Board of Directors of the Real Estate Roundtable; Board of
Trustees of Hathaway Brown School; Board of Trustees for Case
Western Reserve University; Board of Directors of University
Hospitals Health Systems; the Board of Trustees of the United
Way; Board Member of the Greater Cleveland Partnership; Board
Member of the Cleveland Development Advisors; and member of the
Executive Committee and Board of Trustees of the Zell-Lurie
Wharton Real Estate Center. He is also a current member of the
Urban Land Institute, PREA, and the World Presidents
Organization. He has served as past Chairman of the State of
Israel Bonds Ohio Chapter; a past Trustee of the
International Council of Shopping Centers; President of the
Board of Trustees of the United Cerebral Palsy Association of
Greater Cleveland; Board of Directors and Executive Committee
Member of the Cleveland Chapter of the Red Cross; Board Member
of the Cleveland Chapter of the Anti Defamation League; and a
member of the Board of the Great Lakes Theater Festival, The
Park Synagogue and the Convention and Visitors Bureau of Greater
Cleveland. Mr. Wolstein is a four-time recipient of the
Realty Stock Reviews Outstanding CEO Award. In 2007, he
received the Malden Mills Corporate Kindness Award.
The Board
of Directors Recommends That Shareholders Vote FOR Re-election
of Each of the Directors.
8
Corporate
Governance
The Board of Directors has adopted Corporate Governance
Guidelines that guide the Board of Directors in the performance
of its responsibilities to serve the best interests of the
Company and its shareholders. The Companys Corporate
Governance Guidelines are posted on the Companys website,
www.ddr.com, under Investor Relations and are
available in print to any shareholder who requests them. The
Board of Directors reviews the Corporate Governance Guidelines
periodically but not less than on an annual basis.
Codes
of Ethics
Code of Ethics for Senior Financial
Officers.
The Company has a Code of Ethics for
Senior Financial Officers that applies to the chief executive
officer, chief operating officer, chief financial officer, chief
accounting officer and other designated senior financial
officers (collectively, the Senior Financial
Officers) of the Company. This code requires the Senior
Financial Officers to act with honesty and integrity; to
endeavor to provide information that is full, fair, accurate,
timely and understandable in all reports and documents that the
Company files with, or submits to, the SEC and other public
filings or communications made by the Company; to endeavor to
comply faithfully with all laws, rules and regulations of
federal, state and local governments and all applicable private
or public regulatory agencies as well as all applicable
professional codes of conduct; to not knowingly or recklessly
misrepresent material facts or allow their independent judgment
to be compromised; to not use for personal advantage
confidential information acquired in the course of their
employment; to proactively promote ethical behavior among peers
and subordinates in the workplace; and to promptly report any
violation or suspected violation of this code in accordance with
the Companys Reporting and Non-Retaliation Policy and, if
appropriate, directly to the Audit Committee. Only the Audit
Committee or the Board of Directors, including a majority of the
independent directors, may waive any provision of this code with
respect to a Senior Financial Officer. Any such waiver or any
amendment to this code will be promptly disclosed on the
Companys website and as otherwise required by rule or
regulation. This code is posted on the Companys website,
www.ddr.com, under Investor Relations and is
available in print to any shareholder who requests it.
Code of Business Conduct and Ethics.
The
Company also has a Code of Business Conduct and Ethics that
addresses the Companys commitment to honesty, integrity
and the ethical behavior of the Companys employees,
officers and directors. This code governs the actions and
working relationships of the Companys employees, officers
and directors with current and potential tenants, fellow
employees, competitors, government and self-regulatory agencies,
investors, the public, the media, and anyone else with whom the
Company has or may have contact. Only the Board of Directors or
the Nominating and Corporate Governance Committee may waive any
provision of this code with respect to an executive officer or
director. Any such waiver will be promptly disclosed on the
Companys website and as otherwise may be required by rule
or regulation. The Corporate Compliance Officer may waive any
provision of this code with respect to all other employees. This
code is posted on the Companys website, www.ddr.com, under
Investor Relations and is available in print to any
shareholder who requests it.
Reporting
and Non-Retaliation Policy
The Company is committed to integrity and ethical behavior and
has adopted a Reporting and Non-Retaliation Policy. The purpose
of the policy is to encourage all employees to disclose any
alleged wrongdoing that may adversely impact the Company, the
Companys tenants, shareholders, fellow employees,
investors or the public at large without fear of retaliation.
The policy sets forth procedures for the reporting of alleged
financial (including auditing, accounting and internal control
matters) and non-financial wrongdoing by employees on a
confidential and anonymous basis and by other interested third
parties, and a process for investigating such reported acts of
alleged wrongdoing and retaliation. Reports may be made directly
to the Corporate Compliance Officer, the Audit Committee or to
Global Compliance Services, an independent third-party service
retained on behalf of the Audit Committee. The Audit Committee
receives notices of complaints reported under this policy and
oversees the investigation of such complaints. This policy is
posted on the Companys website, www.ddr.com, under
Investor Relations and is available in print to any
shareholder who requests it.
9
Independent
Directors
The Board of Directors has affirmatively determined that all of
the nominated directors, except for Messrs. Adler and
Wolstein, are independent directors within the
meaning of the listing standards of the New York Stock Exchange
(NYSE). The Companys Corporate Governance
Guidelines provide that the Board of Directors will be comprised
of a majority of independent directors and that only those
directors or nominees who meet the listing standards of the NYSE
will be considered independent. The Board of Directors reviews
annually the relationships that each director or nominee has
with the Company (either directly or as a partner, shareholder
or officer of an organization that has a relationship with the
Company), and only those directors or nominees whom the Board
affirmatively determines have no material relationship with the
Company (either directly or as a partner, shareholder or officer
of an organization that has a relationship with the Company)
will be considered independent. The basis for any determination
that a relationship is not material will be disclosed in the
Companys annual proxy statement. No transactions,
relationships or arrangements occurred in 2007 that were
considered by the Board of Directors in making its determination
of each directors independence.
Lead
Director
In accordance with the Corporate Governance Guidelines, the
Board of Directors has a lead director who must be an
independent director and is selected by a majority of the
non-management directors. The Board of Directors has unanimously
selected Mr. Ahern to serve as lead director. The lead
director:
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presides at all meetings of the Board of Directors at which the
Chairman of the Board of Directors is not present;
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serves as liaison between the Chairman of the Board of Directors
and the non-management directors;
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reviews and comments on information to be sent to the Board of
Directors;
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reviews and comments on meeting agendas for the Board of
Directors;
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reviews and comments on meeting schedules to assure that there
is sufficient time for discussion of all agenda items;
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has the authority to call meetings of non-management
directors; and
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if requested by major and institutional shareholders, ensures
that he is available for consultation and direct communication.
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Meetings
of Non-Management and Independent Directors
After each meeting of the Board of Directors, the non-management
directors meet independently of the Chairman of the Board and
these meetings are chaired by the lead director. In 2007, the
non-management directors met after each regularly scheduled
Board meeting. In addition, as required by the Companys
Corporate Governance Guidelines, the independent directors meet
at least once a year.
Committees
and Meetings of the Board of Directors
During the fiscal year ended December 31, 2007, the Board
of Directors held nine meetings. Each director attended more
than 75% of the aggregate number of meetings of the Board of
Directors and committees on which he served in 2007. As stated
in the Corporate Governance Guidelines, all directors are
expected to attend the Companys annual meeting of
shareholders. All of the Companys directors attended the
2007 annual meeting of shareholders.
During 2007, the following committees of the Board of Directors
existed: a Dividend Declaration Committee, an Executive
Compensation Committee, a Nominating and Corporate Governance
Committee, a Pricing Committee and an Audit Committee. The Board
of Directors has approved the written charters of the Audit
Committee, the Executive Compensation Committee and the
Nominating and Corporate Governance Committee, which are posted
on the Companys website at www.ddr.com, under
Investor Relations and are available in print to any
shareholder who requests them. Each of the Audit Committee,
Executive Compensation Committee and Nominating and Corporate
Governance Committee conducts a self-evaluation and review of
its charter annually.
10
The following table indicates the members of each committee:
Committee
Membership
(* Indicates Chair)
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Audit Committee
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Dividend Declaration Committee
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Scott D. Roulston*
Craig Macnab
William B. Summers
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Scott A. Wolstein*
Dean S. Adler
Craig Macnab
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Executive Compensation Committee
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Nominating and Corporate Governance Committee
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Terrance R. Ahern*
Victor B. MacFarlane
Barry A. Sholem
William B. Summers
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Craig Macnab*
Terrance R. Ahern
Victor B. MacFarlane
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Pricing Committee
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Scott A. Wolstein*
Scott D. Roulston
William B. Summers
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Dividend Declaration Committee.
The Dividend
Declaration Committee determines if and when the Company should
declare dividends on its capital shares and the amount thereof,
consistent with the dividend policy adopted by the Board of
Directors. The Dividend Declaration Committee held eight
meetings in 2007.
Executive Compensation Committee.
The
Executive Compensation Committee reviews and approves
compensation for the Companys executive officers and
directors, oversees the compensation and executive benefit plans
under which such executive officers and directors receive
benefits, reviews and discusses with management the Compensation
Discussion and Analysis and produces the Compensation Committee
Report in the Companys annual proxy statement. The
Executive Compensation Committee engages a compensation
consultant to assist in the design of the compensation program
and the review of its effectiveness. The Chief Executive Officer
makes recommendations to the committee regarding compensation
for executive officers other than himself, and the committee
delegates to senior management the authority to administer
certain aspects of the compensation program for non-executive
officers. All of the members of the Executive Compensation
Committee are independent as independence is currently defined
in the rules and regulations of the SEC, the NYSE listing
standards and the Companys Corporate Governance
Guidelines. The Executive Compensation Committee held eight
meetings in 2007.
Nominating and Corporate Governance
Committee.
The Nominating and Corporate
Governance Committee identifies individuals qualified to become
members of the Board of Directors and recommends to the Board of
Directors the persons to be nominated as directors at each
annual meeting of shareholders; recommends to the Board of
Directors qualified individuals to fill vacancies on the Board
of Directors; reviews and recommends to the Board of Directors
qualifications for committee membership and committee structure
and operations; recommends directors to serve on each committee;
develops and recommends to the Board of Directors corporate
governance policies and procedures in compliance with the
Sarbanes-Oxley Act of 2002 and other rules and regulations
relating to the Companys corporate governance; oversees
compliance and approves any waivers of the Companys Code
of Business Conduct and Ethics with respect to officers and
directors and leads the Board of Directors in its annual review
of the performance of the Board of Directors. All of the members
of the Nominating and Corporate Governance Committee are
independent as independence is currently defined in the NYSE
listing standards and the Companys Corporate Governance
Guidelines. The Nominating and Corporate Governance Committee
held four meetings in 2007.
The Nominating and Corporate Governance Committee will consider
suggestions forwarded by shareholders to the Secretary of the
Company concerning qualified candidates for election as
directors. To recommend a prospective nominee for the Nominating
and Corporate Governance Committees consideration, a
shareholder may submit the candidates name and
qualifications to the Companys Secretary, Joan U. Allgood,
at the following address: 3300 Enterprise Parkway, Beachwood,
Ohio 44122. The Nominating and Corporate Governance Committee
has not established specific minimum qualifications that a
candidate must have to be recommended to the Board of Directors.
However, in determining qualifications for new directors, the
Nominating and Corporate Governance Committee will consider
potential members qualifications as independent under the
NYSE listing
11
standards and the definition of independence set forth in the
Companys Corporate Governance Guidelines, as well as
diversity, age, skill and experience in the context of the needs
of the Board of Directors. The Nominating and Corporate
Governance Committee will consider a pool of potential Board
candidates established from recommendations from shareholders
and third parties, including management and current directors.
Although the Nominating and Corporate Governance Committee may
retain a search consultant to supplement the pool of potential
Board candidates, it has not engaged a consultant at this time.
Pricing Committee.
The Pricing Committee is
authorized to approve the price and terms of offerings of the
Companys debt and equity securities. The Pricing Committee
held no meetings in 2007, but did take written action on one
occasion with respect to one offering.
Audit Committee.
The Audit Committee assists
the Board of Directors in overseeing the integrity of the
financial statements of the Company, the Companys
compliance with legal and regulatory requirements, the
Companys independent registered public accounting
firms qualifications and independence, and the performance
of the Companys internal audit function and independent
registered public accounting firm, and prepares the Audit
Committee Report included in the Companys annual proxy
statement. All of the members of the Audit Committee are
independent as independence is currently defined in the rules
and regulations of the SEC, the NYSE listing standards and the
Companys Corporate Governance Guidelines. The Board of
Directors has determined that each member of the Audit Committee
is a financial expert within the meaning of
Item 407 of
Regulation S-K
under the federal securities laws. The Audit Committee held
eight meetings in 2007.
Audit
Committee Report
In accordance with its written charter adopted by the Board of
Directors, the Audit Committee assists the Board of Directors in
fulfilling its responsibility for oversight of the quality and
integrity of the accounting, auditing and financial reporting
practices of the Company. The Audit Committee meets at least
quarterly to review quarterly or annual financial information
prior to its release and inclusion in SEC filings. As part of
each meeting, the Audit Committee has the opportunity to meet
independently with management and the Companys independent
registered public accounting firm.
In discharging its oversight responsibility as to the audit
process, the Audit Committee obtained a formal written statement
from the independent registered public accounting firm
describing all relationships between the independent registered
public accounting firm and the Company that might bear on the
independent registered public accounting firms
independence consistent with Independence Standards Board
Standard No. 1, Independence Discussions with Audit
Committees, discussed with the independent registered
public accounting firm any relationships that may impact its
objectivity and independence, and satisfied itself as to the
independent registered public accounting firms
independence.
The Audit Committee reviewed and discussed with the independent
registered public accounting firm all communications required by
generally accepted auditing standards, including those described
in Statement on Auditing Standards No. 61, as amended,
Communication with Audit Committees, and reviewed
and discussed the results of the independent registered public
accounting firms examination of the financial statements.
The Audit Committee reviewed and discussed the audited financial
statements of the Company for the year ended December 31,
2007, with management and the independent registered public
accounting firm. Management has the responsibility for the
preparation of the Companys financial statements, and the
independent registered public accounting firm has the
responsibility for the examination of those statements.
Based on the above-described review and discussions with
management and the independent registered public accounting
firm, the Audit Committee recommended to the Board of Directors
that the Companys audited financial statements be included
in its Annual Report on
Form 10-K
for the year ended December 31, 2007, for filing with the
SEC.
Audit Committee
Scott D. Roulston, Chairman
Craig Macnab
William B. Summers, Jr.
12
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview
The following discussion and analysis is set forth with respect
to the compensation and benefits for the Companys
named executive officers, which, with respect to
fiscal year 2007, includes the Companys Chief Executive
Officer, Chief Financial Officer and four other executive
officers. Each of these executive officers other than David M.
Jacobstein, who resigned as an executive officer on May 8,
2007, was serving as an executive officer at December 31,
2007. Mr. Jacobsteins employment and compensation
arrangement is discussed on page 26 of this proxy
statement. The following discussion should be read in
conjunction with the information presented in the compensation
tables, the footnotes to those tables and the related
disclosures appearing elsewhere in this proxy statement.
The compensation and benefits payable to the Companys
executive officers are established by or under the supervision
of the Executive Compensation Committee of the Companys
Board of Directors (the Committee). The Committee
currently consists of four members, Terrance R. Ahern
(Chairman), Victor B. MacFarlane, Barry A. Sholem and William B.
Summers, Jr., each of whom is an independent director
within the meaning of the NYSEs listing standards, a
disinterested director within the meaning of
Rule 16b-3
under the Securities Exchange Act, and a non-employee
director within the meaning of Section 162(m) of the
Internal Revenue Code. Robert H. Gidel also served on the
Committee for a portion of 2007.
The Committee operates under a written charter (the
Charter) adopted by the Companys Board of
Directors. A copy of the Charter is available at www.ddr.com
under Investor Relations and is available in print
to any shareholder who requests it. Pursuant to the Charter, the
fundamental responsibilities of the Committee are:
1. To review and approve the goals and objectives relevant
to the compensation of the Companys executive officers,
and amend, or recommend that the Board amend, these goals and
objectives if the Committee deems it appropriate.
2. To review the Companys executive and employee
compensation plans and, if the Committee deems it appropriate,
recommend to the Board and shareholders, if required, the
adoption of new plans or the amendment of existing plans.
3. To review and approve the compensation of senior
executive officers.
The Charter provides that the Committee must meet at least two
times annually. However, the Committee meets as often as
necessary in order to discharge its duties effectively. During
2007, the Committee held eight meetings. The agenda for each
meeting is established by the Chairman of the Committee. The
Committees outside consultant and the Companys
outside counsel participate in its meetings, and members of
senior management also periodically attend meetings.
Compensation
Philosophy and Objectives
The Committee believes that the Company must be in a position to
attract, retain and motivate superior executive officers and, in
order to achieve this goal, those executive officers must be
compensated at a level commensurate with their performance when
measured against executive officers in comparable companies. The
Committee also believes compensation packages provided by the
Company to its executive officers, including the named executive
officers, should include as a primary component
performance-based compensation that is both cash and
equity-based and that rewards performance as measured against
annual, long-term and strategic goals designed to facilitate the
achievement of the Companys business objectives and the
enhancement of shareholder value.
In order to assure the alignment of interests between the
executive officers and shareholders, the Committee believes that
each executive officer should have a significant equity stake in
the Company. This view is shared by the Board, which adopted
guidelines requiring each executive officer to own common shares
or common share equivalents of the Company (including unvested
restricted shares and shares deferred in one of the
Companys
13
equity deferred compensation plans (the Equity Deferred
Compensation Plans), but excluding unvested options) with
an aggregate market value of no less than the sum of that
officers annual salary and performance-based cash bonus
for the immediately preceding year (a) no later than the
fourth anniversary of the first
March 15
th
as
of which that officer receives his or her first grant of common
share equivalents, and (b) on each anniversary date
thereafter. Notwithstanding the phase-in period, each executive
officer must own 20% of the requisite value of common shares and
common share equivalents on the first
March 15
th
following
the date an executive officer receives his or her first grant of
common share equivalents, and an additional 20% on each
anniversary of such date until the fourth anniversary when the
share ownership requirement must be satisfied.
As a result of the Committees pay for
performance philosophy, a significant percentage of total
compensation for the Companys executive officers,
including the named executive officers, is allocated to
incentive awards. The Committee has no mandatory policy for the
allocation between cash and non-cash or short-term and long-term
incentive compensation. Generally, the higher ranking the
officer, the higher percentage of incentive and equity-based
compensation as compared to total compensation, making a
significant portion of the value of his or her total pay package
dependent on long-term share appreciation.
The historical percentage of compensation earned by executive
officers for each type of compensation is as follows:
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Type of Compensation
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Historical Percentage of Compensation
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Annual Salary
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20-50
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%
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Annual Performance-Based Cash Bonus
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20-50
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%
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Long-Term Incentive Compensation
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20-50
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%
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Compensation
Setting Process
Consistent with past practices, in 2007 the Committee retained a
compensation consultant, Gressle & McGinley, LLC (the
Compensation Consultant), to assist the Committee in
its process of identifying and establishing peer groups of
companies, reviewing the compensation programs of members of the
peer groups and making recommendations and providing advice with
respect to compensation of the Companys executive
officers. The Compensation Consultant was also engaged to
conduct a detailed review of supplemental equity programs
maintained by other real estate investment trusts
(REITs), to advise the Committee with respect to the
establishment of parameters for the 2007 Supplemental Equity
Program and to work with the Committee and the Companys
management to establish a program that is designed to
incentivize executive officers and increase shareholder value.
The Committee, with advice from the Compensation Consultant,
established the following peer group of companies for
benchmarking total compensation for 2007 (the Compensation
Peer Group):
Compensation
Peer Group
|
|
|
|
|
Alexandria Real Estate Equities, Inc.
AMB Property Corporation
Apartment Investing and Management Company
Archstone-Smith Trust
Avalonbay Communities, Inc.
Boston Properties, Inc.
Brandywine Realty Trust
BRE Properties, Inc.
Camden Property Trust
|
|
Duke Realty Corporation
Essex Prop. Trust, Inc.
Equity Residential Properties
Trust
Federal Realty Investment Trust
Host Hotels & Resorts, Inc.
Kilroy Realty Corporation
Kimco Realty Corporation
Liberty Property Trust
Mack-Cali Realty Corporation
|
|
The Macerich Company
Prologis
Regency Center Corporation
Simon Property Group, Inc.
SL Green Realty Corp.
Taubman Centers, Inc.
United Dominion Realty Trust, Inc.
Vornado Realty Trust
Weingarten Realty Investors
|
In preparing a recommendation regarding the Compensation Peer
Group for consideration by the Committee, the Compensation
Consultant reviewed the NAREIT index of companies in the office,
mixed use, shopping center, mall, apartment, diversified and
lodging property subsectors. This group was then narrowed by
eliminating companies with an equity market capitalization below
$2.5 billion, which was less than half of the equity market
14
capitalization of the Company. This group was narrowed further
by eliminating companies that had entered into agreements to be
acquired, companies with significant family ownership and
companies that did not have a chief executive officer. The
Committee believes that the members of the Compensation Peer
Group compete with the Company for investment dollars and
executive talent. The total compensation for the named executive
officers has generally been targeted to exceed the average total
compensation paid to similarly situated executives of the
companies comprising the Compensation Peer Group, because the
performance of the named executive officers has historically
enabled the Companys shareholders to receive returns
generally in excess of the average returns of their Compensation
Peer Group counterparts.
The executive compensation setting process generally begins with
the Compensation Consultant reviewing the composition of the
Compensation Peer Group and the Companys financial results
of the prior year and advising the Committee of its analysis and
any recommended changes. Following deliberation by the
Committee, the Chairman of the Committee then typically meets
with Messrs. Wolstein and Hurwitz to discuss the
Committees conclusions after review of the Compensation
Consultants report and the metrics used to determine
performance-based awards for the immediately preceding fiscal
year to assure that the achievement of those metrics facilitated
the achievement of the Companys business objectives for
that fiscal year and to determine whether any such metric should
be modified or replaced for the current fiscal year. Generally,
Mr. Wolstein then makes recommendations to the Committee
regarding all elements of suggested compensation for the
Companys executive officers, including the named executive
officers, other than himself. These recommendations are based on
Mr. Wolsteins review of each executive officers
individual performance as well as guidance he receives from the
Committee and the Compensation Consultant concerning overall
compensation levels and individual performance. The Committee
then either accepts or modifies Mr. Wolsteins
proposals. At this most senior level within the organization,
the Committee does not utilize internal pay equity as a basis
for establishing base salaries. In establishing executive
compensation for Mr. Wolstein, the Committee and the
Compensation Consultant measure his total compensation,
including base salary, relative to the total compensation of the
most senior executive officers at companies in the Compensation
Peer Group. Mr. Wolsteins compensation also is
impacted by his relatively long tenure within the organization.
Elements
of Compensation
The elements of the Companys executive compensation for
2007 consisted of base salary; performance-based cash bonuses;
long-term equity-based compensation in the form of stock
options, restricted shares, outperformance awards and a
supplemental equity program; retirement benefits in the form of
a qualified defined contribution plan and non-qualified deferred
compensation plans; and life insurance, health insurance and
other perquisites and personal benefits.
Components
of the Compensation Program
Short-Term
Compensation
Base Salaries and Certain Other Annual
Compensation.
The salaries and certain other
annual compensation for the Companys named executive
officers in 2007 were based on the Companys past practices
and prior contractual commitments, and comparisons to
compensation paid by companies in the Compensation Peer Group.
Base salaries are intended to provide the named executive
officers with a base level of income for services rendered by
them each year. The named executive officers have employment
agreements with the Company that provide that their base
salaries may not be amounts less than those specified in their
respective employment agreements.
As part of its engagement, the Compensation Consultant conducted
a comprehensive review of the total compensation programs for
Messrs. Wolstein and Hurwitz and focused primarily on the
top two executives of the companies included in the Compensation
Peer Group. Mr. Wolsteins salary was increased
significantly during 2007 based on this review, as well as his
agreement to forgo certain payments of benefits to which he was
entitled. Mr. Hurwitzs salary was increased
significantly based on the Compensation Consultants
review, his significant achievements and his promotion to
President and Chief Operating Officer; however, the Committee
targeted his compensation at a level below the median of
companies in the Compensation Peer Group based on the fact that
he was only recently promoted.
15
After analysis, and based on the recommendation of
Mr. Wolstein and the Compensation Consultant, the Committee
approved for 2007 base salary increases for the named executive
officers other than Messrs. Wolstein and Hurwitz of 4% over
their 2006 base salaries. The Committee believed that the
increases in base salaries for 2007 generally represented
adjustments for cost-of-living increases and were reasonable and
consistent with the percentage increases given to all employees
of the Company. For information on the amount of base salaries
paid to the named executive officers in 2007, please refer to
the Summary Compensation Table.
In addition, pursuant to Mr. Wolsteins prior
employment agreement, the Company was obligated to provide
certain life insurance benefits to Mr. Wolstein and his
family. Because such an insurance arrangement, commonly referred
to as split-dollar life insurance, is characterized
as a loan for tax purposes, the Company determined that such
insurance arrangement may be prohibited by the Sarbanes-Oxley
Act of 2002, which prohibits a company from making loans to its
executive officers and directors. The Sarbanes-Oxley Act of 2002
was enacted on July 30, 2002, and therefore the Company did
not make any premium payments on the split-dollar life insurance
policies after that date. Mr. Wolsteins employment
agreement was amended to provide that the Company no longer has
an obligation to provide the split-dollar life insurance
benefits, and in lieu of the split-dollar life insurance
benefits, the Company incurred an obligation to pay
Mr. Wolstein an additional $650,000 per year in
compensation for fiscal years 2003 through 2007. After 2007, the
Company has no further obligation to pay this additional
compensation or to provide split-dollar life insurance benefits.
The Company has the right to be reimbursed for all premiums paid
by the Company prior to July 30, 2002 for split-dollar life
insurance policies, which reimbursement will be made from the
proceeds payable on the policies.
Non-Equity Incentive Plan Compensation.
All
executive officers, including the named executive officers, are
eligible to receive annual performance-based cash bonuses. The
Company establishes potential annual performance-based cash
bonuses in accordance with the participants levels of
responsibility and salary and total compensation paid by the
members of the Compensation Peer Group.
Messrs. Schafers, Oakes and Bruces annual
performance-based cash bonus is also targeted based upon
internal equity. The bonuses are in the form of lump-sum cash
incentive payments that are earned based on corporate
performance and individual qualitative performance during the
fiscal year. Because the annual performance-based cash bonuses
are based upon performance throughout the year and, in some
cases, determined from the Companys final year-end
financial statements, the bonuses are not actually paid until
March of the year following the year with respect to which
performance is being measured.
With respect to Messrs. Wolstein and Hurwitz, performance
is measured based on the following metrics: (a) Funds From
Operations (FFO) per common share, (b) the
Companys earnings before interest, taxes, depreciation and
amortization (EBITDA) adjusted to subtract preferred
dividends and to restate joint venture income to the
Companys proportionate share of joint venture EBITDA
(Adjusted EBITDA) per common share, (c) total
shareholder return relative to other REITs in a peer group (the
Non-Equity Incentive Plan Peer Group), and
(d) a qualitative assessment of individual contributions
and efforts. The preceding three quantitative corporate
performance metrics were selected by the Committee because they
are recognized industry standards, easily quantifiable,
incentivize the achievement of short-term Company goals that
support the Companys long-term success, and, in the case
of total shareholder return, require superior performance
compared to the Non-Equity Incentive Plan Peer Group. The
Committee believes that individual performance is an important
consideration. Each of the four metrics is given equal weight by
the Committee in determining the total amount of the annual
performance-based cash bonus of Messrs. Wolstein and
Hurwitz.
The Non-Equity Incentive Plan Peer Group includes the following
companies:
Non-Equity
Incentive Plan Peer Group
|
|
|
|
|
CBL & Associates Properties, Inc. Federal Realty
Investment Trust
General Growth Properties, Inc. Glimcher Realty Trust
|
|
Kimco Realty Corporation
The Macerich Company Pennsylvania Real
Estate Investment Trust
|
|
Regency Centers Corporation
Simon Property Group, Inc. Taubman Centers, Inc.
Weingarten Realty Investors
|
These companies were selected because they are retail REITs,
meaning they own and operate retail malls and shopping centers,
and, as a result, their share prices are likely to be affected
by market conditions in a manner similar to the Companys
common shares.
16
In 2007, the quantitative performance targets relating to FFO
per common share and Adjusted EBITDA per common share were
established by the Committee on a basis consistent with the
Companys budgeting and planning process for 2007.
Messrs. Wolstein and Hurwitz could earn up to the maximum
designated percentage for the achievement of each performance
target. If actual performance is below the threshold, no amount
is earned, and if actual performance is between threshold and
maximum, the amount earned is interpolated.
The structure for the plan and performance against the
established metrics for Messrs. Wolstein and Hurwitz was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Bonus
|
|
Metric
|
|
Threshold
|
|
|
Maximum
|
|
|
Actual
|
|
|
25%
|
|
FFO Per Common Share (diluted)(1)
|
|
$
|
3.61
|
|
|
$
|
3.75
|
|
|
$
|
3.79
|
|
25%
|
|
Adjusted EBITDA Per Common Share(2)
|
|
$
|
6.10
|
|
|
$
|
6.33
|
|
|
$
|
6.34
|
|
25%
|
|
Relative Total Shareholder Return(3)
|
|
|
Third
|
|
|
|
First
|
|
|
|
Fourth
|
|
25%
|
|
Qualitative Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
FFO is generally defined and calculated by the Company as net
income, adjusted to exclude: (a) preferred share dividends,
(b) gains from disposition of depreciable real estate
property, except for those sold through the Companys
merchant building program, which are presented net of taxes,
(c) extraordinary items and (d) certain non-cash
items. A calculation of FFO for 2007 is included under
Item 7 of the Companys Annual Report on
Form 10-K.
FFO Per Common Share equals FFO divided by average diluted
shares outstanding.
|
|
(2)
|
|
Adjusted EBITDA Per Common Share equals (a) the sum of net
income, interest expense, taxes, depreciation and amortization
and the cumulative effect of accounting changes adjusted to
subtract preferred dividends and to restate the Companys
joint venture income to the Companys proportionate share
of joint venture EBITDA divided by (b) average diluted
shares outstanding.
|
|
(3)
|
|
Relative Total Shareholder Return is total shareholder return on
an investment in the Companys common shares compared to
total shareholder return on an investment in the common shares
of each company in the Non-Equity Incentive Plan Peer Group.
Total shareholder return is calculated for the Company and each
member of the Non-Equity Incentive Plan Peer Group by assuming a
one-year hypothetical investment in the common shares of the
respective entity. The value of the investment at the end of the
one-year period, based on market value of the common shares and
assuming the reinvestment of dividends, is compared to the value
at the beginning of the period and expressed as a percentage
return on the original investment. Based on the results, the
Company is ranked in either the first, second, third or fourth
quartile of the Non-Equity Incentive Plan Peer Group.
|
The annual performance-based cash bonus opportunity with respect
to 2007 that was available for each of Messrs. Wolstein and
Hurwitz as well as the actual amounts awarded based on
performance during the year, expressed as a percentage of his
base salary at the end of the year, is set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. Wolstein
|
|
|
Daniel B. Hurwitz
|
|
Metric
|
|
Threshold
|
|
|
Maximum
|
|
|
Actual
|
|
|
Threshold
|
|
|
Maximum
|
|
|
Actual
|
|
|
FFO Per Common Share
|
|
|
25.00
|
%
|
|
|
37.50
|
%
|
|
|
37.50
|
%
|
|
|
25.00
|
%
|
|
|
31.25
|
%
|
|
|
31.25
|
%
|
Adjusted EBITDA Per Common Share
|
|
|
25.00
|
%
|
|
|
37.50
|
%
|
|
|
37.50
|
%
|
|
|
25.00
|
%
|
|
|
31.25
|
%
|
|
|
31.25
|
%
|
Relative Total Shareholder Return
|
|
|
25.00
|
%
|
|
|
37.50
|
%
|
|
|
00.00
|
%
|
|
|
25.00
|
%
|
|
|
31.25
|
%
|
|
|
00.00
|
%
|
Qualitative Metric
|
|
|
00.00
|
%
|
|
|
37.50
|
%
|
|
|
25.00
|
%
|
|
|
00.00
|
%
|
|
|
31.25
|
%
|
|
|
25.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
75.00
|
%
|
|
|
150.00
|
%
|
|
|
100.00
|
%
|
|
|
75.00
|
%
|
|
|
125.00
|
%
|
|
|
87.50
|
%
|
The qualitative metric relating to non-equity incentive
compensation for Messrs. Wolstein and Hurwitz was both
established and evaluated by the Committee. In 2007, these goals
included succession planning and executive development. Progress
against these goals was assessed by the Committee throughout the
performance year.
For the named executive officers other than
Messrs. Wolstein and Hurwitz, the performance-based cash
bonus is discretionary and based on the executive officers
performance specifically related to his area of control and his
individual contributions and efforts toward the strategic and
tactical objectives of the Company. This assessment is
17
tailored to each named executive officer based upon his unique
area of responsibility. Messrs. Wolstein and Hurwitz assess
performance, and a performance-based cash bonus can be awarded
at a threshold, target or maximum level.
The annual performance-based cash bonus opportunity with respect
to 2007 that was available for each named executive officer
other than Messrs. Wolstein and Hurwitz, expressed as a
percentage of his base salary at the end of the fiscal year, is
set forth opposite the name of such named executive officer:
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
William H. Schafer
|
|
|
20
|
%
|
|
|
40
|
%
|
|
|
80
|
%
|
David J. Oakes
|
|
|
50
|
%
|
|
|
75
|
%
|
|
|
125
|
%
|
Timothy J. Bruce
|
|
|
20
|
%
|
|
|
40
|
%
|
|
|
80
|
%
|
Based on the previously described performance, the Committee
awarded the following annual performance-based cash bonuses to
the named executive officers with respect to 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wolstein
|
|
Schafer
|
|
Hurwitz
|
|
Oakes
|
|
Bruce
|
|
$1,000,000
|
|
$
|
175,361
|
|
|
$
|
476,000
|
|
|
$
|
350,000
|
|
|
$
|
187,022
|
|
Long-Term
Incentive Compensation
General.
All of the Companys executive
officers, including the named executive officers, are eligible
to receive awards of restricted common shares, stock options,
performance units, outperformance awards and other share-based
awards pursuant to one or more equity-award plans, which were
approved by the Companys shareholders. These plans give
the Committee the latitude to design stock-based incentive
compensation programs to promote high performance and the
achievement of corporate goals by the executive officers, foster
the growth of shareholder value and enable executive officers to
participate in the long-term growth and profitability of the
Company. These equity- based awards reinforce the
Committees long-term goal of increasing shareholder value
by providing the proper nexus between the interests of executive
officers and the interests of the Companys shareholders.
Annual Long-Term Incentive Compensation.
All
executive officers, including the named executive officers, are
eligible to receive annual long-term incentive awards based on
their levels of responsibility, annual salary and annual
performance-based cash bonus compensation, overall corporate
performance and, in the case of all named executive officers
other than Messrs. Wolstein and Hurwitz, individual
qualitative performances. The Committee does not consider the
amount or value of prior awards in making long-term incentive
awards. Because the annual long-term incentive awards are based
upon performance throughout the year and, in some cases,
determined from the Companys final year-end financial
statements, the awards are not actually made until February of
the year following the year with respect to which performance is
being measured.
The performance metrics currently used to determine annual
long-term incentive awards for Messrs. Wolstein and Hurwitz
are FFO per common share and total shareholder return. These
metrics were selected by the Committee because they are
recognized industry standards, easily quantifiable, incentivize
the achievement of long-term Company goals that support the
Companys long-term success and focus Messrs. Wolstein
and Hurwitz directly on the creation of shareholder value. Each
of the preceding metrics is given equal weight by the Committee
in determining the amount of the annual long-term incentive
award for Messrs. Wolstein and Hurwitz.
In 2007, the performance targets relating to long-term incentive
awards for Messrs. Wolstein and Hurwitz were established by
the Committee on a basis consistent with the Companys
budgeting and planning process for 2007. Messrs. Wolstein
and Hurwitz were eligible to earn up to the maximum designated
percentage for the achievement of each performance metric. If
actual performance is below the threshold of the range, no
amount is earned and if actual performance is between threshold
and maximum, the amount earned is interpolated.
The structure of the plans and performance against the
established metrics was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Award
|
|
|
Metric
|
|
Threshold
|
|
|
Maximum
|
|
|
Actual
|
|
|
|
50
|
%
|
|
Total Shareholder Return(1)
|
|
|
5%
|
|
|
|
15%
|
|
|
|
(36)%
|
|
|
50
|
%
|
|
FFO Per Common Share (diluted)(2)
|
|
$
|
3.61
|
|
|
$
|
3.75
|
|
|
$
|
3.79
|
|
18
|
|
|
(1)
|
|
Total Shareholder Return is calculated by assuming a one-year
hypothetical investment in the Companys common shares. The
value of the investment at the end of the one-year period based
on the fair market value of the common shares and assuming the
reinvestment of dividends is compared to the fair market value
at the beginning of the period and expressed as a percentage
return on the original investment.
|
|
(2)
|
|
FFO is generally defined and calculated by the Company as net
income, adjusted to exclude: (a) preferred share dividends,
(b) gains from disposition of depreciable real estate
property, except for those sold through the Companys
merchant building program, which are presented net of taxes,
(c) extraordinary items and (d) certain non-cash
items. A calculation of FFO for 2007 is included under
Item 7 of the Companys Annual Report on
Form 10-K.
FFO Per Common Share equals FFO divided by average diluted
shares outstanding.
|
The long-term incentive award opportunity with respect to 2007
that was available for each of Messrs. Wolstein and Hurwitz
as well as the actual amounts awarded based on performance
during the year, expressed as a multiple of the sum of his base
salary at the end of the year plus his annual performance-based
cash bonus for such year, is set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. Wolstein
|
|
|
Daniel B. Hurwitz
|
|
Metric
|
|
Threshold
|
|
|
Maximum
|
|
|
Actual
|
|
|
Threshold
|
|
|
Maximum
|
|
|
Actual
|
|
|
Total Shareholder Return
|
|
|
0.375
|
|
|
|
0.750
|
|
|
|
0.000
|
|
|
|
0.375
|
|
|
|
0.625
|
|
|
|
0.000
|
|
FFO Per Common Share (diluted)
|
|
|
0.375
|
|
|
|
0.750
|
|
|
|
0.750
|
|
|
|
0.375
|
|
|
|
0.625
|
|
|
|
0.625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
0.750
|
|
|
|
1.500
|
|
|
|
0.750
|
|
|
|
0.750
|
|
|
|
1.250
|
|
|
|
0.625
|
|
Based upon the previously described performance, the Committee
awarded Messrs. Wolstein and Hurwitz the following
long-term incentive awards:
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Actual Long-Term Incentive Multiple
|
|
Actual Long-Term Incentive Award
|
|
Scott A. Wolstein
|
|
|
0.750
|
|
|
$
|
1,500,000
|
|
Daniel B. Hurwitz
|
|
|
0.625
|
|
|
$
|
637,500
|
|
There are no specific quantitative or qualitative performance
metrics that have been established in order to determine the
annual long-term incentive award payments for the named
executive officers other than Messrs. Wolstein and Hurwitz.
The performance of each of the other named executive officers is
assessed by Messrs. Wolstein and Hurwitz based on the
executive officers overall performance related to his area
of control and his individual contributions and efforts toward
the strategic and tactical objectives of the Company. Generally,
in each year Messrs. Schafer, Oakes and Bruce receive a
long-term incentive award approximately equal to the same
percentage of his maximum award under the annual
performance-based cash bonus program. The final awards to
Messrs. Schafer, Oakes and Bruce reflect discretionary
assessments of performance made by Messrs. Wolstein and
Hurwitz.
The long-term incentive award opportunity that was available for
each named executive officer other than Messrs. Wolstein
and Hurwitz based on performance during 2007, expressed as a
multiple of the sum of his base salary at the end of the year
plus his annual performance-based cash bonus earned with respect
to such year, is set forth opposite the name of the named
executive officer. These multiples, as well as the multiples for
Messrs. Wolstein and Hurwitz, were established after
consultation with the Companys prior compensation
consultant.
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Threshold
|
|
|
Maximum
|
|
|
William H. Schafer
|
|
|
0.125
|
|
|
|
0.500
|
|
David J. Oakes
|
|
|
0.500
|
|
|
|
1.000
|
|
Timothy J. Bruce
|
|
|
0.125
|
|
|
|
0.500
|
|
Based upon the performance evaluations by Messrs. Wolstein
and Hurwitz, the Committee awarded each named executive officer
other than Messrs. Wolstein and Hurwitz a long-term
incentive award with respect to
19
performance during 2007 equal to the following multiple of his
respective annual base salary plus annual performance-based cash
bonus:
|
|
|
|
|
|
|
|
|
|
|
Actual Long-Term
|
|
|
Actual Long-Term
|
|
Named Executive Officer
|
|
Incentive Multiple
|
|
|
Incentive Award
|
|
|
William H. Schafer
|
|
|
0.375
|
|
|
$
|
175,385
|
|
David J. Oakes
|
|
|
0.875
|
|
|
$
|
612,567
|
|
Timothy J. Bruce
|
|
|
0.375
|
|
|
$
|
187,154
|
|
In the course of reviewing the compensation of
Messrs. Wolstein and Hurwitz with respect to 2007, the
Committee and the Compensation Consultant became concerned that
the metrics for the Companys long-term incentive program
were weighted too heavily on total shareholder return because
the Companys 2007 Supplemental Equity Program uses total
shareholder return as its only metric. The Committee and
Compensation Consultant are evaluating the long-term incentive
program metrics and are considering modifications to the
metrics, including the introduction of a qualitative strategic
initiatives component.
Consistent with the philosophy of the Committee and the Board in
assuring that each of the Companys executive officers has
a significant equity stake in the Company, 75% of the value of
each long-term incentive award payable with respect to 2007 was
in the form of grants of restricted shares vesting in five equal
annual installments and 25% of the value was in the form of
stock options vesting in three equal annual installments.
The following sets forth the number of restricted shares and
stock options granted to each named executive officer based on
his long-term incentive award:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of Award
|
|
Exercise Price
|
|
|
Wolstein
|
|
|
Schafer
|
|
|
Hurwitz
|
|
|
Oakes
|
|
|
Bruce
|
|
|
Stock Options
|
|
$
|
37.69
|
|
|
|
161,724
|
|
|
|
13,011
|
|
|
|
88,785
|
|
|
|
45,438
|
|
|
|
13,875
|
|
Restricted Shares
|
|
|
|
|
|
|
43,385
|
|
|
|
3,490
|
|
|
|
23,820
|
|
|
|
12,190
|
|
|
|
3,725
|
|
Except for the grants to Mr. Oakes in 2007, no restricted
shares or stock options were granted to the named executive
officers with respect to employment during 2007 other than the
long-term incentive awards described in this Compensation
Discussion and Analysis. The Company granted restricted shares
and stock options to Mr. Oakes as an inducement to hire
pursuant to its 2004 Equity-Based Award Plan.
Restricted Shares.
The Company believes that
restricted share awards provide significant incentives while
directly aligning the interests of the Companys executive
officers with the interests of the Companys shareholders.
To date, all of the Companys awards of restricted common
shares have been service-based awards that vest over a period of
time to encourage the participants continued employment
with the Company. Except for the restricted shares granted to
Mr. Oakes in 2007 and to Mr. Jacobstein in 2007 as
part of his long-term incentive award with respect to 2006, the
shares vest annually in 20% increments with the first increment
vesting on the date of the award. Mr. Oakes shares
vest annually in 20% increments with the first increment vesting
on the first anniversary of the date of grant.
Mr. Jacobsteins shares vest annually in 25%
increments with the first increment vesting on the date of the
award. The holder of restricted shares has the right to receive
dividends with respect to all restricted shares immediately upon
their grant; however, the holder has no other rights as a
shareholder with respect to the restricted shares, including
voting rights, until the shares have vested.
The Company granted an aggregate of 86,610 restricted common
shares to the named executive officers in February 2008 based on
the long-term incentive awards discussed in this section,
allocated among them as described in the Summary Compensation
Table.
Stock Options.
The Company believes that stock
option grants are a valuable motivating tool and provide a
long-term incentive to the executive officers. Generally, if the
Company granted stock options to an eligible executive officer
upon commencement of employment, then the options were issued at
the end of the fiscal quarter in which the executive officer
commenced employment; and stock options granted as part of a
long-term incentive award for existing executive officers were
issued in February on the date on which the award was granted by
the Committee during its regularly scheduled February meeting to
establish compensation levels and awards. The majority of the
options granted by the Committee, including those granted as
part of long-term incentive awards
20
with respect to 2007 performance, vest at a rate of
33
1
/
3
%
per year over the first three years of the ten-year option term.
Prior to the exercise of an option, the holder has no rights as
a shareholder with respect to the shares subject to such option,
including voting rights and the right to receive dividends.
Options are granted with an exercise price equal to the closing
price of the Companys common shares on the date of grant.
The Company has never repriced any stock options or issued
options with reload provisions.
The Company granted an aggregate of 322,833 stock options to the
named executive officers in February 2008 based on the long-term
incentive awards discussed in this section, allocated among them
as described in the Summary Compensation Table. The number of
options granted was determined by dividing the value of the
award earned under the long-term incentive award by the value of
an option based on the Black Scholes valuation model.
Outperformance Awards.
In connection with its
regular evaluation of the Companys compensation programs,
in 2005 the Committee reassessed the performance unit plans
previously implemented as a part of the Companys long-term
incentive compensation program. While the performance units
served the purpose of retaining the executive officers who
received them, there were several aspects of the performance
unit plans that the Committee believed could be improved. In
particular, the Committee believed that granting a minimum award
based entirely on tenure with the Company without any associated
performance criteria was inconsistent with the Committees
goal of achieving long-term incentive compensation that is
performance-based. The Committee also believed that because the
performance units were an award in addition to other long-term
incentive compensation, performance by the Company superior to
that required to achieve annual long-term incentive awards
should be required to justify the grant of additional
compensation. In addition, the Committee and
Messrs. Wolstein and Hurwitz also believed that a five-year
vesting period for common shares received as a payout under the
plans commencing after a five-year performance measurement
period was too long of a term for a plan primarily designed to
reward performance. Finally, if superior Company performance was
to be a condition to the grant of an award, then the award
should be made available to a broader group of executives,
because superior performance by the Company would require a team
of superior performers. Therefore, in 2006, the Committee chose
to discontinue its practice of awarding performance units and
instead granted outperformance awards to eleven executive
officers of the Company, including Messrs. Wolstein,
Schafer, Hurwitz and Bruce (the 2005 Outperformance Award
Plan).
Based on the recommendations of the Companys prior
compensation consultant and Mr. Wolstein, the Committee
chose three metrics to determine whether an outperformance award
should be granted: (a) FFO per common share growth,
(b) Annualized Total Shareholder Return (ATR)
and (c) the Companys ATR compared to the ATR to
shareholders of the companies in the Non-Equity Incentive Plan
Peer Group. ATR is the return on an investment in the
Companys common shares during the applicable measurement
period, assuming the reinvestment of dividends. All quantitative
metrics were measured over a three-year period ending
December 31, 2007, for Messrs. Wolstein and Hurwitz
and are measured over a five-year period ending on
December 31, 2009, for Messrs. Schafer and Bruce and
the other executive officers who were granted outperformance
awards.
The 2005 Outperformance Award Plan quantitative metrics for
Messrs. Wolstein and Hurwitz were as follows:
|
|
|
Outperformance Awards Quantitative Metrics
|
|
Target
|
|
FFO Per Common Share Growth
|
|
8.0% per year
|
ATR
|
|
8.0% per year
|
ATR Compared to Non-Equity Incentive Plan Peer Group
|
|
ATR equal to or greater than the
ATR of not less than 75% of the companies in the Non-Equity
Incentive Plan Peer Group during the applicable measurement
period
|
The Committee also chose to base 25% of the value of the
outperformance awards for Messrs. Wolstein and Hurwitz on
subjective factors relating to areas that the Committee believed
were critical to the Companys long-term success, such as
executive development and the management transition and
succession planning resulting from the anticipated resignation
by Mr. Jacobstein as an executive officer.
21
The 2005 Outperformance Award Plan quantitative metrics for
Messrs. Schafer and Bruce are as follows:
|
|
|
Outperformance Awards Quantitative Metrics
|
|
Target
|
|
FFO Per Common Share Growth
|
|
8.0% per year
|
ATR
|
|
17.0% per year
|
ATR Compared to Non-Equity Incentive Plan Peer Group
|
|
ATR equal to or greater than the
ATR of not less than 75% of the companies in the Non-Equity
Incentive Plan Peer Group during the applicable measurement
period
|
The Committee determines whether the performance targets have
been achieved once the Companys year end financial
statements are available. Any award earned will vest on the
March 1st immediately after the expiration of the
measurement period. In all cases, the outperformance awards
relating to the FFO metric and the subjective metrics are
expressed as a fixed dollar amount, and the outperformance award
relating to the ATR metrics is expressed as a number of common
shares of the Company, subject to a cap on the value of the
common shares which can be received. It is the intent of the
Committee to pay all awards in common shares of the Company;
however, the Committee has the right to pay the awards in cash.
The Committee also retained the flexibility if no quantitative
metric is achieved in full during the relevant measurement
period, but any or all of the quantitative metrics have been
substantially achieved, to award to the participants an award
equal to 25% of the total award that would have been awarded had
all quantitative metrics been achieved in full.
The outperformance award opportunity available for each named
executive officer based on the 2005 grant, expressed in dollars
with respect to the FFO metric and the subjective metric and in
number of common shares of the Company with respect to the ATR
metrics, is set forth opposite his name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO Metric
|
|
|
ATR Metrics
|
|
|
Discretionary Metric
|
|
|
Total Award
|
|
Named Executive Officer
|
|
Opportunity
|
|
|
Opportunity
|
|
|
Opportunity
|
|
|
Opportunity
|
|
|
Scott A. Wolstein
|
|
$
|
1,500,000
|
|
|
|
53,680 shares with a
maximum value of
$3,760,000
|
|
|
$
|
1,500,000
|
|
|
$
|
6,760,000
|
|
William H. Schafer
|
|
$
|
417,000
|
|
|
|
12,850 shares with a
maximum value of
$1,028,000
|
|
|
$
|
0
|
|
|
$
|
1,445,000
|
|
Daniel B. Hurwitz
|
|
$
|
750,000
|
|
|
|
26,840 shares with a
maximum value of
$1,880,000
|
|
|
$
|
750,000
|
|
|
$
|
3,380,000
|
|
Timothy J. Bruce
|
|
$
|
500,000
|
|
|
|
15,400 shares with a
maximum value of
$1,232,000
|
|
|
$
|
0
|
|
|
$
|
1,732,000
|
|
The measurement period for Messrs. Wolstein and Hurwitz
ended on December 31, 2007. During this measurement period,
the Company achieved the FFO Metric, and the Committee
determined that Messrs. Wolstein and Hurwitz attained the
Discretionary Metric based on effective development of
executives and the successful transition of management
responsibilities and duties following Mr. Jacobsteins
resignation as an executive officer. The Company, however, did
not achieve either ATR metric. Thus, the Committee granted
outperformance awards in common shares of the Company to
Messrs. Wolstein and Hurwitz on March 3, 2008 valued
at $3,000,000 and $1,500,000, respectively.
2007 Supplemental Equity Program.
The 2007
Supplemental Equity Program was adopted to address two areas
that the Committee, after consultation with the Compensation
Consultant, deemed inadequate in the Companys 2005
Outperformance Award Plan. First, the 2005 Outperformance Award
Plan did not provide significant enough incentives for higher
levels of performance, which the Company believes is essential
to be competitive with the compensation paid by private equity
firms and other REITs to retain the best talent. Second, if the
Companys share price rises significantly and then declines
during the measurement period of the 2005 Outperformance Award
Plan, it is possible that an executive will be in, and then out
of, the money. Furthermore, as the Company has grown, the number
of its executives has increased correspondingly. The Committee,
Messrs. Wolstein and Hurwitz, and the Compensation
Consultant all believed it was important to incentivize each of
the
22
Companys key executives to create shareholder value. Thus,
43 executives, including the named executive officers, were
chosen to participate in the 2007 Supplemental Equity Program.
In order for participants to receive any grant of shares under
the 2007 Supplemental Equity Program, the compounded return on
the Companys common shares during the measurement period
must exceed the greater of (a) an amount equal to a deemed
compounded return on the common shares (assuming all cash
dividends paid are reinvested as of the ex-dividend date) equal
to a 9% annual rate compounded as of the last day of each
November during the measurement period and (b) an amount
equal to a deemed compounded return on the common shares
(assuming all cash dividends paid are reinvested as of the
ex-dividend date) equal to the total return of the FTSE NAREIT
Equity Index (total index that includes reinvested dividends)
during the measurement period (the Minimum Return).
These measures were chosen because the Committee, based on the
advice of the Compensation Consultant, deemed it in the best
interests of the Company to have metrics that would require both
superior performance by the Company when compared to its peers
and a minimum return to the shareholders of the Company. The 9%
compounded return metric was selected because the Committee
wanted to reward only superior performance. The Committee and
the Compensation Consultant believed that this 9% compounded
return was approximately 1% above the Companys cost of
equity capital and the historical return on a broad index of
stock.
The award pool created pursuant to the Supplemental Equity
Program will be earned only if the actual total return on the
common shares during the relevant measurement period exceeds the
Minimum Return. The actual total return on the common shares
during the measurement period will be based on (a) the
price of a common share as of the last day of a measurement
period plus the sum of all cash dividends on a common share
during the measurement period with each such dividend being
deemed reinvested in common shares as of the ex-dividend date
minus (b) $44.41, the closing price of a common share on
November 30, 2007 (the Company Total Return).
The price of a common share as of the last day of a measurement
period (the Share Price) will be the greater of
(i) the average closing price of a common share as reported
on the NYSE over the 20 trading days ending on the relevant
valuation date and (ii) the closing price of a common share
as reported on the NYSE on the trading day immediately preceding
the relevant valuation date. However, for purposes of a
valuation date that is the date of a Change in Control (as
defined in the 2007 Supplemental Equity Program), the Share
Price will mean the final price per common share agreed upon by
the parties to the Change in Control. If the Company issues
additional common shares other than pursuant to employee
compensation arrangements, including any equity-based award
plan, the Minimum Return and the Company Total Return on those
additional common shares and the amount of any award pool
payable with respect to those additional common shares will be
calculated from the date of issuance of those shares.
Subject to adjustment if the Company issues additional common
shares other than pursuant to employee compensation
arrangements, the award pool will be an amount equal to the
product of (a) 7.5% multiplied by (b) the product of
(i) the amount by which the Company Total Return exceeds
the Minimum Return times (ii) the number of weighted
average outstanding shares during the relevant measurement
period calculated on a fully diluted basis as if calculating FFO
per common share. On each valuation date occurring on and after
November 30, 2010, the award pool will be reduced by the
total value of all shares (or cash) previously awarded pursuant
to the 2007 Supplemental Equity Program. The maximum award pool
on any valuation date shall not exceed (a) the product of
(i) 1.5% times (ii) the Share Price on such valuation
date times (iii) the number of outstanding common shares on
such valuation date determined on a fully diluted basis as if
calculating FFO per common share minus (b) the total value
of all shares (or cash), if any, previously awarded pursuant to
the 2007 Supplemental Equity Program.
A measurement period means each period commencing on
December 1, 2007 and ending on a valuation date, with a
valuation date meaning each of (i) prior to
November 30, 2010, the earlier of (A) the last day of
any thirty consecutive calendar day period during which, on each
day in that period, the award pool would have equaled the
maximum award pool; provided, however, that there shall be no
more than one valuation date determined pursuant to
clause (A) in any plan year, and (B) the date on which
a Change in Control occurs, (ii) November 30, 2010,
(iii) after November 30, 2010 to and including
November 30, 2011, the earlier of
(Y) November 30, 2011 and (Z) the date on which a
Change in Control occurs, and (iv) after November 30,
2011, the earlier of (A) November 30, 2012 (the
final valuation date) and (B) the date on which
a Change in Control occurs. A plan year means each
period of twelve consecutive months during the measurement
period starting on
December 1
st
and
ending on
November 30
th
.
23
If for any measurement period, the Company Total Return exceeds
the Minimum Return, then the Company will grant to each grantee
in respect of an award a number of shares equal to the number of
shares (rounded up to the nearest whole number) determined by
(i) first multiplying the applicable award pool by the
percentage of the award pool to which the grantee is entitled
and (ii) then dividing such product by the Share Price. If
during a measurement period, the grantee dies or becomes
Disabled (as defined in the 2007 Supplemental Equity Program),
or the employment of the grantee is terminated by the Company
without Cause (as defined in the 2007 Supplemental Equity
Program), the grantee will retain the right to receive a grant
of shares in respect of an award with respect to that
measurement period, and the number of shares granted with
respect to an award will be prorated based on the number of days
during which the grantee was employed during the measurement
period. In such event, the grantee will immediately forfeit any
and all rights to receive a grant with respect to all subsequent
measurement periods.
Any shares granted with respect to a measurement period will
vest in equal annual installments on each vesting date occurring
after the end of such measurement period through and including
December 15, 2012, so long as the grantee remains in
continuous employment with the Company through such vesting date
other than by reason of death, Disability or termination of
employment without Cause. All unvested shares that have not been
previously forfeited will vest immediately upon a Change in
Control. In the Committees sole discretion it may
determine that a grantees termination of employment
followed by his simultaneous entry into a consulting or
consulting-type relationship with the Company constitutes
continuous employment with the Company for purposes of the 2007
Supplemental Equity Program. Under the terms of the 2007
Supplemental Equity Program, the term vesting date
means (i) if a valuation date is determined other than by
reference to a Change in Control, then each
December 15
th
succeeding
such valuation date to and including December 15, 2012, and
(ii) if the valuation date is the date on which a Change in
Control occurs, the valuation date.
If the grantees employment with the Company is terminated
for Cause during any measurement period or in the event the
grantee voluntarily terminates his employment with the Company
for any reason during any measurement period, the grantee will
immediately forfeit any and all rights to receive an award with
respect to such measurement period and all subsequent
measurement periods, and any and all rights the grantee had in,
or may have had to, the 2007 Supplemental Equity Program and all
unearned and unvested common shares awarded to the grantee under
the 2007 Supplemental Equity Program will terminate.
The following table sets forth the initial percentages of the
award pool for the named executive officers:
|
|
|
|
|
Name
|
|
Percentage of Award Pool
|
|
|
Scott A. Wolstein
|
|
|
30.0
|
%
|
William H. Schafer
|
|
|
2.4
|
%
|
Daniel B. Hurwitz
|
|
|
18.0
|
%
|
David J. Oakes
|
|
|
6.0
|
%
|
Timothy J. Bruce
|
|
|
2.4
|
%
|
Discretionary Bonuses.
As previously
discussed, the Committee chose FFO per common share and total
shareholder return as the metrics for the determination of
long-term incentive awards in order to incentivize the
achievement of short-term Company goals that support the
Companys long-term success and focus Messrs. Wolstein
and Hurwitz on the creation of shareholder value. However, the
overriding philosophy of the Committee is that the Company must
be able to retain and motivate superior senior executive
officers and, in order to achieve this goal, those executive
officers must be compensated at a level commensurate with their
performance when measured against executive officers in
comparable companies; and the Committee reserves the right to
make any necessary adjustments to compensation levels determined
pursuant to metrics in order to assure that its overall goal is
achieved. Based on the data and analysis provided by the
Compensation Consultant, the compensation payable to
Messrs. Wolstein and Hurwitz pursuant to the metrics would
have resulted in an overall level of compensation below that
necessary to assure the achievement of the Committees
overriding philosophy. To meet the objectives of the
Committees compensation philosophy, the Committee awarded
discretionary bonuses with respect to 2007 to
Messrs. Wolstein and Hurwitz comprising a cash bonus and
long-term incentive compensation award aggregating $700,000 and
$627,300, respectively, in order to assure that these officers
were compensated at competitive levels and the primary goal of
the Committee was realized. Mr. Wolstein received $20,000
of his discretionary bonus in cash and 75% of the remaining
balance of $680,000 in restricted shares and 25% of the
remaining balance of
24
$680,000 in stock options. Mr. Hurwitz received $68,000 of
his discretionary bonus in cash and 75% of the remaining balance
of $559,300 in restricted shares and 25% of the remaining
balance of $559,300 in stock options.
Other
Benefits
Perquisites.
Pursuant to their employment
agreements, the named executive officers receive certain
additional benefits. The Committee believes that these benefits
are reasonable and consistent with its overall compensation
program to better enable the Company to attract and retain
superior executives.
Mr. Wolstein, for purposes of security and efficiency, has
the right to use for personal purposes any airplane that the
Company leases or in which the Company owns an interest for up
to 100 flight hours per calendar year. If
Mr. Wolsteins usage is less than 100 flight hours
during the year, the Company is required to pay him the annual
average cost per flight hour multiplied by his unused flight
hours for the year. If Mr. Wolsteins usage is greater
than 100 flight hours during a year, Mr. Wolstein is
required to pay the Company based upon the annual average cost
per flight hour multiplied by the number of flight hours by
which his usage exceeded 100 flight hours for the year.
Mr. Hurwitz was entitled to use of a Company automobile and
the payment of club membership fees and dues in 2007. He has
agreed to forgo his right to use of a Company automobile in 2008
and thereafter and will receive an adjustment to his base salary
based on the value of such benefit. Messrs. Schafer and
Oakes are entitled to the payment of certain club membership
fees and dues. In addition, Mr. Oakes is entitled to
receive a reimbursement from the Company in 2007 for relocation
expenses and a relocation allowance. In addition, the employment
agreements for each of the Companys executive officers
provides for participation in health, life, disability and other
insurance plans, sick leave, reasonable vacation time and other
customary fringe benefits.
Retirement Benefits.
The Company has
established a 401(k) plan for its employees pursuant to which
the Company makes semi-monthly, matching contributions equal to
50% of each participants contribution, up to 6% of the sum
of his base salary plus annual performance-based cash bonus, not
to exceed the sum of 3% of the participants base salary
plus annual performance-based cash bonus.
Deferred Compensation Plans.
The
Companys executive officers, including the named executive
officers, are entitled to participate in the Companys
elective deferred compensation plans (the Elective
Deferred Compensation Plans) and the Equity Deferred
Compensation Plans.
Pursuant to the Elective Deferred Compensation Plans, the
executive officers can defer up to 100% of their base salaries
and annual performance-based cash bonuses, less applicable taxes
and authorized benefits deductions. The Elective Deferred
Compensation Plans are non-qualified plans and are unsecured,
general obligations of the Company. The Company provides a
matching contribution to any participant in a given year who has
contributed the maximum permitted under the Companys
401(k) plan. This matching contribution is equal to the
difference between (a) 3% of the sum of the
executives base salary and annual performance-based cash
bonus deferred under the 401(k) plan and the Elective Deferred
Compensation Plans combined and (b) the actual employer
matching contribution provided under the 401(k) plan. Earnings
on a participants deferred account are based on the
results of the investment measurement options available in the
applicable plan that are selected by the participant. Settlement
is generally made in cash at a date determined by the
participant at the time a deferral election is made. All of the
named executive officers other than Mr. Oakes elected to
defer all or a portion of their 2007 total annual cash
compensation pursuant to the Elective Deferred Compensation
Plans. In accordance with the transition rules under
Section 409A of the Code, Messrs. Wolstein and Hurwitz
each elected to have his deferrals for 2005, 2006 and 2007
distributed to him in 2008. For information on the value of
annual cash compensation deferred by the named executive
officers in 2007, please refer to the Summary Compensation Table
and to the Non-Qualified Deferred Compensation Table on pages 28
and 34.
Equity Deferred Compensation Plans.
Pursuant
to the Equity Deferred Compensation Plans, the Companys
executive officers, including the named executive officers, have
the right to defer the receipt of restricted shares earned under
any equity compensation plan and, for compensation earned prior
to December 31, 2004, the gain otherwise recognizable upon
the exercise of options. The value of participants
deferrals is converted into units, based on the market value of
the Companys common shares at the time of the deferral, so
that each unit is equivalent in value to one common share. The
Company has established a rabbi trust, which holds
common shares of the Company, to satisfy its payment obligations
under these plans. Common shares equal to the number of units
25
credited to the participants accounts under the plans are
placed in the rabbi trust. In the event of the
Companys insolvency, the assets of the rabbi
trust are available to general creditors. Settlement of units is
generally made in common shares of the Company at a date
determined by the participant at the time a deferral election is
made. For information on the value of the 2007 awards, please
refer to the Summary Compensation Table. In 2007,
Messrs. Wolstein, Hurwitz and Bruce deferred receipt of
96,784, 30,912 and 2,473 restricted shares, respectively. In
accordance with the transition rules under Section 409A of
the Code, Mr. Wolstein elected to have certain restricted
shares deferred during 2007 distributed to him in 2008.
Change
in Control Agreements
The Company has entered into a change in control agreement with
several executive officers, including each of the named
executive officers. The change in control agreements are
designed to promote stability and continuity of senior
management. Under these agreements, certain benefits are payable
by the Company if a Triggering Event occurs within
two years (or three years for Mr. Wolstein) after a
Change in Control. In general, the Compensation
Committee believes that the use of change in control agreements
is appropriate because such agreements help insure a continuity
of management during a threatened takeover and help insure that
management remains focused on completing a transaction that is
likely to maximize shareholder value. Payments are only
triggered if a change in control occurs and the officer is
terminated or effectively terminated or actions are taken that
materially and adversely impact the executive officers
position with the Company or his compensation. The Compensation
Committee believes the compensation is appropriate because the
executive officer may have forgone other opportunities at the
time of the change in control, and it may be difficult for an
executive officer to find a comparable position within a
reasonable period of time.
Additional information concerning the terms of the change in
control agreements and the amounts payable pursuant to the
change in control agreements for the named executive officers
upon the occurrence of a triggering event and a
change in control are contained under Potential
Payments Upon Termination or Change in Control on pages
35 42.
David
M. Jacobsteins Compensation
On May 8, 2007, Mr. Jacobstein resigned as an
executive officer of the Company. Prior to his resignation,
Mr. Jacobstein held the office of President and Chief
Operating Officer. In order to assist in an orderly management
transition and to permit the Company to avail itself of
Mr. Jacobsteins experience and expertise, the Company
and Mr. Jacobstein entered into an amended and restated
employment agreement, effective May 8, 2007, pursuant to
which Mr. Jacobstein provides services as reasonably
requested by Mr. Wolstein or the Board of Directors through
December 31, 2010, but he is not required to devote more
than 20 hours per month to the performance of such duties.
The employment agreement may be terminated by the Company with
cause (as defined in the agreement) or without cause upon not
less than 90 days prior written notice to
Mr. Jacobstein. The following list sets forth
Mr. Jacobsteins compensation under the amended and
restated employment agreement: (a) base salary of $600,000
per annum; (b) participation in additional benefits
generally available to other executive officers throughout the
term of the agreement; (c) reimbursement for financial
planning, tax return and financial statement preparation
services up to $5,000 per annum; (d) a one-time
reimbursement for legal and consulting fees related to the
review of the amended and restated employment agreement up to
$5,000; and (e) use of a new automobile, including all
operating expenses. Additionally, the Company and
Mr. Jacobstein entered into an amended and restated change
in control agreement that provides him the payments and benefits
he would have received during the remaining term of the
employment agreement in the event of a change in control. The
Company recorded a charge to general and administrative expense
of approximately $4.1 million in the first quarter of 2007
relating to these agreements.
Tax
and Accounting Implications
Nonqualified
Deferred Compensation
On October 22, 2004, the American Jobs Creation Act of 2004
was signed into law, changing the tax rules applicable to
nonqualified deferred compensation arrangements. The Company
believes that it is operating in good faith compliance with the
statutory provisions and the regulations promulgated thereunder.
26
Accounting
for Stock-Based Compensation
Beginning on January 1, 2006, the Company began accounting
for share-based payments in accordance with the requirements of
FASB Statement 123(R).
Impact of
Section 162(m) of the Internal Revenue Code of
1986
The Company has made an election to qualify as a REIT under the
Internal Revenue Code of 1986, and as such generally will not be
subject to federal income tax. Thus, the deduction limit for
compensation paid to the Chief Executive Officer and the three
other most highly compensated executive officers of a public
company contained in Section 162(m) of the Internal Revenue
Code is not material to the design and structure of the
Companys executive compensation program.
Compensation
Committee Report
The Compensation Committee of the Company has reviewed and
discussed the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussions, the
Compensation Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in
this proxy statement.
Executive
Compensation Committee
Terrance
R. Ahern, Chairman
Victor B. MacFarlane
Barry A. Sholem
William B. Summers, Jr.
Compensation
Committee Interlocks and Insider Participation
None of the Companys executive officers or directors serve
or have served on the board of directors or compensation
committee of any entity that has one or more executive officers
serving as a member of the Companys Board of Directors or
Executive Compensation Committee.
27
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Plan
|
|
Compensation
|
|
All Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)(1)
|
|
(d)(2)
|
|
(e)(3)
|
|
(f)(4)
|
|
(g)(1)(5)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
Scott A. Wolstein
|
|
|
2007
|
|
|
$
|
880,449
|
(6)
|
|
$
|
700,000
|
|
|
$
|
2,528,826
|
|
|
$
|
628,812
|
|
|
$
|
1,000,000
|
|
|
|
|
|
|
$
|
1,414,314
|
(7)
|
|
$
|
7,152,401
|
|
Chairman and Chief Executive Officer
|
|
|
2006
|
|
|
$
|
641,667
|
|
|
|
|
|
|
$
|
2,440,858
|
|
|
$
|
691,277
|
|
|
$
|
1,614,380
|
|
|
|
|
|
|
$
|
752,295
|
|
|
$
|
6,140,477
|
|
William H. Schafer
|
|
|
2007
|
|
|
$
|
290,395
|
|
|
$
|
175,361
|
|
|
$
|
266,014
|
|
|
$
|
46,277
|
|
|
|
|
|
|
|
|
|
|
$
|
28,704
|
(8)
|
|
$
|
806,751
|
|
Executive Vice President and Chief Financial Officer
|
|
|
2006
|
|
|
$
|
266,667
|
|
|
$
|
140,514
|
|
|
$
|
249,756
|
|
|
$
|
51,113
|
|
|
|
|
|
|
|
|
|
|
$
|
40,146
|
|
|
$
|
748,196
|
|
Daniel B. Hurwitz
|
|
|
2007
|
|
|
$
|
507,131
|
(9)
|
|
$
|
627,300
|
|
|
$
|
1,034,972
|
|
|
$
|
235,727
|
|
|
$
|
476,000
|
|
|
|
|
|
|
$
|
53,400
|
(10)
|
|
$
|
2,934,530
|
|
President and Chief Operating Officer
|
|
|
2006
|
|
|
$
|
425,171
|
|
|
|
|
|
|
$
|
972,633
|
|
|
$
|
235,904
|
|
|
$
|
505,900
|
|
|
|
|
|
|
$
|
62,710
|
|
|
$
|
2,202,318
|
|
David J. Oakes
|
|
|
2007
|
|
|
$
|
247,917
|
(11)
|
|
$
|
350,000
|
|
|
$
|
215,333
|
|
|
$
|
234,832
|
|
|
|
|
|
|
|
|
|
|
$
|
41,428
|
(12)
|
|
$
|
1,089,510
|
|
Executive Vice President and Chief Investment Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy J. Bruce
|
|
|
2007
|
|
|
$
|
309,706
|
|
|
$
|
187,022
|
|
|
$
|
277,130
|
|
|
$
|
55,426
|
|
|
|
|
|
|
|
|
|
|
$
|
12,771
|
(13)
|
|
$
|
842,055
|
|
Executive Vice President of Development
|
|
|
2006
|
|
|
$
|
288,042
|
|
|
$
|
116,000
|
|
|
$
|
261,844
|
|
|
$
|
73,844
|
|
|
|
|
|
|
|
|
|
|
$
|
14,125
|
|
|
$
|
753,855
|
|
David M. Jacobstein
|
|
|
2007
|
|
|
$
|
545,067
|
|
|
|
|
|
|
$
|
2,176,217
|
|
|
$
|
501,785
|
|
|
|
|
|
|
|
|
|
|
$
|
50,368
|
(14)
|
|
$
|
3,273,437
|
|
Former President and Chief Operating Officer
|
|
|
2006
|
|
|
$
|
436,333
|
|
|
|
|
|
|
$
|
606,202
|
|
|
$
|
278,309
|
|
|
$
|
519,300
|
|
|
|
|
|
|
$
|
92,974
|
|
|
$
|
1,933,118
|
|
|
|
|
(1)
|
|
The amounts reported in columns (c) and (g) include
amounts deferred into the Companys 401(k) Plan (a
qualified plan) and Elective Deferred Compensation Plans
(nonqualified plans) by Messrs. Wolstein, Schafer, Hurwitz,
Oakes, Bruce and Jacobstein for the years ended
December 31, 2007 and December 31, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Wolstein
|
|
|
Schafer
|
|
|
Hurwitz
|
|
|
Oakes
|
|
|
Bruce
|
|
|
Jacobstein
|
|
|
2007
|
|
$
|
1,563,596
|
|
|
$
|
41,355
|
|
|
$
|
57,401
|
|
|
$
|
0
|
|
|
$
|
52,871
|
|
|
$
|
233,373
|
|
2006
|
|
$
|
86,125
|
|
|
$
|
38,500
|
|
|
$
|
57,889
|
|
|
$
|
0
|
|
|
$
|
12,090
|
|
|
$
|
417,747
|
|
|
|
|
|
|
Under the Elective Deferred Compensation Plans, amounts are
payable to the executive officer at a date specified by the
executive officer at the time of his deferral election in
accordance with the provisions of the plans. In accordance with
the transition rules under Section 409A of the Code,
Messrs. Wolstein and Hurwitz each elected to have his
deferrals to the Elective Deferred Compensation Plans for 2005,
2006 and 2007 distributed to him in 2008.
|
|
(2)
|
|
The amounts reported in column (d) for
Messrs. Wolstein and Hurwitz reflect a discretionary bonus
comprising a cash bonus and long-term incentive compensation
award aggregating $700,000 and $627,300, respectively.
Mr. Wolstein received $20,000 as a cash bonus and 75% of
the remaining balance of $680,000 in restricted shares and 25%
of the remaining balance of $680,000 in stock options.
Mr. Hurwitz received $68,000 as a cash bonus and 75% of the
remaining balance of $559,300 in restricted shares and 25% of
the remaining balance of $559,300 in stock options. See
Compensation Discussion and Analysis
Components of the Compensation Program on page 15 for
additional information. The amounts reported in column
(d) for the named executive officers other than
Messrs. Wolstein and Hurwitz reflect amounts earned by such
executives as part of the Companys annual
performance-based cash bonus program and include amounts
deferred by the executives. The amount of bonus earned is
calculated as a percentage of annualized base compensation and
is more fully described in Compensation Discussion and Analysis
under Non-Equity Incentive Plan Compensation on
page 16.
|
28
|
|
|
(3)
|
|
The amounts reported in column (e) reflect the dollar
amount recognized for financial statement purposes for the
fiscal years ended December 31, 2007 and 2006, in
accordance with FAS 123(R), of awards pursuant to the
Companys long-term incentive program, including the 2007
Supplemental Equity Program, and include amounts for awards
granted in and prior to such years. Assumptions used in the
calculation of these amounts are included in Footnote 18 to the
financial statements included in the Companys Annual
Report on
Form 10-K,
for the year ended December 31, 2007, filed with the SEC on
February 29, 2008.
|
|
(4)
|
|
The amounts reported in column (f) reflect the dollar
amount recognized for financial statement purposes for the
fiscal years ended December 31, 2007 and 2006, in
accordance with FAS 123(R), of awards pursuant to the
long-term incentive program, and include amounts for awards
granted in and prior to such years. Assumptions used in the
calculation of these amounts are included in Footnote 18 to the
financial statements included in the Companys Annual
Report on Form
10-K
for the
year ended December 31, 2007, filed with the SEC on
February 29, 2008.
|
|
(5)
|
|
The amounts reported in column (g) reflect amounts earned
by such executives as part of the Companys annual
performance-based cash bonus program. In the case of
Mr. Wolstein, the amount for 2006 also includes an
incentive payment of $683,000 earned as part of the RVIP
Incentive Program, which is more fully explained in Compensation
Discussion and Analysis under Base Salaries and Certain
Other Annual Compensation in the Companys Proxy
Statement for the year ended December 31, 2006, filed with
the SEC on April 3, 2007. Mr. Wolstein did not receive
any payment as part of the RVIP Incentive Program in 2007 and
will not receive additional payments under such program.
|
|
(6)
|
|
The amount reported reflects an annual base salary for
Mr. Wolstein of $669,528 for the portion of 2007 prior to
May 1, 2007 and an annual base salary of $1,000,000 for the
portion of 2007 on and after May 1, 2007.
|
|
(7)
|
|
The amount reported as All Other Compensation for
Mr. Wolstein includes amounts related to matching
contributions to the Elective Deferred Compensation Plans in the
amount of $54,355; personal auto usage of $30,592; amounts paid
for a long-term disability policy; and amounts paid for life
insurance coverage. Also includes $650,000 received in lieu of
certain split-dollar life insurance benefits, explained more
fully in the Compensation Discussion and Analysis under
Base Salaries and Certain Other Annual Compensation
on pages 15 16. Mr. Wolstein will not receive
additional compensation in lieu of these life insurance benefits
in 2008 or thereafter. Mr. Wolstein also has the right to
use for personal purposes any airplane which the Company leases
or has an interest in for up to 100 flight hours per fiscal
year. If his usage is less than 100 flight hours, the Company
will pay him based upon the annual average cost per flight hour
multiplied by his unused flight hours. If
Mr. Wolsteins usage is greater than 100 flight hours,
Mr. Wolstein will pay the Company based upon the annual
average cost per flight hour multiplied by the number of flight
hours by which his usage exceeded 100 flight hours. The hourly
cost of usage is based on the incremental cost to the Company,
taking into account the following items for the number of flight
hours used: management fees, fuel expense, landing fees,
international fees, miscellaneous taxes, and the hourly rate the
Company pays for use of the airplane. The amount shown in column
(i) for Mr. Wolstein includes $668,497, which is
attributable to Mr. Wolsteins personal use of the
Companys airplanes. None of the other amounts in column
(i), if not a perquisite or personal benefit, exceeds $10,000
or, if a perquisite or personal benefit, exceeds the greater of
$25,000 or 10% of the total amount of perquisites and personal
benefits for Mr. Wolstein.
|
|
(8)
|
|
The amount reported as All Other Compensation for
Mr. Schafer includes: matching contributions to the
Companys 401(k) plan; matching contributions to the
Elective Deferred Compensation Plans; amounts paid for a
long-term disability policy; amounts paid for life insurance
coverage; and amounts paid for business and country club
memberships. None of the amounts in column (i), if not a
perquisite or personal benefit, exceeds $10,000 or, if a
perquisite or personal benefit, exceeds the greater of $25,000
or 10% of the total amount of perquisites and personal benefits
for Mr. Schafer.
|
|
(9)
|
|
The amount reported reflects an annual base salary for
Mr. Hurwitz of $432,407 for the portion of 2007 prior to
May 1, 2007 and an annual base salary of $544,000 for the
portion of 2007 on and after May 1, 2007.
|
|
(10)
|
|
The amount reported as All Other Compensation for
Mr. Hurwitz includes: matching contributions to the
Companys 401(k) plan; matching contributions to the
Elective Deferred Compensation Plans in the amount of $25,181;
amounts paid for a long-term disability policy; amounts paid for
life insurance coverage; amounts paid for business and country
club memberships; and use of a Company automobile. None of the
other
|
29
|
|
|
|
|
amounts in column (i), if not a perquisite or personal benefit,
exceeds $10,000 or, if a perquisite or personal benefit, exceeds
the greater of $25,000 or 10% of the total amount of perquisites
and personal benefits for such officer.
|
|
|
|
(11)
|
|
Mr. Oakes commenced employment with the Company on
April 16, 2007 at an annual base salary of $350,000. The
amount reported reflects the annual base salary paid to
Mr. Oakes for the portion of 2007 during which he was
employed.
|
|
(12)
|
|
The amount reported as All Other Compensation for
Mr. Oakes includes: amounts paid for business and country
club memberships; reimbursement by the Company of certain
relocation expenses in the amount of $28,743; and a relocation
allowance of $10,000. None of the other amounts in column (i),
if not a perquisite or personal benefit, exceeds $10,000 or, if
a perquisite or personal benefit, exceeds the greater of $25,000
or 10% of the total amount of perquisites and personal benefits
for such officer.
|
|
(13)
|
|
The amount reported as All Other Compensation for
Mr. Bruce includes: matching contributions to the
Companys 401(k) plan and matching contributions to the
Elective Deferred Compensation Plans. None of the amounts in
column (i), if not a perquisite or personal benefit, exceeds
$10,000 or, if a perquisite or personal benefit, exceeds the
greater of $25,000 or 10% of the total amount of perquisites and
personal benefits for such officer.
|
|
(14)
|
|
The amount reported as All Other Compensation for
Mr. Jacobstein includes matching contributions to the
Companys 401(k) plan; matching contributions by the
Company to the Elective Deferred Compensation Plans in the
amount of $25,181; use of a Company automobile; amounts paid for
the employee portion of medical, dental and vision insurance;
and amounts paid for tax and financial planning fees. None of
the other amounts in column (i), if not a perquisite or personal
benefit, exceeds $10,000 or, if a perquisite or personal
benefit, exceeds the greater of $25,000 or 10% of the total
amount of perquisites and personal benefits for such officer.
|
Grant of
Plan-Based Awards for Fiscal Year 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
Awards:
|
|
|
Exercise
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Number of
|
|
|
or Base
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Securities
|
|
|
Price
|
|
|
Fair Value
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Estimated Future Payouts
|
|
|
Number of
|
|
|
Underlying
|
|
|
of Option
|
|
|
of Stock
|
|
|
|
Grant
|
|
|
Under Non-Equity Incentive
|
|
|
Under Equity Incentive
|
|
|
Shares of Stock
|
|
|
Options
|
|
|
Awards
|
|
|
and Option
|
|
|
|
Date
|
|
|
Plan Awards(1)
|
|
|
Plan Awards(2)
|
|
|
or Units (#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
Awards
|
|
|
|
|
|
|
Threshold ($)
|
|
|
Target ($)
|
|
|
Maximum ($)
|
|
|
Threshold ($)
|
|
|
Target ($)
|
|
|
Maximum ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)(3)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. Wolstein
|
|
|
2/23/2007
|
|
|
$
|
750,000
|
|
|
|
|
|
|
$
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,312,500
|
|
|
|
|
|
|
$
|
3,750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/1/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
32,083,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,926,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William H. Schafer
|
|
|
2/23/2007
|
|
|
$
|
58,454
|
|
|
$
|
116,907
|
|
|
$
|
233,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
43,840
|
|
|
|
|
|
|
$
|
263,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/1/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
2,567,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
554,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel B. Hurwitz
|
|
|
2/23/2007
|
|
|
$
|
408,000
|
|
|
|
|
|
|
$
|
680,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
714,000
|
|
|
|
|
|
|
$
|
1,530,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/1/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
19,250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,155,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David J. Oakes
|
|
|
4/16/2007
|
|
|
$
|
175,000
|
|
|
$
|
262,500
|
|
|
$
|
437,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/16/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
262,500
|
|
|
|
|
|
|
$
|
787,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/1/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
6,417,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,385,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy J. Bruce
|
|
|
2/23/2007
|
|
|
$
|
62,341
|
|
|
$
|
124,682
|
|
|
$
|
249,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
46,756
|
|
|
|
|
|
|
$
|
280,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/1/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
2,567,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
554,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David M. Jacobstein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Amounts reflect award opportunities the Company granted under
its annual performance-based cash bonus program for 2007 based
on performance during that year. The amount of the award earned
by each of Messrs. Wolstein and Hurwitz is included in the
Non-Equity Incentive Plan Compensation column (column (g)) of
the Summary Compensation Table, and the amount of the award
earned by each of the other named executive officers is included
in the Bonus column (column (d)) of the Summary Compensation
Table. See
|
30
|
|
|
|
|
Compensation Discussion and Analysis
Components of the Compensation Program on page 15 for
additional information concerning the program.
|
|
(2)
|
|
Amounts granted on February 23, 2007 (but with respect to
Mr. Oakes on April 16, 2007) reflect award
opportunities the Company granted under its annual long-term
incentive compensation program for 2007 based on performance
during that year. See Compensation Discussion and
Analysis Components of the Compensation
Program on page 15 for additional information
concerning the program, including the actual amounts awarded for
2007. Amounts granted on December 1, 2007 reflect grants
made under the 2007 Supplemental Equity Program to
Messrs. Wolstein, Schafer, Hurwitz, Oakes and Bruce, on
December 1, 2007. The parameters of this program, which has
a threshold of zero and no target award, are more fully
described in the Compensation Discussion and Analysis under
2007 Supplemental Equity Program. The 2007
Supplemental Equity Program is described in Footnote 18 to the
financial statements included in the Companys Annual
Report on
Form 10-K
for the year ended December 31, 2007, filed with the SEC on
February 29, 2008. It is the intent of the Company to pay
all awards under the 2007 Supplemental Equity Program in common
shares of the Company; however, the Company has the right to pay
the awards in cash. For 2007, awards under the long-term
incentive compensation program and the 2007 Supplemental Equity
Program were determined in dollars; however, the long-term
incentive awards were, and the Supplemental Equity Program
awards are expected to be, paid in common shares of the Company.
|
|
(3)
|
|
Amounts shown in this column are estimated based upon the
assumption that (i) the Company exceeded the Minimum Total
Shareholder Return over the three-year period of 9% ending
November 30, 2010, (ii) the total return of the FTSE
Equity Index during such period was equal to or less than 9% and
(iii) the Companys performance resulted in an award
pool equal to the Maximum Award Pool (1.5% times the number of
outstanding common shares of the Company on a fully diluted
basis on December 31, 2007). The maximum dollar amounts
indicated for each executive are calculated according to the
applicable percentage of the aggregate award pool granted to
each executive. The 2007 Supplemental Equity Program is more
fully explained in the Compensation Discussion and Analysis on
pages 22 24.
|
31
Outstanding
Equity Awards at Fiscal Year-End for Fiscal Year 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
Market or
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
Number of
|
|
|
Payout Value
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
of Shares
|
|
|
Unearned
|
|
|
of Unearned
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
or Units
|
|
|
Shares, Units
|
|
|
Shares, Units
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
Stock That
|
|
|
That
|
|
|
or Other Rights
|
|
|
or Other Rights
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
|
That Have
|
|
|
That Have Not
|
|
|
|
Exercisable
|
|
|
Unexercisable(1)
|
|
|
Options (#)
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
Vested ($)
|
|
|
Not Vested
|
|
|
Vested ($)
|
|
Name
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)(2)
|
|
|
(g)(3)
|
|
|
(h)(4)(5)
|
|
|
(i)
|
|
|
Scott A. Wolstein
|
|
|
55,243
|
|
|
|
0
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
330,026
|
|
|
$
|
12,636,696
|
|
|
|
53,680
|
|
|
$
|
2,055,407
|
|
|
|
|
45,334
|
|
|
|
45,334
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,128
|
|
|
|
44,256
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
57,770
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William H. Schafer
|
|
|
4,500
|
|
|
|
0
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
2/25/2013
|
|
|
|
5,063
|
|
|
$
|
193,862
|
|
|
|
12,850
|
|
|
$
|
492,027
|
|
|
|
|
15,036
|
|
|
|
0
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,446
|
|
|
|
4,223
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,967
|
|
|
|
3,934
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
4,719
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel B. Hurwitz
|
|
|
17,342
|
|
|
|
0
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
135,027
|
|
|
$
|
5,170,184
|
|
|
|
26,840
|
|
|
$
|
1,027,704
|
|
|
|
|
32,526
|
|
|
|
16,263
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,889
|
|
|
|
17,780
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
22,809
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David J. Oakes
|
|
|
0
|
|
|
|
100,000
|
|
|
|
|
|
|
$
|
64.60
|
|
|
|
4/16/2017
|
|
|
|
25,000
|
|
|
$
|
957,250
|
|
|
|
|
|
|
|
|
|
Timothy J. Bruce
|
|
|
61,896
|
|
|
|
0
|
|
|
|
|
|
|
$
|
22.89
|
|
|
|
9/09/2012
|
|
|
|
4,950
|
|
|
$
|
189,536
|
|
|
|
15,400
|
|
|
$
|
589,666
|
|
|
|
|
2,080
|
|
|
|
0
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
2/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,672
|
|
|
|
0
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,930
|
|
|
|
4,465
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,627
|
|
|
|
5,254
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
2,706
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David M. Jacobstein
|
|
|
19,676
|
|
|
|
0
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
2/25/2013
|
|
|
|
136,373
|
|
|
$
|
5,221,722
|
|
|
|
|
|
|
|
|
|
|
|
|
66,214
|
|
|
|
0
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,329
|
|
|
|
18,329
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,113
|
|
|
|
18,227
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
23,412
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The following table sets forth the vesting dates of the options
held by the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Wolstein
|
|
Schafer
|
|
Hurwitz
|
|
Oakes
|
|
Bruce
|
|
Jacobstein
|
|
2/23/2008
|
|
|
41,384
|
|
|
|
3,540
|
|
|
|
16,493
|
|
|
|
|
|
|
|
3,529
|
|
|
|
16,917
|
|
2/24/2008
|
|
|
45,334
|
|
|
|
4,223
|
|
|
|
16,263
|
|
|
|
|
|
|
|
4,465
|
|
|
|
18,329
|
|
4/16/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,333
|
|
|
|
|
|
|
|
|
|
2/23/2009
|
|
|
41,385
|
|
|
|
3,540
|
|
|
|
16,493
|
|
|
|
|
|
|
|
3,529
|
|
|
|
16,918
|
|
4/16/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,333
|
|
|
|
|
|
|
|
|
|
2/23/2010
|
|
|
19,257
|
|
|
|
1,573
|
|
|
|
7,603
|
|
|
|
|
|
|
|
902
|
|
|
|
7,804
|
|
4/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,334
|
|
|
|
|
|
|
|
|
|
32
|
|
|
(2)
|
|
The following table sets forth the vesting dates of the
restricted shares held by the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Wolstein
|
|
|
Schafer
|
|
|
Hurwitz
|
|
|
Oakes
|
|
|
Bruce
|
|
|
Jacobstein
|
|
|
1/01/2008
|
|
|
68,000
|
|
|
|
|
|
|
|
22,666
|
|
|
|
|
|
|
|
|
|
|
|
22,666
|
|
2/23/2008
|
|
|
10,061
|
|
|
|
860
|
|
|
|
4,009
|
|
|
|
|
|
|
|
845
|
|
|
|
4,606
|
|
2/24/2008
|
|
|
15,654
|
|
|
|
1,403
|
|
|
|
5,118
|
|
|
|
|
|
|
|
1,465
|
|
|
|
6,263
|
|
4/16/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
1/01/2009
|
|
|
68,000
|
|
|
|
0
|
|
|
|
22,667
|
|
|
|
|
|
|
|
|
|
|
|
22,667
|
|
2/23/2009
|
|
|
10,061
|
|
|
|
860
|
|
|
|
4,009
|
|
|
|
|
|
|
|
845
|
|
|
|
4,606
|
|
2/24/2009
|
|
|
7,318
|
|
|
|
682
|
|
|
|
2,625
|
|
|
|
|
|
|
|
721
|
|
|
|
2,959
|
|
4/16/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
1/01/2010
|
|
|
68,000
|
|
|
|
|
|
|
|
22,666
|
|
|
|
|
|
|
|
|
|
|
|
22,666
|
|
2/23/2010
|
|
|
10,061
|
|
|
|
860
|
|
|
|
4,009
|
|
|
|
|
|
|
|
845
|
|
|
|
4,606
|
|
4/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
1/01/2011
|
|
|
34,000
|
|
|
|
|
|
|
|
22,667
|
|
|
|
|
|
|
|
|
|
|
|
22,667
|
|
2/23/2011
|
|
|
4,871
|
|
|
|
398
|
|
|
|
1,924
|
|
|
|
|
|
|
|
229
|
|
|
|
|
|
4/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
1/01/2012
|
|
|
34,000
|
|
|
|
|
|
|
|
22,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/16/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
These amounts were calculated based upon the closing price of
the Companys common shares on December 31, 2007 of
$38.29.
|
|
(4)
|
|
Reflects shares available to the named executive officer if the
ATR metrics are met with respect to the 2005 Outperformance
Award Plan. The 2005 Outperformance Award Plan is more fully
described in the Compensation Discussion and Analysis on pages
21 22. A target award amount is not determinable
under the 2007 Supplemental Equity Program. Amount reflects a
grant of no shares under the program as of December 31,
2007 because the return on the Companys common shares for
the year ended December 31, 2007 was less than the Minimum
Return for that year. Any shares granted under the 2007
Supplemental Equity Program vest in equal annual installments on
each December 15th occurring after the end of the
applicable measurement period for which the shares were granted
through and including December 15, 2012, subject to certain
exceptions set forth in the program. The 2007 Supplemental
Equity Program is more fully described in the Compensation
Discussion and Analysis on pages 22 24.
|
|
(5)
|
|
The ATR metrics under the 2005 Outperformance Plan were not
satisfied for Messrs. Wolstein and Hurwitz, and as a
result, Messrs. Wolstein and Hurwitz did not receive these
shares.
|
Option
Exercises and Shares Vested for Fiscal Year 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards(1)
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Acquired on Vesting
|
|
|
Value Realized on
|
|
|
|
Exercise (#)
|
|
|
Exercise ($)
|
|
|
(#)
|
|
|
Vesting ($)
|
|
Name
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)(2)
|
|
|
Scott A. Wolstein
|
|
|
2,753
|
|
|
$
|
76,120
|
|
|
|
99,558
|
|
|
$
|
6,406,397
|
|
William H. Schafer
|
|
|
0
|
|
|
$
|
0
|
|
|
|
3,119
|
|
|
$
|
208,558
|
|
Daniel B. Hurwitz
|
|
|
0
|
|
|
$
|
0
|
|
|
|
31,871
|
|
|
$
|
2,053,036
|
|
David J. Oakes
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
Timothy J. Bruce
|
|
|
5,887
|
|
|
$
|
179,101
|
|
|
|
2,473
|
|
|
$
|
165,559
|
|
David M. Jacobstein
|
|
|
2,753
|
|
|
$
|
77,029
|
|
|
|
34,636
|
|
|
$
|
2,237,642
|
|
|
|
|
(1)
|
|
Reflects shares received in the first quarter of 2007 pursuant
to the long-term incentive awards for the
2003-2007
grants to such named executive officer.
|
33
|
|
|
(2)
|
|
Computed as the number of shares acquired on vesting using the
market price as of the date of vesting. For
Messrs. Wolstein and Hurwitz, 64,000 and 20,000 shares
vested on January 1, 2007, at $62.95. The remaining shares
acquired on vesting occurred in February 2007 at $66.75.
|
Nonqualified
Deferred Compensation for Fiscal Year 2007(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Earnings
|
|
|
Withdrawals/
|
|
|
Aggregate Balance at
|
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
Distributions
|
|
|
Last FYE
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Name
|
|
(a)(2)
|
|
|
(b)(3)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
Scott A. Wolstein
|
|
$
|
1,563,596
|
|
|
$
|
54,355
|
|
|
$
|
2,301,052
|
|
|
$
|
0
|
|
|
$
|
34,196,289
|
|
William H. Schafer
|
|
$
|
25,855
|
|
|
$
|
6,177
|
|
|
$
|
29,752
|
|
|
$
|
0
|
|
|
$
|
330,858
|
|
Daniel B. Hurwitz
|
|
$
|
50,651
|
|
|
$
|
27,016
|
|
|
$
|
198,657
|
|
|
$
|
0
|
|
|
$
|
3,013,490
|
|
David J. Oakes
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Timothy J. Bruce
|
|
$
|
42,571
|
|
|
$
|
7,656
|
|
|
$
|
23,515
|
|
|
$
|
0
|
|
|
$
|
433,977
|
|
David M. Jacobstein
|
|
$
|
212,873
|
|
|
$
|
25,181
|
|
|
$
|
196,391
|
|
|
$
|
0
|
|
|
$
|
2,420,344
|
|
|
|
|
(1)
|
|
The Companys nonqualified deferred compensation plans,
which include the Elective Deferred Compensation Plans and the
Equity Deferred Compensation Plans, are described more fully in
the Compensation Discussion and Analysis under Other
Benefits on page 25.
|
|
(2)
|
|
In accordance with the transition rules under Section 409A
of the Code, Messrs. Wolstein and Hurwitz each elected to
have his deferrals to the Elective Deferred Compensation Plans
for 2005, 2006 and 2007 distributed to him in 2008, and
Mr. Wolstein elected to have certain restricted shares
deferred to the Equity Deferred Compensation Plans during 2007
distributed to him in 2008.
|
|
(3)
|
|
Amounts included as part of All Other Compensation
to such named executive officer in the Summary Compensation
Table on page 28.
|
Employment
Agreements
The Company has entered into separate employment agreements with
each of the named executive officers. Mr. Jacobsteins
employment agreement is discussed in the Compensation
Discussion and Analysis section on page 26. Each of
the employment agreements (other than
Messrs. Wolsteins and Jacobsteins agreements)
contains an evergreen provision that provides for an
automatic extension of the agreement for an additional year at
the end of each fiscal year, subject to the parties
termination rights.
In the case of Messrs. Schafer, Hurwitz, Oakes and Bruce,
the agreement can be terminated by the Company by giving
90 days prior written notice prior at any time.
Mr. Wolsteins employment agreement does not permit
the Company to terminate his employment without cause unless
three years prior notice is given.
The agreements provide for minimum base salaries subject to
increases approved by the Committee. The annual base salary for
Mr. Wolstein for 2007 was $669,528 prior to May 1 2007 and
$1,000,000 on and after such date. The annual base salary for
Mr. Hurwitz for 2007 was $432,407 prior to May 1, 2007
and $544,000 on and after such date. The annual base salaries
for 2007 were $292,268, $350,000 and $311,704 for
Messrs. Schafer, Oakes and Bruce, respectively.
Pursuant to his employment agreement, Mr. Wolstein is
currently entitled to use any airplane the Company leases or in
which the Company owns an interest for up to 100 flight hours
per fiscal year. If Mr. Wolsteins flight usage is
less than 100 flight hours during the year, the Company is
required to pay him the annual average cost per flight hour
multiplied by his unused flight hours for the year. If
Mr. Wolsteins usage is greater than 100 flight hours
during a year, Mr. Wolstein is required to pay the Company
based upon the annual average cost per flight hour multiplied by
the number of flight hours by which his usage exceeded 100
flight hours for the year.
Pursuant to his employment agreement, Mr. Hurwitz was
entitled to use of a Company automobile and the payment of
country and business club membership fees and dues in 2007. He
has agreed to forgo his right to use of a
34
Company automobile in 2008 and thereafter and will receive an
adjustment to his base salary based on the value of such benefit.
Pursuant to their agreements, Messrs. Schafer and Oakes are
entitled to the payment of certain club membership fees and
dues. In addition, Mr. Oakes was entitled to receive
reimbursement by the Company in 2007 for certain relocation
expenses and a relocation allowance of $10,000.
In addition, the employment agreements for each of the
Companys named executive officers provide for
participation in health, life, disability and other insurance
plans, sick leave, reasonable vacation time and other customary
fringe benefits. Attributed costs of these benefits for the
named executive officers for 2007 are included in the Summary
Compensation Table on page 28.
Pursuant to the agreements, each of Messrs. Wolstein,
Schafer, Hurwitz, Oakes and Bruce is entitled to annual
performance-based cash bonuses equal to a percentage of his base
salary as approved by the Committee. See the Compensation
Discussion and Analysis under Non-Equity Incentive Plan
Compensation for a discussion of the methods used to
determine these annual performance-based cash bonuses and each
named executive officers threshold, target and maximum
annual performance-based cash bonus percentage.
If the named executive officers employment is terminated
by the Company without cause, or by the named executive officer
for good reason, he is entitled to receive (a) in the case
of Mr. Wolstein, in addition to the amounts payable under
his employment agreement, continued use of office space, office
support and secretarial services at the expense of the Company
for a period ending on the earlier of
(i) Mr. Wolsteins death, (ii) the date on
which Mr. Wolstein commences other employment, or
(iii) the fifth anniversary of the termination date,
(b) in the case of Mr. Hurwitz, a payment equal to two
times his annual salary plus his target annual performance-based
cash bonus for the year during which the termination occurs
assuming all performance goals for such target amount have been
met, (c) in the case of Messrs. Schafer, Oakes and
Bruce, a payment equal to his annual salary plus the amount of
annual performance-based cash bonus payable to him prorated up
through the date of termination and accrued by the Company as of
the month of termination and (d) in the case of
Messrs. Schafer, Hurwitz, Oakes and Bruce, continued life,
disability and medical insurance for a period of one year
following such termination.
In the cases of Messrs. Wolstein, Schafer, Hurwitz, Oakes
and Bruce, the agreements also provide that to the extent that
any of the payments to be made under the employment agreements
or the change in control agreements discussed below (together
with all other payments of cash or property, whether pursuant to
the agreements or otherwise, but excluding any units or awards
granted or vested pursuant to his Outperformance Long-Term
Incentive Plan Agreement or Performance Unit Agreement with the
Company or pursuant to the 2007 Supplemental Equity Program)
constitutes excess parachute payments under certain
tax laws, the Company will pay to the executive officer such
additional amounts as are necessary to cause him to receive the
same after-tax compensation that he would have received but for
the application of such tax laws.
Potential
Payments Upon Termination or Change in Control
The Company has entered into certain agreements and maintains
certain plans that will require the Company to provide
compensation and other benefits to the named executive officers
in the event of a termination of employment or a change in
control of the Company. The amount of compensation payable to
each named executive officer in each situation is listed in the
tables below.
35
Based on a hypothetical termination or change in control
occurring on December 31, 2007, the following tables
describe the potential payments upon such termination or change
in control for each named executive officer.
Scott
A. Wolstein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
Involuntary
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
Executive Benefits
|
|
or Other
|
|
|
Not For
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
and Payments
|
|
Voluntary
|
|
|
Cause
|
|
|
For Cause
|
|
|
(Change in
|
|
|
|
|
|
|
|
Upon Termination
|
|
Termination
|
|
|
Termination(1)
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(2)
|
|
$
|
0
|
|
|
$
|
6,000,000
|
|
|
$
|
0
|
|
|
$
|
7,500,000
|
|
|
$
|
4,902,419
|
|
|
$
|
0
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Restricted Shares(3)
|
|
$
|
0
|
(4)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
12,073,718
|
|
|
$
|
12,073,718
|
|
|
$
|
12,073,718
|
|
Unvested and Accelerated Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Outperformance Units(5)
|
|
$
|
0
|
|
|
$
|
3,000,000
|
|
|
$
|
0
|
|
|
$
|
3,000,000
|
|
|
$
|
3,000,000
|
|
|
$
|
3,000,000
|
|
2007 Supplemental Equity Program(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health, Welfare and Airplane Benefits(7)
|
|
$
|
0
|
|
|
$
|
1,860,000
|
|
|
$
|
0
|
|
|
$
|
1,240,000
|
|
|
$
|
1,240,000
|
|
|
$
|
0
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
22,722,557
|
(8)
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,345,402
|
(9)
|
|
$
|
0
|
|
280G
Gross-Up(10)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(11)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Post Termination Office and Secretarial Services(7)
|
|
$
|
700,000
|
|
|
$
|
700,000
|
|
|
$
|
0
|
|
|
$
|
700,000
|
|
|
$
|
700,000
|
|
|
$
|
0
|
|
|
|
|
(1)
|
|
Mr. Wolsteins employment agreement does not permit
the Company to terminate his employment without cause unless
three years prior notice is given. Accordingly, the
Company has assumed for this hypothetical termination that
Mr. Wolstein would receive a lump-sum payment equal to the
salary and bonus and health, welfare and airplane benefits he
would have received under his employment agreement during the
three-year period following the termination.
|
|
(2)
|
|
Amounts calculated pursuant to the terms of
Mr. Wolsteins employment agreement or change in
control agreement, as applicable.
|
|
(3)
|
|
Includes 400,000 restricted shares granted pursuant to the
conversion of performance unit awards.
|
|
(4)
|
|
Pursuant to the plans under which restricted shares were
awarded, the Compensation Committee may, in its discretion,
accelerate the vesting of unvested restricted shares in the
event of Mr. Wolsteins retirement.
|
|
(5)
|
|
Amounts calculated pursuant to the terms of
Mr. Wolsteins outperformance long-term incentive
agreement are based on the assumption that the FFO metric and
the discretionary metric would have been achieved during the
measurement period, as actually occured.
|
|
(6)
|
|
Amounts calculated pursuant to the 2007 Supplemental Equity
Program. It was assumed that a valuation date and any without
cause, disability or death termination occurred on
December 31, 2007. For the hypothetical change in control
on December 31, 2007, it was assumed that the price per
common share agreed upon by the parties to the change in control
was equal to the closing price of the common shares on the NYSE
on December 31, 2007.
|
|
(7)
|
|
Estimated present value of benefits calculated assuming a 6.5%
discount rate and an assumed rate of cost increase of 6.5%.
|
36
|
|
|
(8)
|
|
Includes a $400,000 payment under a group term life policy
provided by the Company, a $11,878,998 payment under an
individual voluntary policy for which the Company paid premiums
prior to July 30, 2002 and a $10,443,559 payment under a
survivors policy for which the Company paid premiums prior
to July 30, 2002.
|
|
(9)
|
|
The estimated payments for long-term disability utilize a
present value calculation based upon the executives age
and maximum benefit available upon a total disability. In
general, benefits are available until age 65.
|
|
(10)
|
|
While Mr. Wolsteins change in control agreement
provides for a
gross-up
payment with respect to excess parachute payments under
Section 280G, based on the assumed hypothetical change in
control, the
gross-up
payment would not have been triggered because no excess
parachute payments would have been made.
|
|
(11)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to the Companys vacation
policy.
|
William
H. Schafer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
Involuntary
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
Executive Benefits
|
|
or Other
|
|
|
Not For
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
and Payments
|
|
Voluntary
|
|
|
Cause
|
|
|
For Cause
|
|
|
(Change in
|
|
|
|
|
|
|
|
Upon Termination
|
|
Termination
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
467,629
|
|
|
$
|
0
|
|
|
$
|
1,052,165
|
|
|
$
|
467,629
|
|
|
$
|
467,629
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Restricted Shares
|
|
$
|
0
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
132,905
|
|
|
$
|
132,905
|
|
|
$
|
132,905
|
|
Unvested and Accelerated Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Outperformance Units(3)
|
|
$
|
0
|
|
|
$
|
866,278
|
|
|
$
|
0
|
|
|
$
|
417,000
|
|
|
$
|
866,278
|
|
|
$
|
866,278
|
|
2007 Supplemental Equity Program(4)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health and Welfare Benefits(5)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
40,000
|
|
|
$
|
0
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,220,131
|
(6)
|
|
$
|
0
|
|
280G
Gross-Up(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(8)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
(1)
|
|
Amounts calculated pursuant to the terms of
Mr. Schafers employment agreement or change in
control agreement, as applicable.
|
|
(2)
|
|
Pursuant to the plans under which restricted shares were
awarded, the Compensation Committee may, in its discretion,
accelerate the vesting of unvested restricted shares in the
event of Mr. Schafers retirement.
|
|
(3)
|
|
Amounts calculated pursuant to the terms of
Mr. Schafers outperformance long-term incentive
agreement. For the hypothetical change in control on
December 31, 2007, the following assumptions were utilized:
growth in FFO metric would have been achieved and neither total
shareholder return metric would have been achieved. In such
event, the payment would be made upon the occurrence of the
change in control. For the hypothetical without cause, death or
disability termination, the amounts are based on the assumption
that all the metrics would have been achieved during the
measurement period ending on December 31, 2009, and that
the maximum award would have been granted. In such event, the
payment would be made on March 1, 2010.
|
|
(4)
|
|
Amounts calculated pursuant to the 2007 Supplemental Equity
Program. It was assumed that a valuation date and any without
cause, disability or death termination occurred on
December 31, 2007. For the hypothetical change in control
on December 31, 2007, it was assumed that the price per
common share agreed upon by the
|
37
|
|
|
|
|
parties to the change in control was equal to the closing price
of the common shares on the NYSE on December 31, 2007.
|
|
(5)
|
|
Estimated present value of benefits calculated assuming a 6.5%
discount rate and an assumed rate of cost increase of 6.5%.
|
|
(6)
|
|
The estimated payments for long-term disability utilize a
present value calculation based upon the executives age
and maximum benefit available upon a total disability. In
general, benefits are available until age 65.
|
|
(7)
|
|
While Mr. Schafers change in control agreement
provides for
gross-up
protection with respect to excess parachute payments under
Section 280G, based on the assumed hypothetical
termination, the
gross-up
payment would not be triggered because no excess parachute
payments would be made.
|
|
(8)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to the Companys vacation
policy.
|
Daniel
B. Hurwitz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
Involuntary
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
Executive Benefits
|
|
or Other
|
|
|
Not For
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
and Payments
|
|
Voluntary
|
|
|
Cause
|
|
|
For Cause
|
|
|
(Change in
|
|
|
|
|
|
|
|
Upon Termination
|
|
Termination
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
2,176,000
|
|
|
$
|
0
|
|
|
$
|
2,448,000
|
|
|
$
|
2,108,000
|
|
|
$
|
2,108,000
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Restricted Shares(2)
|
|
$
|
0
|
(3)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,302,264
|
|
|
$
|
4,302,264
|
|
|
$
|
4,302,264
|
|
Unvested and Accelerated Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Outperformance Units(4)
|
|
$
|
0
|
|
|
$
|
1,500,000
|
|
|
$
|
0
|
|
|
$
|
1,500,000
|
|
|
$
|
1,500,000
|
|
|
$
|
1,500,000
|
|
2007 Supplemental Equity Program(5)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health and Welfare Benefits(6)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
40,000
|
|
|
$
|
0
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,384,572
|
(7)
|
|
$
|
0
|
|
280G
Gross-Up(8)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
(1)
|
|
Amounts calculated pursuant to the terms of
Mr. Hurwitzs employment agreement or change in
control agreement, as applicable.
|
|
(2)
|
|
Includes 133,333 restricted shares granted pursuant to the
conversion of performance unit awards.
|
|
(3)
|
|
Pursuant to the plans under which restricted shares were
awarded, the Compensation Committee may, in its discretion,
accelerate the vesting of unvested restricted shares in the
event of Mr. Hurwitzs retirement.
|
|
(4)
|
|
Amounts calculated pursuant to the terms of
Mr. Hurwitzs outperformance long-term incentive
agreement are based on the assumption that the FFO metric and
the discretionary metric would have been achieved during the
measurement period, as actually occurred.
|
|
(5)
|
|
Amounts calculated pursuant to the 2007 Supplemental Equity
Program. It was assumed that a valuation date and any without
cause, disability or death termination occurred on
December 31, 2007. For the hypothetical change in control
on December 31, 2007, it was assumed that the price per
common share agreed upon by the parties to the change in control
was equal to the closing price of the common shares on the NYSE
on December 31, 2007.
|
|
(6)
|
|
Estimated present value of benefits calculated assuming a 6.5%
discount rate and an assumed rate of cost increase of 6.5%.
|
38
|
|
|
(7)
|
|
The estimated payments for long-term disability utilize a
present value calculation based upon the executives age
and maximum benefit available upon a total disability. In
general, benefits are available until age 65.
|
|
(8)
|
|
While Mr. Hurwitzs employment agreement provides for
gross-up
protection with respect to excess parachute payments under
Section 280G, based on the assumed hypothetical
termination, the
gross-up
payment would not be triggered because no excess parachute
payments would be made.
|
|
(9)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to the Companys vacation
policy.
|
David
J. Oakes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
Involuntary
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
Executive Benefits
|
|
or Other
|
|
|
Not For
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
and Payments
|
|
Voluntary
|
|
|
Cause
|
|
|
For Cause
|
|
|
(Change in
|
|
|
|
|
|
|
|
Upon Termination
|
|
Termination
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
700,000
|
|
|
$
|
0
|
|
|
$
|
1,575000
|
|
|
$
|
1,575,000
|
|
|
$
|
1,575,000
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Restricted Shares(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
957,250
|
|
|
$
|
957,250
|
|
|
$
|
957,250
|
|
Unvested and Accelerated Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
2007 Supplemental Equity Program(3)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health and Welfare Benefits(4)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
40,000
|
|
|
$
|
0
|
|
|
$
|
30,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,287,513
|
(5)
|
|
$
|
0
|
|
280G
Gross-Up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
934,007
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
(1)
|
|
Amounts calculated pursuant to the terms of Mr. Oakes
employment agreement or change in control agreement, as
applicable.
|
|
(2)
|
|
Pursuant to the plans under which restricted shares were
awarded, the Compensation Committee may, in its discretion,
accelerate the vesting of unvested restricted shares in the
event of Mr. Oakes retirement.
|
|
(3)
|
|
Amounts calculated pursuant to the 2007 Supplemental Equity
Program. It was assumed that a valuation date and any without
cause, disability or death termination occurred on
December 31, 2007. For the hypothetical change in control
on December 31, 2007, it was assumed that the price per
common share agreed upon by the parties to the change of control
was equal to the closing price of the common shares on the NYSE
on December 31, 2007.
|
|
(4)
|
|
Estimated present value of benefits calculated assuming a 6.5%
discount rate and an assumed rate of cost increase of 6.5%.
|
|
(5)
|
|
The estimated payments for long-term disability utilize a
present value calculation based upon the executives age
and maximum benefit available upon a total disability. In
general, benefits are available until age 65.
|
|
(6)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to the Companys vacation
policy.
|
39
Timothy
J. Bruce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
Involuntary
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
Executive Benefits
|
|
or Other
|
|
|
Not For
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
and Payments
|
|
Voluntary
|
|
|
Cause
|
|
|
For Cause
|
|
|
(Change in
|
|
|
|
|
|
|
|
Upon Termination
|
|
Termination
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
498,726
|
|
|
$
|
0
|
|
|
$
|
1,122,134
|
|
|
$
|
498,726
|
|
|
$
|
498,726
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Restricted Shares(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
180,767
|
|
|
$
|
180,767
|
|
|
$
|
180,767
|
|
Unvested and Accelerated Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Outperformance Units(3)
|
|
$
|
0
|
|
|
$
|
1,038,334
|
|
|
$
|
0
|
|
|
$
|
500,000
|
|
|
$
|
1,038,334
|
|
|
$
|
1,038,334
|
|
2007 Supplemental Equity Program(4)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health and Welfare Benefits(5)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
40,000
|
|
|
$
|
0
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,351,921
|
(6)
|
|
$
|
0
|
|
280G
Gross-Up(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(8)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
(1)
|
|
Amounts calculated pursuant to the terms of
Mr. Bruces employment agreement or change in control
agreement, as applicable.
|
|
(2)
|
|
Pursuant to the plans under which restricted shares were
awarded, the Committee may, in its discretion, accelerate the
vesting of unvested restricted shares in the event of
Mr. Bruces retirement.
|
|
(3)
|
|
Amounts calculated pursuant to the terms of
Mr. Bruces outperformance long-term incentive
agreement. For the hypothetical change in control on
December 31, 2007, the following assumptions were utilized:
growth in FFO metric would have been achieved and neither total
shareholder return metrics would have been achieved. In such
event, the payment would be made upon the occurrence of the
change in control. For the hypothetical without cause, death or
disability termination, the amounts are based on the assumption
that all the metrics would have been achieved during the
measurement period ending on December 31, 2009, and that
the maximum award would have been granted. In such event, the
payment would be made on March 1, 2010.
|
|
(4)
|
|
Amounts calculated pursuant to the 2007 Supplemental Equity
Program. It was assumed that a valuation date and any without
cause, disability or death termination occurred on
December 31, 2007. For the hypothetical change in control
on December 31, 2007, it was assumed that the price per
common share agreed upon by the parties to the change in control
was equal to the closing price of the common shares on the NYSE
on December 31, 2007.
|
|
(5)
|
|
Estimated present value of benefits calculated assuming a 6.5%
discount rate and an assumed rate of cost increase of 6.5%.
|
|
(6)
|
|
The estimated payments for long-term disability utilize a
present value calculation based upon the executives age
and maximum benefit available upon a total disability. In
general, benefits are available until age 65.
|
|
(7)
|
|
While Mr. Bruces employment agreement provides for
gross-up
protection with respect to excess parachute payments under
Section 280G, based on the assumed hypothetical
termination, the
gross-up
payment would not be triggered because no excess parachute
payments were made.
|
|
(8)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to the Companys vacation
policy.
|
40
David
M. Jacobstein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
Involuntary
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
Executive Benefits
|
|
or Other
|
|
|
Not For
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
and Payments
|
|
Voluntary
|
|
|
Cause
|
|
|
For Cause
|
|
|
(Change in
|
|
|
|
|
|
|
|
Upon Termination
|
|
Termination
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
1,800,000
|
|
|
$
|
0
|
|
|
$
|
1,800,000
|
|
|
$
|
1,800,000
|
|
|
$
|
1,800,000
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Restricted Shares(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,353,803
|
|
|
$
|
4,353,803
|
|
|
$
|
4,353,803
|
|
Unvested and Accelerated Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health and Welfare Benefits(3)
|
|
$
|
0
|
|
|
$
|
60,000
|
|
|
$
|
0
|
|
|
$
|
40,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
442,888
|
(4)
|
|
$
|
0
|
|
280G
Gross-Up(5)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation Pay(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
(1)
|
|
Amounts calculated pursuant to the terms of
Mr. Jacobsteins amended and restated employment
agreement or amended and restated change in control agreement,
as applicable.
|
|
(2)
|
|
Includes 133,333 restricted shares granted pursuant to the
conversion of performance unit awards.
|
|
(3)
|
|
Estimated present value of benefits calculated assuming a 6.5%
discount rate and an assumed rate of cost increase of 6.5%.
|
|
(4)
|
|
The estimated payments for long-term disability utilize a
present value calculation based upon the executives age
and maximum benefit available upon a total disability. In
general, benefits are available until age 65.
|
|
(5)
|
|
While Mr. Jacobsteins amended and restated employment
agreement provides for
gross-up
protection with respect to excess parachute payments under
Section 280G, based on the assumed hypothetical
termination, the
gross-up
payment would not be triggered because no excess parachute
payments would be made.
|
|
(6)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to the Companys vacation
policy.
|
Under the change in control agreements, benefits are payable by
the Company if a Triggering Event occurs within two
years (or three years for Mr. Wolstein) after a
Change in Control. Payments are only triggered if a
change in control occurs and the officer is terminated or
effectively terminated or actions are taken that materially and
adversely impact the officers position with the Company or
his compensation. A Triggering Event occurs if
within two years (or three years in the case of
Mr. Wolstein) after a Change in Control (a) the
Company terminates the employment of the named executive
officer, other than in the case of a Termination For
Cause (as defined in the applicable change in control
agreement), (b) the Company reduces the named executive
officers title, responsibilities, power or authority in
comparison with his title, responsibilities, power or authority
at the time of the Change in Control, (c) the Company
assigns the named executive officer duties that are inconsistent
with the duties assigned to the named executive officer on the
date on which the Change in Control occurred and which duties
the Company persists in assigning to the named executive officer
despite the prior written objection of that officer,
(d) the Company (i) reduces the named executive
officers base salary, his annual performance-based cash
bonus percentages of salary, his group health, life, disability
or other insurance programs (including any such benefits
provided to the named executive officers family), his
pension, retirement or profit-sharing benefits or any benefits
provided by the Companys equity-based award plans or any
substitute therefore, (ii) excludes him from any plan,
program or arrangement in which the other executive officers of
the Company are included, (iii) establishes criteria and
factors to be achieved for the payment of annual
performance-based cash bonus compensation that are substantially
different than the criteria and factors established for other
similar executive officers of the
41
Company, or (iv) fails to pay the named executive officer
any annual performance-based cash bonus compensation to which
the named executive officer is entitled through the achievement
of the criteria and factors established for the payment of such
bonus, or (e) the Company requires the named executive
officer to be based at or generally work from any location more
than 50 miles from the geographical center of Cleveland,
Ohio.
A Change in Control occurs if (a) any person or
group of persons, acting alone or together with any of its
affiliates or associates, acquires a legal or beneficial
ownership interest, or voting rights, in 20% or more of the
outstanding common shares, (b) at any time during a period
of two years, individuals who were directors of the Company at
the beginning of the period no longer constitute a majority of
the members of the Board of Directors unless the election, or
the nomination for election by the Companys shareholders,
of each director who was not a director at the beginning of the
period is approved by at least a majority of the directors who
are in office at the time of the election or nomination and were
directors at the beginning of the period, (c) a record date
is established for determining shareholders of the Company
entitled to vote upon (i) a merger or consolidation of the
Company with another REIT, partnership, corporation or other
entity in which the Company is not the surviving or continuing
entity or in which all or a substantial part of the outstanding
shares are to be converted into or exchanged for cash,
securities, or other property, (ii) a sale or other
disposition of all or substantially all of the assets of the
Company, or (iii) the dissolution of the Company, or
(d) the Board or shareholders of the Company approve a
consolidation or merger in which the Company is not the
surviving corporation, the sale of substantially all of the
assets of the Company, or the liquidation or dissolution of the
Company.
Within five business days after the occurrence of a Triggering
Event, the Company must pay the named executive officer an
amount equal to the sum of two times (or three times in the case
of Mr. Wolstein) the then-effective annual salary and the
bonus at the maximum level payable to the officer. In addition,
the Company agreed to provide continued insurance benefits that
are comparable to or better than those provided to the named
executive officer at the time of the Change in Control until the
earlier of two years from the date of the Triggering Event and
the date the named executive officer becomes eligible to receive
comparable or better benefits from a new employer and
outplacement services for a period of up to one year.
Each change in control agreement provides that to the extent
that any of the payments to be made to the named executive
officer (together with all other payments of cash or property,
whether pursuant to the agreement or otherwise, other than
pursuant to a performance unit plan or an outperformance award)
constitutes excess parachute payments under certain
tax laws, the Company will pay the named executive officer such
additional amounts as are necessary to cause him to receive the
same after-tax compensation that he would have but for the
application of such tax laws.
42
Compensation
of Directors
2007 Director
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
Stock
|
|
|
|
|
|
|
Paid in Cash
|
|
|
Awards
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)
|
|
|
Dean S. Adler
|
|
$
|
100,000
|
(2)
|
|
$
|
0
|
|
|
$
|
100,000
|
|
Terrance R. Ahern
|
|
$
|
128,750
|
(2)
|
|
$
|
0
|
|
|
$
|
128,750
|
|
Robert H. Gidel
|
|
$
|
0
|
|
|
$
|
135,093
|
|
|
$
|
135,093
|
|
Victor B. MacFarlane
|
|
$
|
107,500
|
(2)
|
|
$
|
0
|
|
|
$
|
107,500
|
|
Craig Macnab
|
|
$
|
107,500
|
(2)
|
|
$
|
0
|
|
|
$
|
107,500
|
|
Scott D. Roulston
|
|
$
|
105,000
|
(2)
|
|
$
|
0
|
|
|
$
|
105,000
|
|
Barry A. Sholem
|
|
$
|
0
|
|
|
$
|
100,122
|
|
|
$
|
100,122
|
|
William B. Summers, Jr.
|
|
$
|
50,000
|
|
|
$
|
50,085
|
|
|
$
|
100,085
|
|
|
|
|
(1)
|
|
The amounts shown in this column are based on the fair market
value of the common shares on the business day preceding date of
issuance.
|
|
(2)
|
|
Fees were deferred into the Directors Deferred
Compensation Plans.
|
Directors receive an annual fee of $100,000. Directors must
either receive not less than 50% of such fee in the form of
common shares or defer not less than 50% of such fee pursuant to
the Companys directors deferred compensation plans.
Pursuant to the Companys directors deferred
compensation plans, deferred fees are converted into units that
are the equivalent of common shares, although the units do not
have voting rights. Fees are paid to directors in quarterly
installments. The number of common shares (or common share
equivalents under the directors deferred compensation
plans) to be issued quarterly is determined by converting
one-fourth of the value of the directors annual fees that
such director elected to receive in the form of common shares
(or deferred under the directors deferred compensation
plans) into common shares (or common share equivalents under the
directors deferred compensation plans) based on the fair
market value of the common shares on the business day preceding
the date of the issuance.
Persons who chair the Audit Committee, the Executive
Compensation Committee and the Nominating and Corporate
Governance Committee are entitled to receive additional
compensation of $20,000, $20,000 and $15,000, respectively, as a
fee for services rendered as chair of these committees. The lead
director is entitled to receive additional compensation of
$35,000, as a fee for services rendered as lead director.
Directors receiving this additional compensation must either
receive not less than 50% of such fee in the form of common
shares or defer not less than 50% of such fee pursuant to the
Companys directors deferred compensation plans. Fees
are paid to the Committee Chairman and lead director in
quarterly installments, and the number of common shares (or
common share equivalents) received is determined in the same
manner as the annual fee.
Each non-employee director is also reimbursed for expenses
incurred in attending meetings.
Directors Deferred Compensation
Plans.
Non-employee directors have the right to
defer all or a portion of the cash portion of their fees
pursuant to the Companys directors deferred
compensation plans. The Companys directors deferred
compensation plans are an unsecured, general obligation of the
Company. Participants contributions are converted to
units, based on the market value of the common shares, so that
each unit is the economic equivalent of one common share without
voting rights. Settlement of units is made in cash or shares at
a date determined by the participant at the time a deferral
election is made. The Company has established a
rabbi trust, which holds common shares of the
Company, to satisfy its payment obligations under the plans.
Common shares equal to the number of units credited to
participants accounts under the plans are contributed to
the rabbi trust. In the event of the Companys
insolvency, the assets of the rabbi trust are
available to general creditors. Messrs. Adler, Ahern,
MacFarlane, Macnab and Roulston elected to defer certain of
their 2007 fees pursuant
43
to the Companys directors deferred compensation
plans. During their terms as directors, Messrs. Adler,
Ahern, MacFarlane, Macnab and Roulston have deferred
compensation represented by the following number of units:
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Units under the
|
|
|
Value of Units as of
|
|
|
|
Directors Deferred
|
|
|
the Year Ended
|
|
|
|
Compensation Plans as of
|
|
|
December 31,
|
|
Name
|
|
December 31, 2007
|
|
|
2007 ($)
|
|
|
Dean S. Adler
|
|
|
15,972
|
|
|
$
|
611,578
|
|
Terrance R. Ahern
|
|
|
14,322
|
|
|
$
|
548,404
|
|
Victor B. MacFarlane
|
|
|
8,659
|
|
|
$
|
331,571
|
|
Craig Macnab
|
|
|
7,157
|
|
|
$
|
274,024
|
|
Scott D. Roulston
|
|
|
3,661
|
|
|
$
|
140,194
|
|
Equity Deferred Compensation Plans.
Prior to
2006, directors received a portion of their fees in restricted
shares and a portion of their fees in cash. Directors had the
right to defer the vesting of the restricted shares pursuant to
the Equity Deferred Compensation Plans. In addition, for
compensation earned prior to December 31, 2004, directors
had the right to defer the gain otherwise recognizable upon the
exercise of options in accordance with the terms of the Equity
Deferred Compensation Plans.
During their terms as directors, Messrs. Adler, Ahern,
MacFarlane and Macnab have deferred compensation into the Equity
Deferred Compensation Plans represented by the following number
of units:
|
|
|
|
|
|
|
|
|
|
|
Number of Units
|
|
|
Value of Units as of
|
|
|
|
under the
|
|
|
the Year Ended
|
|
|
|
Equity Deferred
|
|
|
December 31,
|
|
Name
|
|
Compensation Plans
|
|
|
2007 ($)
|
|
|
Dean S. Adler
|
|
|
1,029
|
|
|
$
|
39,400
|
|
Terrance R. Ahern
|
|
|
1,362
|
|
|
$
|
52,151
|
|
Victor B. MacFarlane
|
|
|
1,029
|
|
|
$
|
39,400
|
|
Craig Macnab
|
|
|
695
|
|
|
$
|
26,612
|
|
CERTAIN
TRANSACTIONS
Lease of
Corporate Headquarters and Rental of Conference
Facilities
The Company leases space at its former corporate headquarters in
Moreland Hills, Ohio, which is owned by Mrs. Bert Wolstein,
the mother of Mr. Wolstein. Annual rental payments
aggregating $575,675 were made in 2007 by the Company; however,
the Company subleased a portion of this space and, as a result,
the Company received $68,138 in payments from third parties.
Rental payments made by the Company under the lease include the
payment of the Companys pro rata portion of maintenance
and insurance expenses, real estate taxes and operating expenses
over a base year amount. The lease expires on December 31,
2009.
In 2007, the Company paid The Bertram Inn and Conference Center
approximately $166,932 for the use of its conference facilities.
The Bertram Inn and Conference Center is owned by the trust of
Bert Wolstein.
Review,
Approval or Ratification of Transactions with Related
Persons
The Company has a written policy regarding the review and
approval of related party transactions. A proposed transaction
between the Company and certain parties enumerated in the policy
must be submitted to the Executive Vice President-Corporate
Transactions and Governance. This policy applies to directors,
officers and employees; entities in which investments by the
Company are accounted for using the equity method with respect
to transactions outside the ordinary course of business;
significant shareholders (generally holding 5% or more) of the
Company; family of directors, officers, employees or significant
shareholders; entities in which a director, officer or employee
(or a family member of such person) has a significant interest
(generally holding 10% or more) or holds an employment,
management or board position; trusts for the benefit of
employees, such as profit-sharing, deferred compensation or
retirement fund trusts, that are managed by or under the
trusteeship of management; or
44
any other party who directly or indirectly controls, is
controlled by or under common control with the Company (or its
subsidiaries). The relationship of the parties and the terms of
the proposed transaction are reviewed by the Boards
Nominating and Corporate Governance Committee to determine if
the proposed transaction would constitute a related party
transaction. If the committee determines that the proposed
transaction would be a related party transaction, it will make a
recommendation to the Board of Directors. All related party
transactions, whether or not those transactions must be
disclosed under federal securities laws, are approved by the
Board pursuant to the policy and reviewed annually with the
Audit Committee.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the
Companys directors and executive officers, and owners of
more than 10% of a registered class of the Companys equity
securities, to file with the SEC and the NYSE initial reports of
ownership and reports of changes in ownership of common shares
and other equity securities of the Company. Executive officers,
directors and owners of more than 10% of the common shares are
required by SEC regulations to furnish the Company with copies
of all forms they file pursuant to Section 16(a).
To the Companys knowledge, based solely on review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, during the
fiscal year ended December 31, 2007, all Section 16(a)
filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners were complied
with.
45
PROPOSAL TWO:
TO APPROVE THE 2008 DEVELOPERS DIVERSIFIED REALTY
CORPORATION EQUITY-BASED AWARD PLAN
General
The 2008 Developers Diversified Realty Corporation Equity-Based
Award Plan (the 2008 Award Plan) was adopted by the
Companys Board of Directors on November 1, 2007,
subject to approval by the Companys shareholders. The
description herein is a summary of the 2008 Award Plan and is
subject to and qualified by the complete text of the 2008 Award
Plan, which is included as Appendix A.
Shareholder approval of the 2008 Award Plan is being sought in
order that (i) the shares reserved for issuance under the
2008 Award Plan may be listed on the NYSE pursuant to the rules
of the exchange, (ii) the Company may grant options that
qualify as incentive stock options under the Internal Revenue
Code of 1986, as amended (the Code), or that are
non-qualified stock options, and (iii) compensation
attributable to equity-based awards will qualify as
performance-based compensation, exempt from the limits on
deductibility for federal income tax purposes of certain
corporate payments to executive officers. All prior equity-based
award plans of the Company have been approved by the
Companys shareholders.
The Code limits to $1 million per year the deduction
allowed for federal income tax purposes for compensation paid to
the Chief Executive Officer and the three other most highly
compensated executive officers of a public company (the
Deduction Limit). The Deduction Limit applies to
compensation that does not qualify for any of a limited number
of exceptions (the Non-Qualified Compensation). The
Deduction Limit does not apply to compensation paid under a plan
that meets certain requirements for performance-based
compensation. Compensation attributable to an equity award
(such as a stock option or restricted share award) is deemed to
satisfy the requirement that compensation be paid on account of
the attainment of one or more pre-established, objective
performance goals, if (i) the grant is made by a committee
of directors that meets certain criteria, (ii) the plan
under which the award is granted states a maximum number of
shares or options that may be granted to any individual during a
specified period of time, and (iii) the amount of
compensation the individual could receive is based solely on the
increase in the value of the common shares after the date of
grant. Although the Company is generally not subject to federal
income tax because of its REIT status, the Company intends to
structure the 2008 Award Plan to satisfy the requirements for
the performance-based compensation exception to the Deduction
Limit in the event the Company becomes subject to federal income
tax in the future. As a consequence, the Board of Directors has
directed that the 2008 Award Plan, as it applies to
participants, be submitted to the Companys shareholders
for approval in accordance with the requirements for the
performance-based compensation exception to the Deduction Limit.
The 2008 Award Plan provides for the grant to officers, other
employees and directors of the Company, its subsidiaries and
affiliates, of options to purchase common shares of the Company
(the Stock Options), rights to receive the
appreciation in value of common shares (the Share
Appreciation Rights), awards of common shares subject to
vesting and restrictions on transfer (the Restricted
Shares), awards of common shares issuable in the future
upon satisfaction of certain conditions (the Deferred
Shares), rights to purchase common shares (the Share
Purchase Rights), and other awards based on common shares
(the Other Share-Based Awards) (such rights and
awards are collectively referred to herein as
Awards). Under the terms of the 2008 Award Plan,
Awards may be granted with respect to an aggregate of not more
than 2,900,000 common shares and no participant may receive
Awards with respect to more than 500,000 common shares
during any calendar year, subject to adjustment as described
below. The maximum number of common shares that may be granted
under the 2008 Award Plan is approximately 2.4% of the
119,650,141 common shares outstanding as of
February 29, 2008. As of February 29, 2008, the
Company also had 861,893 operating partnership units outstanding
that are exchangeable, under certain circumstances and at the
option of the Company, into an equivalent number of the
Companys common shares or for an equivalent amount of
cash. The Company had an aggregate 120,512,034 common
shares and common share equivalents outstanding as of
February 29, 2008. As of February 29, 2008, the common
shares reserved for issuance under the 2008 Award Plan are in
addition to the aggregate 1,053,939 common shares reserved
for issuance and available for future grant under the 2004
Developers Diversified Realty Corporation Equity-Based Award
Plan (1,051,884 common shares), 2002 Developers Diversified
Realty Corporation Equity-Based Award Plan (1,786 common shares)
and the 1998 Developers Diversified Realty Corporation
Equity-Based Award Plan (269 common
46
shares and which plan expires in May 2008). As of
February 29, 2008, the Company had 2,312,252 options
outstanding under the Companys equity-based award plans
with a weighted average exercise price of $41.87 per option and
a weighted average term to expiration of 7.5 years. As of
February 29, 2008, there were 589,152 Awards outstanding
under the Companys equity-based award plans, which
includes 485,452 unvested restricted shares and
103,700 shares reserved for the outperformance awards. The
closing price of the common shares on the NYSE on
February 29, 2008, was $38.56. At that time, the aggregate
market value of the 2,900,000 common shares proposed to be
reserved for purposes of the 2008 Award Plan was $111,824,000.
The purpose of the 2008 Award Plan is to enable the Company to
attract, retain and reward employees and directors of the
Company and strengthen the mutuality of interests of employees,
directors and the Companys shareholders by offering such
employees and directors equity or equity-based incentives. In
addition, equity-based awards are part of the total compensation
package provided to employees, and consequently, awards are tied
to job performance. Currently, there are approximately
150 employees and eight non-management directors eligible
to participate in the 2008 Award Plan.
The 2008 Award Plan is administered by the Committee. The
Committee has full power to interpret and administer the 2008
Award Plan and full authority to select participants to whom
Awards will be granted and to determine the type and amount of
Award(s) to be granted to each participant, the terms and
conditions of Awards granted and the terms and conditions of the
agreements evidencing Awards to be entered into with
participants. As to the selection and grant of Awards to
participants who are not subject to Section 16(b) of the
Securities Exchange Act, the Committee may delegate its
responsibilities to members of the Companys management
consistent with applicable law.
Subject to any shareholder approval requirement of the NYSE or
applicable law, the Committee has the authority to adopt, alter
and repeal such rules, guidelines and practices governing the
2008 Award Plan as it may, from time to time, deem advisable; to
interpret the terms and provisions of the 2008 Award Plan and
any Award issued under the 2008 Award Plan (and any agreements
relating thereto); and otherwise to supervise the administration
of the 2008 Award Plan.
Terms of
Stock Options
The Committee may grant Stock Options that either
(i) qualify as incentive stock options (Incentive
Stock Options) under Section 422A of the Code,
(ii) do not qualify as Incentive Stock Options
(Non-Qualified Stock Options) or (iii) both. To
qualify as an Incentive Stock Option, an option must meet
certain requirements set forth in the Code. All Stock Options
will be evidenced by a Stock Option agreement in a form approved
by the Committee.
The option price per common share under a Stock Option will be
determined by the Committee at the time of grant and will be not
less than 100% of the fair market value of the common shares at
the date of grant, or with respect to Incentive Stock Options,
110% of the fair market value of the common shares at the date
of grant in the case of a participant who, at the date of grant,
owns shares possessing more than 10% of the total combined
voting power of all classes of stock of the Company. Once
granted, the option price of Stock Options may not be reduced,
or repriced, without shareholder approval.
The term of each Stock Option will be determined by the
Committee and may not exceed ten years from the date the option
is granted or, with respect to Incentive Stock Options, five
years in the case of a participant who, at the date of grant,
owns shares possessing more than 10% of the total combined
voting power of all classes of stock of the Company.
Subject to Section 409A of the Code, the Committee will
determine the time or times at which and the conditions under
which each Stock Option may be exercised. Generally, options
will not be exercisable prior to six months following the date
of grant. No Stock Options are transferable by the participant
other than (i) by will or by the laws of descent and
distribution or (ii) pursuant to a qualified domestic
order. If permitted by the applicable Stock Option agreement, a
participant may transfer Stock Options, other than Incentive
Stock Options, during the participants lifetime
(a) to one or more members of the participants
family, (b) to one or more trusts for the benefit
47
of one or more members of the participants family or to a
partnership or partnerships of members of the participants
family or (c) to charitable organizations.
If a participants employment by the Company terminates by
reason of disability or death, a Stock Option becomes
immediately and automatically vested and exercisable and may be
exercised for a period of two years from the time of death or
termination due to disability (one year in the case of Incentive
Stock Options).
Unless otherwise determined by the Committee at or after the
time of grant, if a participants employment by the Company
terminates for cause, any unvested Stock Options will be
forfeited and terminated immediately and any vested Stock
Options may be exercised for a period of 30 days from the
time of termination of employment for cause.
Unless otherwise determined by the Committee at the time of
grant, if a participants employment with the Company
terminates for any reason other than death, disability or for
cause, all Stock Options will terminate 90 days after the
date employment terminates.
Terms of
Share Appreciation Rights
The Committee will determine the participants to whom and the
time or times at which grants of Share Appreciation Rights (or
SARs) will be made and the other terms and conditions thereof.
Any SAR granted under the 2008 Award Plan will be in such form
as the Committee may from time to time approve. In the case of a
Non-Qualified Stock Option, a SAR may be granted either at or
after the time of the grant of the related Non-Qualified Stock
Option. In the case of an Incentive Stock Option, a SAR may be
granted in connection with the Incentive Stock Option at the
time the Incentive Stock Option is granted and exercised at such
times and under such conditions as may be specified by the
Committee in the participants Stock Option agreement.
SARs generally entitle the holder to receive an amount in cash
or common shares (as determined by the Committee) equal in value
to the excess of the fair market value of a common share on the
date of exercise of the SAR over the per share exercise price of
the related Stock Option. The Committee may limit the amount
that the participant will be entitled to receive upon exercise
of any SAR.
Upon exercise of a SAR and surrender of the related portion of
the underlying Stock Option, the related Stock Option is deemed
to have been exercised. SARs will be exercisable only to the
extent that the Stock Options to which they relate are
exercisable; provided that a SAR granted to a participant who is
subject to Section 16(b) of the Securities Exchange Act
will not be exercisable at any time prior to six months and one
day from the date of grant, unless otherwise determined by the
Committee at or after grant.
SARs will be transferable and exercisable to the same extent and
under the same conditions as the underlying Stock Option.
Terms of
Awards of Restricted Shares
The Committee may grant Restricted Share Awards and determine
when and to whom such grants will be made, the number of shares
to be awarded, the date or dates upon which Restricted Share
Awards will vest, the time or times within which such Awards may
be subject to forfeiture, and all other terms and conditions of
such Awards. The Committee may condition Restricted Share Awards
on the attainment of performance goals or such other factors as
the Committee may determine.
Subject to the provisions of the 2008 Award Plan and the
applicable Restricted Share Award agreement, during a period set
by the Committee commencing with the date of the Award (the
Restriction Period), the participant will not be
permitted to sell, transfer, pledge, assign or otherwise
encumber such Restricted Shares, except (a) by will or by
the laws of descent and distribution or (b) pursuant to a
qualified domestic order. If permitted by the applicable
Restricted Share Award agreement, a participant may transfer
Restricted Shares during the participants lifetime
(i) to one or more members of the participants
family, to one or more trusts for the benefit of one or more
members of the participants family or to a partnership or
partnerships of members of the participants family or
(ii) to charitable organizations. The Committee may permit
restrictions to lapse in installments within the Restriction
Period or may accelerate or waive restrictions in whole or in
part, based on service, performance
48
or such other factors and criteria as the Committee may
determine. Prior to the lapse of the restrictions on the
Restricted Shares, the participant will have all rights of a
shareholder with respect to the shares, including voting and
dividend rights (except that the Committee may permit or require
the payment of cash dividends to be deferred and reinvested in
additional Restricted Shares or otherwise reinvested), subject
to the conditions and restrictions on transferability of such
Restricted Shares or such other restrictions as are enumerated
specifically in the participants Restricted Share Award
agreement. The Committee or the Board will determine at the time
of grant whether share dividends issued with respect to
Restricted Shares will be paid in cash, deferred or reinvested
as additional Restricted Shares that are subject to the same
restrictions and other terms and conditions that apply to the
Restricted Shares with respect to which such dividends are
issued.
Unless otherwise determined by the Committee at or after the
time of grant, if a participants employment by the Company
terminates by reason of death or disability, any Restricted
Shares held by such participant will become immediately and
automatically vested in full and any restrictions will lapse.
Unless otherwise determined by the Committee at or after the
time of grant, in the event that employment of a participant who
holds Restricted Shares is terminated for any reason other than
death or disability, the participant will forfeit such shares
that are unvested or subject to restrictions in accordance with
the applicable provisions of the Restricted Share Award
agreement and in accordance with the terms and conditions
established by the Committee.
Terms of
Awards of Deferred Shares
The Committee may grant Awards of Deferred Shares under the 2008
Award Plan, which will be evidenced by an agreement between the
Company and the participant. The Committee determines when and
to whom Deferred Shares will be awarded, the number of shares to
be awarded, and the duration of the period during which, and the
conditions under which, receipt of shares will be deferred. The
Committee may condition an Award of Deferred Shares on the
attainment of specified performance goals or such other factors
as the Committee may determine.
Deferred Shares Awards generally may not be sold, assigned,
transferred other than (i) by will or by the laws of
descent and distribution or (ii) pursuant to a qualified
domestic order. If permitted by the applicable Deferred Shares
agreement, a participant may transfer Deferred Shares during the
participants lifetime (i) to one or more members of
the participants family, to one or more trusts for the
benefit of one or more members of the participants family
or to a partnership or partnerships of members of the
participants family or (ii) to charitable
organizations. At the expiration of the deferral period, share
certificates will be delivered to the participant in a number
equal to the shares covered by the Deferred Shares Award. The
Committee will determine at the time of the grant whether share
dividends issued with respect to Deferred Shares will be paid in
cash, deferred or reinvested as additional Deferred Shares that
are subject to the same restrictions and other terms and
conditions that apply to the Deferred Shares with respect to
which such dividends are issued.
Unless otherwise determined by the Committee at or after the
time of grant, if a participants employment by the Company
terminates by reason of death or disability, any Deferred Shares
held by such participant will become immediately and
automatically vested and any restriction will lapse, and the
participant or the participants representative will be
issued the Deferred Shares in one lump sum event within ten
business days following such death or disability.
Unless otherwise determined by the Committee at the time of
grant, if a participants employment by the Company is
terminated for any reason other than death or disability, the
Deferred Shares that are unvested or subject to restriction will
thereupon be forfeited. The Committee may accelerate the vesting
of any Deferred Shares Award, in whole or in part, based on
service, performance or such other factors and criteria as the
Committee may determine, subject in all cases to a minimum
deferral period of not less than six months and one day, unless
otherwise determined by the Committee at or after grant.
Terms of
Awards of Share Purchase Rights
The Committee may grant Share Purchase Rights that will enable a
participant to purchase common shares (i) at the fair
market value of such shares on the date of grant or (ii) at
85% of such fair market value on such date if the grant of Share
Purchase Rights is made in lieu of cash compensation. The
Committee determines when and to
49
whom Share Purchase Rights will be made and the number of shares
that may be purchased. The Committee may also impose such
deferral, forfeiture or other terms and conditions as it
determines on such Share Purchase Rights or the exercise
thereof. Each Share Purchase Rights Award will be confirmed by,
and be subject to the terms of, a Share Purchase Rights
agreement.
Share Purchase Rights may contain such additional terms and
conditions as the Committee deems desirable and will generally
be exercisable for such period as is determined by the
Committee. However, Share Purchase Rights granted to a
participant who is subject to Section 16(b) of the
Securities Exchange Act will not become exercisable earlier than
six months and one day after the grant date, unless otherwise
determined by the Committee at or after grant.
Terms of
Other Share-Based Awards
The Committee may grant Other Share-Based Awards, including
dividend equivalent rights, that are valued in whole or in part
by reference to, or that are otherwise based on, common shares
(including, without limitation, performance shares, convertible
preferred shares, convertible debentures, exchangeable
securities and common share Awards or options valued by
reference to book value or subsidiary performance). Other
Share-Based Awards may be granted either alone, in addition to
or in tandem with other Awards granted under the 2008 Award Plan
or cash or equity-based awards made outside the 2008 Award Plan.
Generally, common shares awarded pursuant to Other Share-Based
Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered prior to the date on which the shares are
issued, or, if later, the date on which any applicable
restriction, performance or deferral period or requirement is
satisfied or lapses. In addition, the recipient of such an Award
will usually be entitled to receive, currently or on a deferred
basis, interest or dividends or interest or dividend equivalents
with respect to the number of shares covered by the Award, as
determined at the time of the Award by the Committee, and the
Committee may provide that such amounts (if any) will be deemed
to have been reinvested in additional common shares or otherwise
reinvested. Common shares covered by any such Award will vest or
be forfeited to the extent so provided in the Award agreement,
as determined by the Committee. In the event of the
participants disability, death or termination without
cause, Other Share-Based Awards will become immediately and
automatically vested and any restriction will lapse, permitting
the participant or the participants representative to
exercise the award at any time prior to the expiration of the
2008 Award Plan.
Each Other Share-Based Award will be confirmed by, and subject
to the terms of, an agreement or other document between the
Company and the participant. Other Share-Based Awards granted to
a participant who is subject to Section 16(b) of the
Securities Exchange Act are subject to a minimum holding period
of six months and one day, unless otherwise determined by the
Committee at or after grant. Common shares (including securities
convertible into common shares) issued on a bonus basis as Other
Share-Based Awards will be issued for no cash consideration.
Common shares (including securities convertible into common
shares) purchased pursuant to Other Share-Based Awards will bear
a price of at least 85% of the fair market value of the common
shares on the date of grant.
Change in
Control
Certain acceleration and valuation provisions take effect with
respect to Awards upon the occurrence of a Change in Control, a
409A Change in Control or a Potential Change in Control (each as
defined in the 2008 Award Plan) of the Company.
In the event of a Change in Control, a 409A Change in Control or
a Potential Change in Control, any Stock Options, Restricted
Shares, Deferred Shares, Share Purchase Rights and Other
Share-Based Awards awarded under the 2008 Award Plan will become
fully vested and SARs will become immediately exercisable on the
date of the Change in Control, a 409A Change in Control or
Potential Change in Control, as the case may be. Except as
provided for in the section entitled Adjustments for Stock
Dividends, Mergers, Etc. set forth below, (A) unless
otherwise determined by the Committee at or after grant but
prior to any Change in Control or Potential Change in Control,
each outstanding Award (other than an award subject to Code
Section 409A) will be cashed out (and the Award terminated)
based on the amount, if any, by which the Change in Control
Price (as defined in the 2008 Award Plan) as of the date of such
Change in Control or such Potential Change in Control exceeds
the exercise price or
50
other purchase price, if any, payable by the participant with
respect to such Award or (B) upon any 409A Change in
Control, each outstanding 409A Award will be cashed out (and
such 409A Award terminated) based on the amount, if any, by
which the Change in Control Price as of the date of such 409A
Change in Control exceeds the exercise price or other purchase
price, if any, payable by the participant with respect to such
409A Award. A 409A Award may be cashed out upon a Potential
Change in Control or a Change in Control that does not
constitute a 409A Change in Control only with the written
consent of the Company and the participant.
Adjustments
for Stock Dividends, Mergers, Etc.
In the event of any merger, reorganization, consolidation,
recapitalization, stock split, stock dividend or other change in
corporate structure affecting the common shares, a substitution
or adjustment will be made in the aggregate number of shares
reserved for issuance under the 2008 Award Plan, in the number
and option price of shares subject to outstanding Stock Options,
in the number and purchase price of shares subject to
outstanding Share Purchase Rights and in the number of shares
subject to other outstanding Awards under the 2008 Award Plan.
The Committee, in its sole discretion, will determine the amount
of substitution or adjustment made. Any fractional shares
issuable in connection with a substitution or adjustment will be
eliminated.
Termination
and Amendment of the 2008 Award Plan
Awards may be granted under the 2008 Award Plan at any time
until and including November 1, 2017, on which date the
2008 Award Plan will expire except as to Awards then
outstanding. Awards outstanding at that time will remain in
effect until they have been exercised or have expired.
The Board may at any time amend, alter or discontinue the 2008
Award Plan, but no such amendment, alteration or discontinuation
will be made that (i) impairs the rights of a participant
under an Award theretofore granted without the
participants consent or (ii) requires shareholder
approval under any applicable law or regulation (including any
applicable regulation of an exchange on which the Shares are
traded), unless such shareholder approval is received. The
Company will submit to its shareholders, for their approval, any
material revisions to the 2008 Award Plan provided that such
approval is required by law or regulations (including any
applicable regulation of an exchange on which the common shares
are traded).
Federal
Tax Consequences
With respect to Incentive Stock Options, in general, for federal
income tax purposes under the present law:
(i) Neither the grant nor the exercise of an Incentive
Stock Option, by itself, results in income to the participant;
however, the excess of the fair market value of the common
shares at the time of exercise over the option price is
includable in alternative minimum taxable income (unless there
is a disposition of the common shares acquired upon exercise of
the Stock Option in the taxable year of exercise) which may,
under certain circumstances, result in an alternative minimum
tax liability to the participant.
(ii) If the common shares acquired upon exercise of an
Incentive Stock Option are disposed of in a taxable transaction
after the later of two years from the date on which the
Incentive Stock Option is granted or one year from the date on
which such common shares are transferred to the participant,
long-term capital gain or loss will be realized by the
participant in an amount equal to the difference between the
amount realized by the participant and the participants
basis which, except as provided in (v) below, is the
exercise price.
(iii) Except as provided in (v) below, if the common
shares acquired upon the exercise of an Incentive Stock Option
are disposed of within the two-year period from the date of
grant or the one-year period after the transfer of the common
shares to the participant (a disqualifying
disposition):
(a) Ordinary income will be realized by the participant at
the time of such disposition in the amount of the excess, if
any, of the fair market value of the common shares at the time
of such exercise over the option price, but not in an amount
exceeding the excess, if any, of the amount realized by the
participant over the option price.
51
(b) Short-term or long-term capital gain will be realized
by the participant at the time of any such taxable disposition
in an amount equal to the excess, if any, of the amount realized
over the fair market value of the common shares at the time of
such exercise.
(c) Short-term or long-term capital loss will be realized
by the participant at the time of any such taxable disposition
in an amount equal to the excess, if any, of the option price
over the amount realized.
(iv) No deduction will be allowed to the Company with
respect to Incentive Stock Options granted or common shares
transferred upon exercise thereof, except that if a disposition
is made by the participant within the two-year period or the
one-year period referred to above, the Company will be entitled
to a deduction in the taxable year in which the disposition
occurred in an amount equal to the amount of ordinary income
realized by the participant making the disposition.
(v) With respect to the exercise of an Incentive Stock
Option and the payment of the option price by the delivery of
common shares, to the extent that the number of common shares
received does not exceed the number of common shares
surrendered, no taxable income will be realized by the
participant at that time, the tax basis of the common shares
received will be the same as the tax basis of the common shares
surrendered, and the holding period (except for purposes of the
one-year period referred to in (iii) above) of the
participant in the common shares received will include his
holding period in the common shares surrendered. To the extent
that the number of common shares received exceeds the number of
common shares surrendered, no taxable income will be realized by
the participant at that time; such excess common shares will be
considered Incentive Stock Option shares with a zero basis; and
the holding period of the participant in such common shares will
begin on the date such common shares are transferred to the
participant. If the common shares surrendered were acquired as
the result of the exercise of an Incentive Stock Option and the
surrender takes place within two years from the date the
Incentive Stock Option relating to the surrendered common shares
was granted or within one year from the date of such exercise,
the surrender will result in a disqualifying disposition and the
participant will realize ordinary income at that time in the
amount of the excess, if any, of the fair market value at the
time of exercise of the common shares surrendered over the basis
of such common shares. If any of the common shares received are
disposed of in a disqualifying disposition, the participant will
be treated as first disposing of the common shares with a zero
balance.
With respect to Nonqualified Stock Options, in general, for
federal income tax purposes under present law:
(i) The grant of a Nonqualified Stock Option, by itself,
does not result in income to the participant.
(ii) Except as provided in (v) below, the exercise of
a Nonqualified Stock Option (in whole or in part, according to
its terms) results in ordinary income to the participant at that
time in an amount equal to the excess (if any) of the fair
market value of the common shares on the date of exercise over
the option price.
(iii) Except as provided in (v) below, the tax basis
of the common shares acquired upon exercise of a Nonqualified
Stock Option, which is used to determine the amount of any
capital gain or loss on a future taxable disposition of such
shares, is the fair market value of the common shares on the
date of exercise.
(iv) No deduction is allowable to the Company upon the
grant of a Nonqualified Stock Option but, upon the exercise of a
Nonqualified Stock Option, a deduction is allowable to the
Company at that time in an amount equal to the amount of
ordinary income realized by the participant exercising such
Option, if the Company deducts and withholds appropriate federal
withholding tax.
(v) With respect to the exercise of a Nonqualified Stock
Option and the payment of the option price by the delivery of
common shares, to the extent that the number of common shares
received does not exceed the number of common shares
surrendered, no taxable income will be realized by the
participant at that time, the tax basis of the common shares
received will be the same as the tax basis of the common shares
surrendered, and the holding period of the participant in the
common shares received will include his holding period in the
common shares surrendered. To the extent that the number of
common shares received exceeds the number of common shares
surrendered, ordinary income will be realized by the participant
at that time in the amount of the fair market value of such
excess common shares; the tax basis of such excess common shares
will be equal
52
to the fair market value of such common shares at the time of
exercise; and the holding period of the participant in such
common shares will begin on the date such common shares are
transferred to the participant.
The Company is not entitled to deduct annual remuneration in
excess of the Deduction Limit paid to certain of its employees
unless such remuneration satisfies an exception to the Deduction
Limit, including an exception for performance-based
compensation. Thus, unless Stock Options granted under the 2008
Award Plan satisfy an exception to the Deduction Limit, the
Companys deduction with respect to Nonqualified Stock
Options and Incentive Stock Options with respect to which the
holding periods set forth above are not satisfied will be
subject to the Deduction Limit.
Under Treasury Regulations, compensation attributable to a stock
option is deemed to be performance-based compensation or to
satisfy the performance-based compensation test if:
the grant is made by the compensation committee; the plan
under which the option . . . is granted states the maximum
number of shares with respect to which options . . . may be
granted during a specified period to any employee; and, under
the terms of the option . . . , the amount of compensation the
employee could receive is based solely on an increase in the
value of the stock after the date of grant.
If Proposal Two is approved by the shareholders and the
Committee, which is and will be comprised solely of two or more
outside directors within the meaning of
Section 162(m) of the Code, makes the grants, the
Companys deduction with respect to options granted under
the 2008 Award Plan would not be subject to the Deduction Limit.
The federal income tax information presented herein is only a
general summary of the applicable provisions of the Code and
regulations promulgated thereunder as in effect on the date of
this proxy statement. The actual federal, state, local and
foreign tax consequences to the participant may vary depending
upon his or her particular circumstance.
Vote
Required for Approval
Under the NYSE regulations and the Code, the affirmative vote of
a majority of the votes cast at the meeting is required for
approval of this proposal. If your shares are held in
street name by a broker or nominee indicating on a
proxy that it does not have authority to vote on this proposal,
then it will not count as a vote for or against this proposal.
If you abstain from voting, then it will have the same effect as
a vote against this proposal.
53
The following table sets forth an estimate of the benefits the
Company anticipates will be received under the 2008 Award Plan
in fiscal year 2008 by certain individuals and groups based upon
grants with respect to 2007 under the 2004 Equity-Based Award
Plan:
NEW PLAN
BENEFITS
2008
Developers Diversified Realty Corporation Equity-Based Award
Plan
|
|
|
|
|
|
|
|
|
Name
|
|
Dollar Value(1)
|
|
|
Number of Units(2)
|
|
|
Scott A. Wolstein
Chairman and Chief Executive Officer
|
|
$
|
2,225,176
|
|
|
|
82,125
|
|
William H. Schafer
Executive Vice President and Chief Financial Officer
|
|
$
|
181,802
|
|
|
|
6,709
|
|
Daniel B. Hurwitz
President and Chief Operating Officer
|
|
$
|
878,824
|
|
|
|
32,429
|
|
David J. Oakes
Executive Vice President and Chief Investment Officer
|
|
$
|
2,609,420
|
|
|
|
125,000
|
|
Timothy J. Bruce
Executive Vice President of Development
|
|
$
|
104,509
|
|
|
|
3,851
|
|
David M. Jacobstein
Former President and Chief Operating Officer
|
|
$
|
901,902
|
|
|
|
33,284
|
|
Executive Group(3)
|
|
$
|
7,455,681
|
|
|
|
313,600
|
|
Non-Executive Director Group
|
|
$
|
0
|
|
|
|
0
|
|
Non-Executive Officer Group(4)
|
|
$
|
1,741,861
|
|
|
|
117,235
|
|
|
|
|
(1)
|
|
The dollar value of future awards under the 2008 Developers
Diversified Realty Corporation Equity-Based Award Plan is not
determinable at this time. The dollar value shown is the
long-term incentive award granted with respect to fiscal 2007
under the 2004 Equity-Based Award Plan.
|
|
(2)
|
|
The number of units of future awards under the 2008 Developers
Diversified Realty Corporation Equity-Based Award Plan is not
determinable at this time. The number of units shown is the
annual long-term incentive award granted with respect to fiscal
2007 under the existing 2004 Equity-Based Award Plan.
|
|
(3)
|
|
Includes all current executive officers of the Company,
including the named executive officers.
|
|
(4)
|
|
Includes all employees of the Company, including all current
officers who are not executive officers, as a group.
|
54
Equity
Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Number of Securities
|
|
|
|
Securities To Be
|
|
|
|
|
|
Remaining Available for
|
|
|
|
Issued Upon
|
|
|
Weighted-average
|
|
|
Future Issuance Under
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Equity Compensation
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Plans (Excluding
|
|
|
|
Options, Warrants
|
|
|
Options, Warrants
|
|
|
Securities Reflected in
|
|
Plan Category
|
|
and Rights
|
|
|
and Rights
|
|
|
Column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity Compensation Plans Approved by Security Holders(1)
|
|
|
1,652,631
|
(2)
|
|
$
|
44.00
|
|
|
|
1,723,369
|
|
Equity Compensation Plans Not Approved by Security Holders(3)
|
|
|
41,666
|
|
|
$
|
18.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,694,297
|
|
|
$
|
43.37
|
|
|
|
1,723,369
|
|
|
|
|
(1)
|
|
Includes information related to the Companys 1992
Employees Share Option Plan, 1996 Equity-Based Award Plan,
1998 Equity-Based Award Plan, 2002 Equity-Based Award Plan and
2004 Equity-Based Award Plan. Does not include
184,220 shares reserved for issuance under outperformance
unit agreements.
|
|
(2)
|
|
Does not include 667,686 restricted shares, as these shares have
been reflected in the Companys total shares outstanding.
|
|
(3)
|
|
Represents options issued to directors of the Company. The
options granted to the directors were at the fair market value
at the date of grant and vested over a three-year period.
|
The Board of Directors Recommends That Shareholders Vote FOR
This Proposal Two.
55
PROPOSAL THREE:
TO APPROVE AN AMENDMENT TO THE COMPANYS AMENDED
AND RESTATED ARTICLES OF INCORPORATION TO ADOPT A MAJORITY
VOTE
STANDARD IN UNCONTESTED ELECTIONS OF DIRECTORS
Upon recommendation of the Nominating and Corporate Governance
Committee, the Board of Directors has approved, subject to the
approval of the Companys shareholders, an amendment to the
Companys Amended and Restated Articles of Incorporation,
as amended (the Company Articles), to adopt a
majority vote standard for uncontested elections of directors.
The Board of Directors believes that it is in the best interests
of the Company and its shareholders to amend the Company
Articles in order to eliminate plurality voting in uncontested
elections of directors and to require that a nominee for
director in an uncontested election receive a majority of the
votes cast with respect to such directors election in
order to be elected to the Board of Directors (a majority
vote standard). A majority vote standard empowers
shareholders and further enhances director accountability
because shareholders have the right to vote against election of
a director. Additionally, a majority vote standard ensures that
only directors with broad acceptability are elected. The
majority vote standard has recently received increased support
among shareholders, corporate governance experts and numerous
companies.
In July 2007, the Ohio legislature changed Ohio law, effective
January 1, 2008, to permit corporations to amend their
articles of incorporation to provide for a majority vote
standard for director elections. Prior to this change, Ohio
corporations were required to use a plurality vote standard for
director elections. Ohio law now provides that, unless otherwise
specified in a companys articles of incorporation, a
director is elected by a plurality of the votes cast. The
Company Articles do not currently specify the voting standard
required in elections of directors. Accordingly, the
Companys directors are currently elected by a plurality
vote, which means that a director nominee who receives the
highest number of affirmative votes cast is elected, whether or
not such votes constitute a majority of votes cast. As a result,
an amendment to the Company Articles is necessary to implement a
majority vote standard in an uncontested election of directors.
Under a majority vote standard, each vote is specifically
counted for or against the
directors election. An affirmative majority of the total
number of votes cast for or against a
director nominee will be required for election. Shareholders
will continue to be entitled to abstain with respect to the
election of a director. Abstentions and broker non-votes will
not be considered votes cast at the shareholder meeting and will
be excluded in determining the number of votes cast
for or against a director nominee.
Upon shareholder approval of this proposal, a majority vote
standard will apply in uncontested elections and a plurality
vote standard will apply in contested elections. An election is
contested when the number of nominees for election as a director
exceeds the number of directors to be elected.
Upon shareholder approval of this proposal, the Board of
Directors will amend the Companys Corporate Governance
Guidelines to include a director resignation policy so that an
incumbent director who does not receive the requisite
affirmative majority of the votes cast for his or her
re-election in an uncontested election must tender his or her
resignation to the Nominating and Corporate Governance
Committee. Under Ohio law, an incumbent director who is not
re-elected may remain in office until his or her successor is
elected and qualified and continue as a holdover
director until his or her position is filled by a subsequent
shareholder vote or his or her earlier resignation or removal by
a shareholder vote. The Board of Directors may not believe that
it is in the best interests of the Company for a director who
did not receive an affirmative majority of the votes cast for
his or her re-election in an uncontested election to hold over.
As a result, the Board of Directors will adopt the holdover
director resignation policy to address the continuation in
office of a director that would result from application of the
holdover director provision. Under the holdover director
resignation policy, the Nominating and Corporate Governance
Committee will consider the resignation and recommend to the
Board whether or not to accept such resignation. The Board of
Directors will consider the Nominating and Corporate Governance
Committees recommendation and will decide whether to
accept the resignation. The Board of Directors will publicly
disclose its decision and if the Board of Directors rejects the
resignation, its rationale for the rejection.
The text of the proposed amendment to the Company Articles is
attached to this proxy statement as Appendix B.
The Board of Directors Recommends That Shareholders Vote FOR
This Proposal Three.
56
PROPOSAL FOUR:
TO APPROVE AN AMENDMENT TO THE COMPANYS
AMENDED AND RESTATED ARTICLES OF INCORPORATION TO CHANGE
THE PAR VALUE OF THE COMPANYS COMMON SHARES FROM
WITHOUT
PAR VALUE TO $0.10 PAR VALUE
The Board of Directors has approved, subject to the approval of
the Companys shareholders, an amendment to
Article Fourth of the Company Articles to change the par
value of the Companys common shares from without par value
to $0.10 par value per share. The Board of Directors
believes that it is in the Companys best interest to
change the par value of the common shares because it will enable
the Company to realize significant annual tax savings, increase
the Companys flexibility in structuring future
transactions in order to avoid state licensing fees and reduce
the Companys internal administrative costs. The change to
common shares with a $0.10 par value per share will have no
impact on the market value of the Companys common shares
or the rights of its shareholders.
Par value is used to designate the lowest value for which a
company can sell its shares and to value the shares on a
companys balance sheet. Historically, the concepts of par
value and the stated capital of a company were to protect
creditors and senior security holders by ensuring that a company
received at least par value as consideration for issuance of its
shares. Over time, these concepts have lost their significance
for the most part. So, while an increase in par value may at one
time have been significant, that is no longer the case.
The change in par value of the common shares will have no effect
on the Companys shareholders equity as computed
according to generally accepted accounting principles. The par
value will be equal to the Companys current stated capital
of $0.10 per share. The change in par value also will not change
the number of authorized common shares. There will remain
300,000,000 authorized common shares of which 119,757,095 are
issued and outstanding as of the record date. The increase in
par value will not affect outstanding options. The text of the
proposed amendment to the Company Articles is attached to this
proxy statement as Appendix C.
The Board of Directors Recommends That Shareholders Vote FOR
This Proposal Four.
PROPOSAL FIVE:
RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANYS INDEPENDENT
ACCOUNTANTS
PricewaterhouseCoopers LLP served as independent registered
public accounting firm to the Company in 2007 and is expected to
be retained to do so in 2008. The Board of Directors has
directed that management submit the selection of the independent
registered public accounting firm for ratification by the
shareholders at the Annual Meeting. A representative of
PricewaterhouseCoopers LLP is expected to be present at the
Annual Meeting and will have an opportunity to make a statement,
if desired.
Shareholder ratification of the selection of
PricewaterhouseCoopers LLP as the Companys independent
registered public accounting firm is not required by the
Companys Code of Regulations or otherwise. However, the
Board of Directors is submitting the selection of
PricewaterhouseCoopers LLP to the shareholders for ratification
as a matter of good corporate practice. If the shareholders do
not ratify the selection, the Audit Committee will reconsider
whether to retain the firm. In such event, the Audit Committee
may retain PricewaterhouseCoopers LLP, notwithstanding the fact
that the shareholders did not ratify the selection, or select
another nationally recognized accounting firm without
re-submitting the matter to the shareholders. Even if the
selection is ratified, the Audit Committee reserves the right in
its discretion to select a different nationally recognized
accounting firm at any time during the year if it determines
that such a change would be in the best interests of the Company
and its shareholders.
57
Fees Paid to PricewaterhouseCoopers LLP.
The
following table presents fees for services rendered by
PricewaterhouseCoopers LLP for the years ended December 31,
2007 and 2006.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit fees(1)
|
|
$
|
1,644,319
|
|
|
$
|
1,584,514
|
|
Audit-related fees(2)
|
|
$
|
930,499
|
|
|
$
|
880,040
|
|
Tax fees(3)
|
|
$
|
429,824
|
|
|
$
|
259,343
|
|
All other fees(4)
|
|
$
|
52,878
|
|
|
$
|
837,242
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,057,520
|
|
|
$
|
3,561,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Audit fees consisted principally of fees for the audit of the
Companys financial statements, as well as audit-related
tax services, registration statement related services and
acquisition audits performed pursuant to SEC filing
requirements. Of these amounts, the registration-related
services were $173,121 and $268,352 for 2007 and 2006,
respectively. In addition, of the audit fees paid in 2007,
$151,266 was for services related to additional auditing
services provided to the Company in 2006 but not billed by
PricewaterhouseCoopers LLP until 2007. Similarly, of the audit
fees paid in 2006, $54,474 was for services related to
Sarbanes-Oxley Act Section 404 compliance provided to the
Company in 2005 but not billed by PricewaterhouseCoopers LLP
until 2006.
|
|
(2)
|
|
Audit-related fees consisted of fees billed for assurance and
related services by PricewaterhouseCoopers LLP that are
reasonably related to the performance of the audit or review of
the Companys financial statements and are not reported
under Audit Fees. Such audit-related fees consisted
solely of fees for separate entity and joint venture audits and
reviews. Of the aggregate amount of audit-related fees paid in
2007, $388,233 was for audit-related services provided to the
Company in 2006 but not billed by PricewaterhouseCoopers LLP
until 2007. Of the aggregate amount of audit-related fees paid
in 2006, $347,155 was for audit-related services provided to the
Company in 2005 but not billed by PricewaterhouseCoopers LLP
until 2006. Several of the Companys joint venture
agreements require the engagement of an independent registered
public accounting firm to perform audit-related services because
the joint venture investments have separate financial statement
reporting requirements.
|
|
(3)
|
|
Tax fees consisted of fees billed for professional services
rendered by PricewaterhouseCoopers LLP for tax compliance and
tax consulting services, $293,786 and $192,653 of which
consisted of tax compliance services for 2007 and 2006,
respectively. Such tax compliance fees consisted solely of fees
for separate entity and joint venture tax reviews.
|
|
(4)
|
|
All other fees consisted of fees billed for other products and
services provided by PricewaterhouseCoopers LLP. The fees billed
in 2007 and 2006 relate primarily to transactions related due
diligence procedures performed on behalf of the Company.
|
Policy on Audit Committee Pre-Approval of Audit and
Permissible Non-Audit Services of Independent
Auditors.
The Audit Committee has not established
a policy for the pre-approval of audit and permissible non-audit
services. However, the Audit Committee pre-approves, on an
individual basis, all audit and permissible non-audit services
provided by the independent registered public accounting firm.
These services may include audit services, audit-related
services, tax services and other services.
Auditor Independence.
The Audit Committee
believes that the non-audit services provided by
PricewaterhouseCoopers LLP are compatible with maintaining
PricewaterhouseCoopers LLPs independence.
The Board of Directors Recommends That Shareholders Vote FOR
This Proposal Five.
SHAREHOLDER
PROPOSALS FOR 2009 ANNUAL MEETING
Any shareholder proposals intended to be presented at the
Companys 2009 Annual Meeting of Shareholders must be
received by the Secretary of the Company at 3300 Enterprise
Parkway, Beachwood, Ohio 44122, on or before December 4,
2008, for inclusion in the Companys proxy statement and
form of proxy relating to the 2009 Annual Meeting of
Shareholders. As to any proposal that a shareholder intends to
present to shareholders other than
58
by inclusion in the Companys proxy statement for the 2009
Annual Meeting of Shareholders, the proxies named in
managements proxy for that meeting will be entitled to
exercise their discretionary voting authority on that proposal
unless the Company receives notice of the matter to be proposed
not later than February 17, 2009. Even if proper notice is
received on or prior to February 17, 2009, the proxies
named in the Companys proxy for that meeting may
nevertheless exercise their discretionary authority with respect
to such matter by advising shareholders of that proposal and how
they intend to exercise their discretion to vote on such matter,
unless the shareholder making the proposal solicits proxies with
respect to the proposal to the extent required by
Rule 14a-4(c)(2)
under the Securities Exchange Act.
HOUSEHOLDING
The SEC permits a single set of annual reports and proxy
statements to be sent to any household at which two or more
shareholders reside if they appear to be members of the same
family. Each shareholder continues to receive a separate proxy
card. This procedure, referred to as householding, reduces the
volume of duplicate information shareholders receive and reduces
mailing and printing costs. A number of brokerage firms have
instituted householding. Only one copy of this proxy statement
and the attached annual report will be sent to certain
beneficial shareholders who share a single address, unless any
shareholder residing at that address gave contrary instructions.
If any beneficiary shareholder residing at such an address
desires at this time to receive a separate copy of this proxy
statement and the attached annual report or if any such
shareholder wishes to receive a separate proxy statement and
annual report in the future, the shareholder should provide such
instructions to the Company by calling Michelle M. Dawson, Vice
President of Investor Relations, at
(216) 755-5500,
or by writing to Developers Diversified Realty Corporation,
Investor Relations at 3300 Enterprise Parkway, Beachwood, Ohio
44122.
OTHER
MATTERS
Shareholders and other interested parties may send written
communications to the Board of Directors or the non-management
directors as a group by mailing them to the Board of Directors,
c/o Investor
Relations, Developers Diversified Realty Corporation, 3300
Enterprise Parkway, Beachwood, Ohio 44122. All communications
will be forwarded to the Board of Directors or the
non-management directors as a group, as applicable.
If the enclosed proxy is properly executed and returned to the
Company, the persons named in it will vote the shares
represented by such proxy at the meeting. A shareholder may
specify a vote for the election of directors as set forth under
Proposal One: Election of Directors, the
withholding of authority to vote in the election of directors,
or the withholding of authority to vote for one or more
specified nominees.
Where a choice has been specified in the proxy, the shares
represented will be voted in accordance with such specification.
If no specification is made, such shares will be voted to elect
the director nominees listed in Proposal One:
Election of Directors and for Proposals Two, Three,
Four and Five. If any other matters shall properly come before
the meeting, the persons named in the proxy will vote thereon in
accordance with their judgment. Management does not know of any
other matters which will be presented for action at the meeting.
By order of the Board of Directors,
Joan U. Allgood
Secretary
Dated: April 3, 2008
59
Appendix A
The following is the full text of the 2008 Developers
Diversified Realty Corporation Equity-Based Award Plan, dated
November 1, 2007.
2008
DEVELOPERS DIVERSIFIED REALTY CORPORATION
EQUITY-BASED
AWARD PLAN
Section 1.
Purpose;
Definitions.
The purpose of the 2008 Developers Diversified Realty
Corporation Equity-Based Award Plan (the Plan) is to
enable Developers Diversified Realty Corporation (the
Company) and its Subsidiaries (as defined below) to
attract, retain and reward employees and directors of the
Company, its Subsidiaries and Affiliates designated by the
Companys Board of Directors or the Executive Compensation
Committee of the Board and strengthen the mutuality of interests
between those employees and directors and the Companys
shareholders by offering the employees and directors equity or
equity-based incentives thereby increasing their proprietary
interest in the Companys business and enhancing their
personal interest in the Companys success.
For purposes of the Plan, the following terms are defined as
follows:
(a)
409A Award
means an Award that
provides for a deferral of compensation from the date of grant,
as determined under Code Section 409A and the regulations
promulgated thereunder.
(b)
409A Change in Control
has the
meaning set forth in Section 12(b)(2).
(c)
Affiliate
means any entity (other
than the Company and any Subsidiary) that is designated by the
Board as a participating employer under the Plan.
(d)
Award
means any award of Stock
Options, Share Appreciation Rights, Restricted Shares, Deferred
Shares, Share Purchase Rights or Other Share-Based Awards under
the Plan.
(e)
Award Agreement
means an agreement
between the Company and a participant evidencing an Award.
(f)
Board
means the Board of Directors
of the Company.
(g)
Cause
means, unless otherwise
provided by the Committee, (i) Cause as defined
in any Individual Agreement to which the participant is a party,
or (ii) if there is no such Individual Agreement or if it
does not define Cause: (A) conviction of the participant
for committing a felony under federal law or in the law of the
state in which such action occurred, (B) dishonesty in the
course of fulfilling the participants employment duties,
(C) willful and deliberate failure on the part of the
participant to perform the participants employment duties
in any material respect, or (D) prior to a Change in
Control, such other events as shall be determined by the
Committee. The Committee shall, unless otherwise provided in an
Individual Agreement with the participant, have the sole
discretion to determine whether Cause exists, and
its determination shall be final.
(h)
Change in Control
has the meaning
set forth in Section 12(b)(1).
(i)
Change in Control Price
has the
meaning set forth in Section 12(d).
(j)
Code
means the Internal Revenue Code
of 1986, as amended from time to time, and any successor thereto.
(k)
Committee
means the Executive
Compensation Committee of the Board of the Company or any other
committee or subcommittee authorized by the Board to administer
the Plan.
(l)
Company
means Developers Diversified
Realty Corporation, an Ohio corporation, or any successor
corporation.
(m)
Deferral Period
has the meaning set
forth in Section 8(a).
A-1
(n)
Deferred Shares
means an Award of
the right to receive Shares at the end of a specified deferral
period granted pursuant to Section 8.
(o)
Disability
means a permanent and
total disability as defined in Section 22(e)(3) of the Code.
(p)
Dividend Equivalent
means a right,
granted to a participant under Section 10 hereof, to
receive cash, Shares, other Awards or other property equal in
value to dividends paid with respect to a specified number of
Shares, or other periodic payments.
(q)
Elective Deferral Period
has the
meaning set forth in Section 8(b)(9).
(r)
Exchange Act
means the Securities
Exchange Act of 1934, as amended.
(s)
Fair Market Value
means, as of a
given date (in order of applicability): (i) the closing
price of a Common Share on the principal exchange on which the
Common Shares are then trading, if any, on such date, or if
Common Shares were not traded on such date, then on the next
preceding trading day during which a sale occurred; (ii) if
Common Shares are not then traded on an exchange, the mean
between the closing representative bid and asked prices for
Common Shares on such date as reported by a national quotation
system; or (iii) if Common Shares are not traded on an
exchange and not quoted on a national quotation system, the mean
between the closing bid and asked prices for Common Shares, on
such date, as determined in good faith by the Committee; or
(iv) if Common Shares are not publicly traded, the fair
market value established by the Committee acting in good faith
and in accordance with the applicable requirements of Code
Section 409A and the regulations promulgated thereunder.
(t)
Incentive Stock Option
means any
Stock Option intended to be and designated as, and that
otherwise qualifies as, an Incentive Stock Option
within the meaning of Section 422 of the Code or any
successor section thereto.
(u)
Individual Agreement
means an
employment or similar agreement between a participant and the
Company or one of its Subsidiaries or Affiliates.
(v)
Minimum Deferral Period
has the
meaning set forth in Section 8(b)(1).
(w)
Minimum Holding Period
has the
meaning set forth in Section 10(b)(1).
(x)
Minimum Restriction Period
has the
meaning set forth in Section 7(b)(5).
(y)
Non-Employee Director
has the
meaning set forth under
Rule 16b-3
under the Exchange Act.
(z)
Non-Qualified Stock Option
means any
Stock Option that is not an Incentive Stock Option.
(aa)
Option Agreement
has the meaning
set forth in Section 5(b).
(bb)
Other Share-Based Awards
means an
Award granted pursuant to Section 10 that is valued, in
whole or in part, by reference to, or is otherwise based on,
Shares.
(cc)
Outside Director
has the meaning
set forth in Section 162(m) of the Code and the regulations
promulgated thereunder.
(dd)
Plan
means the 2008 Developers
Diversified Realty Corporation Equity-Based Award Plan, as
amended from time to time.
(ee)
Potential Change in Control
has the
meaning set forth in Section 12(c).
(ff)
Restricted Shares
means an Award of
Shares that is granted pursuant to Section 7 and is subject
to restrictions.
(gg)
Restriction Period
has the meaning
set forth in Section 7(b)(5).
(hh)
Section 16 Participant
means a
participant under the Plan who is subject to Section 16 of
the Exchange Act.
(ii)
Separation from Service
has the
meaning set forth in Section 11(b)(1)(C).
A-2
(jj)
Share Appreciation Right
means an
Award of a right to receive an amount from the Company that is
granted pursuant to Section 6.
(kk)
Shares
means the Common Shares of
the Company.
(ll)
Specified Employee
has the meaning
set forth in Section 11(b)(1)(D).
(mm)
Stock Option
or
Option
means any option to purchase Shares
(including Restricted Shares and Deferred Shares, if the
Committee so determines) that is granted pursuant to
Section 5.
(nn)
Share Purchase Right
means an Award
of the right to purchase Shares that is granted pursuant to
Section 9.
(oo)
Subsidiary
means any corporation
(other than the Company) in an unbroken chain of corporations
beginning with the Company if each of the corporations (other
than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in that chain.
Section 2.
Administration.
The Plan shall be administered by the Committee. The Committee
shall consist of not less than three directors of the Company.
It is intended that all members of the Committee shall be
independent directors, Outside Directors and Non-Employee
Directors; provided, however, that the formation and
establishment of the Committee and all actions taken by the
Committee (or by any subcommittee or any Committee member) shall
be valid and effective even if it is determined that one or more
members of the Committee or any subcommittee does not or may not
qualify as an independent director, Outside Director or a
Non-Employee Director. Those directors shall be appointed by the
Board and shall serve as the Committee at the pleasure of the
Board. The functions of the Committee specified in the Plan
shall be exercised by the Board if and to the extent that no
Committee exists that has the authority to so administer the
Plan.
The Committee shall have full power to interpret and administer
the Plan and full authority to select the individuals to whom
Awards will be granted (other than Awards to directors of the
Company who are not executive officers, which must be approved
by the Board) and to determine the type and amount of any Award
to be granted to each participant (other than to a director who
is not an executive officer, which must be approved by the
Board) the consideration, if any, to be paid for any Award, the
timing of each Award, the terms and conditions of any Award
granted under the Plan, and the terms and conditions of the
related agreements that will be entered into with the
participant. As to the selection of and grant of Awards to
participants who are not executive officers of the Company, or
Section 16 Participants, the Committee may delegate its
responsibilities to members of the Companys management in
any manner consistent with applicable law.
The Committee shall have the authority to adopt, alter and
repeal such rules, guidelines and practices governing the Plan
as it shall, from time to time, deem advisable; to interpret the
terms and provisions of the Plan and any Award issued under the
Plan (and any agreement relating thereto); to direct employees
of the Company or other advisors to prepare such materials or
perform such analyses as the Committee deems necessary or
appropriate; and otherwise to supervise the administration of
the Plan.
Any interpretation or administration of the Plan by the
Committee, and all actions and determinations of the Committee,
shall be final, binding and conclusive on the Company, its
shareholders, Subsidiaries, Affiliates, all participants in the
Plan, their respective legal representatives, successors and
assigns, and all persons claiming under or through any of them.
No member of the Board or of the Committee shall incur any
liability for any action taken or omitted, or any determination
made, in good faith in connection with the Plan.
Section 3.
Shares
Subject to the Plan.
(a)
Aggregate Shares Subject to the
Plan.
Subject to adjustment as provided in
Section 3(c), the total number of Shares reserved and
available for Awards under the Plan is 2,900,000. Any Shares
issued hereunder may consist, in whole or in part, of authorized
and unissued shares or treasury shares.
A-3
(b)
Forfeiture or Termination of Awards of
Shares.
If any Shares subject to any Award
granted hereunder are forfeited or an Award otherwise terminates
or expires without the issuance of Shares, the Shares subject to
that Award shall again be available for future Awards under the
Plan as set forth in Section 3(a), unless the participant
who had been awarded those forfeited Shares or the expired or
terminated Award has theretofore received dividends or other
benefits of ownership with respect to those Shares. For purposes
hereof, a participant shall not be deemed to have received a
benefit of ownership with respect to those Shares by the
exercise of voting rights, or by the accumulation of dividends
that are not realized because of the forfeiture of those Shares
or the expiration or termination of the related Award without
issuance of those Shares.
(c)
Adjustment.
In the event of any
merger, reorganization, consolidation, recapitalization, share
dividend, share split, combination of shares or other change in
corporate structure of the Company affecting the Shares, a
substitution or adjustment shall be made in the aggregate number
of Shares reserved for issuance under the Plan, in the number
and option price of Shares subject to outstanding options
granted under the Plan, in the number and purchase price of
Shares subject to outstanding Share Purchase Rights granted
under the Plan, in the number of Share Appreciation Rights
granted under the Plan, in the number of Shares underlying any
Dividend Equivalent Rights granted under the Plan, and in the
number of Shares subject to Restricted Share Awards, Deferred
Share Awards and any other outstanding Awards granted under the
Plan, but the number of Shares subject to any Award shall always
be a whole number. The Committee, in its sole discretion, shall
determine the kind of securities or other property substituted
and the amount of any substitution or adjustment made, and the
Committees determination shall be final, binding and
conclusive. Any fractional Shares otherwise issuable in
connection with such substitution or adjustment shall be
eliminated. Notwithstanding the foregoing, no substitution or
adjustment shall be made which will result in an Award becoming
subject to the terms and conditions of Code Section 409A,
unless agreed upon by the Committee and the participant.
(d)
Annual Award Limit.
No participant
may be granted Stock Options or other Awards under the Plan with
respect to an aggregate of more than 500,000 Shares
(subject to adjustment as provided in Section 3(c) hereof)
during any calendar year.
Section 4.
Eligibility.
Grants may be made from time to time to those officers,
employees and directors of the Company, a Subsidiary or an
Affiliate who are designated by the Committee in its sole and
exclusive discretion. Eligible persons may include, but shall
not necessarily be limited to, officers and directors of the
Company and any Subsidiary or Affiliate; however, Stock Options
intended to qualify as Incentive Stock Options shall be granted
only to eligible persons while actually employed by the Company,
a Subsidiary or an Affiliate. The Committee may grant more than
one Award to the same eligible person. No Award shall be granted
to any eligible person during any period of time when such
eligible person is on a leave of absence. Awards to be granted
to directors, which may include members of the Committee, must
be approved and granted by the Board.
Section 5.
Stock
Options.
(a)
Grant.
Stock Options may be granted
alone, in addition to or in tandem with other Awards granted
under the Plan or cash or other awards made outside the Plan.
The Committee shall determine the individuals to whom, and the
time or times at which, grants of Stock Options will be made,
the number of Shares purchasable under each Stock Option, and
the other terms and conditions of the Stock Options in addition
to those set forth in Sections 5(b) and 5(c).
Stock Options granted under the Plan may be of two types, which
shall be indicated on their face: (i) Incentive Stock
Options or (ii) Non-Qualified Stock Options. Subject to
Section 5(c), the Committee shall have the authority to
grant to any participant Incentive Stock Options, Non-Qualified
Stock Options or both types of Stock Options.
A-4
(b)
Terms and Conditions.
A Stock Option
under the Plan shall be evidenced by an agreement (an
Option Agreement), shall be subject to the following
terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the
Committee shall determine:
(1)
Option Price
. The option price per
share of Shares purchasable under a Non-Qualified Stock Option
or an Incentive Stock Option shall be determined by the
Committee at the time of grant and shall be not less than 100%
of the Fair Market Value of the Shares at the date of grant (or,
with respect to an Incentive Stock Option, 110% of the Fair
Market Value of the Shares at the date of grant in the case of a
participant who at the date of grant owns Shares possessing more
than 10% of the total combined voting power of all classes of
stock of the Company or its parent or Subsidiary corporations
(as determined under Sections 424(d), (e) and
(f) of the Code)).
(2)
Option Term
. The term of each Stock
Option shall be determined by the Committee, but may not exceed
ten years from the date the Option is granted (or, with respect
to an Incentive Stock Option, five years in the case of a
participant who at the date of grant owns Shares possessing more
than 10% of the total combined voting power of all classes of
stock of the Company or its parent or Subsidiary corporations
(as determined under Sections 424(d), (e) and
(f) of the Code)).
(3)
Exercise
. Stock Options shall be
exercisable at such time or times and shall be subject to such
terms and conditions as shall be determined by the Committee at
or after grant and permitted by Code Section 409A or agreed
upon in writing by the Committee and the participant; but,
except as provided in Section 5(b)(6) and Section 12,
unless otherwise determined by the Committee at or after grant,
no Stock Option shall be exercisable prior to six months and one
day following the date of grant. If any Stock Option is
exercisable only in installments or only after specified
exercise dates, the Committee may waive, in whole or in part,
such installment exercise provisions, and may accelerate any
exercise date or dates, at any time at or after grant, based on
such factors as the Committee shall determine in its sole
discretion; provided, however, the Committee may not waive,
without the participants consent, such installment
exercise provisions or accelerate any exercise dates with
respect to a 409A Award if doing so would result in any adverse
tax consequences for the optionee under Code Section 409A
and the regulations promulgated thereunder.
(4)
Method of Exercise
. Subject to any
installment exercise provisions that apply with respect to any
Stock Option, Code Section 409A and the regulations
promulgated thereunder, and Section 5(b)(3), a Stock Option
may be exercised in whole or in part, at any time during the
Option period, by the holder thereof giving to the Company
written notice of exercise specifying the number of Shares to be
purchased.
That notice shall be accompanied by payment in full of the
Option price of the Shares for which a Stock Option is
exercised, and the Committee shall determine the acceptable form
of consideration for exercising a Stock Option, including the
method of payment, either through the terms of the Option
Agreement or at the time of exercise of a Stock Option.
Acceptable forms of consideration may include:
(A) cash;
(B) check or wire transfer (denominated in
U.S. Dollars);
(C) subject to any conditions or limitations established by
the Committee, other Shares which (A) in the case of Shares
acquired from the Company (whether upon the exercise of a Stock
Option or otherwise), have been owned by the participant for
more than six months on the date of surrender (unless this
condition is waived by the Committee), and (B) have a Fair
Market Value on the date of surrender equal to or greater than
the aggregate exercise price of the Shares as to which said
Stock Option is being exercised (it being agreed that the excess
of the Fair Market Value over the aggregate exercise price shall
be refunded to the participant in cash);
(D) subject to any conditions or limitations established by
the Committee, the Company withholding shares otherwise issuable
upon exercise of a Stock Option;
(E) consideration received by the Company under a
broker-assisted sale and remittance program acceptable to the
Committee;
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(F) such other consideration and method of payment for the
issuance of Shares to the extent permitted by applicable
law; or
(G) any combination of the foregoing methods of payment.
No Shares shall be issued upon exercise of an Option until full
payment has been made. Except in connection with the tandem
award of Dividend Equivalent Rights, a participant shall not
have rights to dividends or any other rights of a shareholder
with respect to any Shares subject to an Option unless and until
the participant has given written notice of exercise, has paid
in full for those Shares, has given, if requested, the
representation described in Section 15(a), and those Shares
have been issued to the participant.
(5)
Non-Transferability of Options
. No
Stock Option shall be transferable by any participant other than
by will or by the laws of descent and distribution or pursuant
to a qualified domestic relations order (as defined in the Code
or the Employee Retirement Income Security Act of 1974, as
amended) except that, if so provided in the Option Agreement,
the participant may transfer the Option, other than an Incentive
Stock Option, during the participants lifetime to one or
more members of the participants family, to one or more
trusts for the benefit of one or more of the participants
family, or to a partnership or partnerships of members of the
participants family, or to a charitable organization as
defined in Section 501(c)(3) of the Code, provided that the
transfer would not result in the loss of any exemption under
Rule 16b-3
of the Exchange Act with respect to any Option. The transferee
of an Option will be subject to all restrictions, terms and
conditions applicable to the Option prior to its transfer,
except that the Option will not be further transferable by the
transferee other than by will or by the laws of descent and
distribution.
(6)
Termination of Employment
(i)
Termination by Death.
Subject to
Sections 5(b)(3) and 5(c), if any participants
employment with the Company or any Subsidiary or Affiliate
terminates by reason of death, any Stock Option held by that
participant shall become immediately and automatically vested
and exercisable. If termination of a participants
employment is due to death, then any Stock Option held by that
participant may thereafter be exercised for a period of two
years (or with respect to an Incentive Stock Option, for a
period of one year) (or such other period as the Committee may
specify at or after grant) from the date of death.
Notwithstanding the foregoing, in no event will any Stock Option
be exercisable after the expiration of the option period of such
Option. The balance of the Stock Option shall be forfeited if
not exercised within two years (or one year with respect to
Incentive Stock Options).
(ii)
Termination by Reason of
Disability
. Subject to Sections 5(b)(3) and
5(c), if a participants employment with the Company or any
Subsidiary or Affiliate terminates by reason of Disability, any
Stock Option held by that participant shall become immediately
and automatically vested and exercisable. If termination of a
participants employment is due to Disability, then any
Stock Option held by that participant may thereafter be
exercised by the participant or by the participants duly
authorized legal representative if the participant is unable to
exercise the Option as a result of the participants
Disability, for a period of two years (or with respect to an
Incentive Stock Option, for a period of one year) (or such other
period as the Committee may specify at or after grant) from the
date of such termination of employment; and if the participant
dies within that two year period (or such other period as the
Committee may specify at or after grant), any unexercised Stock
Option held by that participant shall thereafter be exercisable
by the estate of the participant (acting through its fiduciary)
for the duration of the two-year period from the date of that
termination of employment. Notwithstanding the foregoing, in no
event will any Stock Option be exercisable after the expiration
of the option period of such Option. The balance of the Stock
Option shall be forfeited if not exercised within two years (or
one year with respect to Incentive Stock Options).
(iii)
Termination for Cause
. Unless
otherwise determined by the Committee at or after the time of
granting any Stock Option, if a participants employment
with the Company or any Subsidiary or Affiliate terminates for
Cause, any unvested Stock Options will be forfeited and
terminated immediately upon termination and any vested Stock
Options held by that participant shall terminate 30 days
after the date employment terminates. Notwithstanding the
foregoing, in no event will any Stock Option be exercisable
after
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the expiration of the option period of such Option. The balance
of the Stock Option shall be forfeited if not exercised within
30 days.
(iv)
Other Termination
. Unless otherwise
determined by the Committee at or after the time of granting any
Stock Option, if a participants employment with the
Company or any Subsidiary or Affiliate terminates for any reason
other than death, Disability, or for Cause all Stock Options
held by that participant shall terminate 90 days after the
date employment terminates. Notwithstanding the foregoing, in no
event will any Stock Option be exercisable after the expiration
of the option period of such Option. The balance of the Stock
Option shall be forfeited if not exercised within 90 days.
(v) Leave of Absence.
In the event a
participant is granted a leave of absence by the Company or any
Subsidiary or Affiliate to enter military service or because of
sickness, the participants employment with the Company or
such Subsidiary or Affiliate will not be considered terminated,
and the participant shall be deemed an employee of the Company
or such Subsidiary or Affiliate during such leave of absence or
any extension thereof granted by the Company or such Subsidiary
or Affiliate. Notwithstanding the foregoing, in the case of an
Incentive Stock Option, a leave of absence of more than
90 days will be viewed as a termination of employment
unless continued employment is guaranteed by contract or statute.
(c)
Incentive Stock
Options.
Notwithstanding Sections 5(b)(5)
and (6), an Incentive Stock Option shall be exercisable by
(i) a participants authorized legal representative
(if the participant is unable to exercise the Incentive Stock
Option as a result of the participants Disability) only
if, and to the extent, permitted by Section 422 of the Code
and (ii) by the participants estate, in the case of
death, or authorized legal representative, in the case of
Disability, no later than 10 years from the date the
Incentive Stock Option was granted (in addition to any other
restrictions or limitations that may apply). Anything in the
Plan to the contrary notwithstanding, no term or provision of
the Plan relating to Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be exercised, so as to
disqualify the Plan under Section 422 of the Code, or,
without the consent of the participants affected, to disqualify
any Incentive Stock Option under that Section 422 or any
successor Section thereto.
(d)
Buyout Provisions.
The Committee may
at any time buy out for a payment in cash, Shares, Deferred
Shares or Restricted Shares, an Option previously granted, based
on such terms and conditions as the Committee shall establish
and agree upon with the participant, but (i) no such
transaction involving a Section 16 Participant shall be
structured or effected in a manner that would result in any
liability on the part of the participant under
Section 16(b) of the Exchange Act or the rules and
regulations promulgated thereunder, and (ii) no such
transaction may buy out or cancel outstanding Options or Share
Appreciation Rights in exchange for cash, Options, Share
Appreciation Rights or other Awards with an exercise price that
is less than the exercise price of the original Options or Share
Appreciation Rights without shareholder approval. Further, any
such buy out shall comply with the requirements of Code
Section 409A and the regulations promulgated thereunder,
unless otherwise agreed upon in writing by the Committee and the
participant.
Section 6.
Share
Appreciation Rights.
(a)
Grant.
Share Appreciation Rights may
be granted in connection with all or any part of an Option,
either concurrently with the grant of the Option or, if the
Option is a Non-Qualified Stock Option, by an amendment to the
Option at any time thereafter during the term of the Option.
Share Appreciation Rights may be exercised in whole or in part
at such times and under such conditions as may be specified by
the Committee in the participants Option Agreement;
provided, that no Share Appreciation Right granted in connection
with all or any part of an Option shall be exercisable for less
than the Fair Market Value of the underlying Common Shares as of
the date of the original grant of the Option unless such Share
Appreciation Right or Option is a 409A Award, as provided for in
the applicable Award Agreement.
(b)
Terms and Conditions.
The following
terms and conditions will apply to all Share Appreciation Rights
that are granted in connection with Options:
(1)
Rights
. Share Appreciation Rights
shall entitle the participant, upon exercise of all or any part
of the Share Appreciation Rights, to surrender to the Company,
unexercised, that portion of the underlying Option
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relating to the same number of Shares as is covered by the Share
Appreciation Rights (or the portion of the Share Appreciation
Rights so exercised) and to receive in exchange from the Company
an amount equal to the excess of (x) the Fair Market Value,
on the date of exercise, of the Shares covered by the
surrendered portion of the underlying Option over (y) the
exercise price of the Shares covered by the surrendered portion
of the underlying Option. The Committee may limit the amount
that the participant will be entitled to receive upon exercise
of the Share Appreciation Right, as provided for in the
applicable Award Agreement.
(2)
Surrender of Option
. Upon the
exercise of the Share Appreciation Right and surrender of the
related portion of the underlying Option, the Option, to the
extent surrendered, will not thereafter be exercisable. The
underlying Option may provide that such Share Appreciation
Rights will be payable solely in cash.
(3)
Exercise
. In addition to any further
conditions upon exercise that may be imposed by the Committee,
the Share Appreciation Rights shall be exercisable only to the
extent that the related Option is exercisable, except that,
unless otherwise determined by the Committee at or after grant,
in no event will a Share Appreciation Right held by a
Section 16 Participant be exercisable within the first six
months after it is awarded even though the related Option is or
becomes exercisable, and each Share Appreciation Right will
expire no later than the date on which the related Option
expires. A Share Appreciation Right may be exercised only at a
time when the Fair Market Value of the Shares covered by the
Share Appreciation Right exceeds the exercise price of the
Shares covered by the underlying Option.
(4)
Method of Exercise
. Share
Appreciation Rights may be exercised by the participant giving
written notice of the exercise to the Company, stating the
number of Share Appreciation Rights the participant has elected
to exercise and surrendering the portion of the underlying
Option relating to the same number of Shares as the number of
Share Appreciation Rights elected to be exercised.
(5)
Payment
. The manner in which the
Companys obligation arising upon the exercise of the Share
Appreciation Right will be paid will be determined by the
Committee and shall be set forth in the participants
Option Agreement. The Committee may provide for payment in
Shares or cash, or a fixed combination of Shares or cash, or the
Committee may reserve the right to determine the manner of
payment at the time the Share Appreciation Right is exercised.
Shares issued upon the exercise of a Share Appreciation Right
will be valued at their Fair Market Value on the date of
exercise.
Section 7.
Restricted
Shares.
(a)
Grant.
Restricted Shares may be
issued alone, in addition to or in tandem with other Awards
under the Plan or cash or other awards made outside the Plan.
The Committee shall determine the individuals to whom, and the
time or times at which, grants of Restricted Shares will be
made, the number of Restricted Shares to be awarded to each
participant, the price (if any) to be paid by the participant
(subject to Section 7(b)), the date or dates upon which
Restricted Share Awards will vest, the period or periods within
which those Restricted Share Awards may be subject to
forfeiture, and the other terms and conditions of those Awards
in addition to those set forth in Section 7(b).
The Committee may condition the grant of Restricted Shares upon
the attainment of specified performance goals or such other
factors as the Committee may determine in its sole discretion.
(b)
Terms and Conditions.
Restricted
Shares awarded under the Plan shall be subject to the following
terms and conditions and such additional terms and conditions,
not inconsistent with the provisions of the Plan, as the
Committee shall deem desirable. A participant who receives a
Restricted Share Award shall not have any rights with respect to
that Award, unless and until the participant has executed an
agreement evidencing the Award in the form approved from time to
time by the Committee, has delivered a fully executed copy
thereof to the Company, and has otherwise complied with the
applicable terms and conditions of that Award.
(1) The purchase price (if any) for Restricted Shares shall
be determined by the Committee at the time of grant.
(2) Awards of Restricted Shares must be accepted by
executing a Restricted Share Award Agreement and paying the
price (if any) that is required under Section 7(b)(1).
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(3) Each participant receiving a Restricted Share Award
shall be issued a stock certificate in respect of those
Restricted Shares. The certificate shall be registered in the
name of the participant and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable
to the Award.
(4) The Committee shall require that the stock certificates
evidencing the Restricted Shares be held in custody by the
Company until the restrictions thereon shall have lapsed, and
that, as a condition of any Restricted Shares Award, the
participant shall have delivered to the Company a stock power,
endorsed in blank, relating to the Shares covered by that Award.
(5) Subject to the provisions of this Plan and the
Restricted Share Award Agreement, during a period set by the
Committee commencing with the date of any Award (the
Restriction Period), the participant shall not be
permitted to sell, transfer, pledge, assign or otherwise
encumber the Restricted Shares covered by that Award. The
Restriction Period shall not be less than three years in
duration (Minimum Restriction Period) unless
otherwise determined by the Committee at the time of grant.
Subject to these limitations and the Minimum Restriction Period
requirement, the Committee, in its sole discretion, may provide
for the lapse of restrictions in installments and may accelerate
or waive restrictions, in whole or in part, based on service,
performance or such other factors and criteria as the Committee
may determine in its sole discretion.
(6) Except as provided in this Section 7(b)(6) and
Sections 7(b)(5) and 7(b)(7), the participant shall have, with
respect to the Restricted Shares awarded, all of the rights of a
shareholder of the Company, including the right to vote the
Shares and the right to receive any dividends. The Committee, in
its sole discretion, as determined at the time of Award, may
permit or require the payment of cash dividends to be deferred
and subject to forfeiture and, if the Committee so determines,
reinvested, subject to Section 15(f), in additional
Restricted Shares to the extent Shares are available under
Section 3, or otherwise reinvested. Unless the Committee or
Board determines otherwise, Share dividends issued with respect
to Restricted Shares shall be treated as additional Restricted
Shares that are subject to the same restrictions and other terms
and conditions that apply to the Shares with respect to which
such dividends are issued.
(7) No Restricted Shares shall be transferable by a
participant other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order
(as defined in the Code or the Employee Retirement Income
Security Act of 1974, as amended) except that, if so provided in
the Restricted Shares Agreement, the participant may transfer
the Restricted Shares, during the participants lifetime to
one or more members of the participants family, to one or
more trusts for the benefit of one or more of the
participants family, to a partnership or partnerships of
members of the participants family, or to a charitable
organization as defined in Section 501(c)(3) of the Code,
provided that the transfer would not result in the loss of any
exemption under
Rule 16b-3
of the Exchange Act with respect to any Restricted Shares. The
transferee of Restricted Shares will be subject to all
restrictions, terms and conditions applicable to the Restricted
Shares prior to its transfer, except that the Restricted Shares
will not be further transferable by the transferee other than by
will or by the laws of descent and distribution.
(8) Unless otherwise determined by the Committee at or
after the time of granting any Restricted Shares, if a
participants employment with the Company or any Subsidiary
or Affiliate terminates by reason of death, any Restricted
Shares held by that participant shall thereafter vest and any
restriction shall lapse.
(9) Unless otherwise determined by the Committee at or
after the time of granting any Restricted Shares, if a
participants employment with the Company or any Subsidiary
or Affiliate terminates by reason of Disability, any Restricted
Shares held by that participant shall thereafter vest and any
restriction shall lapse.
(10) Unless otherwise determined by the Committee at or
after the time of granting any Restricted Shares, if a
participants employment with the Company or any Subsidiary
or Affiliate terminates for any reason other than death or
Disability, the Restricted Shares held by that participant that
are unvested or subject to restriction at the time of
termination shall thereupon be forfeited.
(c)
Minimum Value.
In order to better
ensure that Award payments actually reflect the performance of
the Company and service of the participant, the Committee may
provide, in its sole discretion, for a tandem performance-based
or other award designed to guarantee a minimum value, payable in
cash or Shares, to the
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recipient of a Restricted Share Award, subject to such
performance, future service, deferral and other terms and
conditions as may be specified by the Committee.
Section 8.
Deferred
Shares.
(a)
Grant.
Deferred Shares may be awarded
alone, in addition to or in tandem with other Awards granted
under the Plan or cash or other awards made outside the Plan.
The Committee shall determine the individuals to whom, and the
time or times at which, Deferred Shares shall be awarded, the
number of Deferred Shares to be awarded to any participant, the
duration of the period (the Deferral Period) during
which, and the conditions under which, receipt of the Shares
will be deferred, and the other terms and conditions of the
Award in addition to those set forth in Section 8(b).
The Committee may condition the grant of Deferred Shares upon
the attainment of specified performance goals or such other
factors as the Committee shall determine in its sole discretion.
(b)
Terms and Conditions.
Deferred Share
Awards shall be subject to the following terms and conditions
and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall
deem desirable:
(1) The purchase price for Deferred Shares shall be
determined at the time of grant by the Committee. Subject to the
provisions of the Plan and the Award Agreement referred to in
Section 8(b)(10), Deferred Share Awards may not be sold,
assigned, transferred, pledged or otherwise encumbered during
the Deferral Period. At the expiration of the Deferral Period
(or the Elective Deferral Period referred to in
Section 8(b)(9), where applicable), share certificates
shall be delivered to the participant, or the participants
legal representative, for the Shares covered by the Deferred
Share Award. Unless otherwise determined by the Committee at or
after grant, the Deferral Period applicable to any Deferred
Share Award shall not be less than six months and one day
(Minimum Deferral Period).
(2) To the extent a Deferred Share Award is a 409A Award,
the Committee will grant the Award in a manner as to comply with
the requirements of Code Section 409A and the regulations
promulgated thereunder and in accordance with Section 11(b).
(3) Amounts equal to any dividends declared during the
Deferral Period with respect to the number of Shares covered by
a Deferred Share Award will be paid to the participant in cash,
deferred or deemed to be reinvested in additional Deferred
Shares that are subject to the same restrictions and other terms
and conditions that apply to the Deferred Shares with respect to
which such dividends are issued, all as determined by the
Committee, in its sole discretion, at the time of the Award.
(4) No Deferred Shares shall be transferable by a
participant other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order
(as defined in the Code or the Employee Retirement Income
Security Act of 1974, as amended) except that, if so provided in
the Deferred Shares Agreement, the participant may transfer the
Deferred Shares during the participants lifetime to one or
more members of the participants family, to one or more
trusts for the benefit of one or more of the participants
family, to a partnership or partnerships of members of the
participants family, or to a charitable organization as
defined in Section 501(c)(3) of the Code, provided that the
transfer would not result in the loss of any exemption under
Rule 16b-3
of the Exchange Act with respect to any Deferred Shares. The
transferee of Deferred Shares will be subject to all
restrictions, terms and conditions applicable to the Deferred
Shares prior to their transfer, except that the Deferred Shares
will not be further transferable by the transferee other than by
will or by the laws of descent and distribution.
(5) Unless otherwise determined by the Committee at the
time of granting any Deferred Shares, if a participants
employment by the Company or any Subsidiary or Affiliate
terminates by reason of death, any Deferred Shares held by such
participant shall thereafter vest or any restriction shall
lapse, and the participants representative shall receive
the Deferred Shares in one lump sum within 10 business days
following such death; provided, however, that the
participants representative must first provide
satisfactory proof of death to the Committee.
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(6) Unless otherwise determined by the Committee at the
time of granting any Deferred Shares, if a participants
employment by the Company or any Subsidiary or Affiliate
terminates by reason of Disability, any Deferred Shares held by
such participant shall thereafter vest or any restriction lapse,
and the participant or the participants representative
shall be issued the Deferred Shares in one lump sum within 10
business days following such Disability. A determination of
Disability shall be made by the Committee.
(7) Unless otherwise determined by the Committee at or
after the time of granting any Deferred Share Award, if a
participants employment by the Company or any Subsidiary
or Affiliate terminates for any reason other than death or
Disability, all Deferred Shares held by such participant which
are unvested or subject to restriction shall thereupon be
forfeited.
(8) Based on service, performance or such other factors or
criteria as the Committee may determine, the Committee may, at
or after grant, accelerate the vesting of all or any part of any
Deferred Share Award, subject in all cases to the Minimum
Deferral Period requirement.
(9) A participant may elect to further defer receipt of a
Deferred Share Award (or an installment of an Award) for a
specified period or until a specified event (the Elective
Deferral Period), subject in each case to the
Committees approval, the terms of this Section 8,
such other terms as are determined by the Committee, all in its
sole discretion, and in compliance with the terms and conditions
of Code Section 409A and the regulations promulgated
thereunder. Subject to any exceptions approved by the Committee,
such election must be made at least 12 months prior to the
date the Deferral Period is set to expire and the Elective
Deferral Period must be for a period of at least five years from
the date the Deferral Period is set to expire, except to the
extent the holder of a Deferred Share becomes entitled to
receive the underlying Shares due to death or Disability.
(10) Each such Award shall be confirmed by, and subject to
the terms of, a Deferred Share Award Agreement evidencing the
Award in the form approved from time to time by the Committee.
(c)
Minimum Value Provisions.
In order to
better ensure that Award payments actually reflect the
performance of the Company and service of the participant, the
Committee may provide, in its sole discretion, for a tandem
performance-based or other Award designed to guarantee a minimum
value, payable in cash or Shares to the recipient of a Deferred
Share Award, subject to such performance, future service,
deferral and other terms and conditions as may be specified by
the Committee.
Section 9.
Share
Purchase Rights.
(a)
Grant.
Share Purchase Rights may be
granted alone, in addition to or in tandem with other Awards
granted under the Plan or cash or other awards made outside the
Plan. The Committee shall determine the individuals to whom, and
the time or times at which, grants of Share Purchase Rights will
be made, the number of Shares which may be purchased pursuant to
the Share Purchase Rights, and the other terms and conditions of
the Share Purchase Rights in addition to those set forth in
Section 9(b). The Shares subject to the Share Purchase
Rights may be purchased, as determined by the Committee at the
time of grant:
(1) at the Fair Market Value of such Shares on the date of
grant; or
(2) at 85% of the Fair Market Value of such Shares on the
date of grant if the grant of Share Purchase Rights is made in
lieu of cash compensation.
Subject to Section 9(b) hereof, the Committee may also
impose such deferral, forfeiture or other terms and conditions
as it shall determine, in its sole discretion, on such Share
Purchase Rights or the exercise thereof.
Each Share Purchase Right Award shall be confirmed by, and be
subject to the terms of, a Share Purchase Rights Agreement,
which shall be in form approved by the Committee.
(b)
Terms and Conditions.
Share Purchase
Rights may contain such additional terms and conditions not
inconsistent with the terms of the Plan as the Committee shall
deem desirable, and shall generally be exercisable for such
period as shall be determined by the Committee. However, unless
otherwise determined by the Committee at or after grant, Share
Purchase Rights granted to Section 16 Participants shall
not become exercisable earlier than six
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months and one day after the grant date. Share Purchase Rights
shall not be transferable by a participant other than by will or
by the laws of descent and distribution.
Section 10.
Other
Share-Based Awards.
(a)
Grant.
Other Awards of Shares and
other Awards that are valued, in whole or in part, by reference
to, or are otherwise based on, Shares, including, without
limitation, performance shares, convertible preferred shares,
convertible debentures, exchangeable securities, dividend
equivalent rights and Share Awards or options valued by
reference to book value or Subsidiary performance, may be
granted alone, in addition to or in tandem with other Awards
granted under the Plan or cash or other awards made outside the
Plan.
At the time the Shares or Other Share-Based Awards are granted,
the Committee shall determine the individuals to whom and the
time or times at which such Shares or Other Share-Based Awards
shall be awarded, the number of Shares to be used in computing
an Award or which are to be awarded pursuant to such Awards, the
consideration, if any, to be paid for such Shares or Other
Share-Based Awards, and all other terms and conditions of the
Awards in addition to those set forth in Section 10(b). The
Committee will also have the right, at its sole discretion, to
settle such Awards in Shares, Restricted Shares or cash in an
amount equal to the Fair Market Value of the Shares or Other
Share-Based Awards at the time of settlement.
The provisions of Other Share-Based Awards need not be the same
with respect to each participant.
(b)
Terms and Conditions.
Other
Share-Based Awards shall be subject to the following terms and
conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable:
(1) Subject to the provisions of this Plan and the Award
Agreement referred to in Section 10(b)(5) below, Shares
awarded or subject to Awards made under this Section 10 may
not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the Shares are issued, or,
if later, the date on which any applicable restriction,
performance, holding or deferral period or requirement is
satisfied or lapses. Unless otherwise determined by the
Committee at or after grant, all Shares or Other Share-Based
Awards granted under this Section 10 shall be subject to a
minimum holding period (including any applicable restriction,
performance
and/or
deferral periods) of six months and one day (Minimum
Holding Period).
(2) Subject to the provisions of this Plan and the Award
Agreement and unless otherwise determined by the Committee at
the time of grant, the recipient of an Other Share-Based Award
shall be entitled to receive, currently or on a deferred basis,
interest or dividends or interest or dividend equivalents with
respect to the number of Shares covered by the Award, as
determined at the time of the Award by the Committee, in its
sole discretion, subject, if applicable, to the provisions of
Code Section 409A and the regulations promulgated
thereunder, and the Committee may provide that such amounts (if
any) shall be deemed to have been reinvested in additional
Shares or otherwise reinvested.
(3) Subject to the Minimum Holding Period, any Other
Share-Based Award and any Shares covered by any such Award shall
vest or be forfeited to the extent, at the times and subject to
the conditions, if any, provided in the Award Agreement, as
determined by the Committee in its sole discretion.
(4) In the event of the participants Disability or
death, or in cases of special circumstances, the Committee may,
in its sole discretion, waive, in whole or in part, any or all
of the remaining limitations imposed hereunder or under any
related Award Agreement (if any) with respect to any part or all
of any Award under this Section 10, provided that the
Minimum Holding Period requirement may not be waived, except in
case of a participants death. Notwithstanding the
foregoing, the Committee may not waive, in whole or in part, any
remaining limitations imposed with respect to any Award if such
waiver results in an Awards failure to comply with the
requirements of Code Section 409A and the regulations
promulgated thereunder, unless agreed upon in writing by the
Committee and Participant.
(5) Each Award shall be confirmed by, and subject to the
terms of, an agreement or other instrument evidencing the Award
in the form approved from time to time by the Committee, the
Company and the participant.
A-12
(6) Shares (including securities convertible into Shares)
issued under this Section 10 on a bonus basis may be issued
for no cash consideration. Shares (including securities
convertible into Shares) purchased pursuant to a purchase right
awarded under this Section 10 shall bear a price of at
least 85% of the Fair Market Value of the Shares on the date of
grant. The purchase price of such Shares, and of any Other
Share-Based Award granted hereunder, or the formula by which
such price is to be determined, shall be fixed by the Committee
at the time of grant.
(7) In the event that any derivative security,
as defined in
Rule 16a-1(c)
(or any successor thereto) promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act,
is awarded pursuant to this Section 10 to any
Section 16 Participant, such derivative security shall not
be transferable other than by will or by the laws of descent and
distribution.
(c)
Dividend Equivalent Rights.
A
Dividend Equivalent Right is an Award entitling the participant
to receive credits based on cash distributions that would have
been paid on the Shares specified in the Dividend Equivalent
Right (or other Award to which it relates) if such Shares had
been issued to and held by the participant. A Dividend
Equivalent Right may be granted hereunder to any participant as
a component of another Award or as a freestanding award.
(1)
Terms and Conditions
. In addition to
the terms and conditions set forth in Section 10(b),
Dividend Equivalent Rights shall be subject to the following
additional terms and conditions. Dividend Equivalents credited
to the holder of a Dividend Equivalent Right may be paid
currently or may be deemed to be reinvested in additional
Shares, which may thereafter accrue additional Dividend
Equivalent Rights. Any such reinvestment shall be at Fair Market
Value on the date of reinvestment. Dividend Equivalent Rights
may be settled in cash or Shares or a combination thereof, in a
single installment or installments, all determined in the sole
discretion of the Committee. A Dividend Equivalent Right granted
as a component of another Award may provide that such Dividend
Equivalent Right shall be settled upon exercise, settlement, or
payment of, or lapse of restrictions on, such other Award, and
that such Dividend Equivalent Right shall expire or be forfeited
or annulled under the same conditions as such other Award. A
Dividend Equivalent Right granted as a component of another
Award may also contain terms and conditions different from such
other Award.
(2)
Interest Equivalents.
Any Award under
this Plan that is settled in whole or in part in cash on a
deferred basis may provide in the Award Agreement for interest
equivalents to be credited with respect to such cash payment.
Interest equivalents may be compounded and shall be paid upon
such terms and conditions as may be specified by the grant.
(3)
Termination of Employment
. Except as
may otherwise be provided by the Committee either in the Award
Agreement or in writing after the Award Agreement is issued, a
participants rights in all Dividend Equivalent Rights or
interest equivalents (other than any accrued but unpaid Dividend
Equivalent Rights or interest equivalents) shall automatically
terminate upon the date that a participants employment
with the Company or any Subsidiary or Affiliate terminates for
any reason other than death or Disability. Any accrued but
unpaid Dividend Equivalent Rights or interest equivalents shall
be paid in one lump sum amount by the Company within
90 days after the termination of the participants
employment with the Company or any Subsidiary or Affiliate.
Section 11.
Form
and Timing of Payment under Awards; Deferrals.
(a)
Form and Timing of Payment.
Subject
to the terms of the Plan and any applicable Award Agreement (as
may be amended pursuant to Section 13 hereof), payments to
be made by the Company, a Subsidiary or Affiliate upon the
exercise of an Option or other Award or settlement of an Award
may be made in such forms as the Committee shall determine,
including, without limitation, cash, Shares, other Awards or
other property, and may be made in a single payment or transfer,
in installments, or on a deferred basis; provided, however that
settlement in other than Shares or payment on a deferred basis
must be authorized by the applicable Award Agreement. The
settlement of any Award may be accelerated and cash paid in lieu
of Shares in connection with such settlement; provided, however
that settlement in cash must be authorized by the applicable
Award Agreement. The acceleration of any Award that does not
result in a cash settlement must also be authorized by the
applicable Award Agreement. Installment or deferred payments may
be required by the Committee or permitted at the election of the
participant
A-13
on terms and conditions approved by the Committee, including
without limitation the ability to defer awards pursuant to any
deferred compensation plan maintained by the Company, a
Subsidiary or Affiliate. Payments may include, without
limitation, provisions for the payment or crediting of a
reasonable interest rate on installment or deferred payments or
the grant or crediting of Dividend Equivalents or other amounts
in respect of installment or deferred payments denominated in
Shares.
(b)
Certain Limitations on Awards to Ensure Compliance
with Code Section 409A.
(1)
409A Awards and Deferrals.
Other
provisions of the Plan notwithstanding, the terms of any 409A
Award, including any authority of the Company or the Committee
and rights of the participant with respect to the 409A Award,
shall be limited to those terms permitted under Code
Section 409A and the regulations promulgated thereunder.
The following rules will apply to 409A Awards:
If a participant is permitted to elect to defer an Award or any
payment under an Award, such election shall be permitted only at
times in compliance with Code Section 409A and the
regulations promulgated thereunder;
The Company shall have no authority to accelerate or delay
distributions relating to 409A Awards in excess of the authority
permitted under Code Section 409A and the regulations
promulgated thereunder;
Any distribution of a 409A Award triggered by a
Participants termination of employment shall be made only
at the time that the Participant has had a Separation from
Service within the meaning of Code Section 409A (or
at such earlier time preceding a termination of employment that
there occurs another event triggering a distribution under the
Plan or the applicable Award Agreement in compliance with Code
Section 409A and the regulations promulgated thereunder);
Any distribution of a 409A Award to a Specified
Employee, as determined under Code Section 409A,
after Separation from Service, shall occur at the expiration of
the six-month period following said Specified Employees
Separation from Service. In the case of installment payments,
this six-month delay shall not affect the timing of any
installment otherwise payable after the six-month delay
period; and
In the case of any distribution of a 409A Award, the time and
form of payment for such distribution will be specified in the
Award Agreement; provided that, if the time and form of payment
for such distribution is not otherwise specified in the Plan or
an Award Agreement or other governing document, the distribution
shall be made in one lump sum amount on or about March 10 (and
not later than March 15) in the calendar year following the
calendar year at which the settlement of the Award is specified
to occur, any applicable restriction lapses, or there is no
longer a substantial risk of forfeiture applicable to such
amounts.
(2)
Distribution upon Vesting
. In the
case of any Award providing for a distribution upon the lapse of
a substantial risk of forfeiture, the time and form of payment
for such distribution will be specified in the Award Agreement;
provided that, if the timing and form of payment of such
distribution is not otherwise specified in the Plan or an Award
Agreement or other governing document, the distribution shall be
made in one lump sum amount on March 15 of the calendar year
following the calendar year in which the substantial risk of
forfeiture lapses.
(3)
Scope and Application of this
Provision.
For purposes of the Plan, references
to a term or event (including any authority or right of the
Company, the Committee or a participant) being
permitted under Code Section 409A means that
the term or event will not cause the participant to be deemed to
be in constructive receipt of compensation relating to the 409A
Award prior to the distribution of cash, shares or other
property or to be liable for payment of interest or a tax
penalty under Code Section 409A.
(4)
Interpretation
. If and to the extent
that any provision of an Award is required or intended to comply
with Code Section 409A, such provision shall be administered and
interpreted in a manner consistent with the requirements of Code
Section 409A. If and solely to the extent that any such
provision of an Award as currently written would conflict with
or result in adverse consequences to a participant under Code
Section 409A, the Committee shall have the authority,
without the consent of the participant, to administer such
provision and to amend the Award with respect to such provision
to the extent the Committee deems necessary for the purposes
A-14
of avoiding any portion of the Shares or amounts to be delivered
to the participant being subject to additional income or other
taxes under Code Section 409A.
Section 12.
Change
in Control Provision.
(a)
Impact of Event.
Notwithstanding any
other provisions hereof or in any agreement to the contrary, in
the event of: (1) a Change in Control as
defined in Section 12(b)(1), (2) a 409A Change
in Control as defined in Section 12(b)(2) or
(3) a Potential Change in Control as defined in
Section 12(c), the following provisions shall apply:
(1) Any Stock Options awarded under the Plan not previously
exercisable and vested shall become fully exercisable and vested;
(2) Any Share Appreciation Rights shall become immediately
exercisable;
(3) The restrictions applicable to any Restricted Share
Awards, Deferred Shares, Share Purchase Rights and Other
Share-Based Awards shall lapse and such Shares and Awards shall
be deemed fully vested; and
(4) Subject to Section 3(c), (A) unless otherwise
determined by the Committee in its sole discretion at or after
grant but prior to any Change in Control or Potential Change in
Control, each outstanding Award (other than a 409A Award), in
each case to the extent vested, shall be cashed out (and such
Award terminated) by paying the participant an amount equal to
the excess, if any, of the Change in Control Price
as defined in Section 12(d) as of the date such Change in
Control or such Potential Change in Control is determined to
have occurred over the exercise price or other purchase price,
if any, payable by the participant with respect to such Award or
(B) upon any 409A Change in Control, each outstanding 409A
Award, in each case to the extent vested, shall be cashed out
(and such 409A Award terminated) by paying the participant an
amount equal to the excess, if any, of the Change in Control
Price as of the date such 409A Change in Control is determined
to have occurred over the exercise price or other purchase
price, if any, payable by the participant with respect to such
409A Award. A 409A Award may be cashed out upon a Potential
Change in Control or a Change in Control that does not
constitute a 409A Change in Control only with the written
consent of the Company and the participant.
(b)
Definition of Change in Control
.
(1) A Change in Control means the occurrence of
any of the following: (i) the Board or shareholders of the
Company approve a consolidation or merger in which the Company
is not the surviving corporation, the sale of substantially all
of the assets of the Company, or the liquidation or dissolution
of the Company; (ii) any person or other entity (other than
the Company or a Subsidiary or any Company employee benefit plan
(including any trustee of any such plan acting in its capacity
as trustee)) purchases any Shares (or securities convertible
into Shares) pursuant to a tender or exchange offer without the
prior consent of the Board of Directors, or becomes the
beneficial owner of securities of the Company representing 20%
or more of the voting power of the Companys outstanding
securities; or (iii) during any two-year period,
individuals who at the beginning of such period constitute the
entire Board of Directors cease to constitute a majority of the
Board of Directors, unless the election or the nomination for
election of each new director is approved by at least two-thirds
of the directors then still in office who were directors at the
beginning of that period.
(2) A 409A Change in Control means the date on
which any one of the following occurs: (i) any one person,
or more than one person acting as a group (as determined under
Code Section 409A and the regulations promulgated
thereunder), acquires (or has acquired during the twelve
(12) month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the
Company possessing 30% or more of the total voting power of the
stock of the Company; or (ii) a majority of members of the
Board of Directors is replaced during any
12-month
period by directors whose appointment or election is not
endorsed by a majority of the members of the Board of Directors
before the date of such appointment or election; or
(iii) any one person, or more than one person acting as a
group (as determined under Code Section 409A and the
regulations promulgated thereunder), acquires ownership of stock
of the Company that, together with stock held by such person or
group, constitutes more than 50% of the total fair market value
or total voting power of the stock of the Company; or
(iv) any one person, or more than one person acting as a
group (as determined
A-15
under Code Section 409A and the regulations thereunder),
acquires (or has acquired during the twelve (12) month
period ending on the date of the most recent acquisition by such
person or persons) assets from the Company that have a total
gross fair market value equal to or more than 40% of the total
gross fair market value of all of the assets of the Company
before such acquisition or acquisitions. For this purpose,
gross fair market value means the value of the
assets of the Company, or the value of the assets being disposed
of, determined without regard to any liabilities associated with
such assets.
(c)
Definition of Potential Change in
Control.
For purposes of Section 12(a), a
Potential Change in Control means the happening of
any one of the following:
(1) The approval by the shareholders of the Company of an
agreement by the Company, the consummation of which would result
in a Change in Control of the Company as defined in
Section 12(b)(1); or
(2) The acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than the
Company or a Subsidiary or any Company employee benefit plan
(including any trustee of any such plan acting in its capacity
as trustee)) of securities of the Company representing 5% or
more of the combined voting power of the Companys
outstanding securities and the adoption by the Board of a
resolution to the effect that a Potential Change in Control of
the Company has occurred for purposes of this Plan.
(d)
Change in Control Price.
For purposes
of this Section 12, Change in Control Price
means the highest price per share paid in any transaction
reported on the New York Stock Exchange Composite Index (or, if
the Shares are not then traded on the New York Stock Exchange,
the highest price paid as reported for any national exchange on
which the Shares are then traded) or paid or offered in any bona
fide transaction related to a Change in Control, 409A Change in
Control or Potential Change in Control of the Company, at any
time during the
30-day
period immediately preceding the occurrence of the Change in
Control or 409A Change in Control (or, when applicable, the
occurrence of the Potential Change in Control event), in each
case as determined by the Committee.
Section 13.
Amendments
and Termination.
The Board may at any time, amend, alter or discontinue the Plan,
but no such amendment, alteration or discontinuation shall be
made that would (i) impair the rights of a participant
under an Award theretofore granted, without the
participants consent or (ii) require shareholder
approval under any applicable law or regulation (including any
applicable regulation of an exchange on which the Shares are
traded), unless such shareholder approval is received. The
Company shall submit to the shareholders of the Company, for
their approval, any amendments to the Plan required pursuant to
Section 162(m) of the Code or any material revisions to the
Plan so long as such approval is required by law or regulation
(including any applicable regulation of an exchange on which the
Shares are traded).
The Committee may at any time, in its sole discretion, amend the
terms of any Award, but (i) no such amendment shall be made
that would impair the rights of a participant under an Award
theretofore granted, without the participants consent;
(ii) no such amendment shall be made that would make the
applicable exemptions provided by
Rule 16b-3
under the Exchange Act unavailable to any Section 16
Participant holding the Award without the participants
consent and (iii) no such amendment shall be made if it
would reduce the exercise price of a Stock Option or reduce the
purchase price, if any, of the Shares that are subject to the
Award.
Subject to the above provisions, the Board shall have all
necessary authority to amend the Plan, clarify any provision or
to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.
Section 14.
Unfunded
Status of Plan.
The Plan is intended to constitute an unfunded plan
for incentive and deferred compensation. With respect to any
payment not yet made to a participant by the Company, nothing
contained herein shall give that participant any rights that are
greater than those of a general creditor of the Company.
A-16
Section 15.
General
Provisions.
(a) The Committee may require each participant acquiring
Shares pursuant to an Award under the Plan to represent to and
agree with the Company in writing that the participant is
acquiring the Shares without a view to distribution thereof. The
certificates for any such Shares may include any legend which
the Committee deems appropriate to reflect any restrictions on
transfer.
All Shares or other securities delivered under the Plan shall be
subject to such stop-transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Shares are then
listed, and any applicable federal or state securities laws, and
the Committee may cause a legend or legends to be put on any
certificate for any such Shares to make appropriate reference to
those restrictions.
(b) Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required,
and such arrangements may be either generally applicable or
applicable only in specific cases.
(c) Neither the adoption of the Plan, nor its operation,
nor any document describing, implementing or referring to the
Plan, or any part thereof, shall confer upon any participant
under the Plan any right to continue in the employ, or as a
director, of the Company or any Subsidiary or Affiliate, or
shall in any way affect the right and power of the Company or
any Subsidiary or Affiliate to terminate the employment, or
service as a director, of any participant under the Plan at any
time with or without assigning a reason therefor, to the same
extent as the Company or any Subsidiary or Affiliate might have
done if the Plan had not been adopted.
(d) For purposes of this Plan, a transfer of a participant
between the Company and any Subsidiary or Affiliate shall not be
deemed a termination of employment.
(e) No later than the date as of which an amount first
becomes includable in the gross income of the participant for
federal income tax purposes with respect to any Award under the
Plan, the participant shall pay to the Company, or make
arrangements satisfactory to the Committee regarding the payment
of, any federal, state or local taxes or other items of any kind
required by law to be withheld with respect to that amount.
Subject to the following sentence, unless otherwise determined
by the Committee, withholding obligations may be settled with
Shares, including unrestricted Shares previously owned by the
participant or Shares that are part of the Award that gives rise
to the withholding requirement. Notwithstanding the foregoing,
any right by a Section 16 Participant to elect to settle any tax
withholding obligation with Shares that are part of an Award
must be set forth in the agreement evidencing that Award or be
approved by the Committee in its sole discretion. The
obligations of the Company under the Plan shall be conditional
on those payments or arrangements and the Company and its
Subsidiaries and Affiliates shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of
any kind otherwise payable to the participant.
(f) The actual or deemed reinvestment of dividends or
dividend equivalents in additional Restricted Shares (or in
Deferred Shares or other types of Awards) at the time of any
dividend payment shall be permissible only if sufficient Shares
are available under Section 3 for reinvestment (taking into
account then outstanding Stock Options).
(g) The Plan, all Awards made and actions taken thereunder
and any agreements relating thereto shall be governed by and
construed in accordance with the laws of the State of Ohio.
(e) All agreements entered into with participants pursuant
to the Plan shall be subject to the Plan.
(f) The provisions of Awards need not be the same with
respect to each participant.
A-17
Section 16.
Shareholder
Approval; Effective Date of Plan.
The Plan was adopted by the Board on November 1, 2007 and
is subject to approval by the holders of the Companys
outstanding Shares, in accordance with applicable law. If the
Plan is not so approved within twelve (12) months after the
date the Plan is adopted by the Board of Directors, the Plan and
any Grants made hereunder shall be null and void. However, if
the Plan is so approved, no further shareholder approval shall
be required with respect to the granting of Awards pursuant to
the Plan.
Section 17.
Term
of Plan.
No Award shall be granted pursuant to the Plan on or after
November 1, 2017, but Awards granted prior to that date may
extend beyond that date
A-18
Appendix B
The following paragraph will be added to Article Seventh of
the Companys Amended and Restated Articles of
Incorporation, as amended, reflecting the amendment described in
Proposal Three of the Companys Proxy Statement, dated
April 3, 2008:
Except as provided in the Companys code of regulations
with respect to the election of a director to fill a vacancy in
the Board of Directors, each director shall be elected by the
vote of the majority of the votes cast with respect to the
director at any shareholder meeting held for the election of
directors at which a quorum is present; provided, however, that
if as of the date that is ten days in advance of the date the
Company files its definitive proxy statement (regardless of
whether or not thereafter revised or supplemented) with the
Securities and Exchange Commission with respect to a shareholder
meeting the number of nominees for election as a director is
greater than the number of directors to be elected, then the
directors shall be elected at the meeting by the vote of a
plurality of the shares represented in person or by proxy at
that meeting and entitled to vote on the election of directors.
For purposes of this Section, a majority of the votes cast means
the number of shares voted for a director exceeds
the number of votes cast against the director.
Broker non-votes and abstentions will not be considered votes
cast at the shareholder meeting and will be excluded in
determining the number of votes cast at the shareholder meeting.
B-1
Appendix C
The following is the full text of Article Fourth of the
Companys Amended and Restated Articles of Incorporation,
as amended, reflecting the amendment described in
Proposal Four of the Companys Proxy statement, dated
April 3, 2008:
FOURTH: The authorized number of shares of the Corporation is
311,000,000, consisting of 300,000,000 common shares,
$0.10 par value per share (hereinafter called Common
Shares), 750,000 Class A Cumulative Preferred Shares,
without par value (hereinafter called Class A
Shares), 750,000 Class B Cumulative Preferred Shares,
without par value (hereinafter called Class B
Shares), 750,000 Class C Cumulative Preferred Shares,
without par value (hereinafter called Class C
Shares), 750,000 Class D Cumulative Preferred Shares,
without par value (hereinafter called Class D
Shares), 750,000 Class E Cumulative Preferred Shares,
without par value (hereinafter called Class E
Shares), 750,000 Class F Cumulative Preferred Shares,
without par value (hereinafter called Class F
Shares), 750,000 Class G Cumulative Preferred Shares,
without par value (hereinafter called Class G
Shares), 750,000 Class H Cumulative Preferred Shares,
without par value (hereinafter called Class H
Shares), 750,000 Class I Cumulative Preferred Shares,
without par value (hereinafter called Class I
Shares), 750,000 Class J Cumulative Preferred Shares,
without par value (hereinafter called Class J
Shares), 750,000 Class K Cumulative Preferred Shares,
without par value (hereinafter called Class K
Shares), 750,000 Noncumulative Preferred Shares, without
par value (hereinafter called Noncumulative Shares),
and 2,000,000 Cumulative Voting Preferred Shares, without par
value (hereinafter called Voting Preferred Shares).
The Class A Shares, Class B Shares, Class C
Shares, Class D Shares, Class E Shares, Class F
Shares, Class G Shares, Class H Shares, Class I
Shares, Class J Shares, Class K Shares and Voting
Preferred Shares are sometimes collectively referred to herein
as the Cumulative Shares.
C-1
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C/O NATIONAL CITY BANK
SHAREHOLDER SERVICES OPERATIONS
LOCATOR 5352
P.O. BOX 94509
CLEVELAND, OH 44101-4509
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YOUR VOTE IS IMPORTANT
Please mark, sign and date your proxy card and return it in the
postage-paid envelope
provided or
return it to: National City Bank, P.O. Box 535600, Pittsburgh PA 15253
â
Please fold and detach card at perforation before mailing
â
DEVELOPERS DIVERSIFIED REALTY CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Joan U. Allgood and William H. Schafer, and each of them, the
attorneys and proxies of the undersigned with full power of substitution to vote, as indicated
herein, all the common shares of Developers Diversified Realty Corporation held of record by the
undersigned on March 20, 2008, at the Annual Meeting of Shareholders to be held on May 13, 2008, or
any adjournment thereof, with all the powers the undersigned would possess if then and there
personally present. Receipt of Notice of Annual Meeting of Shareholders and the related Proxy
Statement dated April 3, 2008, is hereby acknowledged.
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Dated ____________, 2008
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________________________________________________
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_____________________Signature(s) of Shareholders(s)
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Please sign as your name appears hereon. If shares
are held jointly, all holders must sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give your full title. If
a corporation, please sign in full corporate name by
president or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
YOUR VOTE IS IMPORTANT
â
Please fold and detach card at perforation before mailing
â
DEVELOPERS DIVERSIFIED REALTY CORPORATION PROXY
This proxy when properly executed will be voted as specified by the shareholder. If no
specifications are made, the proxy will be voted FOR the nominees described in proposal 1, and
FOR proposals 2 through 5.
1.
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Election of directors.
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Nominees:
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(1) Dean S. Adler
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(2) Terrance R. Ahern
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(3) Robert H. Gidel
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(4) Victor B. MacFarlane
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(5) Craig Macnab
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(6) Scott D. Roulston
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(7) Barry A. Sholem
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(8) William B. Summers, Jr.
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(9) Scott A. Wolstein
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FOR
all nominees listed above
(except as marked to the contrary)
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WITHHOLD AUTHORITY
to vote for all nominees listed above
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INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominees name or
number on the line below:
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FOR
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AGAINST
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ABSTAIN
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2. To approve the 2008 Developers Diversified Realty Corporation Equity-Based
Award Plan.
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3. To approve an amendment to the Companys Amended and Restated Articles of
Incorporation to adopt a majority vote standard in uncontested elections of directors.
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4. To approve an amendment to the Companys Amended and Restated Articles of
Incorporation to change the par value of the Companys common shares from
without par value to $0.10 par value per share.
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5. To ratify the selection of PricewaterhouseCoopers LLP as the Companys independent
accountants for the Companys fiscal year ending December 31, 2008.
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6. In their discretion, to vote upon such other business as may
properly come before the meeting.
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Developers Realty (NYSE:DDR)
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Developers Realty (NYSE:DDR)
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From Jun 2023 to Jun 2024