UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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:
o
Preliminary
Proxy Statement
o
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ
Definitive
Proxy Statement
o
Definitive
Additional Materials
o
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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o
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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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o
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, which is referred to as the Company, will be held
at the Companys corporate headquarters, 3300 Enterprise
Parkway, Beachwood, Ohio 44122, on June 25, 2009, at
9:00 a.m., local time, for the following purposes:
1. To elect the following eleven directors, each to serve
until the next annual meeting of shareholders and until a
successor has been duly elected and qualified: Dean S. Adler,
Terrance R. Ahern, Robert H. Gidel, Daniel B. Hurwitz, Volker
Kraft, Victor B. MacFarlane, Craig Macnab, Scott D. Roulston,
Barry A. Sholem, William B. Summers, Jr. and Scott A.
Wolstein;
2. To amend the Companys Second Amended and Restated
Articles of Incorporation to increase the number of authorized
common shares, $0.10 par value per share, from 300,0000,000
to 500,000,000, which results in an increase in the total number
of authorized shares of the Company from 311,000,000 to
511,000,000;
3. To approve the Amended and Restated 2008 Developers
Diversified Realty Corporation Equity-Based Award Plan;
4. To ratify the selection of PricewaterhouseCoopers LLP as
the Companys independent accountants for the
Companys fiscal year ending December 31,
2009; and
5. To transact such other business as may properly come
before the meeting.
Only shareholders of record at the close of business on
April 29, 2009 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 or vote their
shares by telephone or over the Internet as described in the
attached proxy statement.
By order of the Board of Directors,
Joan U. Allgood
Secretary
Dated: May 20, 2009
YOUR VOTE
IS IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN FIND
VOTING INSTRUCTIONS ON THE ENCLOSED PROXY.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON JUNE 25, 2009
The Proxy Statement, Annual Report to Shareholders and Proxy
Card are available free of charge at www.proxydocs.com/ddr.
TABLE OF
CONTENTS
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Page
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1
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4
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Proposal One: Election of the Following
Eleven Directors, Each To Serve Until the Next Annual Meeting of
Shareholders and Until a Successor Has Been Duly Elected and
Qualified: Dean S. Adler, Terrance R. Ahern, Robert H. Gidel,
Daniel B. Hurwitz, Volker Kraft, Victor B. MacFarlane,
Craig Macnab, Scott D. Roulston, Barry A. Sholem, William
B. Summers, Jr. and
Scott A. Wolstein
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7
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16
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48
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49
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50
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52
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63
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64
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64
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64
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A-1
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ii
DEVELOPERS
DIVERSIFIED REALTY CORPORATION
PROXY STATEMENT
ABOUT THE
MEETING
Why
did you send me this proxy statement?
Developers Diversified Realty Corporation, which is referred to
as the Company, we, our or
us, sent you this proxy statement and the enclosed
proxy card because our Board of Directors is soliciting your
proxy to vote at our 2009 Annual Meeting of Shareholders, or the
Annual Meeting. This proxy statement summarizes information you
need to know in order to vote at the Annual Meeting. The Annual
Meeting will be held at our corporate headquarters, 3300
Enterprise Parkway, Beachwood, Ohio 44122, on June 25,
2009, at 9:00 a.m., local time. However, you do not need to
attend the Annual Meeting to vote your shares. Instead, you may
vote by telephone, over the Internet or by completing and
mailing the enclosed proxy card.
We will begin mailing this proxy statement, the attached Notice
of Annual Meeting of Shareholders and the enclosed proxy card on
or about May 20, 2009 to all shareholders entitled to vote.
Shareholders who owned our common shares at the close of
business on April 29, 2009, the record date for the Annual
Meeting, are entitled to vote. On the record date, there were
approximately 137,585,964 common shares outstanding. We are also
enclosing our 2008 annual report to shareholders, which includes
our financial statements, with this proxy statement.
Who is
soliciting my proxy?
This solicitation of proxies is made by and on behalf of our
Board of Directors. We will bear the cost of the solicitation of
proxies. In addition to the solicitation of proxies by mail,
certain of our employees may solicit proxies by telephone,
facsimile or email. Those employees will not receive any
additional compensation for their participation in the
solicitation. We retained Georgeson, Inc., at an estimated cost
of $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 our 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 our President,
any Vice President or the Secretary at least 48 hours
before the Annual Meeting that the shareholder desires that
cumulative voting be used for the election of directors, and if
an announcement of the giving of that notice is made when the
Annual Meeting is convened by the Chairman, 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?
Shareholders may vote either by completing, properly signing and
returning the accompanying proxy card via mail, by telephone or
over the Internet, or by attending and voting at the Annual
Meeting. If you properly complete and timely return your proxy
card or properly and timely follow the telephone or Internet
voting instructions described below, your proxy (meaning one of
the individuals named in the proxy card) will vote your shares
as you have directed. If you sign and return the proxy card but
do not indicate specific choices as to your vote, your proxy
will vote your shares as recommended by our Board of Directors:
(i) to elect Dean S. Adler, Terrance R. Ahern,
1
Robert H. Gidel, Daniel B. Hurwitz, Volker Kraft, Victor B.
MacFarlane, Craig Macnab, Scott D. Roulston, Barry A.
Sholem, William B. Summers, Jr. and Scott A. Wolstein as
directors, (ii) to approve an amendment to our Second
Amended and Restated Articles of Incorporation, or our Articles,
to increase the number of authorized common shares from
300,000,000 to 500,000,000, which results in an increase in the
total number of authorized shares from 311,000,000 to
511,000,000; (iii) to approve the Amended and Restated 2008
Developers Diversified Realty Corporation Equity-Based Award
Plan; and (iv) to ratify the selection of
PricewaterhouseCoopers LLP as our independent accountants for
our fiscal year ending December 31, 2009.
Shareholders of record may vote by calling 1-888-693-8683 or
over the Internet by accessing the following website:
www.cesvote.com. Voting instructions, including your shareholder
account number and personal proxy control number, are contained
on the attached proxy. Those shareholders of record who choose
to vote by telephone or over the Internet must do so by not
later than 11:59 p.m., eastern time, on June 24, 2009.
A number of banks and brokerage firms participate in a program
that also permits shareholders whose shares are held in
street name to direct their vote by telephone or
over the Internet. If your shares are held in an account at a
bank or brokerage firm that participates in such a program, you
may direct the vote of these shares by telephone or over the
Internet by following the voting instructions enclosed with the
proxy from the bank or brokerage firm. The Internet and
telephone proxy procedures are designed to authenticate
shareholders identities, to allow shareholders to give
their proxy voting instructions and to confirm that those
instructions have been properly recorded. Votes directed by
telephone or over the Internet through such a program must be
received by 11:59 p.m., eastern time on June 24, 2009.
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, we are 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 us at our principal executive offices
located at 3300 Enterprise Parkway, Beachwood, Ohio 44122, by
submitting to us a duly executed proxy bearing a later date or
by giving us notice 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 that we receive 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 the Following Eleven
Directors, Each To Serve Until the Next Annual Meeting of
Shareholders and Until a Successor Has Been Duly Elected and
Qualified: Dean S. Adler, Terrance R. Ahern, Robert H. Gidel,
Daniel B. Hurwitz, Volker Kraft, Victor B.
MacFarlane, Craig Macnab, Scott D. Roulston, Barry A. Sholem,
William B. Summers, Jr. and Scott A. Wolstein
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To be elected, directors must receive a majority of the votes
cast (the number of shares voted FOR a director
nominee must exceed the number of votes cast AGAINST
that nominee). 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.
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2
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Proposal Two: Approval of an Amendment to Our
Second Amended and Restated Articles of Incorporation to
Increase the Number of Authorized Common Shares from 300,000,000
to 500,000,000, Which Results in an Increase in the Total Number
of Authorized Shares from 311,000,000 to 511,000,000
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Assuming a quorum is present at the Annual Meeting, the proposal
to approve the amendment to our Articles requires the
affirmative vote of the holders of a majority of our outstanding
common shares. Broker non-votes and abstentions will have the
same effect as votes against Proposal Two.
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Proposal Three: Approval of the Amended and
Restated 2008 Developers Diversified Realty Corporation
Equity-Based Award Plan
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Assuming a quorum is present at the Annual Meeting, the proposal
to approve the Amended and Restated 2008 Developers Diversified
Realty Corporation Equity-Based Award Plan requires the
affirmative vote of the holders of a majority our common shares
having voting power present at the meeting in person or by proxy
and entitled to vote on the proposal. Broker non-votes will have
no effect on the outcome of Proposal Three, but abstentions will
have the same effect as a vote against Proposal Three.
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Proposal Four: Ratification of the Selection of
PricewaterhouseCoopers LLP as Our Independent Accountants for
Our Fiscal Year Ending December 31, 2009
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Although our independent registered public accounting firm may
be selected by the Audit Committee of the Board of Directors
without shareholder approval, assuming a quorum is present at
the Annual Meeting, the Audit Committee will consider the
affirmative vote of the holders of a majority our common shares
having voting power present at the meeting in person or by proxy
and entitled to vote on the proposal to be a ratification by the
shareholders of the selection of PricewaterhouseCoopers LLP as
our independent registered public accounting firm. Broker
non-votes will have no effect on the outcome of Proposal Four,
but abstentions will have the same effect as a vote against
Proposal Four.
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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 our common shares as of April 20,
2009, except as otherwise disclosed in the notes below, by
(i) each person who is known by us to own beneficially more
than 5% of our outstanding common shares based on a review of
filings with the Securities and Exchange Commission, or SEC,
(ii) our directors, (iii) our named executive officers
and (iv) our 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
82 Devonshire Street
Boston, Massachusetts 02109
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18,041,848
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(1)
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13.9
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%
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The Vanguard Group Inc.
100 Vanguard Blvd.
Malvern, Pennsylvania 19355
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11,062,629
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(2)
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8.6
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%
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Capital Growth Management Limited Partnership
One International Place
Boston, Massachusetts 02110
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10,200,000
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(3)
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7.9
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%
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Barclays Global Investors, NA
45 Fremont Street
San Francisco, California 94105
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9,622,118
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(4)
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7.4
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%
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State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111
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6,834,573
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(5)
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5.3
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%
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Scott A. Wolstein
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1,123,594
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(6)
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*
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Timothy J. Bruce
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205,865
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(7)(8)
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*
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Daniel B. Hurwitz
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382,270
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(7)(9)
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*
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David J. Oakes
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472,534
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(7)(10)
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*
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William H. Schafer
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135,182
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(11)
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*
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Dean S. Adler
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2,386
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(7)(12)
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*
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Terrance R. Ahern
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692,053
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(7)(12)(13)
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*
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Robert H. Gidel
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46,188
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(15)
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*
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Volker Kraft
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30,000
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Victor B. MacFarlane
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13,279
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(7)(12)(14)(17)
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Craig Macnab
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85,252
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(7)(12)(16)
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*
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Scott D. Roulston
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8,280
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(12)(17)
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*
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Barry A. Sholem
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48,579
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(18)
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William B. Summers, Jr.
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13,111
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*
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All Current Executive Officers and Directors as a Group
(20 persons)
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3,842,997
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(19)
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2.9
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%
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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,
2008, is based on a report on Schedule 13G/A filed with the
SEC on February 17, 2009 by FMR LLC, a parent holding
company, and Edward C. Johnson 3d, an individual. The report
indicated that 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 16,183,167 shares. FMR LLC and
Mr. Johnson each have sole dispositive power with respect
to these
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16,183,167 shares. Also according to the report, Pyramis
Global Advisors, LLC, an indirect wholly-owned subsidiary of FMR
LLC and an investment adviser registered under the Investment
Advisers Act of 1940, is the beneficial owner of
140,845 shares. FMR LLC and Mr. Johnson each have sole
dispositive power with respect to and sole voting power over
these shares. The report indicates that 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, or Exchange Act, is the
beneficial owner of 959,236 shares. FMR LLC and
Mr. Johnson each have sole dispositive power with respect
to and sole voting power over these shares. According to the
information provided in the report, FIL Limited, a qualified
institution under
Section 240.13d-1(b)(1)
pursuant to the SEC No-Action letter dated October 5, 2000,
is the beneficial owner of 758,600 shares. Partnerships
controlled by Mr. Johnsons family, or trusts for
their benefit, own shares of FIL voting stock with the right to
cast approximately 47% of the total votes that may be cast. FMR
LLC and FIL are separate and independent corporate entities and
their Boards of Directors are generally composed of different
individuals. FMR LLC and FIL disclaimed beneficial ownership in
the report indicating that they believe that they are not acting
as a group for purposes of Section 13(d) under
the Exchange Act and that they are not otherwise required to
attribute to each other the beneficial ownership of
securities beneficially owned by the other
corporation within the meaning of
Rule 13d-3
under the Exchange Act. FMR LLC reported that the filing was on
a voluntary basis as if all of the shares were beneficially
owned by FMR LLC and FIL on a joint basis. They reported that
FIL has sole dispositive power over 758,600 shares and has
sole power to vote 747,900 shares and no power to vote or
direct the voting of 10,700 shares.
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(2)
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Information for common shares owned as of December 31,
2008, is based on a report on Schedule 13G filed with the
SEC on February 13, 2009 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 135,901
common shares and sole dispositive power with respect to
10,926,728 common shares. Pursuant to the instructions of
Item 7 of Schedule 13G, Vanguard Fiduciary
Trust Company, a wholly-owned subsidiary of The Vanguard
Group, Inc., is the beneficial owner and directs the voting of
135,901 shares as a result of its serving as investment
manager of collective trust accounts.
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(3)
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Information for common shares owned as of December 31,
2008, is based on a report on Schedule 13G filed with the
SEC on February 10, 2009 by Capital Growth Management
Limited Partnership, an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940.
According to the information provided in the report, Capital
Growth Management Limited Partnership has sole voting power over
10,200,000 shares and shared dispositive power of
10,200,000 shares. Capital Growth Management Limited
Partnership disclaims any beneficial interest in the shares and
views that the client accounts it manages are not acting as a
group for purposes of Section 13(d) under the
Exchange Act and it and such clients are not otherwise required
to attribute to each other the beneficial ownership
of securities beneficially owned under
Rule 13d-3
of the Exchange Act. Therefore, Capital Growth Management
Limited Partnership is of the view that the shares held in such
accounts should not be aggregated for purposes of
Section 13(d) and that the filing of the Schedule 13G
is on a voluntary basis as if all the shares are beneficially
owned by Capital Growth Management Limited Partnership.
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(4)
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Information for common shares owned as of December 31,
2008, is based on a report on Schedule 13G filed with the
SEC on February 5, 2009 by Barclays Global Investors, NA, a
bank as defined in Section 3(a)(6) of the 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 Exchange Act, 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
3,604,636 common shares and sole dispositive power with respect
to 4,366,883 common shares; Barclays Global Fund Advisors
has sole voting power over 4,041,389 common shares and sole
dispositive power with respect to 4,048,892 common shares;
Barclays Global Investors, Ltd. has sole voting power over
620,225 common shares and sole dispositive power with respect to
700,275 common shares; Barclays Global Investors Japan Limited
has sole voting power over 434,655 common shares and sole
dispositive power with respect to 434,655 common shares; and
Barclays Global Investor Canada Limited power has sole voting
power over 71,413 common shares and sole dispositive power with
respect to
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71,413 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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Information for common shares owned as of December 31,
2008, is based on a report on Schedule 13G filed with the
SEC on February 13, 2009 by State Street Bank and
Trust Company, a bank as defined in Section 3(a)(6) of
the Exchange Act. According to the information provided in the
report, State Street Bank and Trust Company has sole voting
power over 6,834,573 common shares and shared dispositive power
with respect to 6,834,573 common shares.
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(6)
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Includes 431,789 common shares subject to options currently
exercisable or exercisable within 60 days. This number also
includes 691,805 common shares pledged as security by
Mr. Wolstein.
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(7)
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Does not include 129,475, 1,029, 1,362, 695, 30,749 and 2,311
stock units credited to the accounts of Messrs. Hurwitz,
Adler, Ahern, Macnab, Oakes and Bruce, respectively, when such
individuals elected to defer the vesting of restricted common
shares pursuant to our equity deferred compensation plan. 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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(8)
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Includes 156,284 common shares subject to options currently
exercisable or exercisable within 60 days.
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(9)
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Includes 204,394 common shares subject to options currently
exercisable or exercisable within 60 days.
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(10)
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Includes 386,728 common shares subject to options currently
exercisable or exercisable within 60 days.
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(11)
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Includes 96,273 common shares subject to options currently
exercisable or exercisable within 60 days. This number also
includes 24,917 common shares pledged as security by
Mr. Schafer.
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(12)
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Does not include 31,479, 37,472, 23,545, 15,679 and
8,102 units credited to the accounts of Messrs. Adler,
Ahern, MacFarlane, Macnab and Roulston pursuant to our
directors deferred compensation plan. 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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(13)
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Includes 15,000 common shares subject to options currently
exercisable or exercisable within 60 days.
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(14)
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Includes 10,000 common shares subject to options currently
exercisable or exercisable within 60 days.
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(15)
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Includes 6,515 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 77,589 common shares as to which Mr. Macnab shares
voting and dispositive power with his wife. This number also
includes 79,724 common shares pledged as security by
Mr. Macnab.
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(17)
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Includes 3,209 common shares held in an individual retirement
account.
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(18)
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Includes 6,000 common shares subject to options currently
exercisable or exercisable within 60 days.
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(19)
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Includes 408,453 common shares subject to options currently
exercisable or exercisable within 60 days owned by
executive officers not named in the table and 31,736 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. Does not include 7,761 stock
units credited to the accounts of other executive officers not
named in the table.
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6
PROPOSAL ONE:
ELECTION OF THE FOLLOWING ELEVEN DIRECTORS, EACH TO SERVE
UNTIL THE NEXT ANNUAL MEETING OF SHAREHOLDERS AND UNTIL A
SUCCESSOR HAS BEEN DULY ELECTED AND QUALIFIED: DEAN S. ADLER,
TERRANCE R. AHERN, ROBERT H. GIDEL, DANIEL B. HURWITZ,
VOLKER KRAFT, VICTOR B. MACFARLANE, CRAIG MACNAB, SCOTT D.
ROULSTON, BARRY A. SHOLEM, WILLIAM B. SUMMERS, JR. AND
SCOTT A. WOLSTEIN
At the Annual Meeting, unless you specify otherwise, the common
shares represented by your proxy will be voted to elect the
following eleven directors nominated herein to serve until the
next annual meeting of shareholders and until a successor has
been duly elected and qualified: Dean S. Adler, Terrance R.
Ahern, Robert H. Gidel, Daniel B. Hurwitz, Volker Kraft, Victor
B. MacFarlane, Craig Macnab, Scott D. Roulston, Barry A. Sholem,
William B. Summers, Jr. and Scott A. Wolstein.
A majority vote standard applies in uncontested elections and a
plurality vote standard applies 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.
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 are
entitled to abstain with respect to the election of a director.
Broker non-votes and abstentions will not be considered votes
cast at the Annual Meeting and will be excluded in determining
the number of votes cast at the Annual Meeting.
If written notice is given by any shareholder to our President,
any Vice President or the Secretary at least 48 hours
before the Annual Meeting that the shareholder desires that
cumulative voting be used for the election of directors, and if
an announcement of the giving of that notice is made when the
Annual Meeting is convened by the Chairman, 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.
7
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
52
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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
53
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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
57
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Managing Member, Liberty Partners, LP (real estate investments)
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5/00-Present
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Daniel B. Hurwitz
45
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Our President and Chief Operating Officer
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5/02-5/04
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Volker Kraft
36
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Director, ECE Projektmanagement International G.m.b.H. &
Co. KG (commercial real estate)
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5/09-Present
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Victor B. MacFarlane
57
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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
53
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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
51
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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
53
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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.
58
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Retired
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5/04-Present
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Scott A. Wolstein
56
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Our Chairman of the Board of Directors and Chief Executive
Officer
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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., or 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 Founder and Principal of
The Townsend Group, an institutional real asset advisory firm
formed in 1986. Townsend consults or advises domestic and
offshore public and private pension plans, endowments and
foundations, sovereign wealth funds and multi-manager funds.
Mr. Ahern is a past member of the Board of Directors of the
Pension Real Estate Association, or PREA, and the Board of
Governors of the National Association of Real Estate Investment
Trusts, or NAREIT. Prior to founding The Townsend Group,
Mr. Ahern was engaged in the private practice of law.
Robert H. Gidel
has been the Managing Member of
Liberty Partners, LP, a partnership that makes investments in
both private and publicly traded real estate and finance focused
operating companies, since 1998. Mr. Gidel was President of
Ginn Development Company, LLC, one of the largest privately held
developers of resort communities and private clubs in the
Southeast, from July 2007 until April 2009. Mr. Gidel was
Chairman of the Board of Directors of LNR Property Holdings, a
private multi-asset real estate company, from 2005 until 2007.
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
lead director, 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. Mr. Gidel was also a member of the Board of
8
Directors of U.S. Restaurant Properties, Inc. until 2005
and a member of the Board of Directors of American Industrial
Properties REIT until 2001.
Daniel B. Hurwitz
has served as our President and
Chief Operating Officer since May 2007. Mr. Hurwitz was our
Senior Executive Vice President and Chief Investment Officer
from May 2005 through May 2007 and an Executive Vice President
from June 1999 through April 2005. He was a member of our Board
of Directors from May 2002 to May 2004. Prior to joining us,
Mr. Hurwitz served as Senior Vice President and Director of
Real Estate and Development for Boscovs Department Store,
Inc., a privately held department store chain, from 1991 until
he joined us in 1999. Prior to Boscovs, Mr. Hurwitz
served as Development Director for The Shopco Group, a
New York City based developer of regional shopping malls.
Mr. Hurwitz is a member of the Board of Trustees of
U-Store-It
Trust and serves on both its Audit and Compensation Committees.
Mr. Hurwitz is also a member of the Board of Trustees of
Hawken School, a member of the Board of Regents for the
University System of Ohio, and member of the Leadership Board
for the Neurological Institute at the Cleveland Clinic. He is a
member of ICSC and ULI and serves as a member of ICSCs
Open Air Centers Committee. In addition, he is a member of the
Samuel Zell and Robert Lurie Real Estate Center at The Wharton
School, University of Pennsylvania, where he serves in the
Career Mentor Program. Mr. Hurwitz has also served on the
Board of Directors of the Colgate University Alumni Corporation,
Colgate University Maroon Council, Berks County Food Bank and
the Reading Jewish Community Center, Boscovs Department
Store Inc., and the Network and Vice Chairman of the Board for
Summer on the Cuyahoga, a civic internship program.
Volker Kraft
is a Director of ECE
Projektmanagement International G.m.b.H. & Co. KG, a fully
integrated international developer, owner and manager of
shopping centers based in Hamburg, Germany, where he is
responsible for commercial real estate project management in
Central and Eastern Europe. Dr. Kraft is also a Managing
Director of ECE Investment International, G.m.b.H., with
responsibility for the development of an institutional real
estate fund management platform in Europe. Prior to joining ECE
in 2008, Dr. Kraft was a Director of Allianz Capital
Partners GmbH, a private equity firm located in Munich, Germany,
where he was a member of the management team and the internal
investment committee from 2001. During that time, Dr. Kraft
served as a member of the Advisory Board and Shareholders
Committee of Bartec GmbH, Bad Mergentheim, an electronic
components company, and as a member of the Supervisory Board of
Scandlines AG, Rostock, a ferry services company.
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 &
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
has served as the Chief Executive
Officer and a Director of National Retail Properties, a publicly
traded REIT, since February 2004 and as Chairman of the Board
since February 2008. Mr. Macnab was the Chief Executive
Officer, President and a Director of JDN Realty Corporation, or
JDN, from 2000 to 2003, when we acquired JDN. Mr. Macnab is
a director of Eclipsys Corporation, a provider of clinical and
financial software to the healthcare industry.
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., an investment fund, 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
9
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 served as our Chief
Executive Officer and a Director since our organization in 1992.
Mr. Wolstein has been the Chairman of our Board of
Directors since May 1997. Prior to our organization,
Mr. Wolstein was a principal and executive officer of
Developers Diversified Group, our 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.
On February 23, 2009, we entered into a stock purchase
agreement with Mr. Alexander Otto (the Otto Stock
Purchase Agreement) to issue and sell 30,000,000 common
shares, which we refer to as the Purchased Shares, and warrants
to purchase 10,000,000 common shares to Mr. Otto and
certain members of his family, whom we collectively refer to as
the Investors. Pursuant to the terms of the Otto Stock Purchase
Agreement, we are also required to issue common shares to the
Investors representing any dividends that we declare after the
date of the Otto Stock Purchase Agreement and prior to the
purchase of the Purchased Shares to which the Investors would
have been entitled had the Purchased Shares been outstanding on
the record dates for any such dividends.
In connection with the sale of common shares and warrants to the
Investors, we also elected Dr. Kraft to our Board of
Directors and entered into an investor rights agreement with
Mr. Otto under which he has a right to nominate individuals
for election to our Board of Directors depending on the
Investors level of ownership in us. During such time as
the Investors beneficially own 17.5% or more of our outstanding
common shares, our Board of Directors will nominate two persons
recommended by the Investors who are suitable to us to become
members of our Board of Directors at each annual election of
directors, and during such time as the Investors beneficially
own less than 17.5% but more than 7.5% of our outstanding common
shares, our board of directors will nominate one person
recommended by the Investors who is suitable to us to become a
member of our Board of Directors at each annual election of
directors. Dr. Kraft is Mr. Ottos initial
nominee pursuant to the investor rights agreement.
The Board
of Directors Recommends That Shareholders Vote FOR the Election
of Each of the Director Nominees.
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. Our Corporate Governance
Guidelines are posted on our website, www.ddr.com, under
Investor Relations and are available in
10
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.
We have 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, which we collectively refer to as our senior financial
officers. This code requires our 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 we file with,
or submit to, the SEC and other public filings or communications
we make; 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 our 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 our website
as required by applicable rule or regulation. This code is
posted on our website, www.ddr.com, under Investor
Relations and is available in print to any shareholder who
requests it.
Code of Business Conduct and Ethics.
We also
have a Code of Business Conduct and Ethics that addresses our
commitment to honesty, integrity and the ethical behavior of our
employees, officers and directors. This code governs the actions
and working relationships of our employees, officers and
directors with current and potential tenants, fellow employees,
competitors, vendors, government and self-regulatory agencies,
investors, the public, the media, and anyone else with whom we
have 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 or any amendment to this code will be
promptly disclosed on our website as required by applicable 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 our website, www.ddr.com, under Investor
Relations and is available in print to any shareholder who
requests it.
Reporting
and Non-Retaliation Policy
We are committed to integrity and ethical behavior and have
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 us, our 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 concerning financial wrongdoing may be made
directly to our Corporate Compliance Officer, Joan U. Allgood,
our Audit Committee Chairman, Scott D. Roulston, our Chairman of
the Board of Directors, Scott A. Wolstein, or to Global
Compliance Services, an independent third-party service retained
on our behalf. Reports concerning non-financial wrongdoing may
be made directly to our Senior Vice President of Human
Resources, Nan Zieleniec, the Corporate Compliance Officer, or
to Global Compliance Services. An inquiry or investigation is
then initiated by the Corporate Compliance Officer, Senior Vice
President of Human Resources or the Audit Committee Chairman to
determine if the report can be sustained or has merit. Results
of investigations concerning financial wrongdoing are reviewed
by the Chief Executive Officer
and/or
Chief
Financial Officer and reported to the Audit Committee. Results
of investigations concerning non-financial wrongdoing are
reviewed by the Chief Executive Officer
and/or
President. This policy is posted on our website, www.ddr.com,
under Investor Relations and is available in print
to any shareholder who requests it.
11
Independent
Directors
The Board of Directors has affirmatively determined that all of
the nominated directors, except for Messrs. Adler, Hurwitz,
Volker and Wolstein, are independent directors
within the meaning of the listing standards of the New York
Stock Exchange, or NYSE. Our 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 us
(either directly or as a partner, shareholder or officer of an
organization that has a relationship with us), and only those
directors or nominees whom the Board affirmatively determines
have no material relationship with us (either directly or as a
partner, shareholder or officer of an organization that has a
relationship with us) will be considered independent. No
transactions, relationships or arrangements occurred in 2008
that were considered by the Board of Directors in making its
determination of each directors independence.
The NYSE listing standards provide that a Director is not
independent if:
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the Director is, or has been within the last three years, one of
our employees, or an immediate family member is, or has been
within the last three years, one of our executive officers;
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the Director has received, or has an immediate family member who
has received, during any
12-month
period within the last three years, more than $120,000 in direct
compensation from us, other than Director and committee fees and
pension or other forms of deferred compensation for prior
service (provided such compensation is not contingent in any way
on continued service);
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(1) the Director or an immediate family member is a current
partner of a firm that is our internal or external auditor;
(2) the Director is a current employee of such firm;
(3) the Director has an immediate family member who is a
current employee of such firm and personally works on our audit;
or (4) the Director or an immediate family member was
within the last three years (but is no longer) a partner or
employee of such firm and personally worked on our audit within
that time;
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the Director or an immediate family member is, or has been
within the last three years, employed as an executive officer of
another company where any of our present executive officers at
the same time serves or served on that companys
compensation committee; or
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the Director is a current employee, or an immediate family
member is a current executive officer, of a company that has
made payments to, or received payments from, us for property or
services in an amount which, in any of the last three fiscal
years, exceeds the greater of $1 million, or 2% of such
other companys consolidated gross revenues.
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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
independent 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 independent 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 independent
directors; and
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if requested by major and institutional shareholders, ensures
that he or she is available for consultation and direct
communication.
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12
Meetings
of Non-Management and Independent Directors
The non-management directors meet in executive session in
conjunction with each regularly scheduled Board meeting. These
meetings are chaired by the lead director. In 2008, the
non-management directors met after each regularly scheduled
Board meeting. In addition, as required by our 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, 2008, the Board
of Directors held seven meetings. Each director attended more
than 90% of the aggregate number of meetings of the Board of
Directors and committees on which he served in 2008. As stated
in the Corporate Governance Guidelines, all directors are
expected to attend the Annual Meeting. All of our directors
attended the 2008 annual meeting of shareholders.
During 2008, 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 our 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.
The following table indicates the current 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*
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Scott A. Wolstein*
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Craig Macnab
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Dean S. Adler
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William B. Summers
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Craig Macnab
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Executive Compensation Committee
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Nominating and Corporate Governance Committee
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Robert H. Gidel*
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Craig Macnab*
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Victor B. MacFarlane
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Terrance R. Ahern
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Barry A. Sholem
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Victor B. MacFarlane
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Pricing Committee
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Controlled Equity Program Pricing Committee
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Scott A. Wolstein*
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Scott A. Wolstein
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Scott D. Roulston
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William B. Summers
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Dividend Declaration Committee.
The Dividend
Declaration Committee determines if and when we should declare
dividends on our capital shares and the amount thereof,
consistent with the dividend policy adopted by the Board of
Directors. The Dividend Declaration Committee held 11 meetings
in 2008.
Executive Compensation Committee.
The
Executive Compensation Committee reviews and approves
compensation for our executive officers, reviews and recommends
to our Board of Directors compensation for 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 our
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, as
further described below in the Compensation Discussion and
Analysis section. The Chief Executive Officer and President
communicate to the Executive Compensation Committee decisions
regarding compensation for executive officers other than
themselves, and the Executive Compensation 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
13
independent as independence is currently defined in the NYSE
listing standards in accordance with our Corporate Governance
Guidelines. The Executive Compensation Committee held six
meetings in 2008.
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 our corporate governance; oversees compliance and
approves any waivers of our 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 in accordance
with our Corporate Governance Guidelines. The Nominating and
Corporate Governance Committee held three meetings in 2008.
The Nominating and Corporate Governance Committee will consider
suggestions forwarded by shareholders to our Secretary
concerning qualified candidates for election as directors. To
recommend a prospective nominee for the Nominating and Corporate
Governance Committees consideration, a shareholder may
submit the candidates name and qualifications to our
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 standards
in accordance with our 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 our
debt and equity securities. The Pricing Committee did not hold
any meetings in 2008.
Controlled Equity Program Pricing
Committee.
In connection with the issuance and
sale of up to $200,000,000 of our common shares that we may
offer through our Controlled Equity Program with BNY Mellon
Capital Markets, LLC, our Controlled Equity Program Pricing
Committee is authorized to approve the timing, price, amount and
terms of sales and to prepare, execute and deliver issuance
notices and other communications. Scott A. Wolstein took written
action on three occasions in 2008 with respect to our Controlled
Equity Program.
Audit Committee.
The Audit Committee assists
the Board of Directors in overseeing the integrity of our
financial statements, compliance with legal and regulatory
requirements, our independent registered public accounting
firms qualifications and independence, and the performance
of our internal audit function and independent registered public
accounting firm, and prepares the Audit Committee Report
included in our 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, and the NYSE
listing standards in accordance with our 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 2008.
14
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 our accounting, auditing and financial reporting
practices. The Audit Committee meets at least quarterly to
review quarterly or annual financial information prior to its
release and inclusion in SEC filings. As part of each meeting,
the Audit Committee has the opportunity to meet independently
with management and our independent registered public accounting
firm.
In discharging its oversight responsibility as to the audit
process, the Audit Committee has received the written
disclosures from the independent registered public accounting
firm required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent registered
public accounting firms communications with the Audit
Committee concerning independence, has discussed with the
independent registered public accounting firm any relationships
that may impact its objectivity and independence, and has
satisfied itself as to the independent registered public
accounting firms independence.
The Audit Committee reviewed and discussed with the independent
registered public accounting firm all communications required by
generally accepted auditing standards, including the matters
required to be discussed by the statement on Auditing Standards
No. 61, as amended (AICPA, Professional Standards, Vol. 1.
AU section 380), as adopted by the Public Company
Accounting Oversight Board in Rule 3200T.
The Audit Committee reviewed and discussed the audited financial
statements of the Company for the year ended December 31,
2008, with management and the independent registered public
accounting firm. Management has the responsibility for the
preparation of our 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, 2008, for filing with the
SEC.
Audit
Committee
Scott
D. Roulston, Chairman
Craig Macnab
William B. Summers, Jr.
15
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Executive
Summary
In this section of the proxy statement, we discuss in detail our
executive compensation program that applied to our senior
executive officers for 2008. This discussion includes a
description of the principles underlying our executive
compensation policies and our most important executive
compensation decisions, and provides our analysis of these
policies and decisions. This discussion and analysis also gives
perspective to the data we present in the compensation tables
and related footnotes below, as well as the narratives that
accompany the compensation tables.
For 2008, our senior executive officers were Mr. Scott
Wolstein, our Chairman and Chief Executive Officer,
Mr. Daniel Hurwitz, our President and Chief Operating
Officer, Mr. William Schafer, our Executive Vice President
and Chief Financial Officer, Mr. David Oakes, our Senior
Executive Vice President of Finance and Chief Investment
Officer, and Mr. Timothy Bruce, our Executive Vice
President of Development. Messrs. Hurwitz, Oakes and Bruce
were our three most-highly paid executive officers who were
serving as executive officers at December 31, 2008 other
than our Chief Executive Officer and Chief Financial Officer. We
refer to these five officers as our named executive officers
throughout our executive compensation discussion.
We are a self-administered and self-managed real estate
investment trust in the business of acquiring, developing,
redeveloping, owning, leasing and managing shopping centers. The
retail market in the United States weakened in 2008, which has
presented challenges to our company. As discussed in greater
detail below, due to economic conditions, we did not meet our
corporate performance targets established for 2008 for
performance-based elements of our executive compensation
program. As a result, for 2008, the annual incentive
compensation payouts that our named executive officers received
were based on their individual performances during the year in
helping us react to the challenging economic conditions. Payouts
of annual incentive compensation took the form of both cash
payments and equity awards for each of our named executive
officers. Changes in base salary in early 2008 for our President
reflected our termination of perquisites for a company
automobile lease and tax planning services. Changes in base
salary amounts during late 2008 for our Chief Executive Officer
and President were made in connection with the terms of revised
employment agreements we entered into with them in October 2008.
Our other named executive officers received only modest merit
increases to their base salaries during 2008, except for
Mr. Bruce, who additionally received a market adjustment to
his base salary during 2008. In terms of long-term compensation,
we eliminated our 2007 Supplemental Equity Program at the end of
2008 because it no longer supplied motivation or retention
value. We also restructured the manner in which we provide
personal aircraft use for our Chief Executive Officer during
2008.
The following discussion should be read together with the
information we present in the compensation tables, the footnotes
and narratives to those tables and the related disclosures
appearing elsewhere in this proxy statement.
Compensation
Philosophy and Objectives
The Executive Compensation Committee of our Board of Directors,
which we refer to as the Committee, is responsible for
establishing and administering our executive compensation
program. The Committee believes that we must focus on
attracting, retaining and motivating superior executive officer
talent. To achieve this goal, we compensate our executive
officers at a level generally comparable to (or, in some cases,
that exceeds) the compensation paid to similarly situated
executive officers serving at comparable companies, as adjusted
to reflect individual and corporate performance and results. The
Committee also believes the compensation packages we provide to
our executive officers, including the named executive officers,
should include performance-based compensation components. This
result is based on our belief that our executives who are most
able to affect our performance and results should have a
significant portion of their potential total compensation
at risk, or in other words dependent upon our and
their performance. As a result, an important part of our
compensation strategy is to pay for performance,
which to us means paying performance-based compensation to
reward the achievement of financial and strategic goals that we
established to enable us to achieve our business objectives and
enhance shareholder value.
16
The Committee also believes that as long as each of our
executive officers has a significant equity stake in our
company, the compensation interests of our executive officers
will be aligned with the investment interests of our
shareholders. If our executive officers share in the common
share gains and losses experienced by our shareholders, we
believe that our executive officers will be even more motivated
than they already are to work to enhance shareholder value for
both themselves and our other shareholders. Our Board of
Directors, which we refer to as the Board, shares this interest
alignment view and has reinforced this alignment by adopting
stock ownership guidelines for our executive officers. We
discuss these stock ownership guidelines, as well as the impact
of recent economic events on our named executive officers
compliance with the guidelines, in further detail below.
As a result of the Committees pay for
performance philosophy, a significant percentage of each
executive officers total compensation consists of
incentive opportunities. For 2008, the primary elements of our
executive compensation packages were base salaries, annual
performance-based compensation payable in the form of cash and
equity awards and long-term equity incentives. For our executive
officers other than Mr. Wolstein and Mr. Hurwitz, the
Committee has no policy for the annual mix between cash and
non-cash or short-term and long-term incentive compensation paid
to our executive officers. The employment agreements for
Messrs. Wolstein and Hurwitz provide that their annual
performance-based bonuses will be paid equally in cash and
equity awards. Generally, as our officers remain employed with
us over time, their total compensation includes an increasing
percentage of incentive and equity-based compensation, which
results in our most senior executive officers having total pay
packages that are significantly dependent on long-term share
appreciation.
Over the past few years, the Committee has been focused on a
goal of simplifying and strengthening our executive compensation
program. The Committee has worked to eliminate certain
perquisites and split-dollar life insurance arrangements,
emphasize incentive compensation elements, restructure the
compensation arrangements for our top two executive officers and
provide more analysis and explanation in our discussion of
executive compensation matters. In this way, the Committee
believes that it has also made our executive compensation
program more transparent and understandable for our shareholders.
Compensation
Consultant
For 2008, the Committee again retained Gressle &
McGinley LLC as its compensation consultant. Gressle &
McGinley assisted the Committee in its process of reviewing the
peer group of companies used to benchmark market pay practices,
reviewing the compensation programs of members of the peer group
and making recommendations and providing advice with respect to
the compensation of our executive officers and the overall
effectiveness of our executive compensation program. As part of
our major benchmarking activity for the year,
Gressle & McGinley also provided the Committee with
detailed comparative compensation data for the most senior
executive officers within the AUM sample (as described further
below) during the Committees renegotiation of the
employment and change in control agreements for
Messrs. Wolstein and Hurwitz, as described in further
detail below.
17
Peer
Group
In 2008, the Committee, with advice from Gressle &
McGinley, re-examined its peer group used for 2007 compensation
decisions and determined that basing compensation decisions on
comparisons with the 2007 peer group was no longer appropriate
because measuring peer companies based on market capitalization
similarities does not properly capture the size and scope of our
business and the responsibilities of our executives. As a
result, the 2007 peer group was determined to no longer remain
appropriate for benchmarking purposes. In mid-2008, the
Committee, with advice from Gressle & McGinley,
established the following peer group of companies for
benchmarking total compensation for 2008:
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AMB Property Corporation
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Host Hotels & Resorts, Inc.
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Apartment Investment & Management Co.
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Kimco Realty Corporation
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Avalonbay Communities, Inc.
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Macerich
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Boston Properties
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Public Storage, Inc.
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Brookfield Properties
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Regency Centers
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Equity Residential
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SL Green Realty Corp.
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General Growth Properties, Inc.
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Vornado Realty Trust
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HCP, Inc.
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In determining the companies to be included in our new peer
group, the Committee considered our strategy of pursuing joint
venture arrangements to acquire and manage properties. The
execution of this strategy has resulted in a significant
expansion of our assets under management to approximately
$21 billion, measured on a book value basis. As a result,
the Committee concluded that it would be appropriate to
establish a peer group of companies with comparable real estate
assets under management (AUM), which we refer to as the AUM
sample or peer group. In constructing the AUM sample, we
selected the 15 real estate companies with assets under
management ranging between $10 and $40 billion. The
Committee believes that the AUM sample represents the group of
companies that most closely resembles the nature and complexity
of our operations and competes directly with us for management
talent. The AUM sample was the primary point of comparison for
compensation decisions by the Committee for
Messrs. Wolstein and Hurwitz during the latter half of
2008, as further described below.
Compensation
Setting Process
The compensation and benefits payable to our executive officers
are established by or under the supervision of the Committee. In
general, the Committee is ultimately responsible for reviewing
and approving the compensation for our named executive officers.
Compensation decisions for the named executive officers are made
either directly by the Committee or indirectly by
Messrs. Wolstein and Hurwitz, who report such decisions to
the Committee and ensure that the other named executive
officers compensation packages are competitive within our
industry. As part of its duties, the Committee, among other
things, establishes company financial performance metrics and
targets used for annual performance-based bonuses, conducts an
in-depth review of and approves compensation arrangements for
Messrs. Wolstein and Hurwitz and reviews market pay
practices when negotiating new employment or other executive
agreements. Messrs. Wolstein and Hurwitz generally review
and approve, for the other named executive officers, other
performance metrics used for annual performance-based bonuses,
our incentive compensation plans, base salary and incentive
compensation decisions and grants and awards under our
equity-based compensation plans. Messrs. Wolstein and
Hurwitzs decisions are then communicated to the Committee.
The executive compensation setting process generally begins in
December with Gressle & McGinleys annual review
of our financial results, performance against strategic
objectives and our total shareholder returns, on both an
absolute basis and relative to our selected peer group of
companies for the prior year. Following deliberation by the
Committee and consideration of Gressle &
McGinleys report, the Committee Chairman typically meets
with Messrs. Wolstein and Hurwitz in January to discuss the
Committees conclusions and the company financial
performance metrics used to determine performance-based awards
for the immediately preceding fiscal year.
When discussing performance metrics, the Committee Chairman and
Messrs. Wolstein and Hurwitz determine whether the relative
achievement of the prior years performance metrics
actually facilitated the achievement of our business objectives
for the year and whether the performance metrics should be
modified or replaced for the current fiscal year.
Messrs. Wolstein and Hurwitz then make decisions regarding
each element of compensation for our other executive officers,
including the other named executive officers, based on their
review of each executive
18
officers individual performance and guidance they receive
from the Committee and Gressle & McGinley concerning
overall compensation levels and individual performance.
Messrs. Wolstein and Hurwitz generally meet with our Senior
Vice President of Human Resources to discuss all elements of our
executive officers compensation packages and to formulate
their decisions. These decisions are considered and verified by
an internal management committee, including Messrs. Hurwitz
and Oakes prior to being communicated to the Committee. As
explained in further detail below, the evaluations and decisions
made by Messrs. Wolstein and Hurwitz are the key factor in
terms of determining the compensation to be paid to the other
named executive officers.
After additional discussion and deliberation by the Committee in
February, the Committee, in consultation with
Gressle & McGinley, then determines the level and form
of payment of the incentive awards for the preceding year for
Messrs. Wolstein and Hurwitz by evaluating our financial
performance, shareholder returns and Messrs. Wolstein and
Hurwitzs performance in achieving the strategic goals and
objectives established for the prior year.
Benchmarking
As further described below, our major benchmarking activity for
the year was the Committees use of the AUM sample as the
primary point of comparison when developing new compensation
packages and employment agreements for Messrs. Wolstein and
Hurwitz. The AUM sample was specifically used to identify new
ranges of annual performance bonus opportunities for
Messrs. Wolstein and Hurwitz that also account for equity
incentives paid by peer companies. The Committee benchmarked
against the AUM sample because the Committee determined that
these companies use strategies similar to those used by us with
respect to operations, development and financing (specifically,
using alternative sources of capital such as joint ventures).
The Committee viewed the AUM sample as a more challenging group
against which to benchmark compensation for
Messrs. Wolstein and Hurwitz and against which to determine
relative total shareholder return metric results, as further
described below. In this way, the Committee believes it has
strengthened pay-for-performance aspects of its incentive awards
for Messrs. Wolstein and Hurwitz by utilizing the AUM
sample. Messrs. Wolstein and Hurwitz also referred to
market compensation data and surveys when reviewing the
compensation of the other named executive officers during 2008.
19
Summary
of Elements of 2008 Executive Compensation Program
The following table summarizes the elements of our executive
compensation program for 2008:
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Element
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Characteristics
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Purpose
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Base Salary
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Fixed annual cash component based on comparative market
analysis, contractual commitments and subject to annual merit or
cost of living adjustments
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Provides base level of cash compensation for annual services to
recognize individual performance; and helps retain and motivate
executive talent
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Annual Performance-Based
Compensation
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Annual performance-based opportunity delivered in the form of
cash and equity for our named executive officers
Payouts earned based on annual company performance targets,
business unit performance (in the case of Messrs. Schafer, Oakes
and Bruce), and individual performance or discretionary
evaluation of individual performance
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Motivates executives; rewards executives for achieving annual
individual and company performance; helps retain executives;
aligns executives compensation interests with
shareholders investment interests; and encourages a
significant equity stake in the company
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Long-Term Equity Incentives
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Outperformance Awards
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Special long-term, performance-based equity opportunity
Common shares earned based on achievement of performance targets
over a five-year measurement period
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Motivates executives; rewards executives for achieving long-term
company performance; and helps retain executives
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Supplemental Equity Program
Awards
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Special long-term, performance-based equity opportunity
Common shares earned based on achievement of superior
share-price performance over a specified period of time
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Motivates executives; rewards executives for achieving long-term
share-price performance; helps retain executives; and aligns
executives compensation interests with shareholders
investment interests
Program terminated at end of 2008 due to loss of motivational
and retention value
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Retirement Benefits
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Standard tax-qualified defined contribution (401(k)) plan
subject to limitations on compensation under the Internal
Revenue Code and cash and equity deferred compensation plan that
provides tax-efficient vehicles to accumulate retirement savings
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Helps attract and retain executives
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Health and Other Welfare
Benefits
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Broad-based employee benefits program, including health, life,
disability and other insurance and customary fringe benefits
providing for basic life and health needs
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Helps attract and retain executives
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Perquisites
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Personal aircraft use, country club fees and expense
reimbursement provided to certain executives
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Helps attract and retain executives
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20
Analysis
of 2008 Executive Compensation Program
Annual
Compensation
Base Salaries.
We pay base salaries to our
named executive officers to provide them with a base level of
income for services rendered by them each year. For 2008, the
named executive officers were parties to employment agreements
with us that provided for minimum base salary amounts. Base
salaries for 2008 for the named executive officers were
determined considering these contractual commitments and
comparisons to base salaries paid to executives in comparable
positions at other real estate companies.
Base salaries for Messrs. Wolstein and Hurwitz at the
beginning of 2008 were $1,000,000 and $544,000, respectively. In
early 2008, the Committee chose to increase
Mr. Hurwitzs base salary to $648,466 by March 1 to
account for discontinuance of perquisites previously provided to
Mr. Hurwitz consisting of a company automobile lease and
tax planning services. In connection with the Committees
use of the AUM sample for compensation decisions for
Messrs. Wolstein and Hurwitz during 2008,
Gressle & McGinley conducted a comprehensive review
beginning in mid-2008 of the total compensation packages for
Messrs. Wolstein and Hurwitz by focusing primarily on
the top two executives at AUM sample companies.
Gressle & McGinley also undertook a comprehensive
re-evaluation of the mix of compensation elements paid to
Messrs. Wolstein and Hurwitz with a goal of streamlining
their compensation packages. As further described below, in
connection with our negotiation of revised employment agreements
with Messrs. Wolstein and Hurwitz, the Committee adjusted
total compensation packages for Messrs. Wolstein and
Hurwitz, resulting in new salaries for Mr. Wolstein and
Mr. Hurwitz as of October 15, 2008 of $800,000 and
$616,000, respectively, based on the Gressle &
McGinley review.
For 2008, a merit pool was created to provide merit increases in
base salary for the other named executive officers of
approximately 4% over their 2007 base salaries. In addition to
his merit increase, Mr. Bruce also received an extra market
adjustment of approximately 10% to bring his base salary more in
line with market data for comparable positions based on market
compensation data and survey information. None of the other
named executive officers received a market increase for 2008. At
the end of 2008, the base salaries for our named executive
officers other than Messrs. Wolstein and Hurwitz were:
Mr. Schafer, $305,000; Mr. Oakes, $364,000; and
Mr. Bruce, $355,000. Upon his promotion to Senior Executive
Vice President effective January 1, 2009, Mr. Oakes
received a promotional increase of approximately 7% over his
2008 base salary. For more information on salaries earned by our
named executive officers for 2006, 2007 and 2008, please refer
to the 2008 Summary Compensation Table.
Annual Performance-Based Compensation in
General.
We pay annual incentive compensation to
our named executive officers to attract and motivate them and
reward them for helping us to achieve annual financial
objectives and company and individual goals that drive
shareholder value. All executive officers, including the named
executive officers, are eligible to receive annual
performance-based compensation in the form of cash payments and
equity awards. For Messrs. Wolstein and Hurwitz, their
annual performance-based compensation is paid equally in cash
and equity awards under the terms of their revised employment
agreements. We refer to this entire amount as their annual
performance bonus. Each of our other named executive officers
receives the full amount of his annual performance-based
compensation in the form of a cash bonus payment, which we refer
to as the annual performance bonus, and an additional equity
award the value of which is based directly on the amount of the
annual performance bonus. As further described below,
Messrs. Wolstein and Hurwitz do not receive an additional
equity award under the terms of their revised employment
agreements. Because the annual performance bonuses are based
upon performance throughout the entire year and year-end
personnel evaluations, and, in some cases, are determined in the
light of our final year-end financial statements, the annual
performance bonuses and equity awards are not actually paid
until our financial statements are completed in the year
following the measurement period.
Annual Performance Bonuses for Messrs. Wolstein and
Hurwitz.
We establish annual performance bonus
opportunities for Messrs. Wolstein and Hurwitz each year
based on the terms of their employment agreements, which
opportunities reflect their respective levels of responsibility
and salary and total compensation amounts paid by the members of
the peer group. Annual performance bonuses are paid to
Messrs. Wolstein and Hurwitz in the form of cash and equity
payments and are earned based on company performance and
individual performance during the fiscal year.
21
As further discussed below, in October 2008, we entered into
revised employment and change in control agreements with
Messrs. Wolstein and Hurwitz to, in part, document
applicable modifications to their respective compensation
structures that had been made over recent years that were not
reflected in the prior versions of those agreements. In
addition, in prior years, Messrs. Wolstein and
Hurwitzs long-term annual incentive awards used
performance metrics similar to those taken into account for
their annual performance bonuses. In 2008, the Committee decided
to simplify Messrs. Wolstein and Hurwitzs
compensation packages by establishing a single annual
performance bonus opportunity payable equally in cash and equity
and eliminating Messrs. Wolstein and Hurwitzs
long-term annual incentive opportunity. As a result, the annual
performance bonus opportunities established for
Messrs. Wolstein and Hurwitz are intended to account for
the equity incentives paid by peer companies. In making this
decision, the Committee relied on Gressle &
McGinleys review of the compensation programs for the
chief executive officer and second ranking officer at companies
within the AUM sample. In addition to benchmarking actual
compensation paid in 2007 and prior years (which reflects actual
peer company performance), Gressle & McGinley
evaluated the annual incentive award opportunities (annual bonus
and annual long-term awards) for a subsample of companies that
published the awards available at threshold, target
and/or
maximum levels of performance. In each case, these award levels
were evaluated as a percent of the executives annual
salary. The Committee then established annual performance bonus
opportunities (both at a threshold and maximum level as a
percentage of base salary) for Messrs. Wolstein and Hurwitz
at the median levels of the subsample of companies reporting
this information about their compensation programs.
The revised employment agreements provide that
Messrs. Wolstein and Hurwitz are entitled to annual
performance-based bonuses equal to a percentage of their base
salaries as determined by the Committee. Half of each annual
performance bonus for Messrs. Wolstein and Hurwitz will be
paid in cash, with the remaining portion of each annual
performance bonus paid in the form of equity awards. Any equity
awarded is valued based on the fair market value of our common
shares on the date of grant using the same methodology and
valuation assumptions that we use for financial statement
reporting purposes. The revised employment agreements provide
that the Committee will from time to time establish the
performance factors and criteria relevant for determination of
such annual performance bonuses and will timely communicate the
applicable performance metrics and targets to
Messrs. Wolstein and Hurwitz. For 2008, the annual
performance bonuses for Messrs. Wolstein and Hurwitz were
based on achievement measured for the following three
performance metrics, which were selected by the Committee and
communicated to Messrs. Wolstein and Hurwitz:
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Funds From Operations, or FFO, per common share;
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relative total shareholder return; and
|
|
|
|
a qualitative assessment of Messrs. Wolsteins and
Hurwitzs individual contributions and achievements.
|
The quantitative corporate performance metrics listed in the
first two bullet points above were selected by the Committee
because they are recognized industry standards, easily
quantifiable, incentivize the achievement of short-term company
goals that support our long-term success, and, in the case of
relative total shareholder return, require superior performance
compared to the AUM sample of peer companies. The Committee also
believes that individual performance is an important
consideration in determining payouts of annual performance
bonuses because Messrs. Wolstein and Hurwitz are
responsible for leading the execution of our overall operating
performance and strategic initiatives. For 2008, the Committee
weighed each of FFO per common share and the qualitative
assessment at 40%, and relative total shareholder return at 20%,
in terms of determining achievement of the annual performance
bonuses for Messrs. Wolstein and Hurwitz. A lower weight
was assigned to relative total shareholder return because it was
the primary performance metric in the 2007 Supplemental Equity
Program.
As in past years, for 2008, the specific quantitative
performance targets relating to FFO per common share was
established by the Committee on a basis consistent with our
budgeting and planning process for 2008. For 2008, the
22
structure for the annual performance bonus opportunities and
performance against the established metrics for
Messrs. Wolstein and Hurwitz was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Bonus
|
|
Metric
|
|
Threshold
|
|
|
Mid-Point
|
|
|
Maximum
|
|
|
Actual
|
|
|
40%
|
|
FFO Per Common Share (diluted)(1)
|
|
$
|
3.90
|
|
|
$
|
3.975
|
|
|
$
|
4.05
|
|
|
$
|
1.52
|
|
20%
|
|
Relative Total Shareholder Return(2)
|
|
|
Third
|
|
|
|
Second
|
|
|
|
First
|
|
|
|
Fourth
|
|
40%
|
|
Qualitative Assessment(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
FFO is generally defined and
calculated by us as net income, adjusted to exclude:
|
|
|
|
preferred share
dividends;
|
|
|
|
gains from disposition
of depreciable real estate property, except for those sold
through our merchant building program, which are presented net
of taxes;
|
|
|
|
extraordinary
items; and
|
|
|
|
certain non-cash items.
|
|
|
|
A calculation of FFO for 2008 is
included under Item 7 of our Annual Report on
Form 10-K.
FFO per common share equals FFO divided by average diluted
shares outstanding.
|
|
(2)
|
|
Relative total shareholder return
is total shareholder return on an investment in our common
shares compared to total shareholder return on an investment in
the common shares of each company in the annual performance
bonus peer group. Total shareholder return is calculated for us
and each member of the annual performance bonus 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, we are ranked in either the first, second, third or
fourth quartile of the AUM sample of peer companies.
|
|
(3)
|
|
The qualitative criteria used to
conduct the qualitative assessment relating to the annual
performance bonuses for Messrs. Wolstein and Hurwitz were
both established and evaluated by the Committee. The criteria
included goals and strategic initiatives related to specific
departments and business units, investment funds, corporate
partnerships, human resources and corporate financial
management. These criteria are qualitative in nature and, as a
result, the Committee did not establish measurable performance
targets for the qualitative assessment metric.
|
The annual performance bonus opportunity with respect to 2008
that was available for each of Messrs. Wolstein and
Hurwitz, as well as the actual annual performance bonus awarded
based on actual performance during the year (expressed as a
percentage of year-end base salary), is set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. Wolstein
|
|
|
Daniel B. Hurwitz
|
|
Metric
|
|
Threshold
|
|
|
Mid-Point
|
|
|
Maximum
|
|
|
Actual
|
|
|
Threshold
|
|
|
Mid-Point
|
|
|
Maximum
|
|
|
Actual
|
|
|
FFO Per Common Share
|
|
|
140
|
%
|
|
|
230
|
%
|
|
|
320
|
%
|
|
|
0
|
%
|
|
|
120
|
%
|
|
|
180
|
%
|
|
|
240
|
%
|
|
|
0
|
%
|
Relative Total Shareholder Return
|
|
|
70
|
%
|
|
|
115
|
%
|
|
|
160
|
%
|
|
|
0
|
%
|
|
|
60
|
%
|
|
|
90
|
%
|
|
|
120
|
%
|
|
|
0
|
%
|
Qualitative Metric
|
|
|
140
|
%
|
|
|
230
|
%
|
|
|
320
|
%
|
|
|
230
|
%
|
|
|
120
|
%
|
|
|
180
|
%
|
|
|
240
|
%
|
|
|
240
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
350
|
%
|
|
|
575
|
%
|
|
|
800
|
%
|
|
|
230
|
%
|
|
|
300
|
%
|
|
|
450
|
%
|
|
|
600
|
%
|
|
|
240
|
%
|
For our quantifiable performance metrics, because our actual
performance was below the threshold performance targets
established by the Committee, no amount was earned for those
performance metrics for 2008. The degree to which each of
Messrs. Wolstein and Hurwitz earned his annual performance
bonus depended on his year-end qualitative assessment. The
Committee determined that, based on its subjective assessment of
performance by Messrs. Wolstein and Hurwitz during 2008,
Mr. Wolstein achieved his mid-point qualitative metric and
Mr. Hurwitz achieved his maximum qualitative metric for
2008. Mr. Hurwitzs achievement of his maximum
qualitative metric was specifically based on the
Committees determination that his individual performance
for 2008 exceeded the Committees initial expectations as
to the role he would serve with the company when he was promoted
in 2007. The Committee chose to pay the equity portion of the
annual performance bonus to each of Messrs. Wolstein and
23
Hurwitz in unrestricted shares. The following table sets forth
the cash paid and the number of unrestricted shares granted to
Messrs. Wolstein and Hurwitz in January 2009 for their
annual performance bonuses earned for 2008:
|
|
|
|
|
|
|
|
|
Form of Payment
|
|
Value for Wolstein
|
|
|
Value for Hurwitz
|
|
|
Cash
|
|
$
|
920,000
|
|
|
$
|
739,200
|
|
Unrestricted Shares(1)
|
|
$
|
920,000
|
|
|
$
|
739,200
|
|
|
|
|
(1)
|
|
Based on the closing price per
share of our common shares as of January 12, 2009 of $6.02,
Messrs. Wolstein and Hurwitz received 152,823 and 122,790
unrestricted shares, respectively.
|
Annual Performance Bonuses for Messrs. Schafer, Oakes
and Bruce.
We establish annual performance bonus
opportunities for Messrs. Schafer, Oakes and Bruce each
year in accordance with the executives respective levels
of responsibility and in consideration of their base salary
amounts at the end of the fiscal year. Annual performance
bonuses are paid in the form of lump-sum cash payments and are
earned based on company performance, business unit performance
and individual performance during the fiscal year. If an annual
performance bonus is earned, each of Messrs. Schafer, Oakes
and Bruce also receives an equity award (which we have referred
to in prior years as a long-term equity award) the value of
which is based directly on the amount of his annual performance
bonus, as further described below.
In recent years, the annual performance bonuses for
Messrs. Schafer, Oakes and Bruce were based on the
subjective evaluations conducted by Messrs. Wolstein and
Hurwitz of the executive officers performance specifically
related to their areas of control and their individual
contributions and efforts toward our strategic and tactical
objectives. For 2008, however, the annual performance bonuses
for Messrs. Schafer, Oakes and Bruce were based on their
achievement measured against the following three
equally-weighted performance metrics:
|
|
|
|
|
Company financial metric of FFO per common share (defined and
calculated in the same manner as described above for
Messrs. Wolstein and Hurwitz);
|
|
|
|
Business unit performance objectives, including, for example:
|
|
|
|
|
-
|
For Mr. Schafer, raising sufficient capital to address debt
maturities, continuously monitoring operating results and
re-forecasting timely, accelerated monthly closings;
|
|
|
-
|
For Mr. Oakes, selling assets to generate merchant build
gains, selling non-core assets and improving buy-side and
sell-side relationships; and
|
|
|
-
|
For Mr. Bruce, improving accuracy and pricing on pro formas
and delivering development and redevelopment/expansion projects
within pro forma and on schedule; and
|
|
|
|
|
|
Individual performance objectives, including a qualitative
assessment of Messrs. Schafers, Oakes and
Bruces individual contributions and achievements on behalf
of the company.
|
For 2008, we used the same specific quantitative performance
targets relating to FFO per common share for
Messrs. Schafer, Oakes and Bruce that were established by
the Committee for Messrs. Wolstein and Hurwitz as follows:
Threshold, $3.90; Target, $3.975; and Maximum, $4.05. Actual FFO
per common share results for 2008 were $1.52.
The annual performance bonus opportunity with respect to 2008
that was available for each of Messrs. Schafer, Oakes and
Bruce, as well as the actual annual performance bonus awarded
based on actual performance during the year (expressed as a
percentage of year-end base salary), is set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Actual
|
|
|
William H. Schafer
|
|
|
20
|
%
|
|
|
40
|
%
|
|
|
80
|
%
|
|
|
40
|
%
|
David J. Oakes
|
|
|
50
|
%
|
|
|
75
|
%
|
|
|
125
|
%
|
|
|
100
|
%
|
Timothy J. Bruce
|
|
|
20
|
%
|
|
|
40
|
%
|
|
|
80
|
%
|
|
|
37.8
|
%
|
The degree to which each of Messrs. Schafer, Oakes and
Bruce earned his annual performance bonus depended on his
year-end qualitative assessment and the extent to which the
quantitative performance target was met. For our quantifiable
performance metric, because our actual performance was below the
threshold performance target
24
established by the Committee, no amount was earned for that
performance metric for 2008. However, based on
Messrs. Wolstein and Hurwitzs subjective assessment
that Messrs. Schafer, Oakes and Bruce exceeded expectations
during 2008 regarding their business unit performance objectives
and individual performance objectives, Mr. Schafer earned
his target annual performance bonus, Mr. Oakes earned
between his target and maximum annual performance bonus and
Mr. Bruce earned just below his target annual performance
bonus. As a result, Messrs. Schafer, Oakes and Bruce
received the following payouts in January 2009 for their annual
performance bonuses for 2008, respectively: Mr. Schafer,
$122,000; Mr. Oakes, $364,000; and Mr. Bruce, $134,190.
Annual Equity Awards for Messrs. Schafer, Oakes and
Bruce.
Our shareholder-approved, equity-based
award plans give the Committee the latitude to make annual
awards of stock-based incentives, which we refer to as annual
equity awards, to promote strong performance and the achievement
of corporate goals, to foster the growth of shareholder value
and enable executive officers to participate in our long-term
growth and profitability. These annual equity incentives
reinforce the Committees long-term goal of increasing
shareholder value by providing the proper nexus between the
compensation interests of our executive officers and the
investment interests of our shareholders. In recent years, all
of our executive officers, including the named executive
officers, have been eligible to receive annual equity awards
pursuant to one or more equity-award plans, which were approved
by our shareholders. In connection with entering into revised
employment agreements with Messrs. Wolstein and Hurwitz in
October 2008, we increased their annual performance bonus
opportunities, which increase took into account that they will
not receive separate annual equity awards. Our other named
executive officers, however, will continue to receive separate
annual equity awards in connection with their annual performance
bonuses, as further described below.
Messrs. Schafer, Oakes and Bruce are eligible to receive
annual equity awards based solely on their annual performance
bonus results, subject to discretionary adjustment based on
individual performance. The Committee does not consider the
amount or value of prior annual equity awards when granting new
annual equity awards because prior annual equity award payouts
relate to prior performance. Because annual equity awards are
based on annual performance bonus results, the awards are
generally not made until our financial statements are finalized.
For 2008, however, the Committee chose to make awards in January
2009 once the annual performance bonus results for
Messrs. Schafer, Oakes and Bruce were determined.
The annual equity incentive opportunity that was available for
each of Messrs. Schafer, Oakes and Bruce based on
performance during 2008 was established as a percentage of his
base salary at the end of the year plus his annual performance
bonus earned with respect to such year, as set forth opposite
his name below (expressed as a percentage of such sum):
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
William H. Schafer
|
|
|
12.5
|
%
|
|
|
25
|
%
|
|
|
50
|
%
|
David J. Oakes
|
|
|
50
|
%
|
|
|
75
|
%
|
|
|
100
|
%
|
Timothy J. Bruce
|
|
|
12.5
|
%
|
|
|
25
|
%
|
|
|
50
|
%
|
There are no specific quantitative or qualitative performance
metrics that have been established in order to determine the
annual equity awards for Messrs. Schafer, Oakes and Bruce
other than achievement of the annual performance bonuses.
Instead, each officer receives an annual equity award with a
value equal to the same proportion of his maximum annual equity
award opportunity as the proportion his actual annual
performance bonus represents of his maximum annual performance
bonus opportunity, subject to discretionary adjustment based on
individual performance.
To further clarify, in determining actual annual equity awards
for Messrs. Schafer, Oakes and Bruce for 2008, we first
determined each officers earned annual performance bonus
as a percentage of his maximum annual performance bonus
opportunity (for example, Mr. Schafer earned an annual
performance bonus for 2008 that was 50% of his maximum annual
performance bonus opportunity (which was 80%)). We then applied
that same percentage to the officers maximum annual equity
award opportunity identified in the table above to determine the
officers percentage achievement of his annual equity award
(for example, 50% of Mr. Schafers maximum annual
equity award opportunity (which was 50%) resulted in actual
annual equity award achievement of 25%). The achieved percentage
was then applied to the sum of the officers base salary at
the end of 2008 plus his annual performance bonus earned for
2008 (for example, 25% of Mr. Schafers year-end base
salary ($305,000) plus 2008
25
annual performance bonus ($122,000) resulted in an annual equity
award value of $106,750). There was no discretionary adjustment
made to awards for Messrs. Schafer and Bruce for 2008, but
Mr. Oakes annual equity award was increased by 7.50% based
on his individual performance for 2008. This adjustment was
based on Messrs. Wolstein and Hurwitzs subjective
assessment that Mr. Oakes exceeded expectations during 2008
regarding his business unit performance objectives and
individual performance objectives described above. Based on the
calculations described in this paragraph, Messrs. Schafer,
Oakes and Bruce earned annual equity awards for 2008 as follows:
|
|
|
|
|
|
|
|
|
|
|
Actual Annual Equity Award
|
|
|
|
|
|
(% of Base Salary Plus Annual
|
|
Actual Annual
|
|
Named Executive Officer
|
|
Performance Bonus)
|
|
Equity Award ($)
|
|
|
William H. Schafer
|
|
|
25%
|
|
|
$
|
106,754
|
|
David J. Oakes
|
|
|
87.5%
|
|
|
$
|
637,029
|
|
Timothy J. Bruce
|
|
|
23.6%
|
|
|
$
|
115,582
|
|
Consistent with our compensation philosophy of aligning the
compensation interests of our executive officers with the
investment interests of our shareholders and ensuring that each
of Messrs. Schafer, Oakes and Bruce has a significant
equity stake in the company, 75% of the value of each annual
equity incentive award payable with respect to 2008 was awarded
in the form of restricted shares vesting, beginning on the date
of grant, in equal annual installments over four years and 25%
of the value was awarded in the form of stock options vesting in
three equal annual installments. Annual equity awards were paid
in restricted shares and stock options because these forms of
equity are a reasonable means by which to encourage share
ownership and align executive interests with shareholder
interests. The following table sets forth the number of
restricted shares and stock options granted to each of
Messrs. Schafer, Oakes and Bruce in January 2009 based on
his annual equity incentive award:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of Award
|
|
Exercise Price
|
|
|
Schafer
|
|
|
Oakes
|
|
|
Bruce
|
|
|
Stock Options
|
|
$
|
6.02
|
|
|
|
40,437
|
|
|
|
241,290
|
|
|
|
43,779
|
|
Restricted Shares
|
|
|
|
|
|
|
13,300
|
|
|
|
79,365
|
|
|
|
14,400
|
|
No restricted shares or stock options were granted to the named
executive officers with respect to employment during 2008 other
than the annual equity awards described above.
Restricted Shares Used To Settle Annual Equity
Awards.
We believe that restricted shares provide
significant incentives for our executive officers because they
directly align the compensation interests of our executive
officers with the investment interests of our shareholders. Our
restricted share awards vest annually in 20% increments with the
first increment vesting on the date of the award. The holder of
restricted shares has the right to receive dividends and to vote
with respect to all restricted shares immediately upon their
grant.
Stock Options Used To Settle Annual Equity
Awards.
We also believe that stock options are a
valuable motivating tool and provide a long-term incentive to
the executive officers because our executive officers will
realize gain on their stock options only if our shareholders
also recognize gain on their holdings of our shares. Our stock
option awards 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 our common shares on the date of grant. We have never
repriced any stock options or issued options with
reload provisions. The number of options granted was
determined by dividing the value of the annual equity incentive
award earned by the value of an option based on the Black
Scholes valuation model.
Long-Term
Equity Incentive Compensation
Outperformance Awards.
In prior years, we
awarded performance units as a retention award for our executive
officers. In 2006, based on its regular evaluation of our
compensation programs, the Committee discontinued its practice
of awarding performance units in favor of granting new
equity-based performance awards to eleven of our executive
officers, including Messrs. Wolstein, Schafer, Hurwitz and
Bruce. We refer to these awards as outperformance awards and to
the equity plan under which the outperformance awards were made
as the 2005 Outperformance Award Plan. The Committee believed
both that the outperformance awards were
26
superior to the performance unit awards because, among other
reasons, a higher level of company performance is required to
trigger payouts under the outperformance awards and that
outperformance awards should be made available to a broader
group of executives because superior company performance
requires a team of superior performers.
Based on the recommendations of our prior compensation
consultant and Mr. Wolstein, the Committee chose to use
three performance metrics to determine whether an outperformance
award should be granted:
|
|
|
|
|
FFO per common share growth;
|
|
|
|
annualized total shareholder return; and
|
|
|
|
our annualized total shareholder return compared to the
annualized total shareholder return of the companies in a
specified peer group, which we refer to as comparative
annualized total shareholder return (we refer to both of these
annualized total shareholder return metrics together as the
shareholder return metrics).
|
For purposes of the outperformance awards, annualized total
shareholder return is the return on an investment in our 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 payouts were made to
Messrs. Wolstein and Hurwitz in early 2008 to reflect their
achievement of their applicable performance targets, as reported
in our Compensation Discussion and Analysis in our 2008 proxy
statement. All quantitative metrics are being 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 (Mr. Oakes was not
yet our employee when the outperformance awards were made). The
peer group established in 2007 for comparative annualized total
shareholder return continues to include the following companies:
|
|
|
|
|
|
|
|
CBL & Associates Properties, Inc.
|
|
|
|
Macerich
|
|
|
Federal Realty Investment Trust
|
|
|
|
Pennsylvania Real Estate Investment Trust
|
|
|
General Growth Properties, Inc.
|
|
|
|
Taubman Centers, Inc.
|
|
|
Glimcher Realty Trust
|
|
|
|
Regency Centers Corporation
|
|
|
Kimco Realty Corporation
|
|
|
|
Simon Property Group, Inc.
|
|
|
|
|
|
|
Weingarten Realty Investors
|
|
The quantitative metrics for the outperformance awards granted
to Messrs. Schafer and Bruce are as follows:
|
|
|
Outperformance Awards Quantitative Metrics
|
|
Target
|
|
FFO Per Common Share Growth
|
|
8.0% per year
|
Annualized Total Shareholder Return
|
|
17.0% per year
|
Comparative Annualized Total Shareholder Return
|
|
Annualized total shareholder return equal to or greater than the
annualized total shareholder return of not less than 75% of the
companies in the applicable peer group during the applicable
measurement period
|
The Committee will determine whether the applicable performance
targets have been achieved once our 2009 year-end financial
statements are available in early 2010. Any outperformance award
earned by Messrs. Schafer and Bruce will vest on
March 1, 2010. In all cases, the outperformance awards
relating to the FFO per common share growth metric are expressed
as a fixed dollar amount, and the outperformance awards relating
to the shareholder return metrics are expressed as a number of
our common shares, subject to a cap on the value of the common
shares that can actually be received. The Committee currently
intends to pay all earned outperformance awards in the form of
our common shares, but the Committee has the right to pay the
awards in cash. The Committee also retains the flexibility so
that if a specific quantitative metric is not achieved in full
during the relevant measurement period, but any or all of the
quantitative metrics have been substantially achieved during the
same period, the Committee may still grant to the participants
an award equal to 25% of the total award that would have been
earned had all quantitative metrics been achieved in full.
27
The remaining outperformance award opportunity available for
Messrs. Schafer and Bruce based on the earlier grant,
expressed in dollars with respect to the FFO per common share
growth metric and in our common shares with respect to the other
quantifiable metrics, is set forth opposite his name:
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO Metric
|
|
Shareholder Return
|
|
Total Award
|
|
Named Executive Officer
|
|
Opportunity
|
|
Metrics Opportunity
|
|
Opportunity
|
|
|
William H. Schafer
|
|
|
$417,000
|
|
|
12,850 shares with a
maximum value of
$1,028,000
|
|
$
|
1,445,000
|
|
Timothy J. Bruce
|
|
|
$500,000
|
|
|
15,400 shares with a
maximum value of
$1,232,000
|
|
$
|
1,732,000
|
|
2007 Supplemental Equity Program.
The 2007
Supplemental Equity Program was adopted and implemented to
address two areas that the Committee, after consultation with
Gressle & McGinley, deemed inadequate in the 2005
Outperformance Award Plan. First, the 2005 Outperformance Award
Plan did not provide significant enough incentives for higher
levels of performance, which we believe is essential to be
competitive with the compensation paid by private equity firms
and other real estate investment trusts to retain the best
executive talent. Second, if our share price were to rise
significantly and then decline during the measurement period of
the 2005 Outperformance Award Plan, it would be possible that an
executive would initially be likely to qualify for a payout
under the 2005 Outperformance Award Plan, but then later become
ineligible for any payout under the 2005 Outperformance Award
Plan without regard to performance by the executive.
Furthermore, as we have grown, the number of our executives has
increased correspondingly. The Committee, Messrs. Wolstein
and Hurwitz, and Gressle & McGinley all believed it
was important to incentivize each of our key executives to
create shareholder value. Thus, 43 executives, including the
named executive officers, were initially chosen to participate
in the 2007 Supplemental Equity Program.
The 2007 Supplemental Equity Program provided for the grant of
awards to designated participants, which awards were to be
earned based on the satisfaction of certain company-based
performance goals over a specified period of time. Under the
2007 Supplemental Equity Program, our named executive officers
had the opportunity to receive, in the form of common shares, a
percentage of an award pool created based on our absolute and
relative total shareholder return (measured against entities in
the North American Real Estate Investment Trust index) during a
series of measurement periods extending into 2012 (or until a
change in control of the company). In this way, the 2007
Supplemental Equity Program was designed to incentivize
participating executives to help us achieve superior financial
and share-price performance over a number of years. As part of
the Committees ongoing review of our executive
compensation program, and based on the recommendation of
Gressle & McGinley, on December 31, 2008, the
Committee authorized and approved the termination of the 2007
Supplemental Equity Program. The Committee decided to terminate
the 2007 Supplemental Equity Program because it determined that
the program no longer provides any motivational or retention
value, and therefore would not help achieve the two goals for
which it was created. No shares have been or will be issued
under the 2007 Supplemental Equity Program.
Impact of April 2009 Special Meeting of
Shareholders.
On April 9, 2009, our
shareholders approved the transaction contemplated by the Otto
Stock Purchase Agreement, which transaction is further described
above under Proposal One. Shareholder approval
of the Otto transaction was deemed a potential change in
control under our equity-based award plans and the related
equity award agreements. As a result, all outstanding unvested
stock options became fully exercisable, all restrictions on
unvested restricted shares lapsed, and all outperformance awards
became vested (which means that each outperformance award
holders right to receive a payment if the performance
criteria are met is no longer subject to forfeiture upon a
termination of the holders employment). The outperformance
awards will still be earned depending on our performance against
the targets established under the outperformance awards for the
performance period (which generally ends on December 31,
2009).
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 us to attract and retain superior
executive talent.
28
Mr. Wolstein, for purposes of security and efficiency, has
the right to use for personal purposes any airplane that we
lease or in which we own an interest, but only after giving
first priority to our business needs. For 2008,
Mr. Wolstein was originally permitted to use up to 100
flight hours for personal use. As further described below,
however, in connection with our negotiation of a revised
employment agreement with Mr. Wolstein in October 2008, we
changed the manner in which we provide this perquisite to
Mr. Wolstein. For the first 9.5 months of 2008,
Mr. Wolstein was permitted to use up to approximately
80 hours of personal flight time (the pro rated amount of
the 100 flight hours). For the first 9.5 months of 2008,
Mr. Wolstein used approximately 78 flight hours, and we
were obligated to pay Mr. Wolstein approximately $8,800 for
the unused flight hours, representing the annual average cost
per flight hour multiplied by his unused flight hours for that
portion of the year. Mr. Wolstein, however, agreed to waive
our obligation to pay this amount.
Beginning in mid-October 2008, however, for each hour of
personal flight time that Mr. Wolstein uses, he will
reimburse us based on applicable Standard Industry Fare Level
rules in accordance with Internal Revenue Code and Department of
the Treasury regulations. In addition, Mr. Wolstein will
reimburse us to the extent that the full cost of
Mr. Wolsteins personal use of company aircraft during
any year, but offset by Mr. Wolsteins reimbursements
to us, exceeds $300,000. As a result, Mr. Wolstein is
receiving from us a perquisite of personal use of company
aircraft each year in an amount up to $300,000.
Mr. Wolstein will reimburse us for personal use of company
aircraft, however, only to the extent permitted under applicable
Federal Aviation Administration rules and regulations.
Under their employment agreements, Messrs. Hurwitz, Schafer
and Oakes are entitled to the payment by us of regular
membership fees, assessments, and dues for a local country club.
In addition, the employment agreements for each of our executive
officers provide for participation in health, life, disability
and other insurance plans, sick leave, reasonable vacation time
and other customary fringe benefits.
Retirement Benefits.
We have established a
401(k) plan for our employees pursuant to which we make
semi-monthly, matching contributions equal to 50% of each
participants contribution, up to 6% of the sum of his or
her base salary plus annual performance bonus, not to exceed the
sum of 3% of the participants base salary plus annual
performance bonus.
Deferred Compensation Plan.
Our executive
officers, including the named executive officers, are entitled
to participate in our elective deferred compensation plan and
our equity deferred compensation plan. Pursuant to the elective
deferred compensation plan, executive officers can defer up to
100% of their base salaries and annual performance bonuses, less
applicable taxes and authorized benefits deductions. The
elective deferred compensation plan is a non-qualified plan and
is an unsecured, general obligation of the company. We provide a
matching contribution to any participant in a given year who has
contributed the maximum permitted under our 401(k) plan. This
matching contribution is equal to the difference between
(1) 3% of the sum of the executives base salary and
annual performance bonus deferred under the 401(k) plan and the
elective deferred compensation plan, combined, and (2) the
actual employer matching contribution provided under the 401(k)
plan. Earnings on a participants deferred account are
based on the results of the investment measurement options
available in the plan that are selected by the participant.
Settlement is generally made in cash at a date determined by the
participant at the time a deferral election is made. All of the
named executive officers elected to defer a portion of their
2008 total annual cash compensation pursuant to the elective
deferred compensation plan. Messrs. Wolstein, Hurwitz,
Schafer and Bruce each elected to have certain deferrals of
compensation distributed to him during 2008 or 2009 in
accordance with either the hardship rules (in the case of
Mr. Wolstein) or the transition rules under
Section 409A of the Internal Revenue Code. For information
on the value of annual cash compensation deferred by the named
executive officers in 2008, please refer to the 2008 Summary
Compensation Table and to the 2008 Nonqualified Deferred
Compensation Table below.
Equity Deferred Compensation Plan.
Pursuant to
the equity deferred compensation plan, our 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 stock options. The value of participants
deferrals is converted into units, based on the market value of
our common shares at the time of the deferral, so that each unit
is equivalent in value to one common share. We have established
and funded a rabbi trust, which holds our common
shares, to satisfy our payment obligations under this plan.
Common shares equal to the number of units credited to the
participants
29
accounts under the plans are placed in the rabbi
trust. In the event of our insolvency, the assets of the
rabbi trust are available to general creditors.
Settlement of units is generally made in our common shares at a
date determined by the participant at the time a deferral
election is made. In 2008, Messrs. Hurwitz, Oakes and Bruce
deferred receipt of 69,625, 7,438 and 3,055 restricted shares,
respectively. Messrs. Wolstein, Schafer and Bruce each
elected to have certain deferrals distributed to him during 2008
or 2009 in accordance with either the hardship rules (in the
case of Mr. Wolstein) or the transition rules under
Section 409A of the Internal Revenue Code.
As described above under Proposal One, on
February 23, 2009, we entered into the Otto Stock Purchase
Agreement with Mr. Alexander Otto to issue and sell the
Purchased Shares and warrants to purchase 10,000,000 common
shares to the Investors. If the Investors collectively become
the beneficial owners of 20% or more of our outstanding common
shares, a change in control will be deemed to have
occurred under our equity deferred compensation plan in which
some of our executive officers and directors participate. Under
both our Equity Deferred Compensation Plan (Effective
January 1, 2003), which we refer to as the original equity
deferred compensation plan, and our 2005 Equity Deferred
Compensation Plan (January 1, 2009 Restatement), which we
refer to as the new equity deferred compensation plan, in the
event of a change in control, all unvested deferred stock units
held for each participant would become vested and no longer
subject to forfeiture upon a termination of employment. Vested
deferred stock units under the original equity deferred
compensation plan would be distributed to participants on a
one-for-one basis in the form of our common shares at the time
of the change in control. Vested deferred stock units under the
new equity deferred compensation plan would not be distributed
to participants until the end of the deferral period selected by
each participant.
Employment
Agreements
We have entered into employment agreements with several
executive officers, including each of the named executive
officers. Prior to 2008, Messrs. Wolstein and Hurwitz had
last entered into employment agreements with us in 2001 and
1999, respectively. During the past several years, we have
adopted various policies and programs relating to executive
compensation. Many of those policies and programs have since
been modified, and we have continued to implement additional
compensation policies and programs. In early 2008, we determined
that the employment agreements with Messrs. Wolstein and
Hurwitz should be reviewed because of the number of executive
compensation changes we had implemented since 1999. We
determined that it would be in our best interests to enter into
new employment agreements with Messrs. Wolstein and Hurwitz
to document all applicable modifications to their respective
compensation structures, which were last set forth in their
existing employment agreements, and to bring the agreements into
compliance with Section 409A of the Internal Revenue Code.
Following a period of negotiations, and with the approval of
both the Board and the Committee, and under the advisement of an
independent compensation consulting company for each of
Messrs. Wolstein and Hurwitz, on the one hand, and us, on
the other hand (namely Gressle & McGinley for us), on
October 15, 2008, we entered into new employment agreements
with Messrs. Wolstein and Hurwitz. For more information
about our employment agreements with Messrs. Wolstein and
Hurwitz, please see the narrative to the 2008 Grants of
Plan-Based Awards Table below.
The employment agreements for the other executive officers,
including Messrs. Schafer, Oakes and Bruce, were last
amended in December 2008 to bring such agreements into
compliance with Section 409A of the Internal Revenue Code,
but no material changes were made to their agreements at that
time. Additional information concerning the terms of the
employment agreements and the amounts payable pursuant to the
employment agreements for Messrs. Schafer, Oakes and Bruce
is also provided in the narrative to the 2008 Grants of
Plan-Based Awards Table below.
Change
in Control Agreements
We have entered into a change in control agreement with each of
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 us if a Triggering Event occurs within two years
(or three years for Mr. Wolstein) after a Change in
Control. In general, the 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
30
transaction that is likely to maximize shareholder value.
Payments would only be triggered if a change in control occurs
and the officer is terminated or effectively terminated, or if
actions are taken that materially and adversely impact the
executive officers position with us or his or her
compensation. The Committee believes that the payment of change
in control compensation would be 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.
The change in control agreements for Messrs. Wolstein and
Hurwitz were last amended in October 2008 in connection with the
changes made to their employment agreements, including
amendments to bring such agreements into compliance with
Section 409A of the Internal Revenue Code. The change in
control agreements for the other executive officers, including
the other named executive officers, were last amended in
December 2008 to bring such agreements into compliance with
Section 409A of the Internal Revenue Code, but no material
changes were made to those agreements at that time.
As described above, if the Investors collectively become the
beneficial owners of 20% or more of our outstanding common
shares in connection with the Otto transaction, a change in
control will be deemed to have occurred under the change in
control agreements. In satisfaction of a condition to the
completion of the transaction with the Investors, however, we
have entered into waiver agreements with our officers with
change in control agreements by which the officers agreed that
the acquisition by the Investors of beneficial ownership of 20%
or more of our outstanding common shares does not constitute a
change in control under the terms of the change in control
agreements. 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 the
Potential Payments Upon Termination or Change in Control
subsection below.
Stock
Ownership Guidelines
Under the stock ownership guidelines established by the Board,
each executive officer, including the named executive officers,
must own common shares or common share equivalents with an
aggregate market value of no less than the sum of the
officers annual salary and annual performance bonus for
the immediately preceding year no later than the fourth
anniversary of the March 15th on which the officer
received his or her first grant of common share equivalents, and
on each anniversary date thereafter. The Board established this
particular level of stock ownership for our executive officers
because it is reasonable evidence of our continuing commitment
to have the interests of our executive officers aligned with the
investment interests of our shareholders. During the initial
four-year phase-in period, each executive officer is expected to
acquire 20% of the amount of required common shares or common
share equivalents during each year in order to satisfy the stock
ownership guidelines in a timely manner. Unvested restricted
shares and shares deferred into our equity deferred compensation
plan, but not unvested options, will count as common share
equivalents toward satisfying the stock ownership guidelines.
Due to the recent economic downturn in the United States, which
has negatively impacted our stock price, as well as certain
margin calls experienced by some of our executive officers, most
of our executive officers who met their stock ownership
guidelines as of March 15, 2008 did not meet such
guidelines as of March 15, 2009. Due to these extraordinary
economic conditions and events, the Board has granted a waiver
of the stock ownership guidelines for 2009 for all our directors
and officers who are subject to Section 16 of the
Securities Exchange Act of 1934, including our named executive
officers. The Board plans on re-evaluating the stock ownership
guidelines in 2009 to determine if any modifications in the
guidelines are appropriate.
Tax
and Accounting Implications
Impact of
Section 162(m) of the Internal Revenue Code of
1986
We have made an election to qualify as a real estate investment
trust under the Internal Revenue Code, and as such generally
will not be subject to federal income tax. Thus, the deduction
limit for compensation paid to our 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 our
executive compensation program.
31
Compensation
Committee Report
The Executive Compensation Committee has reviewed and discussed
the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management. Based on such review and discussions, the
Executive Compensation Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis be
included in the Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 and the Proxy
Statement for the 2009 Annual Meeting of Shareholders for filing
with the Securities and Exchange Commission.
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 our executive officers serves or has served on the board
of directors or compensation committee of any entity that has
one or more executive officers serving as a member of our Board
of Directors or Executive Compensation Committee.
Executive
Compensation
2008
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Plan
|
|
All Other
|
|
|
|
|
|
|
|
|
Salary
|
|
|
|
Bonus
|
|
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
(a)
|
|
(b)
|
|
|
|
(c)(1)
|
|
|
|
(d)
|
|
|
|
(e)(2)
|
|
(f)(3)
|
|
(g)(1)(4)
|
|
(i)
|
|
(j)
|
|
Scott A. Wolstein
|
|
|
2008
|
|
|
|
|
|
|
$
|
957,583
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,708,628
|
|
|
$
|
552,091
|
|
|
$
|
920,000
|
|
|
$
|
486,351
|
(6)
|
|
$
|
4,624,653
|
|
Chairman and Chief
|
|
|
2007
|
|
|
|
|
|
|
$
|
880,449
|
|
|
|
|
|
|
$
|
700,000
|
|
|
|
|
|
|
$
|
2,528,826
|
|
|
$
|
628,812
|
|
|
$
|
1,000,000
|
|
|
$
|
1,414,314
|
|
|
$
|
7,152,401
|
|
Executive Officer
|
|
|
2006
|
|
|
|
|
|
|
$
|
641,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,440,858
|
|
|
$
|
691,277
|
|
|
$
|
1,614,380
|
|
|
$
|
752,295
|
|
|
$
|
6,140,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William H. Schafer
|
|
|
2008
|
|
|
|
|
|
|
$
|
302,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
272,634
|
|
|
$
|
45,024
|
|
|
$
|
122,000
|
|
|
$
|
52,928
|
(7)
|
|
$
|
795,464
|
|
Executive Vice President
|
|
|
2007
|
|
|
|
|
|
|
$
|
290,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
266,014
|
|
|
$
|
46,277
|
|
|
$
|
175,361
|
|
|
$
|
28,704
|
|
|
$
|
806,751
|
|
and Chief Financial Officer
|
|
|
2006
|
|
|
|
|
|
|
$
|
266,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
249,756
|
|
|
$
|
51,113
|
|
|
$
|
140,514
|
|
|
$
|
40,146
|
|
|
$
|
748,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel B. Hurwitz
|
|
|
2008
|
|
|
|
|
|
|
$
|
632,247
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
690,833
|
|
|
$
|
261,386
|
|
|
$
|
739,200
|
|
|
$
|
55,168
|
(9)
|
|
$
|
2,378,834
|
|
President and Chief
|
|
|
2007
|
|
|
|
|
|
|
$
|
507,131
|
|
|
|
|
|
|
$
|
627,300
|
|
|
|
|
|
|
$
|
1,034,972
|
|
|
$
|
235,727
|
|
|
$
|
476,000
|
|
|
$
|
53,400
|
|
|
$
|
2,934,530
|
|
Operating Officer
|
|
|
2006
|
|
|
|
|
|
|
$
|
425,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
972,633
|
|
|
$
|
235,904
|
|
|
$
|
505,900
|
|
|
$
|
62,710
|
|
|
$
|
2,202,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David J. Oakes
|
|
|
2008
|
|
|
|
|
|
|
$
|
361,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
425,638
|
|
|
$
|
452,188
|
|
|
$
|
364,000
|
|
|
$
|
49,970
|
(10)
|
|
$
|
1,653,463
|
|
Senior Executive Vice
|
|
|
2007
|
|
|
|
|
|
|
$
|
247,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
215,333
|
|
|
$
|
234,832
|
|
|
$
|
350,000
|
|
|
$
|
41,428
|
|
|
$
|
1,089,510
|
|
President of Finance and
Chief Investment Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy J. Bruce
|
|
|
2008
|
|
|
|
|
|
|
$
|
347,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
301,460
|
|
|
$
|
41,886
|
|
|
$
|
134,190
|
|
|
$
|
37,104
|
(11)
|
|
$
|
862,424
|
|
Executive Vice President
|
|
|
2007
|
|
|
|
|
|
|
$
|
309,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
277,130
|
|
|
$
|
55,426
|
|
|
$
|
187,022
|
|
|
$
|
12,771
|
|
|
$
|
842,055
|
|
of Development
|
|
|
2006
|
|
|
|
|
|
|
$
|
288,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
261,844
|
|
|
$
|
73,844
|
|
|
$
|
116,000
|
|
|
$
|
14,125
|
|
|
$
|
753,855
|
|
|
|
|
(1)
|
|
The amounts reported in columns (c) and (g) for 2008
include amounts deferred into our 401(k) plan (a qualified plan)
and our elective deferred compensation plan (nonqualified plan)
by Messrs. Wolstein, Schafer, Hurwitz, Oakes and Bruce for
the year ended December 31, 2008 as follows:
Mr. Wolstein, $110,281; Mr. Schafer, $47,394;
Mr. Hurwitz, $42,700; Mr. Oakes, $50,500 and
Mr. Bruce, $73,981. Under our elective deferred
compensation plan, deferred amounts are payable to the named
executive officer at a date specified by the named executive
officer at the time of his deferral election in accordance with
the provisions of the plans.
|
|
(2)
|
|
The amounts reported in column (e) reflect the dollar
amounts recognized for financial statement reporting purposes in
accordance with FAS 123(R), excluding the effect of certain
forfeiture assumptions, for stock awards granted in and prior to
such year. Assumptions used in the calculation of these amounts
are included in
|
32
|
|
|
|
|
Footnote 18 to the financial statements included in our Annual
Report on
Form 10-K
for the year ended December 31, 2008, filed with the SEC on
February 27, 2009.
|
|
(3)
|
|
The amounts reported in column (f) reflect the dollar
amounts recognized for financial statement reporting purposes in
accordance with FAS 123(R), excluding the effect of certain
forfeiture assumptions, for option awards granted in and prior
to such year. Assumptions used in the calculation of these
amounts are included in Footnote 18 to the financial statements
included in our Annual Report on
Form 10-K
for the year ended December 31, 2008, filed with the SEC on
February 27, 2009.
|
|
(4)
|
|
The amounts reported in column (g) reflect cash amounts
earned by such executives as annual performance bonuses.
|
|
(5)
|
|
The amount reported reflects annual base salary rates for
Mr. Wolstein of $1,000,000 for January 2008 through
October 15, 2008 and $800,000 for October 15, 2008
through December 2008.
|
|
(6)
|
|
The amount reported as All Other Compensation for
Mr. Wolstein includes matching contributions to the
deferred compensation plan and 401(k) plan of $30,650. The
amount shown in column (i) for Mr. Wolstein also
includes $450,342, which is attributable to
Mr. Wolsteins personal use of company aircraft as
further described above under Compensation Discussion and
Analysis. 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.
|
|
(7)
|
|
The amount reported as All Other Compensation for
Mr. Schafer includes: matching contributions to the
deferred compensation plan and 401(k) plan of $13,708; 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.
|
|
(8)
|
|
The amount reported reflects annual base salary rates for
Mr. Hurwitz of $544,000 for January 2008, $592,466 for
February 2008, $648,466 for March 2008 through October 15,
2008 and $616,000 for October 15, 2008 through December
2008.
|
|
(9)
|
|
The amount reported as All Other Compensation for
Mr. Hurwitz includes: matching contributions to the
deferred compensation plan and 401(k) plan of $20,500; 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 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.
|
|
(10)
|
|
The amount reported as All Other Compensation for
Mr. Oakes includes: matching contributions to the deferred
compensation plan and 401(k) plan of $21,350; and amounts paid
for business and country club memberships. 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.
|
|
(11)
|
|
The amount reported as All Other Compensation for
Mr. Bruce includes: matching contributions to the deferred
compensation plan and 401(k) plan of $16,044. 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 $25,000 or 10% of the total amount of perquisites
and personal benefits for such officer.
|
33
2008
Grants of Plan-Based Awards Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Number of
|
|
or Base
|
|
Date
|
|
|
|
|
Estimated Possible Payouts
|
|
Estimated Possible Payouts
|
|
of Shares
|
|
Securities
|
|
Price of
|
|
Fair Value
|
|
|
|
|
Under Non-Equity Incentive
|
|
Under Equity Incentive
|
|
of Stock
|
|
Underlying
|
|
Option
|
|
of Stock
|
|
|
Grant
|
|
Plan Awards(1)(2)
|
|
Plan Awards(3)(4)
|
|
or Units
|
|
Options
|
|
Awards
|
|
and Option
|
Name
|
|
Date
|
|
Threshold ($)
|
|
Target ($)
|
|
Maximum ($)
|
|
Threshold ($)
|
|
Target ($)
|
|
Maximum ($)
|
|
(#)(5)
|
|
(#)(5)
|
|
($/Sh)
|
|
Awards(6)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
(k)
|
|
(l)
|
|
Scott A. Wolstein
|
|
|
|
|
|
$
|
280,000
|
|
|
|
|
|
|
$
|
3,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/15/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
280,000
|
|
|
|
|
|
|
$
|
3,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,385
|
|
|
|
|
|
|
|
|
|
|
$
|
1,635,181
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
161,724
|
|
|
$
|
37.69
|
|
|
$
|
536,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William H. Schafer
|
|
|
|
|
|
$
|
20,334
|
|
|
$
|
122,000
|
|
|
$
|
244,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
40,667
|
|
|
$
|
106,750
|
|
|
$
|
274,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,490
|
|
|
|
|
|
|
|
|
|
|
$
|
131,538
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,011
|
|
|
$
|
37.69
|
|
|
$
|
43,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel B. Hurwitz
|
|
|
|
|
|
$
|
184,800
|
|
|
|
|
|
|
$
|
1,848,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/15/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
184,800
|
|
|
|
|
|
|
$
|
1,848,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,820
|
|
|
|
|
|
|
|
|
|
|
$
|
897,776
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88,785
|
|
|
$
|
37.69
|
|
|
$
|
294,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David J. Oakes
|
|
|
|
|
|
$
|
60,679
|
|
|
$
|
273,000
|
|
|
$
|
455,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
212,339
|
|
|
$
|
477,750
|
|
|
$
|
819,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,190
|
|
|
|
|
|
|
|
|
|
|
$
|
459,441
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,438
|
|
|
$
|
37.69
|
|
|
$
|
150,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy J. Bruce
|
|
|
|
|
|
$
|
23,667
|
|
|
$
|
142,000
|
|
|
$
|
284,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
47,333
|
|
|
$
|
124,250
|
|
|
$
|
319,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,725
|
|
|
|
|
|
|
|
|
|
|
$
|
140,395
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,875
|
|
|
$
|
37.69
|
|
|
$
|
46,057
|
|
|
|
|
(1)
|
|
Amounts for Messrs. Wolstein and Hurwitz reflect the cash
portion of annual performance bonus opportunities established
for 2008 under their employment agreements at the threshold and
maximum levels. The amounts shown in column (c) represent
the minimum amount payable in cash (35% and 30% of base salary,
respectively) for minimum performance (threshold achievement of
the relative total shareholder return performance metric). The
amounts shown in column (e) represent the maximum amount
payable in cash (400% and 300% of base salary, respectively) for
maximum performance (maximum achievement of the FFO per common
share, relative total shareholder return and qualitative
performance metrics), for 2008 under their employment
agreements. The amounts actually earned by Messrs. Wolstein
and Hurwitz are included in the Non-Equity Incentive Plan
Compensation column (column (g)) of the 2008 Summary
Compensation Table above. See Compensation Discussion and
Analysis Analysis of 2008 Executive Compensation
Program Annual Compensation above for
additional information about the annual performance bonuses.
|
|
(2)
|
|
Amounts for Messrs. Schafer, Oakes and Bruce reflect the
cash portion of annual performance bonus opportunities
established for 2008 under our annual cash incentive plan at the
threshold, target and maximum levels. The amounts shown in
column (c) represent the minimum amount payable in cash
(6
2
/
3
%
of base salary for Messrs. Schafer and Bruce, and
16
2
/
3
%
of base salary for Mr. Oakes) for minimum performance under
the performance metrics. The amounts shown in column
(d) represent the target amount payable in cash (40% of
base salary for Messrs. Schafer and Bruce, and 75% of base
salary for Mr. Oakes) for target performance under the
performance metrics. The amounts shown in column
(e) represent the maximum amount payable in cash (80% of
base salary for Messrs. Schafer and Bruce, and 125% of base
salary for Mr. Oakes) for maximum performance under the
performance metrics for 2008. The amounts actually earned by
Messrs. Schafer, Oakes and Bruce are included in the
Non-Equity Incentive Plan Compensation column
(column (g)) of the 2008 Summary Compensation Table above. See
Compensation Discussion and Analysis Analysis
of 2008 Executive Compensation Program Annual
Compensation above for additional information about the
annual performance bonuses.
|
|
(3)
|
|
Amounts for Messrs. Wolstein and Hurwitz reflect the equity
portion of annual performance bonus award opportunities
established for 2008 under their employment agreements at the
threshold and maximum levels. The amounts shown in column
(f) represent the minimum amount payable in equity (35% and
30% of base salary, respectively) for minimum performance
(threshold achievement of the relative total shareholder return
performance metric). The amounts shown in column
(h) represent the maximum amount payable in equity (400%
and 300% of
|
34
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|
|
base salary, respectively) for maximum performance (maximum
achievement of the FFO per common share, relative total
shareholder return and qualitative performance metrics), for
2008 under their employment agreements. See Compensation
Discussion and Analysis Analysis of 2008 Executive
Compensation Program Annual Compensation above
for additional information about the annual performance bonuses.
|
|
(4)
|
|
Amounts for Messrs. Schafer, Oakes and Bruce reflect the
annual equity award opportunities established for 2008 under our
annual equity award program at the threshold, target and maximum
levels. The amounts shown in column (f) represent the
minimum amount payable in equity (12.5% of base salary plus
minimum annual performance bonus for Messrs. Schafer and
Bruce, and 50% of base salary plus minimum annual performance
bonus for Mr. Oakes). The amounts shown in column
(g) represent the target amount payable in equity (25% of
base salary plus target annual performance bonus for
Messrs. Schafer and Bruce, and 75% of base salary plus
target annual performance bonus for Mr. Oakes). The amounts
shown in column (h) represent the maximum amount payable in
equity (50% of base salary plus maximum annual performance bonus
for Messrs. Schafer and Bruce, and 100% of base salary plus
maximum annual performance bonus for Mr. Oakes). See
Compensation Discussion and Analysis Analysis
of 2008 Executive Compensation Program Annual
Compensation above for additional information about the
annual equity awards.
|
|
(5)
|
|
The numbers of restricted shares and stock options shown in
columns (i) and (j) represent the actual numbers of
restricted shares and stock options granted to the named
executive officers on February 21, 2008 with respect to
performance in 2007, and do not represent compensation for
performance in 2008. Assumptions used in the calculation of
these amounts are included in Footnote 18 to the financial
statements included in our Annual Report on
Form 10-K
for the year ended December 31, 2008, filed with the SEC on
February 27, 2009.
|
|
(6)
|
|
Amounts computed in accordance with FAS 123(R).
|
Employment
Agreements
We have entered into separate employment agreements with each of
the named executive officers. Our employment agreements with
Messrs. Wolstein and Hurwitz were last amended and restated
in October 2008, as described above.
The term of each employment agreement with Messrs. Wolstein
and Hurwitz initially runs through December 31, 2009, but
the term is subject to a evergreen provision that
provides for an automatic extension of the remaining term for an
additional year at the end of each calendar year, subject to the
parties termination rights or the earlier termination of
the executive. The employment agreements provide for minimum
base salaries, subject to increases approved by the Board, of
$800,000 for Mr. Wolstein and $616,000 for
Mr. Hurwitz. The executives are entitled to participate in
our broad-based retirement and other benefit plans, including
our 401(k) plan and our deferred compensation program, and are
also entitled to receive life, medical, dental and other
insurance coverage and benefits similar to that provided to our
other executive officers. We will also provide disability
insurance coverage (or self-insure such coverage) for
Mr. Wolstein during the employment term of at least $46,500
per month through age 65, and for Mr. Hurwitz during
the employment term of at least $25,000 per month through
age 65. The executives are also entitled to the limited
perquisites and other benefits as described above.
Under the employment agreements, Messrs. Wolstein and
Hurwitz are entitled to annual performance bonuses and long-term
equity incentives as described above. Each employment agreement
may be terminated under a variety of circumstances, including
the executives death. We may terminate each employment
agreement for cause if the executive engages in
certain specified conduct, if the executive is disabled for a
specified period of time or at any other time without cause by
giving the executive 90 days prior written notice.
Each executive may also terminate his employment agreement for
good reason in certain specified circumstances or at
any other time without good reason by giving us
90 days prior written notice.
Messrs. Wolstein and Hurwitz are entitled under the
employment agreements to certain additional payments and
benefits in the event of certain termination circumstances. If
either Mr. Wolstein or Mr. Hurwitz is terminated by us
without cause or the executive terminates his employment for
good reason, he is entitled to receive: (1) accrued but
unpaid base salary and his prior years annual bonus to the
extent not paid; (2) for Mr. Wolstein, a lump sum
amount equal to the greater of (A) $5 million or
(B) the sum of his base salary plus his prior years
annual performance bonus, and for Mr. Hurwitz, a lump sum
amount equal to the greater of (X) $3 million or
(Y) the sum of his base salary plus his prior years
annual performance bonus; (3) one year of continued health
and welfare benefits for the executive and his family; and
(4) immediate accelerated vesting of the executives
non-performance-based
35
equity awards (specifically excluding awards made under any
outperformance award plans and supplemental equity award plans).
If an executive dies during the term of the employment
agreement, his estate or beneficiaries are entitled to receive
his accrued but unpaid base salary and his prior years
annual performance bonus to the extent not paid, and his family
is entitled to receive one year of continued health and welfare
benefits. Additionally, Mr. Hurwitzs estate or
beneficiaries are entitled to receive a lump sum amount equal to
$2.5 million either from us or as a life insurance payment.
If an executive is terminated due to disability, he is entitled
to receive: (1) his accrued but unpaid based salary and his
prior years annual performance bonus to the extent not
paid; (2) a lump sum amount equal to two times his base
salary; (3) a pro rata portion of his annual performance bonus
for the year in which his termination occurs; and (4) one
year of continued health and welfare benefits for the executive
and his family. Certain of these termination payments and
benefits are subject to the executives execution of a
general release of claims against us or our waiver of such
release.
The employment agreements 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 constitutes an
excess parachute payment under certain tax laws,
rules and regulations, we will pay to the executive such
additional cash amounts as are necessary to put him in the same
after-tax position as he would have been in had such payments
(excluding any units or awards granted or vested pursuant to any
performance unit agreement with us or any equity awards granted
under any of our outperformance award plans or supplemental
equity plans, if applicable) not given rise to any applicable
excise tax, penalties or interest. Each executive is also
entitled to a similar
gross-up
payment regarding any excise tax, penalties or interest to which
he is subject under Section 409A of the Internal Revenue
Code. The employment agreements also contain a two-year
confidentiality covenant regarding our proprietary information,
a two-year non-solicitation covenant and other provisions
generally designed to ensure compliance with Section 409A
of the Internal Revenue Code. Mr. Hurwitz is also subject
to a one-year noncompetition covenant that covers the four
largest real estate investment trusts (excluding us) based on
market capitalization that focus primarily on neighborhood and
community shopping centers (subject to a one percent public
equity ownership exception).
Additionally, Mr. Wolsteins employment agreement
provides that:
|
|
|
|
|
Mr. Wolstein is entitled to the personal airplane use
perquisite described above in the Compensation Discussion and
Analysis;
|
|
|
|
Any transition by Mr. Wolstein to service as a
non-executive Chairman of the Board will not have an impact on
the vesting and exercise provisions of any prior or subsequent
equity awards made by us; and
|
|
|
|
If Mr. Wolstein is terminated other than by us for cause or
by reason of his death, he will be entitled to continued use of
office space, office support and secretarial services at our
expense until the earliest of his death, the date he begins
other employment, or the third anniversary of his termination
date.
|
Our employment agreements with Messrs. Schafer, Oakes and
Bruce were last amended in December 2008 to bring such
agreements into compliance with Section 409A of the
Internal Revenue Code, but no material changes were made to
their agreements at that time. Each of the employment agreements
with Messrs. Schafer, Oakes and Bruce 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. The agreements can be terminated by us by giving
90 days prior written notice prior at any time. The
agreements provide for minimum base salaries as disclosed in the
Compensation Discussion and Analysis above, subject to increases
approved by the Committee. Messrs. Schafer and Oakes are
entitled to the payment by us of regular membership fees,
assessments, and dues for a local country club. In addition, the
employment agreements for each of our 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 2008 are included in the
2008 Summary Compensation Table above.
Pursuant to their employment agreements, each of
Messrs. Schafer, Oakes and Bruce is entitled to annual
performance bonuses equal to a percentage of his base salary as
approved by the Committee. See the Compensation Discussion and
Analysis under Annual Compensation for a
discussion of the methods used to determine these annual
performance bonuses and each named executive officers
threshold, target and maximum annual performance bonus
opportunity. If the named executive officers employment is
terminated by us without cause, or by the named executive
officer for good reason, he is entitled to receive a payment
equal to his annual salary plus a pro rata portion
36
(through the date of termination) of the annual performance
bonus he would have earned based on actual results for the
applicable year and continued life, disability and medical
insurance for a period of one year following such termination.
In the cases of Messrs. Schafer, 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 us)
constitutes excess parachute payments under certain
tax laws, we 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.
Outstanding
Equity Awards at 2008 Fiscal Year-End Table
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Option Awards
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Stock Awards
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Equity
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Equity
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Incentive
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Equity
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Incentive
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Plan
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Incentive
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Plan Awards:
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Awards:
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Plan Awards:
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Market or
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Number of
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Number of
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Number of
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Number of
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Market Value
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Number of
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Payout Value
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Securities
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Securities
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Securities
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Shares or
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of Shares
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Unearned
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of Unearned
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Underlying
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Underlying
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Underlying
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Units of
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or Units
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Shares, Units
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Shares, Units
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Unexercised
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Unexercised
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Unexercised
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Option
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Option
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Stock That
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That
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or Other Rights
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or Other Rights
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Grant
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Options (#)
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Options (#)
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Unearned
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Exercise
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Expiration
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Have Not
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Have Not
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That Have
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That Have Not
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Name
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Date
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Exercisable
|
|
Unexercisable(1)
|
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Options (#)
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Price ($)
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Date
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Vested (#)
|
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Vested ($)
|
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Not Vested
|
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Vested ($)
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(a)
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(b1)
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(b2)
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(c)
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(d)
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(e)
|
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(f)
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|
(g)(2)
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(h)(3)
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(i)(4)
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|
(j)(3)
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Scott A. Wolstein
|
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|
2/24/2004
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|
|
55,243
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|
|
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2005
|
|
|
|
90,668
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|
|
|
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2006
|
|
|
|
44,256
|
|
|
|
22,128
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
19,256
|
|
|
|
38,514
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
161,724
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
271,019
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|
|
$
|
1,322,573
|
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|
|
|
|
|
|
|
|
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|
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
William H. Schafer
|
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|
2/25/2003
|
|
|
|
4,500
|
|
|
|
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
2/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2004
|
|
|
|
15,036
|
|
|
|
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2005
|
|
|
|
12,669
|
|
|
|
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2006
|
|
|
|
3,934
|
|
|
|
1,967
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
1,573
|
|
|
|
3,146
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
13,011
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,592
|
|
|
$
|
27,289
|
|
|
|
12,850
|
|
|
$
|
62,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel B. Hurwitz
|
|
|
2/24/2004
|
|
|
|
17,342
|
|
|
|
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2005
|
|
|
|
48,789
|
|
|
|
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2006
|
|
|
|
17,779
|
|
|
|
8,890
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
7,603
|
|
|
|
15,206
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
88,785
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,290
|
|
|
$
|
596,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David J. Oakes
|
|
|
4/16/2007
|
|
|
|
33,333
|
|
|
|
66,667
|
|
|
|
|
|
|
$
|
64.60
|
|
|
|
4/16/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
45,438
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,752
|
|
|
$
|
145,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy J. Bruce
|
|
|
9/09/2002
|
|
|
|
61,896
|
|
|
|
|
|
|
|
|
|
|
$
|
22.89
|
|
|
|
9/09/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2003
|
|
|
|
2,080
|
|
|
|
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
2/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2004
|
|
|
|
10,672
|
|
|
|
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2005
|
|
|
|
13,395
|
|
|
|
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2006
|
|
|
|
5,254
|
|
|
|
2,627
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
902
|
|
|
|
1,804
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
13,875
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,620
|
|
|
$
|
27,426
|
|
|
|
15,400
|
|
|
$
|
75,152
|
|
37
|
|
|
(1)
|
|
Each grant of options vests at a rate of
33
1
/
3
%
per year over the first three years of the ten-year option term.
The following table sets forth the vesting dates of the options
held by the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Wolstein
|
|
|
Schafer
|
|
|
Hurwitz
|
|
|
Oakes
|
|
|
Bruce
|
|
|
2/21/2009
|
|
|
53,908
|
|
|
|
4,337
|
|
|
|
29,595
|
|
|
|
15,146
|
|
|
|
4,625
|
|
2/23/2009
|
|
|
41,385
|
|
|
|
3,540
|
|
|
|
16,493
|
|
|
|
|
|
|
|
3,529
|
|
4/16/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,333
|
|
|
|
|
|
2/21/2010
|
|
|
53,908
|
|
|
|
4,337
|
|
|
|
29,595
|
|
|
|
15,146
|
|
|
|
4,625
|
|
2/23/2010
|
|
|
19,257
|
|
|
|
1,573
|
|
|
|
7,603
|
|
|
|
|
|
|
|
902
|
|
4/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,334
|
|
|
|
|
|
2/21/2011
|
|
|
53,908
|
|
|
|
4,337
|
|
|
|
29,595
|
|
|
|
15,146
|
|
|
|
4,625
|
|
|
|
|
(2)
|
|
Each grant of restricted shares vests at a rate of 20% per year
over a period of four years beginning on the date of grant
(except for Mr. Oakes April 16, 2007 grant,
which vests at a rate of 20% per year over a period of five
years beginning on the first anniversary of the date of grant).
The following table sets forth the vesting dates of the
restricted shares held by the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Wolstein
|
|
|
Schafer
|
|
|
Hurwitz
|
|
|
Oakes
|
|
|
Bruce
|
|
|
1/01/2009
|
|
|
68,000
|
|
|
|
|
|
|
|
22,667
|
|
|
|
|
|
|
|
|
|
2/21/2009
|
|
|
8,677
|
|
|
|
698
|
|
|
|
4,764
|
|
|
|
2,438
|
|
|
|
745
|
|
2/23/2009
|
|
|
10,061
|
|
|
|
860
|
|
|
|
4,009
|
|
|
|
|
|
|
|
845
|
|
2/24/2009
|
|
|
7,318
|
|
|
|
682
|
|
|
|
2,625
|
|
|
|
|
|
|
|
721
|
|
4/16/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
1/01/2010
|
|
|
68,000
|
|
|
|
|
|
|
|
22,666
|
|
|
|
|
|
|
|
|
|
2/21/2010
|
|
|
8,677
|
|
|
|
698
|
|
|
|
4,764
|
|
|
|
2,438
|
|
|
|
745
|
|
2/23/2010
|
|
|
10,061
|
|
|
|
860
|
|
|
|
4,009
|
|
|
|
|
|
|
|
845
|
|
4/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
1/01/2011
|
|
|
34,000
|
|
|
|
|
|
|
|
22,667
|
|
|
|
|
|
|
|
|
|
2/21/2011
|
|
|
8,677
|
|
|
|
698
|
|
|
|
4,764
|
|
|
|
2,438
|
|
|
|
745
|
|
2/23/2011
|
|
|
4,871
|
|
|
|
398
|
|
|
|
1,924
|
|
|
|
|
|
|
|
229
|
|
4/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
1/01/2012
|
|
|
34,000
|
|
|
|
|
|
|
|
22,667
|
|
|
|
|
|
|
|
|
|
2/21/2012
|
|
|
8,677
|
|
|
|
698
|
|
|
|
4,764
|
|
|
|
2,438
|
|
|
|
745
|
|
4/16/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
(3)
|
|
These amounts were calculated based upon the closing price of
our common shares on December 31, 2008 of $4.88.
|
|
(4)
|
|
Reflects shares available to the named executive officer if the
shareholder return metrics are met with respect to the 2005
Outperformance Award Plan. The 2005 Outperformance Award Plan is
more fully described in the Compensation Discussion and Analysis
above.
|
The information in the Outstanding Equity Awards at 2008 Fiscal
Year-End Table above is provided as of December 31, 2008.
As further described above in Compensation Discussion and
Analysis, on April 9, 2009, our shareholders approved the
Otto transaction. As a result, all outstanding unvested stock
options became fully exercisable, all restrictions on unvested
restricted shares lapsed, and all outperformance awards became
vested (which means that each outperformance award holders
right to receive a payment if the performance criteria are met
is no longer subject to forfeiture upon a termination of the
holders employment). The outperformance awards will still
be earned depending on our performance against the targets
established under the outperformance awards for the performance
period (which generally ends on December 31, 2009).
38
2008
Option Exercises and Stock Vested Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards(1)
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Acquired on Vesting
|
|
|
Value Realized on
|
|
Name
|
|
Exercise (#)
|
|
|
Exercise ($)
|
|
|
(#)
|
|
|
Vesting ($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)(2)
|
|
|
Scott A. Wolstein
|
|
|
|
|
|
|
|
|
|
|
174,311
|
|
|
$
|
6,706,838
|
|
William H. Schafer
|
|
|
|
|
|
|
|
|
|
|
2,961
|
|
|
$
|
114,565
|
|
Daniel B. Hurwitz
|
|
|
|
|
|
|
|
|
|
|
72,517
|
|
|
$
|
2,790,007
|
|
David J. Oakes
|
|
|
|
|
|
|
|
|
|
|
7,438
|
|
|
$
|
299,238
|
|
Timothy J. Bruce
|
|
|
|
|
|
|
|
|
|
|
3,055
|
|
|
$
|
118,169
|
|
|
|
|
(1)
|
|
Reflects shares received in the first quarter of 2008 pursuant
to the equity incentive awards for the
2004-2008
grants to such named executive officer.
|
|
(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, 68,000 and 22,666 shares
vested on January 1, 2008, at $38.29 and 71,919 and
35,960 shares vested on March 1, 2008 at $38.56. The
remaining shares acquired on vesting occurred in February 2008
at prices ranging from $37.69 to $39.00 and for Mr. Oakes
in April 2008 at $41.47.
|
2008
Nonqualified Deferred Compensation
Table
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Earnings
|
|
|
Withdrawals/
|
|
|
Aggregate Balance at
|
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
Distributions
|
|
|
Last FYE
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)(2)
|
|
|
(c)(3)
|
|
|
(d)(4)
|
|
|
(e)
|
|
|
(f)(5)(6)
|
|
|
Elective Deferred Compensation Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. Wolstein
|
|
$
|
89,781
|
|
|
|
|
|
|
$
|
(3,045,291
|
)
|
|
$
|
(7,808,705
|
)
|
|
$
|
285,808
|
|
William H. Schafer
|
|
$
|
28,694
|
|
|
$
|
6,808
|
|
|
$
|
(88,206
|
)
|
|
|
|
|
|
$
|
144,828
|
|
Daniel B. Hurwitz
|
|
$
|
27,200
|
|
|
$
|
13,600
|
|
|
$
|
(113,109
|
)
|
|
$
|
(169,532
|
)
|
|
$
|
171,107
|
|
David J. Oakes
|
|
$
|
35,000
|
|
|
$
|
15,070
|
|
|
$
|
722
|
|
|
|
|
|
|
$
|
50,792
|
|
Timothy J. Bruce
|
|
$
|
53,481
|
|
|
$
|
9,144
|
|
|
$
|
7,467
|
|
|
|
|
|
|
$
|
226,390
|
|
Equity Deferred Compensation Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. Wolstein
|
|
|
|
|
|
|
|
|
|
$
|
(11,225,023
|
)
|
|
$
|
(11,921,244
|
)
|
|
|
|
|
William H. Schafer
|
|
|
|
|
|
|
|
|
|
$
|
(116,334
|
)
|
|
|
|
|
|
$
|
16,992
|
|
Daniel B. Hurwitz
|
|
$
|
2,678,806
|
|
|
|
|
|
|
$
|
(4,608,143
|
)
|
|
|
|
|
|
$
|
671,205
|
|
David J. Oakes
|
|
$
|
299,238
|
|
|
|
|
|
|
$
|
(262,941
|
)
|
|
|
|
|
|
$
|
36,297
|
|
Timothy J. Bruce
|
|
$
|
118,169
|
|
|
|
|
|
|
$
|
(345,550
|
)
|
|
|
|
|
|
$
|
50,298
|
|
|
|
|
(1)
|
|
Our nonqualified deferred compensation plans, which include the
elective deferred compensation plan and the equity deferred
compensation plan, are described more fully in the Compensation
Discussion and Analysis under Other Benefits above.
For information about the impact of the Otto transaction
described above on our equity deferred compensation plan, see
the Compensation Discussion and Analysis above under Other
Benefits.
|
|
(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 plan
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. The amounts reported for our named
executive officers in this column are reported under the
Salary column of the 2008 Summary Compensation Table
above.
|
|
(3)
|
|
The amounts reported for our named executive officers in this
column are fully reported as part of the other compensation for
each named executive officer in the All Other
Compensation column of the 2008 Summary Compensation Table.
|
39
|
|
|
(4)
|
|
None of the amounts reported for our named executive officers in
this column are reported in the 2008 Summary Compensation Table.
|
|
(5)
|
|
The amounts reported for our named executive officers in this
column have been previously reported as deferred compensation in
our 2006 or 2007 Summary Compensation Tables included in prior
years proxy statements, except for Mr. Oakes, for
whom none of these amounts have been previously reported.
|
|
(6)
|
|
The amounts reported in this column for the equity deferred
compensation plan do not include the following amounts for
deferred restricted shares that were unvested at
December 31, 2008: Mr. Wolstein, $1,322,573;
Mr. Hurwitz, $236,768; Mr. Oakes, $145,190; and
Mr. Bruce, $27,426. These deferrals, which are included as
unvested restricted shares in the Outstanding Equity Awards at
2008 Fiscal Year-End Table above, are expected to vest in
connection with the Otto transaction as described above under
Compensation Discussion and Analysis Analysis
of 2008 Executive Compensation Program Other
Benefits.
|
Potential
Payments Upon Termination or Change in Control
We have entered into certain agreements and we maintain certain
plans that will require us 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. Based
on a hypothetical termination or change in control occurring on
December 31, 2008, the following tables describe the
potential payments upon such termination or change in control
for each named executive officer:
Scott
A. Wolstein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
Cause
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
or Other
|
|
|
or Good
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
Executive Benefits and Payments
|
|
Voluntary
|
|
|
Reason
|
|
|
For Cause
|
|
|
(Change in
|
|
|
|
|
|
|
|
Upon Termination
|
|
Termination
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
5,000,000
|
|
|
$
|
0
|
|
|
$
|
5,000,000
|
|
|
$
|
2,520,000
|
|
|
$
|
0
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Restricted Shares(2)
|
|
$
|
0
|
(3)
|
|
$
|
1,322,573
|
|
|
$
|
0
|
|
|
$
|
1,322,573
|
|
|
$
|
1,322,573
|
|
|
$
|
1,322,573
|
|
Unvested and Accelerated Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health, Welfare and Outplacement Benefits(4)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
135,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,327,800
|
(5)
|
|
$
|
0
|
|
280G
Gross-Up(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Post Termination Office and Secretarial Services(4)
|
|
$
|
420,000
|
|
|
$
|
420,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
420,000
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
420,000
|
|
|
$
|
6,762,573
|
|
|
$
|
0
|
|
|
$
|
6,457,573
|
|
|
$
|
7,610,373
|
|
|
$
|
1,742,573
|
|
|
|
|
(1)
|
|
Amounts calculated pursuant to the terms of
Mr. Wolsteins employment agreement or change in
control agreement, as applicable.
|
|
(2)
|
|
Includes 204,000 restricted shares granted pursuant to the
conversion of performance unit awards.
|
|
(3)
|
|
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. Wolsteins retirement.
|
|
(4)
|
|
Estimated present value of benefits calculated assuming a 6.5%
discount rate and an assumed rate of cost increase of 6.5%.
|
40
|
|
|
(5)
|
|
The estimated payments for long-term disability utilize a
present value calculation that takes into account (i) the
executives age and total payments over the benefit term
assuming that the disability occurs on December 31, 2008,
and (ii) a discount rate based on the rate for the Treasury
security with a similar term. In general, benefits are available
until age 65.
|
|
(6)
|
|
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.
|
|
(7)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to our vacation policy.
|
William
H. Schafer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
Cause
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
or Other
|
|
|
or Good
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
Executive Benefits and
|
|
Voluntary
|
|
|
Reason
|
|
|
For Cause
|
|
|
(Change in
|
|
|
|
|
|
|
|
Payments Upon Termination
|
|
Termination
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
427,000
|
|
|
$
|
0
|
|
|
$
|
732,000
|
|
|
$
|
427,000
|
|
|
$
|
427,000
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Restricted Shares
|
|
$
|
0
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
27,289
|
|
|
$
|
27,289
|
|
|
$
|
27,289
|
|
Unvested and Accelerated Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Outperformance Units(3)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health, Welfare and Outplacement Benefits(4)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
85,750
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,470,391
|
(5)
|
|
$
|
0
|
|
280G
Gross-Up(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
447,000
|
|
|
$
|
0
|
|
|
$
|
845,039
|
|
|
$
|
3,944,680
|
|
|
$
|
874,289
|
|
|
|
|
(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 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, 2008 and the hypothetical without cause, death
or disability termination on December 31, 2008 scenarios,
it was assumed that none of the metrics would have been achieved
during the applicable measurement period.
|
|
(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 that takes into account (i) the
executives age and total payments over the benefit term
assuming that the disability occurs on December 31, 2008,
and (ii) a discount rate based on the rate for the Treasury
security with a similar term. In general, benefits are available
until age 65.
|
|
(6)
|
|
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.
|
|
(7)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to our vacation policy.
|
41
Daniel
B. Hurwitz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
Cause
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
or Other
|
|
|
or Good
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
Executive Benefits and
|
|
Voluntary
|
|
|
Reason
|
|
|
For Cause
|
|
|
(Change in
|
|
|
|
|
|
|
|
Payments Upon Termination
|
|
Termination
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
3,000,000
|
|
|
$
|
0
|
|
|
$
|
3,000,000
|
|
|
$
|
1,971,200
|
|
|
$
|
2,500,000
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Restricted Shares(2)
|
|
$
|
0
|
(3)
|
|
$
|
596,775
|
|
|
$
|
0
|
|
|
$
|
596,775
|
|
|
$
|
596,775
|
|
|
$
|
596,775
|
|
Unvested and Accelerated Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health, Welfare and Outplacement Benefits(4)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
110,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,647,961
|
(5)
|
|
$
|
0
|
|
280G
Gross-Up(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
3,616,775
|
|
|
$
|
0
|
|
|
$
|
3,706,775
|
|
|
$
|
7,235,936
|
|
|
$
|
3,516,775
|
|
|
|
|
(1)
|
|
Amounts calculated pursuant to the terms of
Mr. Hurwitzs employment agreement or change in
control agreement, as applicable.
|
|
(2)
|
|
Includes 90,667 restricted shares granted pursuant to the
conversion of performance unit awards.
|
|
(3)
|
|
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. Hurwitzs retirement.
|
|
(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 that takes into account (i) the
executives age and total payments over the benefit term
assuming that the disability occurs on December 31, 2008,
and (ii) a discount rate based on the rate for the Treasury
security with a similar term. In general, benefits are available
until age 65.
|
|
(6)
|
|
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.
|
|
(7)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to our vacation policy.
|
42
David
J. Oakes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
Cause
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
or Other
|
|
|
or Good
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
Executive Benefits and
|
|
Voluntary
|
|
|
Reason
|
|
|
For Cause
|
|
|
(Change in
|
|
|
|
|
|
|
|
Payments Upon Termination
|
|
Termination
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
728,000
|
|
|
$
|
0
|
|
|
$
|
1,638,000
|
|
|
$
|
728,000
|
|
|
$
|
728,000
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Restricted Shares
|
|
$
|
0
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
145,190
|
|
|
$
|
145,190
|
|
|
$
|
145,190
|
|
Unvested and Accelerated Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health, Welfare and Outplacement Benefits(3)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
94,600
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,719,166
|
(4)
|
|
$
|
0
|
|
280G
Gross-Up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
784,549
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(5)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
748,000
|
|
|
$
|
0
|
|
|
$
|
2,662,339
|
|
|
$
|
3,612,356
|
|
|
$
|
1,293,190
|
|
|
|
|
(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 Committee may, in its discretion, accelerate the
vesting of unvested restricted shares in the event of
Mr. Oakes retirement.
|
|
(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 that takes into account (i) the
executives age and total payments over the benefit term
assuming that the disability occurs on December 31, 2008,
and (ii) a discount rate based on the rate for the Treasury
security with a similar term. In general, benefits are available
until age 65.
|
|
(5)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to our vacation policy.
|
43
Timothy
J. Bruce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
Cause
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
or Other
|
|
|
or Good
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits and
|
|
Voluntary
|
|
|
Reason
|
|
|
For Cause
|
|
|
(Change in
|
|
|
|
|
|
|
|
|
|
|
Payments Upon Termination
|
|
Termination
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
489,190
|
|
|
$
|
0
|
|
|
$
|
836,380
|
|
|
$
|
489,190
|
|
|
$
|
489,190
|
|
|
|
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Restricted Shares
|
|
$
|
0
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
27,426
|
|
|
$
|
27,426
|
|
|
$
|
27,426
|
|
|
|
|
|
Unvested and Accelerated Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
Outperformance Units(3)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health, Welfare and Outplacement Benefits(4)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
93,250
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
|
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
|
|
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,512,231
|
(5)
|
|
$
|
0
|
|
|
|
|
|
280G
Gross-Up(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
Accrued Vacation(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
509,190
|
|
|
$
|
0
|
|
|
$
|
957,056
|
|
|
$
|
2,048,847
|
|
|
$
|
936,616
|
|
|
|
|
|
|
|
|
(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, 2008 and the hypothetical without cause, death
or disability termination on December 31, 2008 scenarios,
it was assumed that none of the metrics would have been achieved
during the applicable measurement period.
|
|
(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 that takes into account (i) the
executives age and total payments over the benefit term
assuming that the disability occurs on December 31, 2008,
and (ii) a discount rate based on the rate for the Treasury
security with a similar term. In general, benefits are available
until age 65.
|
|
(6)
|
|
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.
|
|
(7)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to our vacation policy.
|
The change in control agreements for Messrs. Wolstein and
Hurwitz were last amended in October 2008 in connection with the
changes made to their employment agreements. Under the revised
change in control agreements, the following payments and
benefits are payable by us to Messrs. Wolstein and Hurwitz
if a Triggering Event occurs: (1) accrued but unpaid base
salary and his prior years annual performance bonus to the
extent not paid; (2) for Mr. Wolstein, a lump sum
amount equal to the greater of (A) $5 million or
(B) the sum of his base salary plus his prior years
annual performance bonus, and for Mr. Hurwitz, a lump sum
amount equal to the greater of (X) $3 million or
(Y) the sum of his base salary plus his prior years
annual performance bonus; (3) three years of continued
health and welfare benefits for him and his family;
(4) immediate accelerated vesting of his
non-performance-based equity awards (specifically excluding
awards made under any outperformance award plans and
supplemental equity award plans); and (5) outplacement
services at an aggregate cost of up to $75,000 for
44
Mr. Wolstein and up to $50,000 for Mr. Hurwitz for no
more than two years after the year in which the Triggering Event
occurs. Additionally, we will be deemed to have waived any
requirement for a general release of claims against us. Each
change in control agreement for Messrs. Wolstein and
Hurwitz will be terminated if the executive ceases to be a
Board-elected officer, appointed officer or our key employee
prior to a change in control.
The terms Change in Control and Triggering
Event are defined in the change in control agreements.
Change in Control generally means certain events including Board
or shareholder approval of a merger or consolidation in which we
are not the surviving entity, a sale of substantially all of our
assets, or a liquidation or dissolution of the Company, certain
significant changes in the ownership of our outstanding
securities or in the composition of the Board, or the
establishment of a record date in connection with shareholder
approval of certain proposed mergers or consolidations in which
we are not the surviving or continuing entity, sales of all or
substantially all of our assets or a dissolution of us. For
Mr. Wolstein, a Triggering Event means certain situations
specified in the change in control agreement in which, within
three years after a change in control, Mr. Wolstein is
terminated or terminates his employment as a result of certain
material and adverse impacts on his position with us or
compensation. For Mr. Hurwitz, a Triggering Event means
certain situations specified in the change in control agreement
in which, within two years after a change in control,
Mr. Hurwitz is terminated or terminates his employment as a
result of certain material and adverse impacts on his position
with us or compensation.
The change in control agreements for the other executive
officers, including Messrs. Schafer, Oakes and Bruce, were
last amended in December 2008 to bring such agreements into
compliance with Section 409A of the Internal Revenue Code,
but no material changes were made to those agreements at that
time. Under the change in control agreements, for
Messrs. Schafer, Oakes and Bruce, benefits are payable by
us if a Triggering Event occurs within two years
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
us or his compensation. A Triggering Event occurs if
within two years after a change in control:
|
|
|
|
|
we terminate 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);
|
|
|
|
we reduce 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;
|
|
|
|
we assign 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 we persist in assigning to the named executive
officer despite the prior written objection of that officer;
|
|
|
|
we (1) reduce 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 our
equity-based award plans or any substitute therefore,
(2) exclude him from any plan, program or arrangement in
which our other executive officers are included,
(3) establish criteria and factors to be achieved for the
payment of annual performance bonus compensation that are
substantially different than the criteria and factors
established for our other similar executive officers, or
(4) fail to pay the named executive officer any annual
performance 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
|
|
|
|
we require 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:
|
|
|
|
|
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;
|
|
|
|
at any time during a period of two years, individuals who were
our directors at the beginning of the period no longer
constitute a majority of the members of the Board unless the
election, or the nomination for election by our 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;
|
45
|
|
|
|
|
a record date is established for determining our shareholders
entitled to vote upon (1) a merger or consolidation with
another real estate investment trust, partnership, corporation
or other entity in which we are 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, (2) a sale or other
disposition of all or substantially all of our assets, or
(3) the dissolution of the company; or
|
|
|
|
the Board or our shareholders approve a consolidation or merger
in which we are not the surviving corporation, the sale of
substantially all of our assets, or the liquidation or
dissolution of the company.
|
Within five business days after the occurrence of a Triggering
Event, we must pay the named executive officer an amount equal
to the sum of two times the then-effective annual salary and the
annual performance bonus at the maximum level payable to the
officer. In addition, we 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, we 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. For information about the impact
of the Otto transaction described above on our change in control
agreements, see the Compensation Discussion and Analysis above
under Change in Control Agreements.
Compensation
of Directors
2008 Director
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
Stock
|
|
|
|
|
Name
|
|
Paid in Cash
|
|
|
Awards
|
|
|
Total
|
|
(a)
|
|
(b)($)(1)
|
|
|
(c)($)(2)
|
|
|
(h)($)
|
|
|
Dean Adler
|
|
$
|
100,000
|
|
|
|
|
|
|
$
|
100,000
|
|
Terrance R. Ahern
|
|
$
|
155,000
|
|
|
|
|
|
|
$
|
155,000
|
|
Robert H. Gidel
|
|
|
|
|
|
$
|
100,055
|
|
|
$
|
100,055
|
|
Victor B. MacFarlane
|
|
$
|
100,000
|
|
|
|
|
|
|
$
|
100,000
|
|
Craig Macnab
|
|
$
|
115,000
|
|
|
|
|
|
|
$
|
115,000
|
|
Scott D. Roulston
|
|
$
|
120,000
|
|
|
|
|
|
|
$
|
120,000
|
|
Barry A. Sholem
|
|
|
|
|
|
$
|
100,055
|
|
|
$
|
100,055
|
|
William B. Summers, Jr.
|
|
$
|
50,000
|
|
|
$
|
50,049
|
|
|
$
|
100,049
|
|
|
|
|
(1)
|
|
All or a portion of the fees listed for Messrs. Adler,
Ahern, MacFarlane, Macnab and Roulston were deferred into the
Directors Deferred Compensation Plan.
|
|
(2)
|
|
The amounts reported in column (c) reflect the dollar
amounts recognized for financial statement reporting purposes
for the fiscal year ended December 31, 2008 in accordance
with FAS 123(R) for stock awards granted in such year. The
non-employee directors had option awards outstanding as of
December 31, 2008 for the following number of shares:
Mr. Ahern, 15,000; Mr. MacFarlane, 10,000 and
Mr. Sholem, 6,000. None of the non-employee directors had
unvested stock awards outstanding as of December 31, 2008.
The grant date fair value of the stock awards issued to each
non-employee director in fiscal year 2008 is reflected in this
column.
|
Our non-employee directors receive an annual fee of $100,000,
and they 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 our directors deferred compensation plan.
Pursuant to our directors deferred compensation plan,
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 plan) to be issued
quarterly is determined by converting one-fourth of the value of
the directors
46
annual fees that such director elected to receive in the form of
common shares (or deferred under the directors deferred
compensation plan) into common shares (or common share
equivalents under the directors deferred compensation
plan) 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 our
directors deferred compensation plan. 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 because we view meeting
attendance as integrally and directly related to the performance
of the non-employee directors duties.
Directors Deferred Compensation
Plan.
Non-employee directors have the right to
defer all or a portion of the cash portion of their fees
pursuant to our directors deferred compensation plan. Our
directors deferred compensation plan is an unsecured, general
obligation of the company. Participants contributions are
converted to units, based on the market value of 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 at a date determined by the participant at the time a
deferral election is made. We have established a
rabbi trust, which holds our common shares, to
satisfy our 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 our 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 2008 fees pursuant to
our directors deferred compensation plan. 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 Plan as of
|
|
|
December 31,
|
|
Name
|
|
December 31, 2008
|
|
|
2008 ($)
|
|
|
Dean S. Adler
|
|
|
24,212
|
|
|
$
|
118,156
|
|
Terrance R. Ahern
|
|
|
26,207
|
|
|
$
|
127,890
|
|
Victor B. MacFarlane
|
|
|
16,278
|
|
|
$
|
79,435
|
|
Craig Macnab
|
|
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15,679
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$
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76,514
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Scott D. Roulston
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8,102
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$
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39,537
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Equity Deferred Compensation Plan.
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 plan. 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 plan. 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:
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Number of Units
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Value of Units as of
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under the
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the Year Ended
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Equity Deferred
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December 31,
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Name
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Compensation Plan
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2008 ($)
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Dean S. Adler
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1,029
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$
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5,022
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Terrance R. Ahern
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1,362
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$
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6,647
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Victor B. MacFarlane
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1,029
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$
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5,022
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Craig Macnab
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695
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$
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3,392
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47
As described above, if the Investors collectively become the
beneficial owners of 20% or more of our outstanding common
shares in connection with the Otto transaction, a change in
control will be deemed to have occurred under our equity
deferred compensation plan in which some of our directors
participate. Under the original equity deferred compensation
plan and the new equity deferred compensation plan, in the event
of a change in control, all unvested deferred stock units held
for each participant would become vested and no longer subject
to forfeiture upon a termination of employment. Vested deferred
stock units under the original equity deferred compensation plan
would be distributed to participants on a one-for-one basis in
the form of our common shares at the time of the change in
control. Vested deferred stock units under the new equity
deferred compensation plan would not be distributed to
participants until the end of the deferral period selected by
each participant.
CERTAIN
TRANSACTIONS
Purchase
of Membership Interest, Lease of Corporate Headquarters and
Rental of Conference Facilities
In July 2008, we purchased a 25.2525% membership interest in
RO & SW Realty LLC, a Delaware limited liability
company, or ROSW, from Wolstein Business Enterprises, L.P., or
WBE, a limited partnership established for the benefit of the
children of Scott A. Wolstein, our CEO, and a 50% membership
interest in Central Park Solon LLC, an Ohio limited liability
company, or Central Park, from Mr. Wolstein, for
$10.0 million. The acquired interests in both ROSW and
Central Park are referred to herein as the Membership Interests.
ROSW is a real estate company that owns 11 properties, which we
refer to as the Properties. Central Park is a real estate
company that owns the development rights relating to a
large-scale mixed use project in Solon, Ohio, which we refer to
as the Project. We had identified a number of development
projects located near the Properties as well as several
value-add opportunities relating to the Properties, including
the Project. In October 2008, we assumed
Mr. Wolsteins obligation under a promissory note that
funded the pre-development expenses of the Project.
Mr. Wolstein and his 50% partner, who also holds the
remaining membership interest in each of Central Park and ROSW,
were jointly and severally liable for the obligations under the
promissory note, and they agreed to indemnify each other for 50%
of such obligations. The balance of the promissory note was
$2.5 million at the effective date of assumption in July
2008, of which we are responsible for 50%.
Our purchase of the Membership Interests, including the
assumption of the promissory note obligations, were approved by
a special committee of our disinterested directors who were
appointed and authorized by the Nominating and Corporate
Governance Committee of our Board of Directors to review and
approve the terms of the acquisition and assumption.
We lease space at our former corporate headquarters in Moreland
Hills, Ohio, which is owned by Mrs. Bert Wolstein, the
mother of Mr. Wolstein. General and administrative rental
expense associated with this office space aggregated
$0.6 million in 2008. The lease expires on
December 31, 2009.
In 2008, we paid The Bertram Inn and Conference Center
approximately $0.2 million for the use of its conference
facilities. The Bertram Inn and Conference Center is owned by
the trust of Bert Wolstein, deceased founder of the Company and
Mr. Wolsteins father.
As described under Proposal One, on
February 23, 2009, we entered into the Otto Stock Purchase
Agreement with Mr. Alexander Otto to issue and sell
30,000,000 common shares and warrants to purchase 10,000,000
common shares to the Investors, including Mr. Otto.
Mr. Otto is currently the Chairman of the Executive Board
of ECE Projektmanagement G.m.b.H. & Co. KG, or ECE, which
is a fully integrated international developer, owner and manager
of shopping centers. In May 2007, DDR and ECE formed a joint
venture to fund investments in new retail developments to be
located in western Russia and Ukraine. DDR contributed 75% of
the equity of the joint venture, and ECE contributed the
remaining 25% of the equity. Dr. Kraft is the
Investors nominee pursuant to the investor rights
agreement that we entered into with Mr. Otto pursuant to
the terms of the Otto Stock Purchase Agreement, and is a
director of ECE Projektmanagement International G.m.b.H., one of
the limited partners in the ECE/DDR joint venture, where he is
responsible for commercial real estate project management in
Central and Eastern Europe, and is also a Managing Director of
ECE Investment International G.m.b.H. with responsibility for
the development of an institutional real estate fund management
platform in Europe.
48
Review,
Approval or Ratification of Transactions with Related
Persons
We have a written policy regarding the review and approval of
related party transactions. A proposed transaction between us
and certain parties enumerated in the policy must be submitted
to the Executive Vice President-Corporate Transactions and
Governance. The policy applies to our directors, nominees for
directors, officers and employees; subsidiaries and joint
venture partners; significant shareholders (generally holding as
a beneficial owner 5% or more of our voting securities) or of
our subsidiaries or joint venture partners; family members (such
as spouse, parent, stepparent, children, stepchildren, sibling,
mother or
father-in-law,
son or
daughter-in-law
or sister or
brother-in-law
of such person or anyone residing in such persons home)
and close friends of directors, nominees for directors,
officers, employees or significant shareholders; entities in
which a director, nominee for director, officer or employee (or
a family member or close friend of such person) has a
significant interest or holds an employment, management or board
position; provided, however, ownership of less than 1% of a
publicly-traded entity will not be deemed a significant
interest; trusts for the benefit of employees, such as
profit-sharing, deferred compensation or retirement fund trusts,
that are managed by or under the trusteeship of management; or
any other party who directly or indirectly controls, is
controlled by or under common control with us (or its
subsidiaries) (control means the power to direct or
cause the direction of the management and policies of an entity
through ownership, contract or otherwise). The relationship of
the parties and the terms of the proposed transaction 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 of 1934
requires our directors and executive officers, and owners of
more than 10% of a registered class of our equity securities, to
file with the SEC and the NYSE initial reports of ownership and
reports of changes in ownership of our common shares and other
equity securities. Executive officers, directors and owners of
more than 10% of our common shares are required by SEC
regulations to furnish us with copies of all forms they file
pursuant to Section 16(a).
To our knowledge, based solely on our review of the copies of
such reports furnished to us and written representations that no
other reports were required, during the fiscal year ended
December 31, 2008, all officers, directors, and greater
than 10% beneficial owners filed the required reports on a
timely basis with the following exceptions: (i) Barry
Sholem filed a late Form 4 that covered one late
transaction; (ii) William B. Summers, Jr. filed a late
Form 4 that covered one late transaction; (iii) Robert
H. Gidel filed a late Form 4 that covered one late
transaction; (iv) Scott A. Wolstein filed a late
Form 4 that covered one late transaction; (v) Christa
A. Vesy filed a late Form 4 that covered one late
transaction; (vi) Terrance R. Ahern filed four late
Form 4s that covered a total of 20 late transactions; and
(vii) John S. Kokinchak filed a late Form 3 that
covered six holdings.
49
PROPOSAL TWO:
APPROVAL OF AN AMENDMENT TO OUR SECOND AMENDED AND
RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER
OF AUTHORIZED
COMMON SHARES FROM 300,000,000 TO 500,000,000, WHICH RESULTS IN
AN INCREASE IN
THE TOTAL NUMBER OF AUTHORIZED SHARES FROM 311,000,000 TO
511,000,000
Our Board of Directors has unanimously approved and recommended
that our shareholders approve an amendment to our Articles to
increase the number of authorized common shares from 300,000,000
to 500,000,000, which will result in an increase in the total
number of authorized shares from 311,000,000 to 511,000,000.
Currently, we have 300,000,000 authorized common shares. As of
May 11, 2009, there were 153,657,392 common shares issued
and outstanding, and 187,632 treasury shares. We also had the
following reserved common shares as of May 11, 2009:
1,948,435 common shares reserved for issuance in connection with
our outstanding convertible senior notes; 2,004,014 common
shares reserved for future issuance under our equity-based award
plans; 3,567,911 common shares reserved for issuance in
settlement of outstanding equity awards; and 5,000,000 common
shares reserved in connection with the warrants issued under the
Otto Stock Purchase Agreement.
In addition, we are obligated to issue additional common shares
pursuant to the terms and conditions of the Otto Stock Purchase
Agreement. Pursuant to the terms of the Otto Stock Purchase
Agreement, we are required to issue and sell an additional
15,000,000 common shares and a warrant to purchase 5,000,000
common shares to the Investors on or before October 9,
2009. We are also required to issue common shares to the
Investors representing any dividends that we declare after the
date of the Otto Stock Purchase Agreement and prior to the
purchase of the Purchased Shares to which the Investors would
have been entitled had the Purchased Shares been outstanding on
the record dates for any such dividends, which entitles the
Investors to at least 1,071,428 common shares.
On May 11, 2009, we issued 16,071,428 common shares and a
warrant to purchase 5,000,000 common shares pursuant to the
terms and conditions of the Otto Stock Purchase Agreement. Based
on the number of outstanding and reserved common shares and
obligations to issue common shares described above, we had
approximately 112,750,820 common shares available for issuance
as of May 11, 2009.
We may also issue additional common shares in connection with
stock dividends. In order to retain capital and enhance
financial flexibility amid the challenging capital markets
environment, and to comply with REIT distribution requirements,
we decided that our first quarter 2009 common stock dividend
would be paid in a combination of cash and common shares. In
accordance with recently issued Internal Revenue Service
guidance, shareholders could elect to receive their dividend
either in cash or common shares. However, the cash component
could not exceed 10% of the aggregate dividend and, to the
extent more than 10% cash was elected by all shareholders in the
aggregate, then the cash portion was prorated. Shareholders who
did not make an election received 90% in common shares and 10%
in cash. On April 21, 2009, we issued approximately
8,300,000 common shares in connection with the first quarter
dividend. The value of the shares distributed in the dividend
were based upon the volume weighted average trading prices of
the Companys common shares over a
three-day
period.
Our Board of Directors believes that the proposed increase in
authorized common shares is desirable to enhance our flexibility
in taking possible future actions, such as equity financings,
corporate mergers, acquisitions, stock splits, stock dividends,
equity compensation awards or other corporate purposes. The
proposed amendment will enable us to accomplish these objectives
in a timely manner. Our Board of Directors determines whether,
when and on what terms to issue authorized common shares,
without further shareholder approval except as may be required
by law, regulation or the rules of any national securities
exchange on which the common shares are then traded. There are
currently no plans or arrangements for the use of the additional
authorized common shares.
The full text of Article Fourth of the Articles, as it is
proposed to be amended, is set forth below, marked to show
changes from the current provision contained in the Articles:
FOURTH:
The authorized number of shares of the
Corporation is
511,000,000
, consisting of
500,000,000
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
50
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.
The additional common shares to be authorized will have rights
identical to our currently outstanding common shares. The
proposed amendment will not affect any series of our preferred
shares.
Our Articles provide that shareholders do not have preemptive
rights to subscribe to additional securities which we may issue.
If we issue additional common shares or other securities
convertible into common shares in the future, it could dilute
the voting rights, equity, earnings per share and book value per
share attributable to present shareholders. The increase in
authorized common shares could also discourage or hinder efforts
by other parties to obtain control of us, thereby having an
anti-takeover effect. The increase in authorized common shares
is not proposed in response to any known attempt to acquire
control of us.
The Board of Directors Recommends That Shareholders Vote FOR
the Amendment to Our Second Amended and Restated Articles of
Incorporation to Increase the Number of Authorized Common Shares
from 300,000,000 to 500,000,000, Which Results in an Increase in
the Total Number of Authorized Shares from 311,000,000 to
511,000,000.
51
PROPOSAL THREE:
APPROVAL OF THE AMENDED AND RESTATED 2008 DEVELOPERS
DIVERSIFIED REALTY CORPORATION EQUITY-BASED AWARD PLAN
The 2008 Developers Diversified Realty Corporation Equity-Based
Award Plan (the 2008 Plan) was adopted by our Board
of Directors on November 1, 2007 and approved by our
shareholders on May 13, 2008. The 2008 Plan provides an
opportunity for our employees and directors to receive equity or
equity-based awards that increase their proprietary interest in
our business and enhance their personal interest in our success.
Certain of our employees have been granted awards under the 2008
Plan.
In April 2009, our Board of Directors approved, subject to
shareholder approval, an amendment and restatement of the 2008
Plan in the form of the Amended and Restated 2008 Developers
Diversified Realty Corporation Equity-Based Award Plan (the
Amended and Restated 2008 Plan). The 2008 Plan was
amended and restated primarily to make an additional
4,500,000 common shares, par value $0.10 per share,
available under the 2008 Plan. Certain other changes have been
made to the 2008 Plan, and a summary of those material changes
contained in the Amended and Restated 2008 Plan is set forth
below under Summary of Changes, followed by a
summary description of the entire Amended and Restated 2008
Plan. The full text of the Amended and Restated 2008 Plan is
attached to this proxy statement as Appendix A, and the
following summaries and descriptions are qualified in their
entirety by reference to Appendix A.
Section 162(m)
The Internal Revenue Code, or Code, limits to $1 million
per year the deduction allowed for federal income tax purposes
for compensation paid to the Chief Executive Officer and certain
other 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 shareholder-approved plan that meets
certain requirements for performance-based
compensation. Compensation attributable to a stock option
or a stock appreciation right is deemed to satisfy the
performance-based compensation requirement if:
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the grant is made by a committee of directors that meets certain
criteria;
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the shareholder-approved plan under which the award is granted
states a maximum number of shares with respect to which options
or rights may be granted to any individual during a specified
period of time; and
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the amount of compensation the individual could receive under
the option or right is based solely on the increase in the value
of the shares after the date of grant.
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Although we are generally not subject to federal income tax
because of our real estate investment trust status, we intend to
structure stock options and stock appreciation rights granted
under the Amended and Restated 2008 Plan that are intended to
qualify as performance-based compensation to satisfy
the requirements for the performance-based compensation
exception to the Deduction Limit in the event we become subject
to federal income tax in the future. We are asking our
shareholders for approval of the Amended and Restated 2008 Plan
for purposes of the Deduction Limit.
Summary
of Changes
Available Common Shares.
Under the 2008 Plan,
the total aggregate number of common shares reserved and
available for awards was 2,900,000 common shares. As of
May 11, 2009, 585,798 of these common shares had been
issued, 924,905 common shares were subject to outstanding awards
and 1,389,297 common shares were available for future awards
under the 2008 Plan. The Amended and Restated 2008 Plan
increases the total aggregate number of common shares reserved
and available for awards by 4,500,000 common shares to
7,400,000 common shares. The available common shares under
both the 2008 Plan and the Amended and Restated 2008 Plan are
subject to adjustment in certain circumstances as further
described in the plans. The Amended and Restated 2008 Plan also
provides that the following common shares will not be added back
to the common shares reserved and available for awards:
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common shares tendered or withheld in payment of a stock
options exercise price or in satisfaction of tax
withholding obligations;
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52
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common shares subject to a share appreciation right
(SAR) that are not actually issued when the SAR is
settled in stock; or
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common shares repurchased in the open market or otherwise with
the cash received from a stock option holder in payment of the
stock options exercise price.
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Incentive Stock Options.
The Amended and
Restated 2008 Plan clarifies that incentive stock options may
only be granted to employees that meet the requirements for such
awards under the Code, and that, subject to adjustment in
certain circumstances as further described in the Amended and
Restated 2008 Plan, we will not issue more than an aggregate of
7,400,000 common shares upon the exercise of incentive
stock options.
Individual Annual Award Limits.
Under the 2008
Plan, no participant may be granted awards during any calendar
year for more than an aggregate of 500,000 common shares,
subject to adjustment in certain circumstances as further
described in the 2008 Plan. The Amended and Restated 2008 Plan
increases this annual aggregate individual award limit by
500,000 common shares to 1,000,000 common shares per
calendar year, subject to adjustment in certain circumstances as
further described in the Amended and Restated 2008 Plan.
Transfer of Awards for Value.
The Amended and
Restated 2008 Plan provides that in no event will any award
granted under the Amended and Restated 2008 Plan be transferred
for value.
Repricing.
The Amended and Restated 2008 Plan
clarifies that, without shareholder approval, we will not engage
in the following repricing activities with respect
to stock options or SARs:
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amend the terms of outstanding stock options or SARs to reduce
the applicable option price; and
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except in connection certain corporate transactions or events
described in the Amended and Restated 2008 Plan, cancel any
outstanding stock options or SARs in exchange for:
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-
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other awards granted under the Amended and Restated 2008 Plan;
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-
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stock options or SARs with an applicable option price that is
less than the original option price; or
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-
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cash.
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This prohibition is not intended to prohibit certain adjustments
or payments provided for under the Amended and Restated 2008
Plan, but this prohibition may not be amended without approval
by our shareholders.
Dividends and Dividend Equivalents.
The
Amended and Restated 2008 Plan provides that:
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dividend equivalent rights, dividends, dividend equivalents and
other distributions will not be granted with respect to or paid
on stock options or SARs; and
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to the extent that performance-based restricted shares, deferred
shares, other share-based awards and dividend equivalent rights
have not been earned, dividends or other distributions on such
unearned performance-based restricted shares, deferred shares,
other share-based awards and dividend equivalent rights must be
deferred and deemed reinvested in additional performance-based
awards until the underlying performance-based awards have either
been earned or forfeited.
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Change in Control and Potential Change in Control
Definitions.
The Amended and Restated 2008 Plan
eliminates the concept and definition of a Potential
Change in Control and revises the definition of
Change in Control as follows:
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The Change in Control definition in the 2008 Plan
provides that a change in control of the company will have
occurred for purposes of the 2008 Plan upon, among other things,
Board or shareholder approval of certain corporate events such
as a consolidation or merger in which the company does not
survive, the sale of substantially all of the companys
assets, or the companys liquidation or dissolution. The
Amended and Restated 2008 Plan revises this provision to state
that a change in control occurs upon the consummation of a
consolidation, merger, sale of assets or liquidation or
dissolution; and
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The Change in Control definition in the 2008 Plan
would be triggered by a turn-over of the majority of our Board
of Directors within any two-year period. While this trigger was
intended to not be tripped by newly-elected directors approved
by two-thirds of the directors serving at the beginning of such
period, a change in control could nevertheless occur if in
certain circumstances just one newly-elected director was not so
approved. Under the Amended and Restated 2008 Plan, a change in
control occurs if individuals who were
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53
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directors at the beginning of any two-year period cease to
constitute a majority of the Board during the two-year period.
However, for purposes of this provision, except as described in
the following sentence, any person becoming a director during
the two-year period whose election or nomination is approved by
two-thirds of the directors who were (or are treated as)
directors at the beginning of the two-year period will be
considered to have been a director at the beginning of the
two-year period. The preceding sentence, though, will not apply
to any person whose initial assumption of office as a director
occurs as a result of an actual or threatened election contest
or other actual or threatened solicitation of proxies or
consents; those persons will not be considered as directors at
the beginning of the two-year period in any event.
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Summary
of the Amended and Restated 2008 Plan
The Amended and Restated 2008 Plan provides for the grant to
employees and directors of the company, its subsidiaries and
affiliates of: options to purchase our common shares, or stock
options; rights to receive the appreciation in value of common
shares, or SARs; awards of common shares subject to vesting and
restrictions on transfer, or restricted shares; awards of common
shares issuable in the future upon satisfaction of certain
conditions, or deferred shares; rights to purchase common
shares, or share purchase rights; and other awards based on
common shares, or other share-based awards; all of which we
refer to collectively as awards. Under the terms of the Amended
and Restated 2008 Plan, awards may be granted with respect to an
aggregate of not more than 7,400,000 common shares, no
participant may be granted awards with respect to an aggregate
of more than 1,000,000 common shares during any calendar
year and we will not issue more than an aggregate of
7,400,000 common shares upon the exercise of incentive
stock options. These share limits are subject to adjustment as
described below.
Common shares tendered or withheld in payment of a stock
options exercise price or in satisfaction of tax
withholding obligations, common shares subject to a SAR that are
not actually issued when the SAR is settled in stock and common
shares repurchased in the open market or otherwise with the cash
received from a stock option holder in payment of the stock
options exercise price will not be added back to the
common shares reserved and available for awards under the
Amended and Restated 2008 Plan. Except in limited circumstances,
shares subject to any award that is forfeited or expires without
the issuance of those shares will be available for future awards
under the Amended and Restated 2008 Plan. The maximum number of
common shares that may be granted as future awards under the
Amended and Restated 2008 Plan is approximately 4.3% of the
137,585,964 common shares outstanding as of April 29,
2009.
As of May 11, 2009, we also had 398,701 operating
partnership units outstanding that are exchangeable, under
certain circumstances and at our option, into an equivalent
number of our common shares or for an equivalent amount of cash.
We had an aggregate 137,585,964 common shares outstanding as of
April 29, 2009, which was the record date. As of
May 11, 2009, we had 1,900,314 common shares reserved for
issuance and available for future grant under our equity-based
award plans, including 1,389,297 common shares under the 2008
Plan, 480,901 common shares reserved for issuance and
available for future grant under the 2004 Developers Diversified
Realty Corporation Equity-Based Award Plan and 30,116 common
shares reserved for issuance and available for future grant
under the 2002 Developers Diversified Realty Corporation
Equity-Based Award Plan. As of May 11, 2009, we had
3,567,911 options outstanding under our equity-based award plans
or otherwise issued to our directors with a weighted average
exercise price of $28.06 per option and a weighted average term
to expiration of 7.7 years. As of May 11, 2009, the
3,567,911 awards outstanding under our equity-based award plans
or otherwise issued to our directors did not include 365,704
unvested deferred stock units (which units were originally
granted as performance shares or restricted shares but have
since been deferred under our equity deferred compensation plan)
and 103,700 shares reserved for our outperformance awards.
Shares subject to outstanding deferred stock units were issued
under our equity-based award plans and are included as
outstanding shares listed above. Shares subject to future
deferred stock units will be issued under our equity-based award
plans from shares available for future grants. The closing price
of our common shares on the NYSE on May 11, 2009 was $5.48.
At that time, the aggregate market value of the additional
4,500,000 common shares proposed to be reserved for
purposes of the Amended and Restated 2008 Plan was $24,660,000.
The purpose of the Amended and Restated 2008 Plan is to enable
us to attract, retain and reward participating employees and
directors and strengthen the mutuality of interests between our
employees and directors and our 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. The Committee, in its sole and exclusive
discretion, designates the officers, other employees and
54
directors who may participate in the Amended and Restated 2008
Plan. Awards granted to directors, including members of the
Committee, must be approved and granted by the Board, and
incentive stock options may only be granted to employees that
meet the requirements for such awards under the Code. Currently,
there are approximately 775 employees and nine non-management
directors eligible to participate in the Amended and Restated
2008 Plan.
The Amended and Restated 2008 Plan is administered by the
Executive Compensation Committee, which we refer to as the
Committee. The Committee has full power to interpret and
administer the Amended and Restated 2008 Plan and full authority
to select participants to whom awards will be granted. The
Committee also has full authority to determine the type and
amount of awards to be granted to each participant, the terms
and conditions of granted awards 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 executive officers or non-employee
directors, or subject to Section 16(b) of the Securities
Exchange Act of 1934, the Committee may delegate its
responsibilities to members of our 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
Amended and Restated 2008 Plan as it may, from time to time,
deem advisable; to interpret the terms and provisions of the
Amended and Restated 2008 Plan and any award issued under the
Amended and Restated 2008 Plan (and any agreements relating
thereto); and otherwise to supervise the administration of the
Amended and Restated 2008 Plan.
The Committees interpretation or administration of the
Amended and Restated 2008 Plan, and all actions and
determinations of the Committee, shall be final, binding and
conclusive on us, our shareholders, subsidiaries and affiliates,
all participants in the Amended and Restated 2008 Plan, their
respective legal representatives, successors and assigns, and
all persons claiming under or through any of them. No member of
the Committee shall incur any liability for any action taken or
omitted, or any determination made, in good faith in connection
with the Amended and Restated 2008 Plan. In the case of 409A
awards (as defined in the Amended and Restated 2008 Plan), the
Committee has the authority to include terms in the case of any
such award that are intended to comply with Code
Section 409A.
Terms of
Stock Options
The Committee may grant stock options that either
(1) qualify as incentive stock options under
Section 422 of the Code, (2) do not qualify as
incentive stock options or (3) 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 our stock. Once granted, the
option price of stock options may not be reduced, or
repriced, without shareholder approval, except in
connection certain corporate transactions or events described in
the Amended and Restated 2008 Plan.
In general, stock options may be exercised when accompanied by
payment in full of the option price, which forms of payment may
include, as determined by the Committee: cash; check or wire
transfer; other common shares (subject to certain conditions and
limitations); the withholding of issuable common shares; and
other forms of payment as permitted by applicable law. Common
shares will not be issued upon exercise of a stock option until
full payment has been made, and no grant of stock options may be
accompanied by a tandem award of dividend equivalent rights or
provide for dividends, dividend equivalents or other
distributions to be paid on such stock options.
The term of each stock option will be determined by the
Committee and may not exceed ten years from the date the stock
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 our stock.
55
Subject to Section 409A of the Code and certain conditions
and limitations, 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 and one day following the date of grant, unless
otherwise determined by the Committee. No stock options are
transferable by the participant other than (1) by will or
by the laws of descent and distribution or (2) 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 under certain circumstances
(1) 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
(2) to charitable organizations. However, in no event will
any stock option be transferred for value.
If a participants employment with us 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, or
for such other period as specified by the Committee) (but not
after the expiration date of the stock option).
Unless otherwise determined by the Committee, subject to certain
conditions and limitations, at or after the time of grant, if a
participants employment with us 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 (but not after the expiration date of the
stock option).
Unless otherwise determined by the Committee, subject to certain
conditions and limitations, at the time of grant, if a
participants employment with us terminates for any other
reason, all stock options will terminate 90 days after the
date employment terminates (or on the expiration date of the
stock option if sooner).
Incentive stock options may be exercised only in accordance with
the Code and as provided for in the Amended and Restated 2008
Plan. Subject to the Amended and Restated 2008 Plans
provisions regarding repricing and certain other conditions,
stock options may be bought out for a payment of cash, common
shares, deferred shares or restricted shares on terms and
conditions established by the Committee shall establish and
agree upon with the participant.
Terms of
Share Appreciation Rights
The Committee will determine the participants to whom and the
time or times at which grants of SARs will be made and the other
terms and conditions thereof. Any SAR granted under the Amended
and Restated 2008 Plan will be in such form as the Committee may
from time to time approve, and will be granted in connection
with all or any part of a stock option. 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.
Each SAR generally entitles 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 option
price of the related stock option. Underlying stock options may
provide that SARs will be payable solely in cash. The Committee
may limit the amount that the participant will be entitled to
receive upon exercise of any SAR. No SAR grant may be
accompanied by a tandem award of dividend equivalent rights or
provide for dividends, dividend equivalents or other
distributions to be paid on the SARs.
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 and only when the fair market value of the common
shares covered by each SAR exceeds the option price of the
underlying stock option; provided, that a SAR granted to a
participant who is subject to Section 16(b) of the
Securities Exchange Act of 1934 will not be exercisable at any
time within the first six months after it is awarded, unless
otherwise determined by the Committee.
SARs will be exercisable to the same extent and under the same
conditions as the underlying stock option. SARs will expire no
later than the expiration date of the underlying stock option.
In no event will any SAR be transferred for value, and SARs may
not be repriced without shareholder approval, as
described above, except in connection certain corporate
transactions or events described in the Amended and Restated
2008 Plan.
56
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 Amended and Restated 2008 Plan
and the applicable restricted share award agreement, during a
period set by the Committee commencing with the date of the
award, the participant will not be permitted to sell, transfer,
pledge, assign or otherwise encumber such restricted shares,
except (1) by will or by the laws of descent and
distribution or (2) 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 under certain circumstances
(1) 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
(2) to charitable organizations. In no event will any
restricted share award be transferred for value.
Except with respect to a limited number of shares as provided
for in the Amended and Restated 2008 Plan, the restriction
period for restricted share awards will be not less than three
years (including on a ratable basis) for non-performance-based
restricted shares and not less than one year for
performance-based restricted shares, which is the minimum
restriction period. Subject to the minimum restriction period,
the Committee, may permit restrictions to lapse in installments
within the restriction period or, subject to a limited number of
shares for which vesting may be accelerated, 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. Subject to certain exceptions described in the
Amended and Restated 2008 Plan, 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; provided, that to the
extent that performance-based restricted shares have not been
earned, dividends or other distributions on such unearned
performance-based restricted shares must be deferred and deemed
reinvested in additional performance-based restricted shares
until the underlying performance-based awards have either been
earned or forfeited. The Committee may permit or require the
payment of cash dividends to be deferred and reinvested in
additional restricted shares or otherwise reinvested. Unless the
Committee or the Board determines otherwise, share dividends
issued with respect to restricted shares will be treated as
additional restricted shares 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 with us
terminates by reason of death or disability, any restricted
shares held by such participant will vest and any restrictions
will lapse.
Subject to certain conditions and limitations, 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 other reason, the participant will
forfeit such shares that are unvested or subject to restrictions.
Terms of
Awards of Deferred Shares
The Committee may grant awards of deferred shares under the
Amended and Restated 2008 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 and
the other terms and conditions of the deferred shares award,
including 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 or
transferred other than (1) by will or by the laws of
descent and distribution or (2) pursuant to a qualified
domestic order. If permitted by the applicable deferred shares
agreement, a participant may transfer deferred shares during the
participants lifetime under certain circumstances
(1) 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
(2) to charitable organizations. In no event will any
deferred shares award be transferred for value. Except with
respect to a limited number of shares as provided for in the
Amended and Restated 2008 Plan, the deferral
57
period for deferred share award will be not less than three
years (including on a ratable basis) for non-performance-based
deferred share awards and not less than one year for
performance-based deferred share awards, which is the minimum
deferral period. 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
dividends declared 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; provided, that to the extent
that performance-based deferred shares have not been earned,
dividends or other distributions on such unearned
performance-based deferred shares must be deferred and deemed
reinvested in additional performance-based deferred shares until
the underlying performance-based awards have either been earned
or forfeited.
Unless otherwise determined by the Committee at the time of
grant, if a participants employment with us terminates by
reason of death or disability, any deferred shares held by such
participant will vest 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.
Subject to certain conditions and limitations, unless otherwise
determined by the Committee, if a participants employment
with us is terminated for any other reason, the deferred shares
that are unvested or subject to restriction will thereupon be
forfeited. Subject to certain conditions and limitations, 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 requirement.
Terms of
Awards of Share Purchase Rights
The Committee may grant share purchase rights that will enable a
participant to purchase common shares (1) at the fair
market value of such shares on the date of grant or (2) 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 whom share purchase rights will
be made and the other terms and conditions of the share purchase
rights, including 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 of 1934 will not become exercisable
earlier than six months and one day after the grant date, unless
otherwise determined by the Committee. Share purchase rights
will not be transferable by a participant other than by will or
by the laws of descent and distribution, but in no event will
any share purchase rights award be transferred for value.
Terms of
Other Share-Based Awards
The Committee may grant common shares or 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 alone, in addition to or
in tandem with other awards granted under the Amended and
Restated 2008 Plan or cash or equity-based awards made outside
the Amended and Restated 2008 Plan. The Committee determines
when and to whom common shares or other share-based awards will
be awarded and the other terms and conditions of the other
share-based awards, including the number of shares to be used in
computing an award or that are to be awarded pursuant to an
award. The Committee may settle such other share-based awards in
common shares, in restricted shares or in cash in an amount
equal to the fair market value of the common shares or other
share-based awards at the time of settlement.
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
58
date on which any applicable restriction, performance, holding
or deferral period or requirement is satisfied or lapses.
Except with respect to a limited number of shares as provided
for in the Amended and Restated 2008 Plan, unless otherwise
determined by the Committee at or after grant, shares or other
share-based awards will be subject to a minimum holding period
(including any applicable restriction, performance
and/or
deferral periods) of three years (which may lapse on a ratable
basis) for non-performance-based other share-based awards and
one year for performance-based other share-based awards, which
is the minimum holding period. 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; provided, that to the
extent that performance-based other share-based awards and
dividend equivalent rights have not been earned, dividends,
dividend equivalents or other distributions on such unearned
performance-based other share-based awards and dividend
equivalent rights must be deferred and deemed reinvested in
additional performance-based awards until the underlying
performance-based awards have either been earned or forfeited.
Subject to any applicable minimum holding period, other
share-based awards and 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. Generally, in the
event of the participants disability or death or, subject
to certain conditions and limitations, in cases of special
circumstances, the Committee may waive any or all of the
remaining limitations with respect to part or all of any other
share-based awards.
Dividend equivalent rights may not be granted, either directly
or indirectly, in connection with, with respect to or as a
component of stock options or SARs. Dividend equivalent rights
will be settled in cash or common shares, or a combination
thereof, in a single installment or installments, as determined
by the Committee. Interest equivalents may be provided with
respect to the cash settlement of awards under the Amended and
Restated 2008 Plan. Generally, a participants rights in
all dividend equivalent rights or interest equivalents will
terminate when the participants employment with us
terminates other than for death or disability. Accrued but
unpaid dividend equivalent rights or interest equivalents will
be paid in a lump sum amount within 90 days after the
participants termination of employment with us.
Each other share-based award will be confirmed by, and subject
to the terms of, an agreement or other document between the
participant and us. Other share-based awards granted as
derivative securities to a participant who is subject to
Section 16(b) of the Securities Exchange Act of 1934 will
not be transferable other than by will or by the laws of descent
and distribution. In no event will any other share-based award
be transferred for value. 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 or
a 409A change in control, as defined in the Amended and Restated
2008 Plan.
In the event of a change in control or a 409A change in control,
any stock options, SARs, restricted shares, deferred shares,
share purchase rights and other share-based awards awarded under
the Amended and Restated 2008 Plan will become fully vested
and/or
exercisable and applicable restrictions will lapse on the date
of the change in control or 409A 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, (1) unless otherwise determined by the
Committee at or after grant but prior to any change in control,
each outstanding and vested 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 Amended and Restated 2008 Plan)
as of the date of such change in control exceeds the exercise
price or other purchase price, if any, payable by the
participant with respect to such award or (2) upon any 409A
change in control, each outstanding and vested 409A award (as
defined in the Amended and Restated 2008 Plan) 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.
59
A change in control is generally defined as (1) the
consummation of certain corporate transactions, such as a
consolidation or merger in which we are not the surviving
corporation, the sale of substantially all of our assets or our
liquidation or dissolution, (2) when any person other than
certain entities affiliated with us purchases our shares in a
tender or exchange offer without prior Board consent or becomes
the beneficial owner of 20% or more of the voting power of our
outstanding securities or (3) when, during any two-year
period, our directors serving on the Board at the beginning of
the period (or their replacements approved under certain
conditions) cease to constitute a majority of the Board. A 409A
change in control is generally defined as the date on which
(1) any one person or a group (as determined under Code
Section 409A) acquires (or has acquired during a
12-month
period) 30% or more of the total voting power of our stock or
acquires, together with their previously-owned stock, more than
50% of the total fair market value or voting power of our stock,
(2) during any
12-month
period, a majority of directors have been replaced by directors
not endorsed by a majority of the Board or (3) any one
person or a group (as determined under Code Section 409A)
acquires (or has acquired during a
12-month
period) our assets having a total gross fair market value equal
to or more than 40% of the total gross fair market value of all
our assets.
Adjustments
for Stock Dividends, Mergers, Etc.
In the event of any merger, reorganization, consolidation,
recapitalization, stock split, stock dividend, combination of
shares or other change in corporate structure affecting the
common shares, a substitution or adjustment will be made in the
aggregate number of shares reserved and available for awards
under the Amended and Restated 2008 Plan, in the incentive stock
option limit and individual annual aggregate award limits
described above, 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 Amended and Restated 2008 Plan. The Committee, in its
sole discretion, will determine the substitution or adjustment
made. Any fractional shares issuable in connection with a
substitution or adjustment will be eliminated. Additionally,
subject to certain conditions and limitations described in the
Amended and Restated 2008 Plan, awards are subject to certain
vesting acceleration limits and certain minimum restriction,
minimum deferral and minimum holding periods, except for an
exempt amount of up to 370,000 shares.
Termination
and Amendment of the Amended and Restated 2008 Plan
Awards may be granted under the Amended and Restated 2008 Plan
at any time until and including November 1, 2017, on which
date the Amended and Restated 2008 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.
If the Amended and Restated 2008 Plan is not approved by our
shareholders within 12 months after it was adopted by the
Board, the 2008 Plan will remain in full force and effect.
The Board may at any time amend, alter or discontinue the
Amended and Restated 2008 Plan, but no such amendment,
alteration or discontinuation will be made that (1) impairs
the rights of a participant under an award theretofore granted
without the participants consent or (2) 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. We will submit to our shareholders, for their
approval, any amendments required pursuant to
Section 162(m) of the Code or any material revisions to the
Amended and Restated 2008 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). The Committee may amend the terms of any award, but no
amendment will impair the rights of a participant under a
granted award without his or her consent.
Federal
Income Tax Consequences
The following is a brief summary of some of the federal income
tax consequences of certain transactions under the Amended and
Restated 2008 Plan based on federal income tax laws in effect on
January 1, 2009. This summary is not intended to be
complete and does not describe state or local tax consequences.
It is not intended as tax guidance to participants under the
Amended and Restated 2008 Plan.
Tax
Consequences to Participants
Non-Qualified Stock Options.
In general,
(1) no income will be recognized by an optionee at the time
a non-qualified stock option is granted, (2) at the time of
exercise of a non-qualified stock option, ordinary income will
be recognized by the optionee in an amount equal to the
difference between the option price paid for the shares and the
60
fair market value of the shares, if unrestricted, on the date of
exercise, and (3) at the time of sale of shares acquired
pursuant to the exercise of a non-qualified stock option,
appreciation (or depreciation) in value of the shares after the
date of exercise will be treated as either short-term or
long-term capital gain (or loss) depending on how long the
shares have been held.
Incentive Stock Options.
No income generally
will be recognized by an optionee upon the grant or exercise of
incentive stock options. The exercise of an incentive stock
option, however, may result in alternative minimum tax
liability. If our common shares are issued to the optionee
pursuant to the exercise of an incentive stock option, and if no
disqualifying disposition of such shares is made by such
optionee within two years after the date of grant or within one
year after the transfer of such shares to the optionee, then
upon sale of such shares, any amount realized in excess of the
exercise price will be taxed to the optionee as a long-term
capital gain and any loss sustained will be a long-term capital
loss.
If our common shares acquired upon the exercise of an incentive
stock option are disposed of prior to the expiration of either
holding period described above, the optionee generally will
recognize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of
such shares at the time of exercise (or, if less, the amount
realized on the disposition of such shares if a sale or
exchange) over the option price paid for such shares. Any
further gain (or loss) realized by the participant generally
will be taxed as short-term or long-term capital gain (or loss)
depending on the holding period.
SARs.
No income will be recognized by a
participant in connection with the grant of a SAR. When the SAR
is exercised, the participant normally will be required to
include as taxable ordinary income in the year of exercise an
amount equal to the amount of cash received and the fair market
value of any unrestricted common shares received on the exercise.
Restricted Shares.
The recipient of restricted
shares generally will be subject to tax at ordinary income rates
on the fair market value of the restricted shares (reduced by
any amount paid by the participant for such restricted shares)
at such time as the shares are no longer subject to forfeiture
or restrictions on transfer for purposes of Section 83 of
the Code, which we refer to as the restrictions. However, a
recipient who so elects under Section 83(b) of the Code
within 30 days of the date of transfer of the shares will
have taxable ordinary income on the date of transfer of the
shares equal to the excess of the fair market value of such
shares (determined without regard to the restrictions) over the
purchase price, if any, of such restricted shares. If a
Section 83(b) election has not been made, any unrestricted
dividends received with respect to restricted shares that are
subject to the restrictions generally will be treated as
compensation that is taxable as ordinary income to the
participant.
Deferred Shares.
No income generally will be
recognized upon the award of deferred shares. The recipient of a
deferred shares award generally will be subject to tax at
ordinary income rates on the fair market value of unrestricted
shares on the date that such shares are transferred to the
participant under the award (reduced by any amount paid by the
participant for such deferred shares), and the capital
gains/loss holding period for such shares will also commence on
such date.
Share Awards and Other Share-Based
Awards.
Upon payment in cash or unrestricted
common shares pursuant to an other share-based award, the
recipient generally will be required to include as taxable
ordinary income in the year of receipt an amount equal to the
amount of cash received and the fair market value of any
unrestricted common shares received.
Tax
Consequences to the Company
To the extent that a participant recognizes ordinary income in
the circumstances described above, we or the subsidiary or
affiliate for which the participant performs services will be
entitled to a corresponding deduction provided that, among other
things, the income meets the test of reasonableness, is an
ordinary and necessary business expense, is not an excess
parachute payment within the meaning of Section 280G
of the Code and is not disallowed by the Deduction Limit.
Vote
Required for Approval
Assuming a quorum is present at the Annual Meeting, the proposal
to approve the Amended and Restated 2008 Plan requires the
affirmative vote of the holders of a majority our common shares
having voting power present at the
61
meeting in person or by proxy and entitled to vote on the
proposal. Broker non-votes will have no effect on the outcome of
Proposal Three, but abstentions will have the same effect as a
vote against Proposal Three.
Plan
Benefits
It is not possible to determine specific amounts and types of
awards that may be awarded in the future under the Amended and
Restated 2008 Plan because the grant and actual payout of awards
under the Amended and Restated 2008 Plan will be discretionary.
Equity
Compensation Plan Information
(As of December 31, 2008)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
2,185,708
|
(2)
|
|
$
|
42.32
|
|
|
|
3,883,908
|
|
Equity compensation plans not approved by security holders(3)
|
|
|
31,666
|
|
|
$
|
17.70
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,217,374
|
|
|
$
|
41.97
|
|
|
|
3,883,908
|
|
|
|
|
(1)
|
|
Includes information related to our 1992 Employees Share
Option Plan, 1996 Equity-Based Award Plan, Amended and Restated
1998 Equity-Based Award Plan, 2002 Equity-Based Award Plan, 2004
Equity-Based Award Plan and 2008 Equity-Based Award Plan.
|
|
(2)
|
|
Does not include 590,489 restricted shares, as these shares have
been reflected in our total shares outstanding. Does not include
103,700 shares reserved for issuance under outperformance
unit agreements.
|
|
(3)
|
|
Represents options issued to our directors. The options granted
to the directors were at the fair market value at the date of
grant and are fully vested.
|
The Board of Directors Recommends That Shareholders Vote FOR
the Amended and Restated 2008 Developers Diversified Realty
Corporation Equity-Based Award Plan.
62
PROPOSAL FOUR:
RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT ACCOUNTANTS
FOR OUR FISCAL YEAR ENDING DECEMBER 31, 2009
PricewaterhouseCoopers LLP served as our independent registered
public accounting firm in 2008 and is expected to be retained to
do so in 2009. 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 our independent registered public
accounting firm is not required by our 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.
Fees Paid to PricewaterhouseCoopers LLP.
The
following table presents fees for services rendered by
PricewaterhouseCoopers LLP for the years ended December 31,
2008 and 2007.
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Audit fees(1)
|
|
$
|
1,606,469
|
|
|
$
|
1,644,319
|
|
Audit-related fees(2)
|
|
$
|
1,218,654
|
|
|
$
|
930,499
|
|
Tax fees(3)
|
|
$
|
631,028
|
|
|
$
|
429,824
|
|
All other fees(4)
|
|
$
|
1,616
|
|
|
$
|
52,878
|
|
Total
|
|
$
|
3,457,767
|
|
|
$
|
3,057,520
|
|
|
|
|
(1)
|
|
Audit fees consisted principally of fees for the audit of our
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 $74,032 and $173,121 for
2008 and 2007, respectively. In addition, of the audit fees paid
in 2008, $195,399 was for services related to additional
auditing services provided to us in 2007 but not billed by
PricewaterhouseCoopers LLP until 2008. Similarly, of the audit
fees paid in 2007, $151,266 was for services related to
additional auditing services provided to us in 2006 but not
billed by PricewaterhouseCoopers LLP until 2007.
|
|
(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
our financial statements and are not reported under Audit
Fees. Such audit-related fees consisted solely of fees for
separate entity and joint venture audits and reviews. Of the
aggregate amount of audit-related fees paid in 2008, $619,432
was for audit-related services provided to us in 2007 but not
billed by PricewaterhouseCoopers LLP until 2008. Of the
aggregate amount of audit-related fees paid in 2007, $388,233
was for audit-related services provided to us in 2006 but not
billed by PricewaterhouseCoopers LLP until 2007. Several of our
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, $507,468 and $293,786 of which
consisted of tax compliance services for 2008 and 2007,
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 2008 relate primarily to software licensing for accounting
and professional standards and the fees paid in 2007 relate
primarily to due diligence procedures performed on our behalf in
connection with certain of our transactions.
|
63
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. None of the services
rendered by PricewaterhouseCoopers LLP under the categories
Audit-related fees, Tax fees and
All other fees described above were approved by the
Audit Committee after services were rendered pursuant to the de
minimis exception established by SEC regulations.
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
Ratification of the Selection of PricewaterhouseCoopers LLP As
Our Independent Accountants for Our Fiscal Year Ending
December 31, 2009.
SHAREHOLDER
PROPOSALS FOR 2010 ANNUAL MEETING
Any shareholder proposals intended to be presented at our 2010
annual meeting of shareholders must be received by our Secretary
at 3300 Enterprise Parkway, Beachwood, Ohio 44122, on or before
January 20, 2010, for inclusion in our proxy statement and
form of proxy relating to the 2010 annual meeting of
shareholders. As to any proposal that a shareholder intends to
present to shareholders other than by inclusion in our proxy
statement for our 2010 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 we receive notice of the matter to be
proposed not later than April 5, 2010. Even if proper
notice is received on or prior to April 5, 2010, the
proxies named in our proxy for that meeting may nevertheless
exercise their discretionary authority with respect to such
matter by advising shareholders of that proposal and how they
intend to exercise their discretion to vote on such matter,
unless the shareholder making the proposal solicits proxies with
respect to the proposal to the extent required by
Rule 14a-4(c)(2)
under the Securities Exchange Act of 1934.
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 us by calling Thomas Morabito, Senior Director
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 Finance
Department, 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.
Shareholders may vote either by completing, properly signing and
returning the accompanying proxy card via mail, by telephone or
over the Internet, or by attending and voting at the Annual
Meeting. If you properly complete and timely return your proxy
card or properly and timely follow the telephone or Internet
voting instructions described below, your proxy (meaning one of
the individuals named in the proxy card) will vote your shares
as you have directed. If you sign and return the proxy card but
do not indicate specific choices as to your vote, your proxy
will vote your shares as recommended by our Board of Directors:
(i) to elect Dean S. Adler, Terrance R. Ahern,
64
Robert H. Gidel, Daniel B. Hurwitz, Volker Kraft,
Victor B. MacFarlane, Craig Macnab, Scott D. Roulston, Barry A.
Sholem, William B. Summers, Jr. and Scott A. Wolstein as
directors, (ii) to approve an amendment to our Articles to
increase the number of authorized common shares from 300,000,000
to 500,000,000 which results in an increase in the total number
of authorized shares of the Company from 311,000,000 to
511,000,000; (iii) to approve the Amended and Restated 2008
Developers Diversified Realty Corporation Equity-Based Award
Plan and (iv) to ratify the selection of
PricewaterhouseCoopers LLP as our independent accountants for
our fiscal year ending December 31, 2009. For information
on how to obtain directions to be able to attend the Annual
Meeting and vote in person, please contact Thomas Morabito,
Senior Director of Investor Relations, at
(216) 755-5500
or at 3300 Enterprise Parkway, Beachwood, Ohio 44122.
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, we are not
aware of any matter to be acted on at the Annual Meeting other
than those matters described in this proxy statement.
By order of the Board of Directors,
Joan U. Allgood
Secretary
Dated: May 20, 2009
65
Appendix A
AMENDED
AND RESTATED 2008
DEVELOPERS DIVERSIFIED REALTY CORPORATION
EQUITY-BASED AWARD PLAN
Section 1.
Purpose;
Definitions.
The purpose of the Amended and Restated 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(c).
(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).
(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.
A-1
(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 Share on the principal exchange on which the Shares
are then trading, if any, on such date, or if Shares were not
traded on such date, then on the next preceding trading day
during which a sale occurred; (ii) if Shares are not then
traded on an exchange, the mean between the closing
representative bid and asked prices for Shares on such date as
reported by a national quotation system; or (iii) if 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 Shares, on such date, as determined in good faith by
the Committee; or (iv) if 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 Amended and Restated
2008 Developers Diversified Realty Corporation Equity-Based
Award Plan, as amended from time to time.
(ee)
Restricted Shares
means an Award of
Shares that is granted pursuant to Section 7 and is subject
to restrictions.
(ff)
Restriction Period
has the meaning
set forth in Section 7(b)(5).
(gg)
Section 16 Participant
means a
participant under the Plan who is subject to Section 16 of
the Exchange Act.
(hh)
Separation from Service
has the
meaning set forth in Section 11(b)(1)(C).
(ii)
Share Appreciation Right
means an
Award of a right to receive an amount from the Company that is
granted pursuant to Section 6.
(jj)
Shares
means the Common Shares of
the Company.
(kk)
Specified Employee
has the meaning
set forth in Section 11(b)(1)(D).
(ll)
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.
(mm)
Share Purchase Right
means an Award
of the right to purchase Shares that is granted pursuant to
Section 9.
A-2
(nn)
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 and to determine the type and amount of
any Award to be granted to each participant, 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
or non-employee directors 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 7,400,000 Shares.
Any Shares issued hereunder may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
Notwithstanding anything to the contrary contained in the Plan,
the following Shares shall not be added to the Shares reserved
and available for Awards under this Section 3(a) of the
Plan: (i) Shares tendered by a participant or withheld by
the Company in payment of the option price of a Stock Option or
to satisfy any tax withholding obligation with respect to
Awards; (ii) Shares subject to a Share Appreciation Right
that are not issued in connection with stock settlement on
exercise of the Share Appreciation Right; and (iii) Shares
reacquired by the Company on the open market or otherwise using
cash proceeds from the exercise of Stock Options.
(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.
A-3
(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 and available for Awards under the Plan, in
the aggregate number of Shares that may be issued by the Company
upon the exercise of Incentive Stock Options, in the maximum
number of Shares that may be subject to Awards made under the
Plan to any participant during any calendar year, 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 1,000,000 Shares
(subject to adjustment as provided in Section 3(c) hereof)
during any calendar year.
(e)
Incentive Stock Option Limit.
Subject
to adjustment as provided in Section 3(c) of the Plan, the
aggregate number of Shares actually issued by the Company upon
the exercise of Incentive Stock Options will not exceed
7,400,000 Shares.
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 individuals who are at the time of grant
employees (under Section 3401(c) of the Code)
of the Company or a subsidiary of the Company (under
Section 424 of the Code). 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.
(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
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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, subject to Section 15(a), 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 option 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 option 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;
(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. No grant of Stock Options may be
accompanied by a tandem award of Dividend Equivalent Rights or
provide for dividends, dividend equivalents or other
distributions to be paid on such Stock Options.
(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
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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 (subject to
Section 15(a)) 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 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 (subject to Section 15(a)) 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.
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(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.
Subject to
Section 13(b) of the Plan, 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 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. 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 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 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
option 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. No grant of Share Appreciation Rights may be
accompanied by a tandem award of Dividend Equivalent Rights or
provide for dividends, dividend equivalents or other
distributions to be paid on such Share Appreciation Rights.
(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 option price of the Shares
covered by the underlying Option.
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(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).
(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. Subject to
Section 15(a), the Restriction Period shall not be less
than three years in duration with respect to a
non-performance-based Restricted Share Award or less than a one
year performance period with respect to a performance-based
Restricted Share Award (Minimum Restriction Period).
For clarification, if a Restricted Share Award vests in
installments, the duration of the Restriction Period shall be
measured from the date of grant of the Restricted Share Award
until the date of vesting of the last installment. Subject to
Section 15(a), a non-performance- based Restricted Share
Award can vest no more favorably than one-third of the
Restricted Share Award each year, and a performance-based
Restricted Share Award can vest no earlier than expiration of
the one year performance period. 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, subject to Section 15(a),
may accelerate or waive restrictions, in whole or in part, based
A-8
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; provided,
however, that to the extent performance-based Restricted Shares
have not yet been earned as a result of the achievement of
applicable performance goals, dividends or other distributions
on such unearned performance-based Restricted Shares shall be
deferred and deemed reinvested in additional performance-based
Restricted Shares until the achievement of the applicable
performance goals. 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(g), 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) Subject to Section 15(a), 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 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.
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(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. Subject to Section 15(a), the Deferral Period
applicable to any Deferred Share Award shall not be less than
three years in duration with respect to a non-performance-based
Deferred Share Award or less than a one year performance period
with respect to a performance-based Deferred Share Award
(Minimum Deferral Period). For clarification, if a
Deferred Share Award vests in installments, the duration of the
Deferral Period shall be measured from the date of grant of the
Deferred Share Award until the date of vesting of the last
installment. Subject to Section 15(a), a
non-performance-based Deferred Share Award can vest no more
favorably than one-third of the Deferred Share Award each year,
and a performance-based Deferred Share Award can vest no earlier
than expiration of the one year performance 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;
provided, however, that to the extent performance-based Deferred
Shares have not yet been earned as a result of the achievement
of applicable performance goals, dividends or other
distributions on such unearned performance-based Deferred Shares
shall be deferred and deemed reinvested in additional
performance-based Deferred Shares until the achievement of the
applicable performance goals.
(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.
(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.
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(7) Subject to Section 15(a), 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 and subject to
Section 15(a), 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 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.
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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. Subject to Section 15(a), 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 three years in duration with respect to a
non-performance-based Other Share-Based Award or a minimum one
year performance period with respect to a performance-based
Other Share-Based Award (the Minimum Holding
Period). For clarification, if an Other Share-Based Award
vests in installments, the duration of the Minimum Holding
Period shall be measured from the date of grant of the Other
Share-Based Award until the date of vesting of the last
installment. Subject to Section 15(a), a
non-performance-based Other Share-Based Award can vest no more
favorably than one-third of the Other Share-Based Award each
year, and a performance-based Other Share-Based Award can vest
no earlier than expiration of the one year performance 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; provided, however, that to the
extent performance-based Other Share-Based Awards have not yet
been earned as a result of the achievement of applicable
performance goals, dividends, dividend equivalents or other
distributions on such unearned performance-based Other
Share-Based Awards shall be deferred and deemed reinvested in
additional performance-based Shares or Other Share-Based Awards
until the achievement of the applicable performance goals.
(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, subject to Section 15(a), 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. 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.
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(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;
provided, however, that Dividend Equivalent Rights may not be
granted, either directly or indirectly, in connection with, with
respect to or as a component of Stock Options or Share
Appreciation Rights.
(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; provided, however, that to the extent
performance-based Dividend Equivalent Rights have not yet been
earned as a result of the achievement of applicable performance
goals, dividends, dividend equivalents or other distributions on
such unearned performance-based Dividend Equivalent Rights shall
be deferred and deemed reinvested in additional
performance-based Dividend Equivalent Rights until the
achievement of the applicable performance goals. 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
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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 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:
(A) 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;
(B) 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;
(C) 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);
(D) 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
(E) 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.
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(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 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) or (2) a 409A Change
in Control as defined in Section 12(b)(2), 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) and Section 13(b),
(A) unless otherwise determined by the Committee in its
sole discretion at or after grant but prior to any 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 is determined to have occurred over the option 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 option 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 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) consummation of 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,
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 cease to constitute a majority of
the Board; provided, that any person becoming a director of the
Company during such two-year period whose election, or
nomination for election by the Companys shareholders, was
approved by a vote of at least two-thirds of the directors who
at the beginning of such period constituted the entire Board
(either by a specific vote or by approval of the Companys
proxy statement in which such person is named as a nominee of
the Company for director), but excluding for this purpose any
person whose initial assumption of office as a director of the
Company occurs as a result of either an actual or threatened
election contest with respect to the election or removal of
directors of the Company or other actual or threatened
solicitation of proxies or consents by or on behalf of an
individual, corporation, partnership, group, associate or other
entity or person other than the Board, shall be, for purposes of
this Section 12(b)(1)(iii), considered as though such
person was a member of the Board at the beginning of such 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
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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 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)
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 or a 409A 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, in each case as determined by
the Committee.
Section 13. Amendments
and Termination.
(a) 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).
(b) 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) notwithstanding anything to the contrary
contained in the Plan, the terms of outstanding Stock Options or
Share Appreciation Rights may not be amended to reduce the
option price of outstanding Stock Options (including Stock
Options underlying Share Appreciation Rights), and, except in
connection with a corporate transaction or event described in
Section 3(c) or Section 12 of the Plan, no outstanding
Stock Options or Share Appreciation Rights may be cancelled in
exchange for other Awards, or cancelled in exchange for Stock
Options or Share Appreciation Rights with an option price that
is less than the option price of the original Stock Options
(including Stock Options underlying the original Share
Appreciation Rights) or cancelled in exchange for cash, without
shareholder approval. Section 13(b)(iii) is intended to
prohibit (without shareholder approval) the repricing of
underwater Stock Options and Share Appreciation
Rights and will not be construed to prohibit the adjustments or
payments provided for in Section 3(c) or Section 12 of
the Plan. Notwithstanding any provision of the Plan to the
contrary, this Section 13(b)(iii) may not be amended
without approval by the Companys shareholders.
(c) 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.
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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.
Section 15. General
Provisions.
(a) Except in connection with the death, Disability or
retirement of participants or in connection with a Change in
Control or a 409A Change in Control, the Committee may not
accelerate the exercise date or vesting of, or waive any
installment provision, limitation or restriction with respect
to, Awards that represent in the aggregate a number of Shares
greater than (i) 370,000 Shares (subject to adjustment as
provided in Section 3(c)) less (ii) the number of
Shares applied against the Restriction Limit (as hereinafter
defined) based upon their restriction period, deferral period or
holding period (the Acceleration Limit). The
Committee may accelerate the exercise date or vesting of, or
waive any installment provision, limitation or restriction with
respect to, an Award upon a participants death, Disability
or retirement or in connection with a Change in Control or a
409A Change in Control, and the Shares covered by such
acceleration or waiver shall not count against the Acceleration
Limit. The Committee may not establish a restriction period,
deferral period or holding period less than the Minimum
Restriction Period, Minimum Deferral Period or Minimum Holding
Period, respectively, with respect to Awards that represent in
the aggregate a number of Shares greater than (i)
370,000 Shares (subject to adjustment as provided in
Section 3(c)) less (ii) the number of Shares subject
to Awards applied against the Acceleration Limit as a result of
acceleration or waiver (the Restriction Limit). In
addition, without regard to the Acceleration Limit or the
Restriction Limit, the Committee may (i) accelerate the
exercise date or vesting of, or waive any installment provision,
limitation or restriction with respect to, an Award or
(ii) grant Shares with less than the Minimum Restriction
Period or Minimum Holding Period, to the extent the Company is
obligated to do so under an agreement or plan entered into prior
to the date of adoption of this Plan by the Companys
shareholders.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) 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
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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.
(g) 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).
(h) 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.
(i) All agreements entered into with participants pursuant
to the Plan shall be subject to the Plan.
(j) The provisions of Awards need not be the same with
respect to each participant.
(k) Notwithstanding anything to the contrary contained in
this Plan, in no event will any Award granted under the Plan be
transferred for value.
Section 16. Shareholder
Approval; Effective Date of Plan.
The Plan was adopted by the Board on April 28, 2009 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, in which case
the 2008 Developers Diversified Realty Corporation Equity-Based
Award Plan will remain in full force and effect. 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
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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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Vote by Telephone
Have your proxy card available when you call
Toll-Free 1-888-693-8683
using a touch-tone phone and
follow the simple instructions to record your vote.
Vote by Internet
Have your proxy card available when you access the website
www.cesvote.com
and follow the simple
instructions to record your vote.
Vote by Mail
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.
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Vote by Telephone
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Vote by Internet
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Vote by Mail
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Call Toll-Free using a
touch-tone telephone:
1-888-693-8683
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Access the Website and
cast your vote:
www.cesvote.com
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Return your proxy
in the postage-paid
envelope provided
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Vote 24 hours a day, 7 days a week.
Your telephone or Internet vote must be received by 11:59 p.m., eastern time,
on June 24, 2009 in order to be counted in the final tabulation.
If you vote by telephone or Internet, please do not send your proxy by mail.
Proxy card must be signed and dated below.
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 of the common shares of Developers Diversified Realty Corporation held of record by the
undersigned on April 29, 2009, at the Annual Meeting of Shareholders to be held on June 25, 2009,
or any adjournment thereof, with all of 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 is hereby acknowledged.
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Dated: ____________, 2009
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________________________________________________
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Signature
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________________________________________________
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Signature, if held jointly
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Please date and sign exactly as your name appears hereon. If shares are held jointly, each
shareholder should sign. Agents, executors, administrators, guardians, trustees, etc. should use
their full title, and, if more than one, all should sign. If the shareholder is a corporation,
please sign full corporate name by the president or another authorized officer. If a partnership,
please sign in partnership name by an authorized person.
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(Continued on reverse side)
YOUR VOTE IS IMPORTANT
If you do not vote by telephone or Internet, please sign and date this
proxy card and return it promptly in the enclosed postage-paid
envelope, or otherwise to Corporate Election Services, P.O. Box
535600, Pittsburgh, PA 15253, so your shares may be represented at
the Annual Meeting. It you vote by telephone or Internet, it is not
necessary to return this proxy card.
Proxy card must be signed and dated on the reverse side.
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, 3 and 4.
1.
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Election of Directors.
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Nominees:
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(01) Dean S. Adler
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(02) Terrance R. Ahern
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(03) Robert H. Gidel
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(04) Daniel B. Hurwitz
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(05) Volker Kraft
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(06) Victor B. MacFarlane
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(07) Craig Macnab
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(08) Scott D. Roulston
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(09) Barry A. Sholem
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(10) William B. Summers, Jr.
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(11) Scott A. Wolstein
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o
FOR
all nominees listed above
(except as marked to the contrary)
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o
WITHHOLD AUTHORITY
to vote for all nominees listed above
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INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through that nominees name above.
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FOR
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AGAINST
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ABSTAIN
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2.
To amend
the Companys Second Amended
and Restated Articles of
Incorporation to increase the
number of authorized Common
Shares from 300,000,000 to
500,000,000, which results in
an increase in the total
number of authorized shares of
the Company from 311,000,000
to 511,000,000.
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o
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o
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3.
To approve the Amended
and Restated 2008 Developers
Diversified Realty Corporation
Equity-Based Award Plan.
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o
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o
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o
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4.
To ratify the selection of
PricewaterhouseCoopers LLP as
the Companys independent accountants
for the Companys fiscal year ending
December 31, 2009.
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o
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o
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o
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5.
In their discretion, to
vote upon such other business
as may properly come before
the meeting.
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