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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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee
paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing.
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(1)
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Amount previously paid:
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(2)
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Form, Schedule or Registration Statement No.:
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DEVELOPERS
DIVERSIFIED REALTY CORPORATION
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders
of Developers Diversified Realty Corporation, an Ohio
corporation, which we refer to as the company, will be held at
the companys corporate offices, 3333 Richmond Road,
Beachwood, Ohio 44122, on May 18, 2011, at 9:00 a.m.,
local time, for the following purposes:
1. To elect the following ten directors, each to serve
until the next annual meeting of shareholders and until a
successor has been duly elected and qualified: Terrance R.
Ahern, James C. Boland, Thomas Finne, Robert H. Gidel, Daniel B.
Hurwitz, Volker Kraft, Victor B. MacFarlane, Craig Macnab, Scott
D. Roulston, and Barry A. Sholem;
2. To ratify the selection of PricewaterhouseCoopers LLP as
the companys independent accountants for the
companys fiscal year ending December 31, 2011;
3. To hold a shareholder advisory vote regarding the
compensation of the companys named executive officers;
4. To hold a shareholder advisory vote regarding the
frequency for future shareholder advisory votes regarding the
compensation of the companys named executive
officers; 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 8, 2011 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 card 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,
David E. Weiss
Secretary
Dated: April 18, 2011
YOUR VOTE
IS IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN
FIND VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON MAY 18, 2011
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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i
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, which we refer to as
our Board, is soliciting your proxy to vote at our 2011 Annual
Meeting of Shareholders, which we refer to as 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 offices, 3333 Richmond Road,
Beachwood, Ohio 44122, on May 18, 2011, 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 April 18, 2011 to all shareholders entitled to
vote. Shareholders who owned our common shares at the close of
business on April 8, 2011, the record date for the Annual
Meeting, are entitled to vote. On the record date, there were
approximately 276,592,862 common shares outstanding. We are also
enclosing our 2010 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. We will bear the cost of the solicitation of proxies. In
addition to the solicitation of proxies by mail, certain of our
employees may solicit proxies by telephone, facsimile or email.
Those employees will not receive any additional compensation for
their participation in the solicitation. We retained Georgeson,
Inc., at an estimated cost of $11,000, 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 of the Board, 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 common
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 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
1
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:
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FOR
the election of Terrance R. Ahern, James C. Boland,
Thomas Finne, Robert H. Gidel, Daniel B. Hurwitz, Volker Kraft,
Victor B. MacFarlane, Craig Macnab, Scott D. Roulston, and Barry
A. Sholem as directors;
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FOR
the ratification of the selection of
PricewaterhouseCoopers LLP as our independent accountants for
our fiscal year ending December 31, 2011;
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FOR
the approval, on an advisory basis, of the
compensation of the companys named executive
officers; and
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FOR
, on an advisory basis, the company to hold future
shareholder advisory votes on the compensation of the
companys named executive officers
EVERY YEAR (1
YEAR)
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Shareholders of record may vote by calling 1-866-540-5760 or
over the Internet by accessing the following website:
www.proxyvoting.com/ddr.
Voting instructions, including
your shareholder account number and personal proxy control
number, are contained on the accompanying proxy card. Those
shareholders of record who choose to vote by telephone or over
the Internet must do so by not later than 11:59 p.m.,
Eastern Time, on May 17, 2011.
A number of banks and brokerage firms participate in a program
that also permits shareholders whose shares are held in
street name to direct their vote by telephone or
over the Internet. If your shares are held in an account at a
bank or brokerage firm that participates in such a program, you
may direct the vote of these shares by telephone or over the
Internet by following the voting instructions enclosed with the
proxy card from the bank or brokerage firm. The Internet and
telephone proxy procedures are designed to authenticate
shareholders identities, to allow shareholders to give
their proxy voting instructions and to confirm that those
instructions have been properly recorded. Votes directed by
telephone or over the Internet through such a program must be
received by 11:59 p.m., Eastern Time, on May 17, 2011.
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 card 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. Proxy
cards 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.
2
What
vote is required to approve each proposal assuming that a quorum
is present at the Annual Meeting?
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Proposal One: Election of Directors
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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 Annual Meeting and will be excluded
in determining the number of votes cast at the Annual Meeting.
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Proposal Two: Ratification of the Selection of
PricewaterhouseCoopers LLP as Our Independent Accountants for
Our Fiscal Year Ending December 31, 2011
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Although our independent registered public accounting firm may
be selected by the Audit Committee of our Board without
shareholder approval, the Audit Committee will consider the
affirmative vote of the holders of a majority of our common
shares, having voting power present at the Annual 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 accountants.
Broker non-votes will have no effect on the outcome of Proposal
Two, but abstentions will have the same effect as a vote against
Proposal Two.
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Proposal Three: Shareholder Advisory Vote Regarding the
Compensation of the Companys Named Executive Officers
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This vote is advisory only and therefore is not binding on us or
our Board of Directors. However, the Board and Executive
Compensation Committee will review the results of the vote and
will consider the affirmative vote of the holders of a majority
of our common shares, having voting power present at the Annual
Meeting in person or by proxy and entitled to vote on the
proposal, to be approval by the shareholders of the compensation
of our named executive officers. 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: Shareholder
Advisory Vote
Regarding the Frequency for Future Shareholder Advisory Votes on
the Compensation of the Companys Named Executive
Officers
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This vote is advisory only and therefore is not binding on us or
our Board of Directors. However, the Board and Executive
Compensation Committee will review the results of the vote and
will consider the frequency choice (every 1 year, every
2 years, or every 3 years) receiving the most votes
cast by those holders of our common shares, having voting power
present at the Annual Meeting in person or by proxy and entitled
to vote on this proposal, to be the frequency recommended by the
shareholders for future advisory votes on the compensation of
our named executive officers. Broker non-votes and abstentions
will have no effect on the outcome of 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 March 18,
2011, except as otherwise disclosed in the notes below, by
(1) 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,
(2) our directors, (3) our named executive officers
and (4) 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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Amount and Nature of
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Beneficial Ownership of
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Percentage
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Common Shares
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Ownership
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More Than 5% Owners
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The Otto Family
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60,681,822
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(1)
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22.7
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Cohen & Steers, Inc.
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34,021,295
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(2)
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12.7
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FMR LLC
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22,407,555
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(3)
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8.4
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The Vanguard Group, Inc
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20,986,352
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(4)
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7.9
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Directors and Management
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Scott A. Wolstein
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1,694,901
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(5)
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*
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Daniel B. Hurwitz
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743,142
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(6)(7)
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*
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Terrance R. Ahern
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24,962
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(7)(8)(9)
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*
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James C. Boland
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13,904
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*
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Thomas Finne
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11,551
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*
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Paul W. Freddo
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250,781
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(10)
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*
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Robert H. Gidel
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32,871
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(11)
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*
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John S. Kokinchak
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187,640
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(7)(12)
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Volker Kraft
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48,234
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Victor B. MacFarlane
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12,500
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(7)(8)(13)
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Craig Macnab
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112,156
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(7)(8)(14)
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David J. Oakes
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539,061
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(7)(15)
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Scott D. Roulston
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6,374
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(8)(16)
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Barry A. Sholem
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82,172
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(17)
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William B. Summers, Jr.
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31,399
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William H. Schafer
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78,073
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(18)
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Joan U. Allgood
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241,737
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(19)
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*
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All Current Executive Officers and Directors as a Group
(16 persons)
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3,896,127
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(20)
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1.5
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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 March 18, 2011,
is based on a report on Schedule 13D/A filed with the SEC on
March 21, 2011 by Alexander Otto, Katharina Otto-Bernstein,
Dr. Michael Otto and Janina Vater, each an individual
(together, the Otto Family). The report stated that
the Otto Family may be deemed to form a group for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934,
which we refer to as the Exchange Act, with Scott A. Wolstein
and Iris S. Wolstein and collectively be deemed to have
beneficial ownership of 66,148,221 common shares, but that the
Otto Family disclaims any beneficial ownership in any securities
held or which may be acquired by Mr. Wolstein or
Ms. Wolstein. According to the information provided in the
report, Alexander Otto is the beneficial owner of 39,674,485
common shares. Alexander Otto has sole voting and sole
dispositive power over each of these common shares. Also
according to the report, Katharina Otto-Bernstein is the
beneficial owner of 15,755,505 common shares. Katharina
Otto-Bernstein has sole voting and sole dispositive power over
each of these common shares. The report indicates
Dr. Michael Otto is the beneficial owner of 5,251,832
common shares. Dr. Michael Otto has sole voting and sole
dispositive power over 2,625,916 of these common shares.
Dr. Michael Otto also shares voting and dispositive power
over 2,625,916 of these common shares with Janina Vater through
power of attorney, granted to Dr. Michael Otto by Janina
Vater. According to the information provided in
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the report, Janina Vater is the beneficial owner of 2,625,916
common shares. The report indicates that the 60,681,822 common
shares set forth in the table above includes 10,000,000 common
shares issued upon the exercise of warrants. The address for
these reporting persons is
c/o Dennis
O. Garris, Alston & Bird LLP, 950 F Street,
N.W., Washington, DC 20004.
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(2)
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Information for common shares owned as of December 31,
2010, is based on a report on Schedule
13G/A
filed
with the SEC on February 14, 2011 by Cohen &
Steers, Inc., a parent holding company, and related parties. The
report indicated that Cohen & Steers, Inc. holds a
100% interest in Cohen & Steers Capital Management,
Inc., an investment advisor registered under Section 203 of
the Investment Advisers Act of 1940, and that Cohen &
Steers, Inc. and Cohen & Steers Capital Management,
Inc. together hold a 100% interest in Cohen & Steers
Europe S.A., which is also an investment advisor registered
under Section 203 of the Investment Advisors Act of 1940.
According to the report, Cohen & Steers, Inc. is the
beneficial owner of, and has sole dispositive power over,
34,021,295 common shares and has sole voting power over
29,258,623 of these common shares. The report indicates that
Cohen & Steers Capital Management, Inc. is the
beneficial owner of, and has sole dispositive power over,
33,076,660 common shares and sole voting power over 28,759,719
of these common shares. The report indicates that
Cohen & Steers Europe S.A. is the beneficial owner of,
and has sole dispositive power over, 944,635 common shares and
sole voting power over 498,904 of these common shares. The
address for this reporting person is 280 Park Avenue, 10th
Floor, New York, New York 10017.
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(3)
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Information for common shares owned as of December 31,
2010, is based on a report on Schedule 13G/A filed with the SEC
on February 14, 2011 by FMR LLC, a parent holding company,
and Edward C. Johnson 3d, an individual. According to the
report, FMR LLC is the beneficial owner of, and has sole
dispositive power over, 22,407,555 common shares and has sole
voting power over 14,436,979 of these common shares. In
addition, according to the report, Edward C. Johnson 3d is the
beneficial owner of, and has sole dispositive power over,
22,407,555 of these common shares. 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 7,939,271 common shares. FMR LLC and
Mr. Johnson each has sole dispositive power with respect to
these 7,939,271 common shares. Also according to the report,
Strategic Advisers, Inc., a wholly-owned subsidiary of FMR LLC
and an investment adviser registered under the Investment
Advisers Act of 1940, is the beneficial owner of 13 common
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 872,220 common 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
Exchange Act is the beneficial owner of 1,236,307 common shares.
FMR LLC and Mr. Johnson each has sole dispositive power
with respect to and sole voting power over the common shares
beneficially owned by Pyramis Global Advisors, LLC, sole
dispositive power with respect to the common shares beneficially
owned by Pyramis Global Advisors Trust Company, and sole
voting power over 1,205,002 of the common shares beneficially
owned by Pyramis Global Advisors Trust Company. According
to the information provided in the report, FIL Limited, a
qualified institution under Rule 13d-1(b)(1)(ii) under the
Exchange Act is the beneficial owner of 12,359,744 common
shares. Partnerships controlled by Mr. Johnsons
family, or trusts for their benefit, own common shares of FIL
Limited voting stock with the right to cast approximately 39% of
the total votes that may be cast. FMR LLC and FIL Limited are
separate and independent corporate entities and their Boards of
Directors are generally composed of different individuals. FMR
LLC and FIL Limited 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 common shares were
beneficially owned by FMR LLC and FIL Limited on a joint basis.
The address for this reporting person is 82 Devonshire Street,
Boston, Massachusetts 02109.
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(4)
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Information for common shares owned as of December 31,
2010, is based on a report on
Schedule 13G/A
filed with the SEC on February 10, 2011 by The Vanguard
Group, Inc. According to the information provided in the report,
The Vanguard Group Inc. is the beneficial owner of 20,986,352
common shares and has sole voting power over 161,249 common
shares, sole dispositive power over 20,825,103 common shares and
shared dispositive power over 161,249 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 of and directs the
voting over 161,249 common shares as a result of it serving as
investment manager of collective trust accounts. The address for
this reporting person is 100 Vanguard Boulevard, Malvern,
Pennsylvania 19355.
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(5)
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Includes 431,789 common shares subject to options exercisable on
or prior to May 17, 2011. This number also includes 700,000
common shares pledged as security by Mr. Wolstein.
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(6)
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Includes 204,394 common shares subject to options exercisable on
or prior to May 17, 2011.
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(7)
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Does not include 72,712; 1,029; 1,029; 695; 4,448 and 150,652
stock units credited to the accounts of Messrs. Hurwitz,
Ahern, MacFarlane, Macnab, Kokinchak and Oakes, respectively,
with respect to restricted common shares that would have vested
pursuant to their terms, and 120,000 and 142,120 stock units to
be credited to the accounts of Messrs. Hurwitz and Oakes,
respectively, with respect to restricted common shares that have
not yet vested, as a result of the election by such individuals
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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Does not include 91,488; 63,860; 17,718 and 18,078 stock units
credited to the accounts of Messrs. 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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(9)
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Includes 5,000 common shares subject to options exercisable on
or prior to May 17, 2011.
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(10)
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Includes 41,891 common shares subject to options exercisable on
or prior to May 17, 2011.
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(11)
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Includes 22,901 common shares owned by a partnership in which
Mr. Gidel and his wife each has a one-half interest.
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(12)
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Includes 75,436 common shares subject to options exercisable on
or prior to May 17, 2011.
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(13)
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Includes 10,000 common shares subject to options exercisable on
or prior to May 17, 2011.
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(14)
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Includes 66,827 common shares as to which Mr. Macnab shares
voting and dispositive power with his wife. This number also
includes 66,827 common shares pledged as security by
Mr. Macnab.
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(15)
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Includes 400,928 common shares subject to options exercisable on
or prior to May 17, 2011.
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(16)
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Includes 685 common shares held in an individual retirement
account.
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(17)
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Includes 5,000 common shares subject to options exercisable on
or prior to May 17, 2011.
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(18)
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Beneficial ownership information for Mr. Schafer is
provided as of February 15, 2010, the effective date of his
departure from the company, based on his Form 4 filing with
the SEC on February 4, 2010 and his Form 5 filing with
the SEC on February 8, 2010, as well as a net restricted
share award of 10,704 common shares on July 31, 2010 and
the expiration of all of his unexercised options in May 2010.
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(19)
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Beneficial ownership information for Ms. Allgood is
provided as of January 31, 2011, the effective date of her
departure from the company, based on her Form 4 filing with
the SEC on August 3, 2010, as well as a withholding tax
transaction with respect to 4,145 common shares and a net
restricted share award on January 31, 2011 of 16,148 common
shares. Includes 8,919 common shares owned by
Ms. Allgoods husband, as reported on the Form 4
filing described in this footnote, and, as of March 18,
2011, 95,666 common shares subject to options exercisable on or
prior to May 17, 2011.
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(20)
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Includes 38,367 common shares subject to options exercisable on
or prior to May 17, 2011 owned by executive officers not
named in the table in addition to the information set forth in
the footnotes above regarding each individual directors
and executive officers holdings.
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6
PROPOSAL ONE:
ELECTION OF DIRECTORS
At the Annual Meeting, unless you specify otherwise, the common
shares represented by your proxy will be voted to elect the
following ten directors nominated herein to serve until the next
annual meeting of shareholders and until a successor has been
duly elected and qualified: Terrance R. Ahern, James C. Boland,
Thomas Finne, Robert H. Gidel, Daniel B. Hurwitz, Volker Kraft,
Victor B. MacFarlane, Craig Macnab, Scott D. Roulston, and Barry
A. Sholem.
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 of the Board, the
President or the Secretary or by or on behalf of the shareholder
giving that notice, then each shareholder will have the right to
cumulate the voting power that the shareholder possesses in the
election of directors. This means that each shareholder will be
able to give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of common
shares owned by such shareholder, or to distribute the
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 our Board
intends that proxies will be voted for the election of a
substitute nominee designated by our Board 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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Terrance R. Ahern
55
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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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James C. Boland
71
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Former President and Chief Executive Officer of Cavs/Gund Arena
Company and Former Vice Chairman of Cavaliers Operating Company,
LLC
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9/09-Present
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Thomas Finne
52
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Managing Director, KG CURA Vermögensverwaltung G.m.b.H.
& Co. (commercial real estate company, Hamburg, Germany)
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9/09-Present
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Robert H. Gidel
59
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Managing Member, Liberty Partners, LLC (real estate investments)
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5/00-Present
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Daniel B. Hurwitz
47
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Our President and Chief Executive Officer
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5/02-5/04,
6/09-Present
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Volker Kraft
38
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Managing Director, ECE Real Estate Partners G.m.b.H. (commercial
real estate company, Hamburg, Germany)
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5/09-Present
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Victor B. MacFarlane
59
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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
55
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Chief Executive Officer, National Retail Properties, Inc. (real
estate investment trust)
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3/03-Present
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Scott D. Roulston
53
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Managing Partner, High Road Partners, LLC (business advisory
firm)
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5/04-Present
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Barry A. Sholem
56
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Partner, MSD Capital, L.P. (family investment office)
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5/98-Present
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Terrance R. Ahern
is a Co-Founder and Principal of
The Townsend Group, an institutional real asset advisory firm
formed in 1986. The Townsend Group 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.
With his years of experience managing a firm whose core skill is
analyzing real estate companies and real estate investment
opportunities, Mr. Ahern brings valuable insight into the
real estate markets in which we operate. In addition, through
his past experience on the boards of some of the most
influential organizations in the real estate industry, he has
amassed an expansive knowledge of the opportunities, challenges
and risks that face real estate companies, as well as the
functions of a board of directors.
James C. Boland
served as President and Chief
Executive Officer of Cavs/Gund Arena Company, the Cleveland
Cavaliers professional basketball team and Gund Arena, from
January 1998 to January 2003 and Vice Chairman of the Cavaliers
Operating Company, LLC (formerly known as Cavs/Gund Arena
Company) from January 2003 to June 2007. Prior to his time with
the Cavaliers, Mr. Boland was a partner of
Ernst & Young LLP for 22 years serving in various
roles including Vice Chairman and Regional Managing Partner as
well as a member of the firms Management Committee from
1988 to 1996 and as Vice Chairman of National Accounts from 1997
until his retirement from the firm in 1998. Mr. Boland is
also a Director of The Sherwin-Williams Company, The Goodyear
Tire & Rubber Company and Invacare Corporation, and
was a Director, from 2004 to 2005, of International Steel Group.
He is also a Trustee of Bluecoats, Inc. and The Harvard Business
School Club of Cleveland.
As a partner and member of the management committee of a major
accounting firm for over 20 years, Mr. Boland has
worked with hundreds of public and private companies and has a
thorough understanding of complex accounting and auditing
matters. Furthermore, his service on several public and private
company boards of directors provides exposure to diverse
industries with unique challenges enabling him to make
8
significant contributions to our Board, particularly in the
areas of risk assessment, corporate governance and executive
compensation.
Thomas Finne
is the Managing Director of KG CURA
Vermögensverwaltung G.m.b.H. & Co., a commercial real
estate company located in Hamburg, Germany, that manages assets
in North America and Europe. Prior to joining KG CURA
Vermögensverwaltung G.m.b.H. & Co. in 1992,
Dr. Finne was responsible for controlling, budgeting,
accounting and finance for Bernhard Schulte KG, a ship owner and
ship manager located in Hamburg, Germany. He is currently
serving as a Managing Director of C.J. VOGEL Aktiengesellschaft
für Beteiligungen. Dr. Finne graduated with an
undergraduate degree in business administration and received his
doctorate from the International Tax Institute at the University
of Hamburg.
Dr. Finnes experience in international commercial
real estate enables him to contribute an international
perspective on the issues impacting a real estate company facing
todays challenges and opportunities. His service on the
boards of directors of several international real estate
companies further provides him with business modeling experience
and an appreciable awareness of the most effective and essential
functions of a board of directors.
Robert H. Gidel
has been the Managing Member of
Liberty Partners, LLC, a company that invests 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 real estate
investment trust, which we refer to as a REIT. 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
Directors of U.S. Restaurant Properties, Inc. until 2005
and a member of the Board of Directors of American Industrial
Properties REIT until 2001.
Through his leadership of two public REITs and five private
REITs, as well as his service on the board of directors of
several public REITs, Mr. Gidel provides our Board with
extensive knowledge of the real estate industry, the development
and implementation of corporate strategies, risk assessment,
corporate finance and governance matters. His experience as a
senior manager of several real estate companies enables him to
make significant contributions to our Board.
Daniel B. Hurwitz
was appointed as our President
and Chief Executive Officer in January 2010. Mr. Hurwitz
served as our President and Chief Operating Officer from May
2007 to January 2010, as our Senior Executive Vice President and
Chief Investment Officer from May 2005 through May 2007 and as
an Executive Vice President from June 1999 through April 2005.
He was previously a member of our Board 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. Prior to Boscovs, Mr. Hurwitz
served as Development Director for The Shopco Group, a New York
City-based developer and acquirer of regional and super regional
shopping malls. Mr. Hurwitz is a graduate of Colgate
University and the Wharton School of Business Executive
Management Program at the University of Pennsylvania.
Mr. Hurwitz is a director of EDT Trust; a member of the
Developers Diversified/Sonae Sierra Brasil Board of Directors; a
member of ICSC, a member of the ICSC Board of Trustees, a member
of the ICSC Executive Committee and a member of the ICSC
Political Action Committee. He previously served as a director
of U-Store-It Trust from January 2008 to January 2011 and
currently is a member of ULI and serves as Vice Chairman of the
CRC Blue Council. Additionally, Mr. Hurwitz is a member of
the Colgate University Board of Trustees; a member of the Board
of Trustees of Hawken School; a member of the Leadership Board
for the Neurological Institute at the Cleveland Clinic; and a
member of the Board of Directors of the Rock and Roll Hall of
Fame. He has also served as a member of the Board of Regents for
the University System of Ohio and the Board of Directors of the
Colgate University Alumni Corporation, Colgate University Maroon
9
Council, Boscovs Department Store, Inc., The Network,
Applewood Centers and the Cleveland Childrens Museum.
During his more than 11 years of service to the company and
as our President and Chief Executive Officer, Mr. Hurwitz
has gained a comprehensive knowledge of the critical internal
and external challenges facing the company and the real estate
industry as a whole. His leadership within the company, his
prior experience as a member of senior management of companies
in the retail industry and his prior role as a member of the
Board of Trustees of U-Store-It Trust, for which he served as a
member of the audit committee and chairman of the executive
compensation committee, make him an invaluable member of our
Board. Mr. Hurwitz is also very active in many cultural,
charitable and academic institutions, which provide an important
diversity of perspective and link between our Board, the company
and the community.
Volker Kraft
is a Managing Director of ECE Real
Estate Partners G.m.b.H., the institutional real estate fund
management platform of ECE Projektmanagement G.m.b.H. & Co.
KG, a fully integrated international developer, owner and
manager of shopping centers based in Hamburg, Germany. Prior to
joining ECE in 2008, Dr. Kraft was a Director of Allianz
Capital Partners G.m.b.H., a private equity firm located in
Munich, Germany, where he was a member of the management team
and the internal investment committee since 2001. During that
time, Dr. Kraft served as a member of the Advisory Board
and Shareholders Committee of Bartec G.m.b.H., Bad
Mergentheim, an electronic components company, and as a member
of the Supervisory Board of Scandlines AG, Rostock, a ferry
services company.
As a member of the board of directors of a major international
retail real estate developer and as a manager of a leading
German private equity company, Dr. Kraft brings to our
Board the knowledge of the retail real estate industry on a
global basis, corporate finance, funds management, corporate
transactions and strategic planning. In addition, as a member of
the supervisory boards of several international companies in
various industries, Dr. Kraft contributes to our Board by
drawing upon his extensive experience with corporate governance,
leadership and risk management.
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 more than 30 years of real estate
experience. He sits on the Board of Directors of each of the
Robert Toigo Foundation, the Real Estate Executive Council and
the Initiative for a Competitive Inner City. He also serves on
the Board of Advisors for UCLA School of Law and the board
facilities committee of Stanford Hospital & Clinics.
He is a member and trustee of ULI; a member and former director
of PREA; and a member of ICSC, the Chief Executives Organization
and the World Presidents Organization.
Mr. MacFarlane brings to our Board over two decades of
experience as a chief executive officer of a real estate
advisory firm and over 30 years of experience in the areas
of real estate investment, corporate finance, portfolio
management and risk management. His extensive managerial
experience as well as his knowledge of the real estate and
private capital industries provide our Board with an expansive
view on issues impacting the company and our corporate strategy.
Craig Macnab
has served as the Chief Executive
Officer and a Director of National Retail Properties, Inc., 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 from 2000 to 2003, when we acquired JDN Realty
Corporation. Mr. Macnab was a director of Per-Se
Technologies, Inc., now McKesson Corporation, from 2002 to 2007.
He was also a Director of Eclipsys Corporation, a provider of
clinical and financial software to the healthcare industry,
prior to its merger with Allscripts in 2010. Mr. Macnab is
a member of the Board of Governors of NAREIT.
As the current chief executive officer and director of a public
company, as well as the former president, chief executive
officer and director of a publicly held developer, owner and
manager of shopping centers, Mr. Macnab has direct
experience with the significant managerial matters arising from
the business and financial issues pertaining to the company,
particularly in the areas of corporate finance, capital markets
and strategic planning. His current and former service on the
board of directors of several public companies has
10
provided him with a comprehensive understanding of corporate
governance issues facing a public company and its board of
directors.
Scott D. Roulston
is Managing Partner of High Road
Partners, LLC, advisors to growth companies, both public and
private, since 2002. From 1990 to 2010, he was Chief Executive
Officer of Fairport Asset Management, a registered investment
advisor, and its predecessor firm, Roulston & Company.
He is a member of the World Presidents Organization and
past Chapter Chairman for Young Presidents
Organization. He is a Trustee and President of Bluecoats, Inc.,
and a Trustee of Policy Bridge. He is a former director of
Defiance, Inc. where he served as chair of the Compensation
Committee, several private companies, and advisory boards for
Charles Schwab Institutional, TIAA-CREF, and the Weatherhead
School of Management at Case Western Reserve University.
Mr. Roulston is a graduate of Dartmouth College.
In addition to his past experience on the board of directors of
both public and private companies, including on the audit
committee of a public company, Mr. Roulston contributes his
insights as a leader of an asset management and investment
company. This experience has provided him with extensive
knowledge of the issues involved with the review and analysis of
financial statements, as well as capital markets and the
development and implementation of corporate strategy.
Barry A. Sholem
became a partner of MSD Capital,
L.P., the family office of Michael and Susan Dell, and head of
its real estate fund in July 2004. From 1995 until August 2000,
Mr. Sholem was Chairman of DLJ Real Estate Capital
Partners, a $2 billion real estate fund that he co-founded
and that invested in a broad range of real estate-related
assets, and a managing director at Credit Suisse First Boston.
Prior to forming DLJ Real Estate Capital Partners,
Mr. Sholem spent ten years at Goldman Sachs in its New York
and Los Angeles offices. Mr. Sholem is currently active in
ULI (CRC Silver Council), ICSC, the University of California,
Berkeley Real Estate Advisory Board and the Business Roundtable.
Years of experience leading the real estate groups of investment
firms gives Mr. Sholem a unique perspective on the business
and operations of the company. In addition, he brings a broad
understanding of the social and political issues facing the
company through his involvement with ULI and ICSC.
Certain
Transactions
On February 23, 2009, we entered into a stock purchase
agreement with Mr. Alexander Otto, which we refer to as the
Otto Stock Purchase Agreement. Pursuant to the Otto Stock
Purchase Agreement, we issued and sold 30,000,000 common shares,
which we refer to as the Purchased Shares, for gross proceeds of
approximately $112.5 million and issued warrants to
purchase 10,000,000 common shares at an exercise price of $6.00
per share to Mr. Otto and certain members of his family,
whom we collectively refer to as the Otto Family. No additional
consideration was paid for the warrants. Under the terms of the
Otto Stock Purchase Agreement, we also issued to the Otto Family
2,858,732 common shares as a result of first and second quarter
2009 partial stock dividends associated with the Purchased
Shares. On March 18, 2011, the Otto Family members
exercised all of the warrants and purchased 10,000,000 common
shares of the company at a price of $6.00 per share.
In connection with the sale of the Purchased Shares, we also
entered into an investor rights agreement with Mr. Otto
under which he has a right to nominate individuals for election
to our Board depending on the Otto Familys level of
ownership in us. In accordance with the investor rights
agreement, Dr. Kraft and Dr. Finne were nominated and
elected to our Board. During such time as the Otto Family
beneficially owns 17.5% or more of our outstanding common
shares, our Board will nominate two persons recommended by the
Otto Family who are suitable to us to become members of our
Board at each annual election of directors, and during such time
as the Otto Family beneficially owns less than 17.5% but more
than 7.5% of our outstanding common shares, our Board will
nominate one person recommended by the Otto Family who is
suitable to us to become a member of our Board at each annual
election of directors. Dr. Kraft and Dr. Finne are
Mr. Ottos current nominees pursuant to the investor
rights agreement.
Our Board Recommends That Shareholders Vote FOR the Election
of Each of the Director Nominees.
11
CORPORATE
GOVERNANCE
Our Board has adopted Corporate Governance Guidelines that guide
our Board in the performance of its responsibilities to serve
the best interests of the company and our shareholders. Our
Corporate Governance Guidelines are posted on our website,
www.ddr.com
, under Investor Relations. Our
Board reviews the Corporate Governance Guidelines periodically
but not less than annually.
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:
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to act with honesty and integrity;
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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;
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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;
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to not knowingly or recklessly misrepresent material facts or
allow their independent judgment to be compromised;
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to not use for personal advantage confidential information
acquired in the course of their employment;
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to proactively promote ethical behavior among peers and
subordinates in the workplace; and
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to promptly report any violation or suspected violation of this
code in accordance with our Reporting and Non-Retaliation Policy
and, if appropriate, directly to the Audit Committee.
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Only the Audit Committee or our Board, including a majority of
the independent directors, may waive any provision of this code
with respect to a senior financial officer. Any such waiver or
any amendment to this code will be promptly disclosed on our
website or in a Current Report on
Form 8-K
as required by applicable rule or regulation. This code is
posted on our website,
www.ddr.com
, under Investor
Relations.
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 our Board 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 or in a Current Report on
Form 8-K
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.
Reporting
and Non-Retaliation Policy
We are committed to honesty, 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
12
directly to our Corporate Compliance Officer, David E. Weiss,
our Audit Committee Chairman, Scott D. Roulston, 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. This policy is posted
on our website,
www.ddr.com
, under Investor
Relations.
Independent
Directors
Our Board has affirmatively determined that all of the nominated
directors, except for Dr. Finne, Mr. Hurwitz, and
Dr. Kraft, are independent directors within the
meaning of the listing standards of the New York Stock Exchange,
or NYSE. Our Corporate Governance Guidelines provide that our
Board will be comprised of a majority of independent directors
and that only those directors or nominees who meet the listing
standards of the NYSE will be considered independent. Our Board
reviews annually the relationships that each director or nominee
has with us (either directly or as a partner, shareholder or
officer of an organization that has a relationship with us), and
only those directors or nominees whom our 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. With respect to our independent directors, there
were no transactions, relationships or arrangements that
occurred in 2010 that were considered by our Board in making its
determination of such directors independence.
Board
Leadership Structure and Risk Oversight
As of January 1, 2010, we separated the roles of Chief
Executive Officer and Chairman of the Board in recognition of
the differences between the two roles. Daniel B. Hurwitz was
appointed our Chief Executive Officer with responsibility for
planning, formulating and coordinating the development and
execution of our corporate strategy, policies, goals and
objectives. He is accountable for company performance and
reports directly to our Board.
On January 1, 2010, Scott A. Wolstein was appointed our
Executive Chairman of the Board. Mr. Wolstein held a
leadership role at the company and served on our Investment
Committee. He also maintained his historic capital markets and
tenant relationships to enhance his ability to implement our
long-term corporate strategy. Our Executive Chairman of the
Board also:
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provided guidance to our Chief Executive Officer;
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worked closely with our Chief Executive Officer to develop the
companys strategic plan;
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in conjunction with our Chief Executive Officer, directed the
planning, investigation, evaluation and negotiations pertaining
to our capital structure, new ventures, acquisitions,
dispositions and joint ventures and presented such plans for
review and approval by our Board;
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worked with our Chief Executive Officer and Chief Investment
Officer on transactional matters by networking with strategic
relationships;
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consulted and advised on any operational matters as requested by
our Chief Executive Officer;
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ensured that our Board fulfilled its oversight and governance
responsibilities;
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ensured that our Board set and implemented our goals and
strategies;
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established procedures to govern our Boards work;
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ensured that the financial and other decisions of our Board were
fully, promptly and properly carried out;
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ensured that all members of our Board had opportunities to
acquire sufficient knowledge and understanding of our business
to enable them to make informed judgments;
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presided over meetings of our shareholders; and
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provided leadership to our Board and set the agenda for, and
presided over, Board meetings.
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In February 2011, the company announced that Mr. Wolstein
would no longer serve as Executive Chairman of the Board and
that the position of Executive Chairman of the Board would not
be filled. Effective April 11, 2011, Mr. Wolstein no
longer serves as Executive Chairman of the Board and
Mr. Wolstein resigned from the Board. The Board elected
Mr. Ahern to serve as Chairman of the Board until his
successor is duly appointed. The position of Chairman of the
Board will be a non-executive officer position and will be held
by an independent director. Any non-executive Chairman of the
Board will have the following responsibilities, among others as
determined by the Board:
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consult and advise on any operational matters as requested by
our Chief Executive Officer;
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ensure that our Board fulfills its oversight and governance
responsibilities;
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ensure that our Board sets and implements our goals and
strategies;
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establish procedures to govern our Boards work;
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ensure that the financial and other decisions of our Board are
fully, promptly and properly carried out;
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ensure that all members of our Board have opportunities to
acquire sufficient knowledge and understanding of our business
to enable them to make informed judgments;
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preside over meetings of our shareholders; and
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provide leadership to our Board and set the agenda for, and
preside over, Board meetings.
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In accordance with our Corporate Governance Guidelines, our
Board has also maintained a lead director who was an independent
director and was selected by a majority of the independent
directors. Because Mr. Wolstein was an employee of the
company during 2010 and therefore was not
independent, our Board unanimously selected
Mr. Ahern to serve as lead director. The lead director:
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presides at all meetings of our Board at which the Chairman of
the Board is not present;
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serves as liaison between the Chairman of the Board and the
independent directors;
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reviews and comments on information to be sent to our Board;
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reviews and comments on meeting agendas for our Board;
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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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We believe this Board leadership structure recognizes the time,
effort and commitment that our Chief Executive Officer is
required to devote to his position in the current business
environment, the commitment required for our Chief Executive
Officer to fulfill his responsibilities and the independent
oversight required by our Chairman of the Board and lead
director.
This structure also enables our Board as a whole to fulfill its
responsibility to oversee the companys risks presented by
its long-term strategy, business plan and model. With a Board
comprised of management, independent directors and
non-independent directors, members of our Board bring a variety
of perspectives to address risks. Our Boards role in
enterprise risk management includes receiving regular reports
from members of senior management on areas of material risk to
the company, including operational, financial, strategic and
14
compliance risks. The company has an Enterprise Risk Management
(ERM) Committee comprised of senior management which meets
regularly to address risk and risk mitigation strategies. The
chair of the Audit Committee is invited to attend and
participate in ERM Committee meetings. The Audit Committee
assists the Board in its oversight responsibilities by, among
other matters, reviewing reports prepared by the ERM Committee,
reviewing our policies and procedures with respect to risk
assessment, risk management, risk monitoring and risk mitigation
and works with the other committees of our Board to identify
additional risks related to the committees respective
areas of expertise. The Chairman of the relevant committee
consults with the Audit Committee regarding the committees
findings regarding the identified risks and the committees
proposals to address such risks. The Audit Committee then
reports, on at least an annual basis, to our full Board on the
companys enterprise risk program. This enables our Board
and its committees to coordinate the risk oversight role,
particularly with respect to interrelated risks.
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 2010, the
non-management directors met either before or 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 Our Board
During the fiscal year ended December 31, 2010, our Board
held six meetings and took written action on nine occasions.
Each director attended at least 75% of the aggregate number of
meetings of our Board and committees on which he served in 2010.
As stated in our Corporate Governance Guidelines, all directors
are expected to attend the Annual Meeting. All of our directors
attended the annual meeting of shareholders in May 2010.
During 2010, the following committees of our Board existed: an
Audit Committee, a Dividend Declaration Committee, an Executive
Committee, an Executive Compensation Committee, a Nominating and
Corporate Governance Committee, and a Pricing Committee. Our
Board 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.
Each of the Audit Committee, Executive Compensation Committee
and Nominating and Corporate Governance Committee conducts a
self-evaluation and review of its charter annually and reports
the results of these evaluations and reviews to our Board, and
our Board also conducts a self-evaluation annually.
15
The following table indicates the current members of each
standing committee as of March 1, 2011:
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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James C. Boland
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Thomas Finne
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William B. Summers, Jr.
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Craig Macnab
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Executive Committee
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Executive Compensation Committee
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Scott A. Wolstein*
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Robert H. Gidel*
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Terrance R. Ahern
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James C. Boland
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Volker Kraft
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Victor B. MacFarlane
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Craig Macnab
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Barry A. Sholem
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Daniel B. Hurwitz
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Nominating and Corporate Governance Committee
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Pricing Committee
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Craig Macnab*
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Daniel B. Hurwitz*
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Terrance R. Ahern
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Scott D. Roulston
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Victor B. MacFarlane
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William B. Summers, Jr.
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Audit Committee.
The Audit Committee assists
our Board in overseeing the integrity of our financial
statements, compliance with legal and regulatory requirements,
our independent registered public accounting firms
qualifications and independence, the performance of our internal
audit function and those of our independent registered public
accounting firm, our enterprise risk management policies and
procedures, 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. Our Board 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. In addition, our Board has
determined that Mr. Bolands simultaneous service on
the audit committees of three other public companies would not
impair his ability to effectively serve on our Audit Committee
and has, with respect to Mr. Boland, waived the limitations
set forth in our Corporate Governance Guidelines and our Audit
Committee Charter related to the number of other public company
boards and audit committees on which members of our Board are
allowed to serve. The Audit Committee held eight meetings in
2010.
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 our Board. The
Dividend Declaration Committee held no meetings and took written
action on nine occasions in 2010.
Executive Committee.
The Executive Committee
advises our Board on major strategic initiatives, business
opportunities and policy issues for the company, provides
assistance and advice to our Board with respect to any special
matters that may arise before our Board from time to time, and
takes action on behalf of the Board during intervals between
meetings of the Board. However, the actions of the Executive
Committee are subject to control, revision and alteration by the
Board. The Executive Committee held three meetings in 2010.
Executive Compensation Committee.
The
Executive Compensation Committee reviews and approves
compensation for our executive officers, reviews and recommends
to our Board 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.
16
The President and Chief Executive Officer communicates to the
Executive Compensation Committee decisions regarding
compensation for executive officers other than himself and the
Executive Chairman of the Board, and the Executive Compensation
Committee delegates to senior management the authority to
administer certain aspects of the compensation program for
non-executive officers. In addition, the Executive Compensation
Committee may form subcommittees of at least two members for any
purpose it deems appropriate and may delegate to the
subcommittees any of its power and authority that the Executive
Compensation Committee deems appropriate. All of the members of
the Executive Compensation Committee are 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 and took
written action on one occasion in 2010.
Nominating and Corporate Governance
Committee.
The Nominating and Corporate
Governance Committee identifies individuals qualified to become
members of our Board and recommends to our Board the persons to
be nominated as directors at each annual meeting of
shareholders; recommends to our Board qualified individuals to
fill vacancies on our Board; reviews and recommends to our Board
qualifications for committee membership and committee structure
and operations; recommends directors to serve on each committee;
develops and recommends to our Board corporate governance
policies and procedures in compliance with the Sarbanes-Oxley
Act of 2002, the Dodd-Frank Wall Street Reform and Consumer
Protection Act 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 our Board in its annual
review of the performance of our Board. All of the members of
the Nominating and Corporate Governance Committee are
independent as independence is currently defined in the
applicable federal securities laws and rules of the SEC and the
NYSE listing standards in accordance with our Corporate
Governance Guidelines. The Nominating and Corporate Governance
Committee held four meetings and took written action on one
occasion in 2010.
Pricing Committee.
The Pricing Committee is
authorized to approve the timing, amount, price and terms of
offerings of our debt and equity securities. The Pricing
Committee held no meetings and took written action on eight
occasions in 2010.
Director
Qualifications and Review of Director Nominees
The Nominating and Corporate Governance Committee reviews
annually with our Board the composition of our Board as a whole
and recommends, if necessary, action to be taken so that our
Board reflects the appropriate balance of knowledge, experience,
skills, expertise and diversity required for our Board as a
whole and contains at least the minimum number of independent
directors required by applicable laws and regulations and our
Corporate Governance Guidelines. The Nominating and Corporate
Governance Committee is responsible for ensuring that the
composition of our Board appropriately reflects the needs of our
business and, in furtherance of this goal, proposing the
addition of Directors and the necessary resignation of Directors
for purposes of ensuring the requisite skill sets and commitment
of the Directors to actively participate in Board and committee
meetings. Directors should possess such attributes and
experience as are necessary to provide a broad range of personal
characteristics including diversity, management skills, and real
estate and general business experience. Directors should commit
the requisite time for preparation and attendance at regularly
scheduled Board and committee meetings, as well as participate
in other matters necessary to ensure we are well-positioned to
engage in best corporate governance practices.
In evaluating a Director candidate, the Nominating and Corporate
Governance Committee considers factors that are in the best
interests of the company and its shareholders, including the
knowledge, experience, integrity and judgment of each candidate;
the potential contribution of each candidate to the diversity of
backgrounds, experience and competencies that our Board desires
to have represented; each candidates ability to devote
sufficient time and effort to his or her duties as a director;
independence and willingness to consider all strategic
proposals; any other criteria established by our Board and any
core competencies or real estate expertise necessary to staff
Board committees. In addition, the Nominating and Corporate
Governance Committee assesses whether a candidate possesses the
integrity, judgment, knowledge, experience, skills and expertise
that are likely to enhance our Boards ability to oversee
our affairs and business, including, when
17
applicable, to enhance the ability of committees of our Board to
fulfill their duties. A description of the qualifications,
skills and expertise that the Nominating and Corporate
Governance Committee considered when nominating each of the
director nominees nominated for election at the Annual Meeting
is described above under Proposal One: Election
of Directors.
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, David E. Weiss, at the following address: 3300
Enterprise Parkway, Beachwood, Ohio 44122. The Nominating and
Corporate Governance Committee has not established specific
minimum qualifications that a candidate must have to be
recommended to our Board. However, in determining qualifications
for new directors, the Nominating and Corporate Governance
Committee will consider potential members qualifications
to be independent under the NYSE listing standards in accordance
with our Corporate Governance Guidelines, as well as integrity,
judgment, knowledge, experience, skills and expertise as
described above. The Nominating and Corporate Governance
Committee will consider a pool of potential Board candidates
established from recommendations from shareholders and third
parties, including management and current directors. 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.
18
AUDIT
COMMITTEE REPORT
In accordance with its written charter adopted by our Board, the
Audit Committee assists our Board 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. 114, 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,
2010, 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 our Board that the
companys audited financial statements be included in its
Annual Report on
Form 10-K
for the year ended December 31, 2010, for filing with the
SEC.
Audit
Committee
Scott
D. Roulston, Chairman
James C. Boland
William B. Summers, Jr.
19
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Executive
Summary
The economic environment and U.S. retail real estate market
of the past two years have presented our management and Board
with significant challenges. We have responded to these
challenges by placing greater strategic emphasis on operational
excellence, which we describe as our new prime
business strategy. Under our prime business strategy, we are
focused on three primary objectives that position us to
effectively compete: (1) maintaining a prime balance sheet
relative to our peers, which means strengthening our credit
metrics and reducing risk; (2) operating a prime portfolio,
which means focusing on what we define as prime properties (in
other words, market-dominant shopping centers populated by
moderate- to budget-priced retailers with strong credit profiles
and growing market share); and (3) maintaining a prime
operating platform, which means improving property operating
fundamentals such as increasing the cash flow from our
properties.
To strengthen our balance sheet and reduce financial risk, we
raised long-term capital, refinanced and extended the maturities
of our remaining debt, and reduced our overall leverage ratios.
To focus on our prime portfolio properties, our management and
our Board completed a thorough strategic review of our
portfolio, and reaffirmed our objective for the next several
years to increase our ownership and operation of prime
properties and to dispose of non-core assets that will not
contribute to long-term earnings growth. To improve our
operating platform, we have placed greater strategic emphasis on
our operations by increasing the occupancy and revenue rates for
our properties while controlling costs.
Implementing our prime business strategy has required changes in
our company leadership, performance measurement processes and
annual performance-based incentive compensation metrics. With
respect to executive personnel, we promoted Daniel B. Hurwitz to
the office of Chief Executive Officer, David J. Oakes to the
office of Chief Financial Officer and John S. Kokinchak to the
office of Chief Administrative Officer. In addition,
Mr. Wolsteins employment with the company will cease
in July 2011 without cause. Effective April 11, 2011,
Mr. Wolstein no longer serves as Executive Chairman of the
Board and he resigned from the Board. Independent director
Terrance R. Ahern will serve as Chairman of the Board, a
non-executive officer position, until Mr. Aherns
successor is duly appointed.
Our historical compensation philosophy has been to tie incentive
pay to the performance we expect our management to achieve given
the environment in which we compete for tenants and capital. In
other words, we pay for performance. The Executive Compensation
Committee of our Board, which we refer to as the Committee,
sought to establish a key financial performance metric for 2010
for our annual performance-based incentive compensation program
that would best define our success both externally to the
investing community and internally to all of our employees.
Based on an analysis prepared by the Committees
compensation consultant, the measure selected was Same
Store EBITDA.
During 2010, we made a significant change in how we measured
performance by adopting a long-term annual growth target for our
Same Store EBITDA performance metric included as part of our
annual performance-based incentive compensation program. Going
forward, all annual incentive-eligible employees will be
measured, in large part, by our achievement with respect to Same
Store EBITDA, as further discussed below. We also retained
elements from our prior years annual performance-based
incentive compensation program, including a relative total
shareholder return performance metric (or Relative TSR) and the
evaluation of clearly articulated individual performance goals.
For 2010 comparative purposes, we evaluated our performance
against a peer group of real estate investment trusts based on
the dollar amount of assets under management. Going forward,
beginning with 2011, we will modify our peer group to focus on
retail real estate investment trusts with whom we most directly
compete for talent, tenants, and capital.
We believe that we executed on our
pay-for-performance
philosophy for 2010. Based on a review of our named executive
officers performance during 2010 against our Same Store
EBITDA and relative total shareholder return performance metrics
and the officers individual objectives, as explained in
greater detail below, we paid annual performance-based cash
incentives at the target level for
Messrs. Hurwitz and
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Wolstein, while Messrs. Oakes, Freddo and Kokinchak
received annual performance-based cash incentives between the
target and maximum levels.
Over the past 24 months, we have made substantial changes
and improvements in our business strategy and our balance sheet,
and have restructured our senior management team in order to
serve the long-term interests of shareholders, customers, and
employees. We also aligned our compensation programs with these
strategic changes. In the remainder of this Compensation
Discussion and Analysis below, we describe the philosophy and
objectives that guide our approach to executive compensation and
the design and implementation of our executive compensation
program. We also describe and analyze our 2010 compensation
decisions, including the decision to reward our named executive
officers with annual performance-based incentives based on 2010
performance.
2010
Compensation Program Design
Compensation
Philosophy and Objectives
The Committee believes our compensation packages should provide
an incentive to our named executive officers to deliver a return
to shareholders that, on average and over time, ranks among the
highest delivered by our peers. Our compensation program rewards
management for delivering superior returns and for improving the
financial and non-financial measures of performance that enhance
shareholder value.
Our goal is to attract and retain leading industry talent who
will execute a strategy that provides opportunity to retailers,
builds and sustains our core competencies and enables us to take
advantage of new business opportunities. To that end, our annual
performance-based incentive compensation program for our named
executive officers is based primarily on three performance
measures: growth in Same Store EBITDA; relative total
shareholder return compared to our peer group of real estate
investment trusts; and the achievement of strategic, business
unit or individual objectives, as described further below.
Key
Incentive Compensation Metrics
As discussed above, we selected Same Store EBITDA as our key
operational performance metric for 2010. We believe Same Store
EBITDA is an effective way to measure our performance both
externally to the investment community and internally for all of
our employees. EBITDA is earnings before interest, taxes,
depreciation and amortization, which includes all overhead and
administrative costs, but excludes interest expense and other
non-operating items, such as the gain or loss on the sale of
properties and asset impairments. Same Store EBITDA is further
defined as profit from properties and other investments that we
have owned for at least two consecutive years. Same Store EBITDA
growth captures key property value drivers, such as occupancy
rates, rental rates, and property expenses, and it also includes
fee income and general and administrative expenses. At the same
time, Same Store EBITDA is not impacted by financing decisions
or current year acquisitions, and is a performance measure that
is less prone to influence by financial engineering and
strategies that rely on short-term debt and increased risk. Of
further importance, every
bonus-eligible
employee can contribute to and is significantly focused on Same
Store EBITDA growth through our incentive compensation program.
The Committee also adopted a long-term target annual growth rate
for Same Store EBITDA. The target was set with the concurrence
of management and was based on an analysis by
Gressle & McGinley, LLC, the Committees
compensation consultant. This annual long-term growth target
reflects the economics of a
retail-focused
real estate investment trust such as our company. It is the
Committees view that if managements objective is to
grow Same Store EBITDA
year-over-year,
it can produce strong annual performance while making decisions
that are in the best long-term interest of the company and its
shareholders.
In addition to Same Store EBITDA, the Committee also placed
continued emphasis on delivering a high total shareholder return
relative to our peers and achieving qualitative performance
objectives established to execute the new business strategy.
This is the basis of our annual performance-based incentive
program. If management achieves the target level of
performance on all metrics, an annual performance-based bonus
equal to the target level will be awarded. At the
same time, the Committee also adopted a performance level
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for the threshold annual performance-based bonus
award level and a performance level for the maximum
annual performance-based bonus award level. If management
achieves a performance level below the threshold
level on all metrics, no annual performance-based bonuses will
be awarded. Likewise, if achievement equals or exceeds the
maximum level, annual performance-based bonuses
equal to the maximum level will be paid.
Role of
the Committee and Management in Executive Compensation
The Committee has overall responsibility for the compensation
programs provided to our named executive officers. The Committee
establishes financial performance metrics and targets used for
annual performance-based bonuses, conducts an in-depth review of
performance against objectives, reviews market pay practices as
they relate to both cash-based and equity-based award programs
and specifically approves compensation arrangements for
Messrs. Wolstein and Hurwitz.
For the named executive officers other than Mr. Wolstein,
Mr. Hurwitz sets the annual performance-based objectives
and evaluates the performance against such objectives.
Mr. Hurwitz makes a recommendation to the Committee for
final awards of annual performance-based bonuses.
Mr. Hurwitz also makes recommendations for base salary
adjustments and awards under our equity-based compensation
plans. Mr. Hurwitzs recommendations to the Committee
regarding the compensation for these named executive officers
were based on his review of each officers individual role
and performance.
Compensation
Consultant
For 2010, the Committee retained Gressle & McGinley as
its independent compensation consultant. Gressle &
McGinley assisted the Committee in:
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Its year-end performance reviews for Messrs. Wolstein and
Hurwitz to determine payments under the annual performance-based
incentive compensation program;
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Reviewing the shares awarded under the Value Sharing Equity
Program;
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Completing an analytical study of performance metrics leading to
the adoption of the Same Store EBITDA growth metric discussed
above;
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Completing a study of alternatives for measuring relative total
shareholder return that would serve as the basis of adopting a
new peer group in 2011; and
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Evaluating our director compensation program, which resulted in
the Committee determining that no changes would be made to
director compensation in 2010.
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Peer
Group
In 2010, the Committee continued to use the same 15 real estate
investment trusts, or REITs, it used in prior years as its peer
group for making compensation decisions. These particular REITs
were originally chosen as the companys peer group for
comparison purposes based on their comparability in terms of
real estate assets under management, or AUM, and included the
principal REITs with whom we believed we compete for executive
management talent. We refer to these 15 REITs as our peer group.
The following are the public companies that comprised our peer
group:
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AMB Property Corporation
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Host Hotels & Resorts, Inc.
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Apartment Investment and Management
Company
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Kimco Realty Corporation
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Avalonbay Communities, Inc.
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Macerich Company
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Boston Properties, Inc.
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Public Storage
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Brookfield Properties Corporation
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Regency Centers Corporation
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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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|
|
|
|
22
In 2010, we utilized our peer group for determining relative
total shareholder return performance for purposes of our annual
performance-based incentive compensation program. 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 our peer
group. Total shareholder return is calculated for us and each
REIT in our 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 determined our
ranking relative to the peer group.
The Committee did not target a certain percentile of
compensation provided by our peer group entities in making
either total compensation decisions or decisions regarding
individual compensation elements. However, the Committee used
the AUM sample for comparative analysis in setting terms for the
current employment agreements with Messrs. Hurwitz and
Wolstein, which agreements were entered into during 2009 and
will expire at the end of 2012, unless they are earlier
terminated, as is the case with Mr. Wolstein. More
specifically, in its deliberations, the Committee took into
account the comparative analysis of total compensation as just
one data point in its compensation decision-making process for
those agreements. Further, the Committees decisions to set
the ranges of total compensation at threshold,
target and maximum levels for
Messrs. Wolstein and Hurwitz were evaluated relative to
total compensation levels of our peer group.
Principal
Elements of Compensation
The following table summarizes the key elements of our executive
compensation program for 2010:
|
|
|
|
|
|
|
|
|
Element
|
|
Characteristics
|
|
Purpose
|
|
Base Salary
|
|
|
|
Fixed annual cash compensation based on comparative market
analysis and contractual commitments and subject to possible
annual merit adjustments
|
|
|
|
Provides competitive base level of annual cash compensation to
help retain executive talent
|
|
|
|
|
|
|
|
|
|
Annual Performance-Based Incentive Compensation
|
|
|
|
Annual performance-based incentives delivered in cash or a mix
of cash and equity, subject to time-based vesting
Payouts earned based on all or some combination of Same Store
EBITDA, Relative TSR and individual performance
|
|
|
|
Motivates executives to achieve individual and company objectives and aligns executives compensation interests with shareholders investment interests
Expected total compensation (base salary, annual incentive compensation and equity awards) provides a competitive level of pay that promotes retention of executives
|
23
|
|
|
|
|
|
|
|
|
Element
|
|
Characteristics
|
|
Purpose
|
|
Long-Term Equity Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Promotion Equity
Award
|
|
|
|
Special one-time equity awards for Messrs. Hurwitz and Oakes
granted in connection with promotions during 2010, subject to
time-based vesting
|
|
|
|
Recognizes Messrs. Hurwitz and Oakes promotions and
further aligns them in their new roles with our shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted shares vesting over four years, subject to
accelerated or continued vesting in certain instances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value Sharing Equity Program Awards
|
|
|
|
Special long-term, performance-based equity awards for 43 officers of the company
Restricted shares earned based on increases in adjusted market capitalization over an established initial base point and then subject to additional time-based vesting over four years, subject to accelerated or continued vesting in certain instances
|
|
|
|
Motivates and rewards executives for achieving long-term
share-price appreciation, helps retain executives, and aligns
executives compensation interests with shareholders
investment interests
|
|
|
|
|
|
|
|
|
|
Retirement Benefits
|
|
|
|
Standard tax-qualified defined contribution (401(k)) plan that
provides tax efficient vehicle to accumulate retirement savings,
subject to limits on compensation under the Internal Revenue Code
|
|
|
|
Provides benefits that are competitive with industry practices
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified cash and equity deferred compensation plans that
permit contributions in excess of Internal Revenue Code limits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Other Welfare Benefits
|
|
|
|
Broad-based employee benefits program, including health, life,
disability and other insurance and customary fringe benefits
providing for basic health and welfare needs
|
|
|
|
Provides benefits that are competitive with industry practices
|
|
|
|
|
|
|
|
|
|
Perquisites
|
|
|
|
Country and other club fee and expense reimbursement provided to
a limited number of executives
|
|
|
|
Encourages executives to build community and business
relationships, and helps attract and retain executives
|
Named
Executive Officers
The following seven individuals are our named executive officers
for 2010:
|
|
|
|
|
Mr. Daniel B. Hurwitz, our President and Chief Executive
Officer;
|
|
|
|
Mr. David J. Oakes, our Senior Executive Vice President and
Chief Financial Officer;
|
|
|
|
Mr. Scott A. Wolstein, our former Executive Chairman of the
Board, whose employment will cease in July 2011;
|
|
|
|
Mr. Paul W. Freddo, our Senior Executive Vice President of
Leasing and Development;
|
|
|
|
Mr. John S. Kokinchak, our Senior Executive Vice President
and Chief Administrative Officer;
|
24
|
|
|
|
|
Mr. William H. Schafer, our former Executive Vice President
and Chief Financial Officer, who departed from the company in
February 2010; and
|
|
|
|
Ms. Joan U. Allgood, our former Corporate Secretary and
Executive Vice President of Corporate Transactions and
Governance, who departed from the company in January 2011.
|
Analysis
of Compensation Decisions and Actions
Annual
Compensation
Base Salaries.
We pay salaries to our named
executive officers to provide them with a base level of income
for services rendered. For 2010, the named executive officers
were parties to employment agreements with us that provided for
minimum base salary amounts. The base salaries for 2010 for the
named executive officers were determined in accordance with
these contractual obligations and were originally established
based on an analysis of the salaries paid to executives in
comparable positions within our industry provided by
Gressle & McGinley.
Upon his promotion to Chief Financial Officer in February 2010,
Mr. Oakes received a promotional salary increase to
$450,000 effective March 1, 2010, which compensated him for
the added duties of being our Chief Financial Officer.
Mr. Kokinchaks base salary was increased to $280,000
effective March 1, 2010, in connection with his promotion
and acceptance of additional responsibility as Senior Executive
Vice President. The Committee and management determined that it
was appropriate to provide no base salary increases to our other
named executive officers for 2010. Mr. Schafer received his
2010 base salary only through February 15, 2010 due to his
departure from the company.
The following table summarizes our named executive
officers annual base salary rates for 2009 and 2010, and
the
year-over-year
change in their base salary rates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 Year-End
|
|
2010 Year-End
|
|
|
Named Executive Officer
|
|
Base Salary
|
|
Base Salary
|
|
% Change
|
|
Daniel B. Hurwitz
|
|
$
|
616,000
|
|
|
$
|
616,000
|
|
|
|
0
|
%
|
David J. Oakes
|
|
$
|
390,000
|
|
|
$
|
450,000
|
|
|
|
15
|
%
|
Scott A. Wolstein
|
|
$
|
875,000
|
|
|
$
|
875,000
|
|
|
|
0
|
%
|
Paul W. Freddo
|
|
$
|
380,000
|
|
|
$
|
380,000
|
|
|
|
0
|
%
|
John S. Kokinchak
|
|
$
|
240,000
|
|
|
$
|
280,000
|
|
|
|
17
|
%
|
William H. Schafer
|
|
$
|
305,000
|
|
|
$
|
305,000
|
|
|
|
0
|
%
|
Joan U. Allgood
|
|
$
|
305,000
|
|
|
$
|
305,000
|
|
|
|
0
|
%
|
For more information on base salaries earned by our named
executive officers, please refer to the 2010 Summary
Compensation Table below.
Annual Performance-Based Incentive
Compensation.
For 2010, we established annual
performance-based incentive compensation opportunities for our
named executive officers. These incentive compensation
opportunities were linked to achievement against specific
financial, strategic and operational metrics, and
25
those metrics were applied and weighted for the executives based
upon their roles. The metrics and the applicable weightings for
each executive were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Metric Weightings
|
|
|
Same
|
|
|
|
|
|
|
|
|
|
|
Store
|
|
Relative
|
|
Individual
|
|
CEO
|
|
|
Named Executive Officer
|
|
EBITDA
|
|
TSR
|
|
Objectives
|
|
Assessment
|
|
Total
|
|
Daniel B. Hurwitz
|
|
|
33
|
%
|
|
|
33
|
%
|
|
|
33
|
%
|
|
|
0
|
%
|
|
|
100
|
%
|
David J. Oakes
|
|
|
33
|
%
|
|
|
33
|
%
|
|
|
33
|
%
|
|
|
0
|
%
|
|
|
100
|
%
|
Scott A. Wolstein
|
|
|
0
|
%
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
0
|
%
|
|
|
100
|
%
|
Paul W. Freddo
|
|
|
55
|
%
|
|
|
10
|
%
|
|
|
20
|
%
|
|
|
15
|
%
|
|
|
100
|
%
|
John S. Kokinchak
|
|
|
55
|
%
|
|
|
10
|
%
|
|
|
20
|
%
|
|
|
15
|
%
|
|
|
100
|
%
|
William H. Schafer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joan U. Allgood
|
|
|
55
|
%
|
|
|
10
|
%
|
|
|
20
|
%
|
|
|
15
|
%
|
|
|
100
|
%
|
Achievement against Same Store EBITDA and Relative TSR metrics
was measured from a threshold level for performance
below expectations to a maximum level for superior
performance. We achieved Same Store EBITDA of
$846.8 million, which was below both our
maximum level of $872.6 million and
target level of $855.5 million but above the
threshold level of $838.4 million. We achieved
Relative TSR performance that ranked 5th out of 16 REITs
(including our company) in our peer group.
At the beginning of 2010, individual objectives were set for all
named executive officers. The Committee set the objectives for
Messrs. Hurwitz and Wolstein, the weighting of which is
indicated in the 2010 Metric Weightings table above. For
Mr. Hurwitz, the qualitative individual objectives included
strategic planning and execution, leadership, management of
human and capital resources, Board relations, and managing
critical constituents such as investors and tenants. For
Mr. Wolstein, the qualitative individual objectives
included Board and CEO relations, international performance and
the raising of private capital.
At the end of 2010, each Board member subjectively scored
Messrs. Hurwitz and Wolstein in a blind survey on a scale
of 1 (which meant well below expectations) to 5
(which meant well above expectations) for each
qualitative objective. The weighted score yielded a qualitative
assessment of Messrs. Hurwitz and Wolstein for annual
performance-based bonus purposes. For example, a score of 3.0
(which meant meets expectations) would have equated
to a target annual performance-based bonus, while a
score of 1.0 (which meant well below expectations)
would have resulted in no bonus. A score between 3.0 and 4.0
would be adjusted by interpolation to result in an annual
performance-based bonus between target and
maximum levels.
Based on an evaluation of Mr. Hurwitzs 2010
performance as measured by relative total shareholder return,
his individual objectives and Same Store EBITDA growth, the
Committee recommended an annual performance-based bonus at the
target level for Mr. Hurwitz. Based on an
evaluation of Mr. Wolsteins 2010 performance as
measured by relative total shareholder return and his individual
objectives, the Committee recommended an annual
performance-based bonus at the target level for
Mr. Wolstein.
Mr. Hurwitz set the individual objectives for the other
eligible named executive officers at the beginning of 2010, as
discussed below, and evaluated their performance against those
objectives at the end of the year. This evaluation took place as
part of the companys year-end performance appraisal
process. Messrs. Oakes, Freddo and Kokinchak were assessed
to have achieved a maximum level of performance on
their individual objectives. Ms. Allgoods performance
on individual objectives was established at the
target level.
26
The individual objectives for the named executive officers
reporting to Mr. Hurwitz at year-end were weighted as
indicated in the 2010 Metric Weightings table above and
consisted of the following:
|
|
|
|
|
Named Executive
Officer
|
|
Individual Objectives
|
|
|
David J. Oakes
|
|
|
|
Raise capital opportunistically to meet 2010 maturities and
extend debt maturities
|
|
|
|
|
Lower debt to EBITDA levels
|
|
|
|
|
Lower consolidated debt
|
|
|
|
|
Dispose of $150 million of non-prime assets
|
|
|
|
|
Enhance investor relations through personal contact and improved
transparency
|
|
Paul W. Freddo
|
|
|
|
Increase year-end leased rate by 100 basis points
|
|
|
|
|
Enhance tenant-landlord relationships
|
|
|
|
|
Improve credit quality of tenants throughout the portfolio
|
|
|
|
|
Achieve sector-leading deal velocity
|
|
|
|
|
Monetize development land
|
|
John S. Kokinchak
|
|
|
|
Control common area maintenance and capital expenses in
accordance with established budgets
|
|
|
|
|
Increase ancillary income revenue
|
|
|
|
|
Effectively promote corporate brand through national marketing
|
|
|
|
|
Reduce accounts receivable balances through enhanced collection
efforts
|
|
Joan U. Allgood
|
|
|
|
Enhance Board relations and oversee corporate governance
|
|
|
|
|
Lead corporate effort on enterprise risk management
|
|
|
|
|
Lead compliance efforts under the Foreign Corrupt Practices Act
|
|
|
|
|
Direct transition in connection with recapitalization of
Australian joint venture
|
Additionally for Messrs. Oakes, Freddo and Kokinchak and
Ms. Allgood, a subjective assessment of overall performance
by Mr. Hurwitz was performed at year-end. This assessment
was undertaken as part of the companys performance
appraisal process. Individual assessments for 2010 were based
upon our general business achievements during 2010, which
included:
|
|
|
|
|
executing a record number of leases, exceeding budgeted
expectations;
|
|
|
|
increasing our core portfolio leased rate over 2009, exceeding
budgeted expectations;
|
|
|
|
achieving same store net operating income growth, exceeding
budgeted expectations;
|
|
|
|
opportunistically raising approximately $2.9 billion of
various forms of long-term capital;
|
|
|
|
completing over $790 million of predominantly non-prime
asset sales, of which our pro-rata share was approximately
$250 million;
|
|
|
|
reducing consolidated indebtedness by nearly $900 million
to approximately $4.3 billion at December 31, 2010,
exceeding budgeted expectations by $100 million;
|
|
|
|
increasing the weighted average maturity of our consolidated
debt from under three years to approximately four years; and
|
27
|
|
|
|
|
achieving total shareholder return performance for our common
shares for the year of 53.2%, which ranked us 5th out of 16
REITs within our peer group.
|
Mr. Hurwitz determined that Messrs. Oakes, Freddo and
Kokinchak all performed at a superior level of performance in
2010 and therefore each achieved a maximum
performance level on this metric. With regard to
Ms. Allgood, her overall performance for the year was
established at the target level. The weighting of
this assessment for each executive is indicated above in the
2010 Metric Weightings table.
Payment for achievement of the four metrics described above was
delivered in the form of cash or a mix of cash and equity
awards. Below is a summary of the cash portion of the annual
performance-based incentive compensation opportunities available
and paid to each named executive officer for 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Performance-Based
|
|
|
|
|
|
|
Incentive Opportunity
|
|
Annual Performance-Based
|
|
|
|
|
(% of Base Salary)
|
|
Incentive Opportunity ($)
|
|
|
Named Executive Officer
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Actual
|
|
Daniel B. Hurwitz
|
|
|
200
|
%
|
|
|
300
|
%
|
|
|
400
|
%
|
|
$
|
1,232,000
|
|
|
$
|
1,848,000
|
|
|
$
|
2,464,000
|
|
|
$
|
1,848,000
|
|
David J. Oakes
|
|
|
50
|
%
|
|
|
75
|
%
|
|
|
150
|
%
|
|
$
|
225,000
|
|
|
$
|
337,500
|
|
|
$
|
675,000
|
|
|
$
|
487,620
|
|
Scott A. Wolstein
|
|
|
250
|
%
|
|
|
375
|
%
|
|
|
500
|
%
|
|
$
|
2,187,500
|
|
|
$
|
3,281,250
|
|
|
$
|
4,375,000
|
|
|
$
|
3,281,250
|
|
Paul W. Freddo
|
|
|
50
|
%
|
|
|
75
|
%
|
|
|
125
|
%
|
|
$
|
190,000
|
|
|
$
|
285,000
|
|
|
$
|
475,000
|
|
|
$
|
337,583
|
|
John S. Kokinchak
|
|
|
50
|
%
|
|
|
75
|
%
|
|
|
125
|
%
|
|
$
|
140,000
|
|
|
$
|
210,000
|
|
|
$
|
350,000
|
|
|
$
|
248,745
|
|
William H. Schafer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joan U. Allgood
|
|
|
20
|
%
|
|
|
40
|
%
|
|
|
80
|
%
|
|
$
|
61,000
|
|
|
$
|
122,000
|
|
|
$
|
244,000
|
|
|
$
|
122,000
|
|
After the annual performance-based cash incentive was
calculated, the equity awards for eligible named executive
officers were determined. Messrs. Oakes, Freddo and
Kokinchak were eligible to receive equity awards. The value of
their equity awards was calculated by taking the actual
percentage achievement under the cash portion of the plan as a
percentage of the maximum annual performance-based
bonus potential available and applying it to the
maximum bonus potential available under the equity
portion of the annual incentive program. The resulting
percentage is applied to the combined value of each
executives annual performance-based cash incentive payment
plus their base salaries at year-end. Messrs. Wolstein and
Hurwitz do not receive such equity awards under the terms of
their employment agreements. Due to their departures from the
company in February 2010 and January 2011 respectively,
Mr. Schafer and Ms. Allgood did not receive equity
awards for 2010.
The table below summarizes the equity incentive opportunity
available and granted for each of the eligible named executive
officers (expressed both as a percentage of the sum of their
annual performance-based bonus and salary and in actual dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Equity Award
|
|
|
|
|
|
|
Opportunity
|
|
Actual Annual
|
|
Actual Annual
|
|
|
(% Salary + Bonus)
|
|
Equity Award
|
|
Equity Award
|
Named Executive Officer
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
(% Salary + Bonus)
|
|
($)
|
|
David J. Oakes
|
|
|
50
|
%
|
|
|
75
|
%
|
|
|
150
|
%
|
|
|
108.4
|
%
|
|
$
|
1,016,049
|
|
Paul W. Freddo
|
|
|
25
|
%
|
|
|
50
|
%
|
|
|
100
|
%
|
|
|
65
|
%
|
|
$
|
466,437
|
|
John S. Kokinchak
|
|
|
25
|
%
|
|
|
50
|
%
|
|
|
100
|
%
|
|
|
65
|
%
|
|
$
|
343,718
|
|
Consistent with past practice, 75% of the value of the annual
equity award was awarded in the form of restricted shares and
25% of the value was awarded in the form of stock options, based
on the value of our common shares as of the grant date. The
first 20% of the restricted shares immediately vest at grant and
the remainder of the restricted shares vests in equal annual
installments over the next four years. The stock options vest in
three equal annual installments beginning one year after the
grant date. The following table
28
sets forth the number of restricted shares and stock options
granted to each of Messrs. Oakes, Freddo and Kokinchak in
February 2011 based on these equity incentive awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of Award
|
|
Exercise Price
|
|
Oakes
|
|
Freddo
|
|
Kokinchak
|
|
Stock Options
|
|
$
|
13.83
|
|
|
|
45,132
|
|
|
|
20,718
|
|
|
|
15,267
|
|
Restricted Shares
|
|
|
|
|
|
|
55,100
|
|
|
|
25,295
|
|
|
|
18,640
|
|
No restricted shares or stock options were granted to the named
executive officers with respect to employment during 2010 other
than the equity awards described above, the promotion awards,
and the restricted shares received under the Value Sharing
Equity Program, as further described below.
We believe that time-based vesting restricted shares provide
significant retention incentives for our executive officers as
they directly align the compensation interests of our executive
officers with the investment interests of our shareholders. The
holder of restricted shares has the right to receive dividends
and to vote with respect to all restricted shares immediately
upon their grant. We also believe that time-based vesting stock
options are a valuable motivating tool and provide a long-term
incentive to the executive officers because these officers will
realize gain on their stock options only if our shareholders
also recognize gain on their holdings of our shares. 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 is
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 Compensation
Promotion Equity Award to Mr. Hurwitz.
As
of January 1, 2010, Mr. Hurwitz received a promotion
equity award of 160,000 restricted shares upon assuming the
duties of Chief Executive Officer, which award we refer to as
his promotion award. Mr. Hurwitz did not
receive an increase in base salary when assuming the duties of
Chief Executive Officer, nor had he received an increase in base
salary for the two years prior to this promotion. The promotion
award continues to vest in annual 20% increments on each of
January 1, 2012, 2013 and 2014, and 40% of the shares
(64,000) have vested as of April 8, 2011. The promotion
award is subject to accelerated vesting upon
Mr. Hurwitzs death, disability or the termination of
his employment without cause within two years following a change
in control of the company. The award is also subject to
continued vesting upon a termination without cause and under
certain other circumstances or at the end of the term of his
employment agreement. This promotion equity award was negotiated
between Mr. Hurwitz and the Committee during 2009 when the
company entered into a revised employment agreement with
Mr. Hurwitz.
Promotion Equity Award to Mr. Oakes.
As
of February 22, 2010, Mr. Oakes received a promotion
equity award of 50,000 restricted shares upon assuming the
duties of Chief Financial Officer as part of our leadership
succession plan. The promotion award continues to vest in annual
20% increments on each of February 22, 2012, 2013 and 2014,
and 40% of the shares (20,000) have vested as of April 8,
2011. The promotion award is subject to accelerated vesting upon
Mr. Oakess death, disability or the termination of
his employment without cause within two years following a change
in control of the company.
Value Sharing Equity Program.
In July 2009,
our Board approved and adopted the Value Sharing Equity Program
(which we refer to as the VSEP) and the grant of awards to our
named executive officers under the VSEP and our equity-based
award plans. The VSEP and the restricted shares granted under
this program are subject to the terms of our 2008 equity plan.
Under this program, we reward participants with a portion of the
value created (in other words, the increase in our
adjusted market capitalization over our market capitalization at
the beginning of the program, as further described below)
through periodic grants of restricted shares. The underlying
principle of the VSEP is that management shares in
the value it creates for shareholders. There are two design
elements of this plan that are important to note. First,
management shares in the value creation only if
shareholders experience an increase in their investment, and
second, if any increase in shareholder wealth is not sustainable
over time, the value shared with management is diminished.
29
Each participant was assigned a percentage share of
the value created. After the first measurement date of
July 31, 2010, each participant received a number of
restricted shares with an aggregate value equal to two-sevenths
of the participants percentage share. After the second
measurement date of January 31, 2011, each participant
received a number of restricted shares that, when combined with
the value of shares awarded on the first measurement date, had
an aggregate value equal to three-sevenths of the
participants percentage share. The percentage share
assigned to each named executive officer, and the aggregate
number of restricted shares granted to each named executive
officer through the January 31, 2011 measurement date, are
set forth in the table below:
|
|
|
|
|
|
|
Named Executive Officer
|
|
Value Sharing Opportunity
|
|
Restricted Shares Received
|
|
Daniel B. Hurwitz
|
|
0.5800% (58.00 basis points)
|
|
|
356,445
|
|
David J. Oakes
|
|
0.1300% (13.00 basis points)
|
|
|
79,895
|
|
Scott A. Wolstein
|
|
0.7250% (72.50 basis points)
|
|
|
445,555
|
|
Paul W. Freddo
|
|
0.1300% (13.00 basis points)
|
|
|
79,895
|
|
John S. Kokinchak
|
|
0.0725% ( 7.25 basis points)
|
|
|
44,560
|
|
William H. Schafer
|
|
0.0725% ( 7.25 basis points)
|
|
|
13,380
|
|
Joan U. Allgood
|
|
0.0725% ( 7.25 basis points)
|
|
|
44,560
|
|
On four future measurement dates (July 31, 2011;
January 31, 2012; July 31, 2012; and December 31,
2012), we will measure the value created during the period
between the start of the VSEP and the applicable measurement
date. Value created will be measured as the increase in our
market capitalization as adjusted for any equity issuances or
equity repurchases between the start of the VSEP and the
applicable measurement date.
After each of the next three measurement dates, each participant
will receive a number of restricted shares with an aggregate
value equal to four-sevenths, then five-sevenths and then
six-sevenths, respectively, of the participants percentage
share. After the final measurement date, each participant will
receive a number of restricted shares with an aggregate value
equal to the participants full percentage share. For each
measurement date, however, the number of restricted shares
awarded to a participant will be reduced by the number of
restricted shares previously earned by the participant on the
prior measurement dates. This will keep the participants from
benefiting more than once for increases in our share price that
occurred during earlier measurement periods.
The restricted shares granted to a participant are subject to an
additional time-based vesting period during which the restricted
shares granted on each measurement date will vest in 20% annual
increments beginning on the date of grant and on each of the
first four anniversaries of the date of grant.
Other
Benefits and Information
Perquisites.
Pursuant to their employment
agreements, the named executive officers received certain
additional benefits during 2010. The Committee believes that
these benefits are reasonable and consistent with its overall
compensation program and better enable us to attract and retain
superior executive talent.
Under their employment agreements, Messrs. Hurwitz, Oakes
and Kokinchak and Ms. Allgood were entitled to the payment
by us of their 2010 regular membership fees, assessments, and
dues for, in the case of Messrs. Hurwitz, Oakes and
Kokinchak, a local country club and, in the case of
Ms. Allgood, a social club. Mr. Schafer was also
entitled to similar payments under his employment agreement
while he was employed by us during 2010 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.
Retirement Benefits.
We have established a tax
qualified 401(k) plan for our employees pursuant to which we,
during 2010, made 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, subject to Internal Revenue Code
limits.
Deferred Compensation Plan.
Our 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-based
30
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 and we have established and funded a
rabbi trust to satisfy our payment obligations under
this plan. 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-based 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. Messrs. Hurwitz,
Oakes, Freddo and Kokinchak and Ms. Allgood elected to
defer a portion of their 2010 total annual cash compensation
pursuant to the elective deferred compensation plan. For
information on the value of annual cash compensation deferred by
the named executive officers in 2010, please refer to the 2010
Summary Compensation Table and the 2010 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. The value of a 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 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 2010, Messrs. Hurwitz and Oakes deferred receipt
of 57,121 and 19,174 restricted shares respectively.
Employment
Agreements
During 2010, the company was a party to employment agreements
with each of the named executive officers. The employment
agreements with Mr. Schafer and Ms. Allgood terminated
due to their departures from the company without cause in
February 2010 and January 2011, respectively. In connection with
these departures, we entered into a separation agreement and
release with each of Mr. Schafer and Ms. Allgood under
which we provided them with certain severance benefits and
payments. In addition, Mr. Wolsteins employment with
the company will cease without cause in July 2011, and his
employment agreement with the company will terminate, as further
described below. More information concerning the terms of the
employment agreements and the amounts payable pursuant to the
employment agreements is provided in the narrative to the 2010
Grants of Plan-Based Awards Table below, and additional
information concerning the separation arrangements and payments
and benefits regarding these terminations is provided in the
Potential Payments Upon Termination or Change in Control section
below.
Change
in Control Agreements
During 2010, the company was also a party to separate change in
control agreements with Messrs. Oakes, Freddo, Kokinchak
and Schafer and Ms. Allgood. Our change in control
agreements with Mr. Schafer and Ms. Allgood terminated
due to their departures from the company, and no payment was
triggered under their change in control agreements. Under these
agreements, certain benefits were payable by us if a
Triggering Event occurs within two years after a
Change in Control (each as defined in the
agreements). In general, the Committee believes that the use of
change in control agreements was appropriate because such
agreements help insure a continuity of management during a
potential change in control and help insure that management
remains focused on completing a transaction that is likely to
maximize shareholder value. Payments would only have been
triggered if both a change in control occurred and the executive
officer was terminated or effectively terminated, or if actions
were taken that materially and adversely impacted 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
31
time of the change in control. We are not a party to independent
change in control agreements with Messrs. Wolstein and
Hurwitz, as their employment agreements contain their change in
control provisions, as further described below.
We continue to implement responsible pay practices. In 2011, we
entered into new employment agreements with Messrs. Oakes,
Freddo and Kokinchak that supersede, replace and combine their
existing employment and change in control agreements. Consistent
with best practices, these new employment agreements, among
other revisions, removed certain provisions including historical
excise tax
gross-up
provisions and replaced automatic renewal provisions with a
fixed term. Additional information about the terms of the new
employment agreements with these named executive officers and
the amounts payable pursuant to the employment agreements is
provided in the narrative to the 2010 Grants of Plan-Based
Awards Table below.
Stock
Ownership Guidelines
Under the stock ownership guidelines established by our Board,
each named executive officer 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-based cash 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. Our Board established this particular level of
stock ownership for our executive officers because it is
reasonable evidence of managements continuing commitment
to have the interests of our executive officers aligned with the
investment interests of our shareholders. During an initial
four-year phase-in period, each executive officer is expected to
acquire 25% of the amount of required common shares or common
share equivalents during each year in order to satisfy the stock
ownership guidelines. Unvested restricted shares and shares
deferred into our equity deferred compensation plan will count
as common share equivalents toward satisfying the stock
ownership guidelines. All of our named executive officers met
the companys established stock ownership guidelines as of
March 15, 2011.
Margin
Policy
In 2010, our Board adopted a policy prohibiting our directors
and executive officers from (1) engaging in certain hedging
transactions involving the companys stock and
(2) pledging company stock as collateral for a loan because
the Board determined that such a policy is in the best interests
of the company and our shareholders. The policy provides a
phase-in period of five years, with regard to arrangements that
existed at the time the policy became effective. Currently all
named executive officers and directors are in compliance with
the companys policy. Mr. Wolstein and Mr. Macnab
currently maintain certain margin arrangements that are subject
to the policys phase-in provisions.
Tax
and Accounting Implications
Impact of Section 162(m) of the Internal Revenue
Code.
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 the chief
executive officer and the three other most highly compensated
executive officers, other than the chief financial officer, 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.
32
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 our Board that
the Compensation Discussion and Analysis be included in the
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 and the proxy
statement for the 2011 Annual Meeting of Shareholders for filing
with the Securities and Exchange Commission.
Executive
Compensation Committee
Robert
H. Gidel, Chairman
James C. Boland
Victor B. MacFarlane
Barry A. Sholem
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
or Executive Compensation Committee.
Compensation-Related
Risk Analysis
The senior management team, specifically through
managements compensation committee, regularly reviews the
risks related to our compensation policies and practices across
the company. This management compensation committee is regularly
provided with information that allows it to review and discuss
our policies and practices as they relate to company-wide
compensation programs and the potential creation of any risks
that are likely to have a material adverse impact on the
company. The management compensation committee also reviews the
specific performance measures relating to any of the
companys annual performance-based bonus metrics and our
long-term incentive programs to assess any potential risks. In
the process of conducting this internal review, the management
compensation committee also considers best practice information
from our peer companies, as provided by our human resources
department or Gressle & McGinley.
The Committee has overall responsibility for overseeing the
risks relating to compensation policies and practices affecting
senior management. The Committee uses its consultant,
Gressle & McGinley to independently consider and
analyze the extent, if any, to which our compensation policies
and practices might create risks for the company, and this
review also focused on variable and incentive compensation
elements, as well as policies and practices that could mitigate
or balance any such incentives.
After conducting these reviews, including most recently in early
2011, both the Committee and management compensation committee
have determined that none of our compensation policies and
practices create any risks that are reasonably likely to have a
material adverse effect on the company.
33
Executive
Compensation Tables and Related Disclosure
2010
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Plan
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)(1)
|
|
($)
|
|
($)(2)
|
|
($)(3)
|
|
($)(1)(4)
|
|
($)(5)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
Daniel B. Hurwitz
|
|
|
2010
|
|
|
|
616,000
|
|
|
|
|
|
|
|
1,481,600
|
|
|
|
|
|
|
|
1,848,400
|
|
|
|
77,359
|
|
|
|
4,023,359
|
|
President and Chief Executive Officer
|
|
|
2009
|
|
|
|
616,000
|
|
|
|
750,000
|
|
|
|
4,424,782
|
|
|
|
|
|
|
|
2,396,240
|
|
|
|
27,261
|
|
|
|
8,214,283
|
|
|
|
|
2008
|
|
|
|
632,247
|
|
|
|
|
|
|
|
897,776
|
|
|
|
294,713
|
|
|
|
739,200
|
|
|
|
55,168
|
|
|
|
2,619,104
|
|
David J. Oakes
|
|
|
2010
|
|
|
|
440,000
|
|
|
|
|
|
|
|
1,163,661
|
|
|
|
214,304
|
|
|
|
487,620
|
|
|
|
33,815
|
|
|
|
2,339,400
|
|
Senior Executive Vice President
|
|
|
2009
|
|
|
|
390,000
|
|
|
|
|
|
|
|
1,436,988
|
|
|
|
77,768
|
|
|
|
487,500
|
|
|
|
36,189
|
|
|
|
2,428,445
|
|
and Chief Financial Officer
|
|
|
2008
|
|
|
|
361,667
|
|
|
|
|
|
|
|
459,441
|
|
|
|
150,827
|
|
|
|
364,000
|
|
|
|
49,970
|
|
|
|
1,385,905
|
|
Scott A. Wolstein
|
|
|
2010
|
|
|
|
875,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,281,250
|
|
|
|
19,725
|
|
|
|
4,175,975
|
|
Former Executive Chairman of the
|
|
|
2009
|
|
|
|
875,000
|
|
|
|
1,000,000
|
|
|
|
6,034,976
|
|
|
|
|
|
|
|
3,963,522
|
|
|
|
42,237
|
|
|
|
11,915,735
|
|
Board of Directors
|
|
|
2008
|
|
|
|
957,583
|
|
|
|
|
|
|
|
1,635,181
|
|
|
|
536,827
|
|
|
|
920,000
|
|
|
|
486,351
|
|
|
|
4,535,942
|
|
Paul W. Freddo
|
|
|
2010
|
|
|
|
380,000
|
|
|
|
|
|
|
|
224,442
|
|
|
|
73,090
|
|
|
|
337,583
|
|
|
|
24,369
|
|
|
|
1,039,484
|
|
Senior Executive Vice President of
|
|
|
2009
|
|
|
|
380,000
|
|
|
|
|
|
|
|
983,080
|
|
|
|
12,297
|
|
|
|
285,000
|
|
|
|
22,717
|
|
|
|
1,683,094
|
|
Leasing and Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John S. Kokinchak
|
|
|
2010
|
|
|
|
273,333
|
|
|
|
|
|
|
|
135,019
|
|
|
|
43,962
|
|
|
|
248,745
|
|
|
|
34,938
|
|
|
|
735,997
|
|
Senior Executive Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Chief Administrative Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William H. Schafer
|
|
|
2010
|
|
|
|
38,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,898,071
|
|
|
|
1,936,196
|
|
Former Executive Vice President
|
|
|
2009
|
|
|
|
305,000
|
|
|
|
|
|
|
|
591,564
|
|
|
|
13,033
|
|
|
|
|
|
|
|
26,498
|
|
|
|
936,095
|
|
and Chief Financial Officer
|
|
|
2008
|
|
|
|
302,878
|
|
|
|
|
|
|
|
131,538
|
|
|
|
43,189
|
|
|
|
122,000
|
|
|
|
52,928
|
|
|
|
652,533
|
|
Joan U. Allgood
|
|
|
2010
|
|
|
|
305,000
|
|
|
|
|
|
|
|
137,294
|
|
|
|
44,702
|
|
|
|
122,000
|
|
|
|
1,823,358
|
|
|
|
2,432,354
|
|
Former Executive Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Corporate Transactions and
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Governance
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(1)
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The amounts reported in columns (c) and (except for
Mr. Schafer) (g) for 2010 include amounts deferred
into our 401(k) plan (a qualified plan) and our elective
deferred compensation plan (nonqualified plan) by
Messrs. Hurwitz, Oakes, Wolstein, Freddo, Kokinchak and
Schafer and Ms. Allgood for the year ended
December 31, 2010 as follows: Mr. Hurwitz, $112,500;
Mr. Oakes, $41,500; Mr. Wolstein, $22,000;
Mr. Freddo, $46,000; Mr. Kokinchak, $32,000;
Mr. Schafer, $22,000; and Ms. Allgood, $32,542. Under
our elective deferred compensation plan, deferred amounts are
payable to the named executive officer at a date and in a form
specified by the named executive officer at the time of his or
her deferral election in accordance with the provisions of the
plan.
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(2)
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The amounts reported in column (e) reflect the aggregate
grant date fair value computed in accordance with FASB ASC Topic
718 of stock awards granted during the reported years.
Assumptions used in the calculation of these amounts are
included in Footnote 15 to the financial statements included in
our Annual Report on
Form 10-K
for the year ended December 31, 2010, filed with the SEC on
February 28, 2011.
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(3)
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The amounts reported in column (f) reflect the aggregate
grant date fair value computed in accordance with FASB ASC Topic
718 of option awards granted during the reported years.
Assumptions used in the calculation of these amounts are
included in Footnote 15 to the financial statements included in
our Annual Report on
Form 10-K
for the year ended December 31, 2010, filed with the SEC on
February 28, 2011.
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(4)
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The amounts reported in column (g) for 2010 reflect cash
amounts earned by such executives as annual performance bonuses.
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34
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(5)
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The amounts shown in column (h) for the named executive
officers for 2010 include:
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for Mr. Hurwitz, matching contributions to the deferred
compensation plan and 401(k) plan of $56,250 and country club
expenses;
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for Mr. Oakes, matching contributions to the deferred
compensation plan and 401(k) plan of $20,750 and country club
expenses;
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for Mr. Wolstein, $12,375 attributable to a supplemental
long-term disability premium;
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for Mr. Freddo, matching contributions to the deferred
compensation plan and 401(k) plan of $19,950;
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for Mr. Kokinchak, $10,991 attributable to a supplemental
long-term disability premium, matching contributions to the
deferred compensation plan and 401(k) plan of $13,814 and
country club expenses;
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for Mr. Schafer (who departed the company in February
2010), a severance payment of $1,892,000 and country club
expenses; and
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for Ms. Allgood (who departed the company in January 2011),
a severance payment of $1,800,000, matching contributions to the
deferred compensation plan and 401(k) plan of $14,640 and social
club expenses.
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None of the amounts reported for the named executive officers
for 2010 in column (h), 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, except as disclosed in this footnote.
2010
Grants of Plan-Based Awards Table
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All Other
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All Other
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Stock
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Option
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Awards:
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Awards:
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Exercise
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Grant
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Number
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Number of
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or Base
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Date
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Estimated Possible Payouts
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Estimated Future Payouts
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of Shares
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Securities
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Price of
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Fair Value
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Under Non-Equity Incentive
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Under Equity Incentive
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of Stock
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Underlying
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Option
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of Stock
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Grant
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Plan Awards(1)
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Plan Awards
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or Units
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Options
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Awards
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and Option
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Name
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Date
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Threshold ($)
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Target ($)
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Maximum ($)
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Threshold ($)
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Target ($)
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Maximum ($)
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(#)(2)(3)
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(#)(4)
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($/Sh)
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Awards($)(5)
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(a)
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(b)
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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)
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(h)
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(i)
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(j)
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(k)
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(l)
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Daniel B. Hurwitz
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1,848,000
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2,464,000
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1/1/2010
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160,000
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1,481,600
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David J. Oakes
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337,500
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675,000
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2/22/2010
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50,000
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505,500
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2/22/2010
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65,100
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658,161
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2/22/2010
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42,600
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10.11
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214,304
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Scott A. Wolstein
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3,281,250
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4,375,000
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Paul W. Freddo
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285,000
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475,000
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2/22/2010
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22,200
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224,442
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2/22/2010
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14,529
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10.11
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73,090
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John S. Kokinchak
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210,000
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350,000
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2/22/2010
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13,355
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135,019
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2/22/2010
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8,739
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10.11
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43,962
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William H. Schafer
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Joan U. Allgood
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122,000
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244,000
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2/22/2010
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13,580
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137,294
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2/22/2010
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8,886
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10.11
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44,702
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(1)
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Amounts for the named executive officers reflect the annual
performance bonus opportunities established for 2010 under their
employment agreements at the target and
maximum levels. The Threshold column
shows dashes because the ultimate value of the annual
performance bonus could be reduced to zero. The amounts actually
earned by the named executive officers for 2010 are included in
the Non-
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Equity Incentive Plan Compensation column (column (g)) of
the 2010 Summary Compensation Table above. See
Compensation Discussion and Analysis Analysis
of 2010 Executive Compensation Program Annual
Compensation above for additional information about the
annual performance bonuses.
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(2)
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Certain amounts for Messrs. Hurwitz (160,000 share
award) and Oakes (50,000 share award) reflect promotion
awards of restricted shares in early 2010 as further described
above in Compensation Discussion and Analysis
Analysis of 2010 Executive Compensation Program
Long-Term Equity Compensation.
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(3)
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Certain amounts for Messrs. Oakes (65,100 share
award), Freddo (22,200 share award) and Kokinchak
(13,355 share award) and Ms. Allgood
(13,580 share award) reflect annual equity awards of
restricted shares issued in February 2010.
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(4)
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Amounts for Messrs. Oakes, Freddo and Kokinchak and
Ms. Allgood reflect annual equity awards of stock options
issued in February 2010.
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(5)
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Amounts disclosed in this column for equity awards are computed
in accordance with FASB ASC Topic 718.
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Employment
Agreements
Employment Agreements with Messrs. Hurwitz and
Wolstein.
We are a party to employment agreements
with Messrs. Hurwitz and Wolstein, and the terms of the
employment agreements are described below. As announced in
February 2011, Mr. Wolsteins employment with the
company will cease without cause in July 2011, and his
employment agreement with the company will terminate.
The term of the employment agreements between each of
Messrs. Hurwitz and Wolstein and us runs from July 29,
2009 through December 31, 2012, unless their employment is
earlier terminated under the employment agreement, as is the
case with Mr. Wolstein. The employment agreements provide
for minimum base salaries, subject to increases approved by the
Committee, of $616,000 for Mr. Hurwitz and $875,000 for
Mr. Wolstein. Messrs. Hurwitz and Wolstein 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 the
medical and dental insurance coverage and benefits maintained by
us during the term that are generally available to our other
employees. We will also provide disability insurance coverage
(or self-insure such coverage) for Mr. Hurwitz during the
term while Mr. Hurwitz is employed by us of at least
$25,000 per month through age 65 and for Mr. Wolstein
during the term while Mr. Wolstein is employed by us of at
least $46,500 per month through age 65.
Under the employment agreements, Messrs. Hurwitz and
Wolstein are entitled to annual performance-based cash bonuses
equal to a percentage of their year-end base salaries as
determined by the Committee. The respective
threshold, target and
maximum annual cash bonus opportunities, as a
percentage of year-end base salary, are: for Mr. Hurwitz,
200%, 300% and 400%; and for Mr. Wolstein, 250%, 375% and
500%. The Committee establishes the performance factors and
criteria relevant for determination of such annual cash bonuses
from time to time. There are no guaranteed annual cash bonuses
under the employment agreements.
Each employment agreement may be terminated under a variety of
circumstances, including Messrs. Hurwitz or Wolsteins
death. Our Board may terminate each employment agreement for
cause if Messrs. Hurwitz or Wolstein engages in
certain specified conduct, if he is disabled for a specified
period of time or at any other time without cause by giving him
at least 90 days prior written notice. Each of
Messrs. Hurwitz or Wolstein may also terminate his
employment agreement for good reason in certain
specified circumstances or at any other time without good reason
by giving us at least 90 days prior written notice.
Messrs. Hurwitz and Wolstein are entitled under the
employment agreements to certain additional payments and
benefits in the event of certain termination circumstances. If
Messrs. Hurwitz or Wolstein is terminated by our Board
without cause or he terminates his employment for good reason
during the term (and the termination is not in connection with a
change in control (as defined in the employment agreements)), he
36
is entitled to receive: (1) accrued but unpaid base salary
and his prior years annual cash bonus to the extent not
paid; (2) a lump sum amount equal to (A) if the
termination occurred during 2010, two times the sum of his base
salary as of the termination date plus his target
annual cash bonus opportunity for the year in which the
termination date occurs, (B) if the termination occurs
during 2011, the sum of his base salary for the period after the
termination date through the end of the term plus two times his
target annual cash bonus opportunity for 2011 or
(C) if the termination occurs during 2012, the sum of his
base salary for the period after the termination date through
the end of the term plus his target annual cash
bonus opportunity for 2012; and (3) continued health and
welfare benefits for him and his eligible dependents through the
earlier of the first anniversary of the termination date and the
end of the term. Additionally, in the event of such termination,
subject to the terms of applicable equity plans,
Messrs. Hurwitz or Wolsteins unvested time-based
equity awards and earned but unvested long-term equity incentive
awards (including those under the VSEP) will remain outstanding
and continue to vest according to their original vesting terms,
subject to our Boards discretion to cash-out such equity
awards. Upon the termination of Mr. Wolsteins employment
agreement without cause in July 2011, he will be entitled to
receive the amounts and benefits described above.
If either Mr. Hurwitz or Mr. Wolstein is terminated by
reason of his death during the term, his estate or beneficiaries
are entitled to receive his accrued but unpaid base salary and
his prior years annual cash bonus to the extent not paid,
and his eligible dependents are entitled to receive continued
health and welfare benefits through the earlier of the first
anniversary of the termination date and the end of the term.
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 Messrs. Hurwitz or Wolstein is terminated due to
disability during the term, he is entitled to receive:
(1) his accrued but unpaid based salary and his prior
years annual cash bonus to the extent not paid; and
(2) continued health and welfare benefits for him and his
eligible dependents through the earlier of the first anniversary
of the termination date and the end of the term. Certain of
these termination payments and benefits described above are
subject to execution of a general release of claims against us
or our waiver of such release.
Under the employment agreements, the following payments and
benefits are payable by us to Messrs. Hurwitz or Wolstein
if a Triggering Event occurs during the term:
(1) accrued but unpaid base salary and his prior
years annual cash bonus to the extent not paid; (2) a
lump sum amount equal to (A) if the termination occurs
during either 2009 or 2010, two times the sum of his base salary
as of the termination date plus his target annual
cash bonus opportunity for the year in which the termination
date occurs, (B) if the termination occurs during 2011, the
sum of his base salary for the period after the termination date
through the end of the term plus two times his
target annual cash bonus opportunity for 2011, or
(C) if the termination occurs during 2012, the sum of his
base salary for the period after the termination date through
the end of the term plus his target annual cash
bonus opportunity for 2012; and (3) continued health and
welfare benefits for him and his eligible dependents through the
earlier of the first anniversary of the termination date and the
end of the term. Additionally, under such circumstances, subject
to the terms of applicable equity plans, Messrs. Hurwitz or
Wolsteins unvested time-based equity awards and earned but
unvested long-term equity incentive awards (including those
under the VSEP) will remain outstanding and continue to vest
according to their original vesting terms, subject to our
Boards discretion to cash-out such equity awards. Under
these circumstances, we will also be deemed to have waived any
requirement for a general release of claims against us.
The terms change in control and Triggering
Event are defined in the employment agreements. Change in
control generally means the occurrence during the term of
certain events including consummation of a merger or
consolidation in which we are not the surviving entity, a sale
of substantially all of our assets, or the liquidation or
dissolution of the company and certain significant changes in
the ownership of our outstanding securities or in the
composition of our Board. For each of Messrs. Hurwitz and
Wolstein, a Triggering Event means certain situations specified
in his employment agreement and occurring during the term in
which, within two years (for Mr. Hurwitz) or three years
(for Mr. Wolstein) after a change in control, he is
terminated or terminates his employment as a result of certain
adverse impacts on his position with us or compensation.
37
The employment agreements also contain a confidentiality
covenant regarding our proprietary information that runs for the
duration of the term plus two years, a non-solicitation covenant
that runs for the duration of the term and other provisions
generally designed to ensure compliance with Section 409A
of the Internal Revenue Code. Mr. Hurwitz is also subject
to a noncompetition covenant for the duration of the term 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, under
the terms of Mr. Wolsteins employment agreement, if
Mr. Wolsteins employment is terminated during the
term other than by our Board for cause, by Mr. Wolstein
without good reason, 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 the
end of the term, his death, the date he begins other employment,
or the third anniversary of his termination date. In connection
with the termination without cause of Mr. Wolsteins
employment agreement, we have agreed to provide
Mr. Wolstein a lump sum amount of $300,000 in satisfaction
of this company obligation.
As a result of our termination of Mr. Wolsteins
employment under his employment agreement without
cause, Mr. Wolstein will receive certain
payments and other benefits from us pursuant to his employment
agreement and certain benefits pursuant to our 2008 equity plan
and our benefit and retirement plans. These payments and
benefits include: $7,871,719 as his contractual severance
payment; one year of health benefits; the vesting of 94,387
common shares previously earned and granted to Mr. Wolstein
in accordance with our 2008 equity plan; a cash payment in lieu
of common shares previously earned and granted to
Mr. Wolstein in an amount equal to his statutory minimum
termination withholding tax obligations for his equity awards;
$160,000 in connection with his waiver to stand for re-election
to the Board at the Annual Meeting; the continuing office
support payment described above; and $30,000 for the fees of
legal and other advisors.
Prior Employment Agreements with Messrs. Oakes, Freddo,
Kokinchak and Schafer and
Ms. Allgood.
During 2010, we were also a
party to employment agreements with the other named executive
officers. The employment agreements with Mr. Schafer and
Ms. Allgood terminated due to their respective departures
from the company in 2010 and 2011.
Until replaced by new employment agreements as described below,
each of the employment agreements with Messrs. Oakes,
Freddo, Kokinchak and Schafer and Ms. Allgood contained an
evergreen provision that provided for an automatic
extension of the agreement for an additional year at the end of
each fiscal year, subject to the parties termination
rights. We could terminate the agreements by giving each officer
90 days prior written notice. The agreements provided
for minimum base salaries as disclosed in Compensation
Discussion and Analysis section above. Messrs. Schafer and
Oakes were entitled to the payment by us of regular membership
fees, assessments, and dues for a local country club and
Ms. Allgood was entitled to the payment by us of such fees
for a social club. In addition, the employment agreements
provided for participation in health, life, disability and other
insurance plans, sick leave, reasonable vacation time and other
customary fringe benefits.
Pursuant to their prior employment agreements, each of
Messrs. Freddo, Oakes, Kokinchak and Schafer and
Ms. Allgood was entitled to an annual performance-based
bonus equal to a percentage of his or her base salary. See
Compensation Discussion and Analysis Analysis
of Compensation Decisions and Actions Annual
Compensation above for a discussion of the methods used to
determine these annual performance-based bonuses and each named
executive officers threshold,
target and maximum annual
performance-based bonus opportunity. If the named executive
officers employment was terminated by us without cause, or
by the named executive officer for good reason, he or she was
entitled to receive a payment equal to his or her annual salary
plus a pro rata portion (through the date of termination) of the
annual performance bonus he or she 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. Oakes, Freddo, Kokinchak and
Schafer and Ms. Allgood, the prior employment agreements
also provided 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), constituted excess parachute payments
under certain tax laws, we would pay to the executive officer
such additional amounts as were necessary to cause him or her to
receive the same after-tax compensation that he or she would
have received but for the
38
application of such tax laws. This provision was subsequently
eliminated in the new employment agreements as described below.
Current Employment Agreements with Messrs. Oakes, Freddo and
Kokinchak.
In April 2011, we entered into new
employment agreements with Messrs. Oakes, Freddo and
Kokinchak. The new employment agreements, among other things,
eliminated the tax
gross-up
entitlements that these officers had under their prior
employment and change in control agreements. The new employment
agreements also increased the threshold for triggering a change
in control as a result of the acquisition of beneficial
ownership of our outstanding securities from 20% or more to 30%
or more of the voting power of our outstanding securities
without the prior consent of our Board, which threshold is now
consistent with that under Mr. Hurwitzs employment
agreement. These new employment agreements are materially
consistent with the terms of our employment agreement with
Mr. Hurwitz, except that:
|
|
|
|
|
Messrs. Oakes, Freddo and Kokinchak are not entitled to any
separate disability insurance coverage;
|
|
|
|
Messrs. Oakes, Freddo and Kokinchak, upon a termination
without cause or for good reason (other than in connection with
a change in control, as defined in the employment agreements),
are entitled to receive: (1) accrued but unpaid base salary
as of the termination date and the prior years annual cash
bonus to the extent not paid; (2) a lump sum amount equal
to one times base salary as of the termination date plus one
times the annual cash bonus at the target level for
the year in which the termination date occurs; (3) one year
of continued health, dental and vision coverage; and
(4) payment by us for one year of outplacement services;
|
|
|
|
Messrs. Oakes, Freddo and Kokinchak, upon a termination by
reason of disability, or their representatives, upon a
termination by reason of death, are entitled to receive:
(1) accrued but unpaid base salary and the prior
years annual cash bonus to the extent not paid; (2) a
lump sum amount equal to one times base salary as of the
termination date plus one times the annual cash bonus at the
target level for the year in which the termination
date occurs; and (3) one year of continued health, dental
and vision coverage;
|
|
|
|
Messrs. Oakes, Freddo and Kokinchak, upon a qualifying
termination within two years of a change in control of the
company, are entitled to receive: (1) accrued but unpaid
base salary and the prior years annual cash bonus to the
extent not paid; (2) a lump sum amount equal to two times
base salary as of the termination date plus two times the annual
cash bonus at the target level for the year in which
the termination date occurs; (3) 18 months of
continued health, dental and vision coverage; and
(4) payment by us for one year of outplacement
services; and
|
|
|
|
the confidentiality covenant and noncompetition covenants extend
for two years and one year following the employment agreement
term, respectively.
|
39
Outstanding
Equity Awards at 2010 Fiscal Year-End Table
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Plan Awards:
|
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|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
Market or
|
|
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Market Value
|
|
Number of
|
|
Payout Value
|
|
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
of Shares
|
|
Unearned
|
|
of Unearned
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
or Units
|
|
Shares, Units
|
|
Shares, Units
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Stock That
|
|
That
|
|
or Other Rights
|
|
or Other Rights
|
|
|
|
|
Options (#)
|
|
Options (#)
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
That Have
|
|
That Have Not
|
Name
|
|
Grant Date
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)(1)
|
|
Vested ($)(2)
|
|
Not Vested (#)
|
|
Vested ($)
|
(a)
|
|
(b-1)
|
|
(b-2)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
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
|
|
|
|
26,669
|
|
|
|
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
22,809
|
|
|
|
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
88,785
|
|
|
|
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
403,992
|
|
|
$
|
5,692,247
|
|
|
|
|
|
|
|
|
|
David J. Oakes
|
|
|
4/16/2007
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
$
|
64.60
|
|
|
|
4/16/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
45,438
|
|
|
|
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/12/2009
|
|
|
|
241,290
|
|
|
|
|
|
|
|
|
|
|
$
|
6.02
|
|
|
|
1/12/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/22/2010
|
|
|
|
|
|
|
|
42,600
|
|
|
|
|
|
|
$
|
10.11
|
|
|
|
2/22/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
167,044
|
|
|
$
|
2,353,650
|
|
|
|
|
|
|
|
|
|
Scott A. Wolstein(3)
|
|
|
2/24/2004
|
|
|
|
55,243
|
|
|
|
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2005
|
|
|
|
90,668
|
|
|
|
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2006
|
|
|
|
66,384
|
|
|
|
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
57,770
|
|
|
|
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
161,724
|
|
|
|
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
394,988
|
|
|
$
|
5,565,381
|
|
|
|
|
|
|
|
|
|
Paul W. Freddo
|
|
|
10/1/2008
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
$
|
30.80
|
|
|
|
10/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/12/2009
|
|
|
|
12,048
|
|
|
|
|
|
|
|
|
|
|
$
|
6.02
|
|
|
|
1/12/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/22/2010
|
|
|
|
|
|
|
|
14,529
|
|
|
|
|
|
|
$
|
10.11
|
|
|
|
2/22/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,724
|
|
|
$
|
1,306,481
|
|
|
|
|
|
|
|
|
|
John S. Kokinchak
|
|
|
8/16/2004
|
|
|
|
13,219
|
|
|
|
|
|
|
|
|
|
|
$
|
35.70
|
|
|
|
8/16/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2005
|
|
|
|
1,008
|
|
|
|
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2006
|
|
|
|
1,233
|
|
|
|
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
2,994
|
|
|
|
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
9,159
|
|
|
|
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/12/2009
|
|
|
|
44,910
|
|
|
|
|
|
|
|
|
|
|
$
|
6.02
|
|
|
|
1/12/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/22/2010
|
|
|
|
|
|
|
|
8,739
|
|
|
|
|
|
|
$
|
10.11
|
|
|
|
2/22/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,184
|
|
|
$
|
707,093
|
|
|
|
|
|
|
|
|
|
William H. Schafer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,704
|
|
|
$
|
432,619
|
|
|
|
|
|
|
|
|
|
Joan U. Allgood(3)
|
|
|
2/25/2003
|
|
|
|
2,023
|
|
|
|
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
2/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2004
|
|
|
|
14,488
|
|
|
|
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2005
|
|
|
|
13,749
|
|
|
|
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2006
|
|
|
|
6,138
|
|
|
|
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
5,757
|
|
|
|
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
13,074
|
|
|
|
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/12/2009
|
|
|
|
40,437
|
|
|
|
|
|
|
|
|
|
|
$
|
6.02
|
|
|
|
1/12/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/22/2010
|
|
|
|
|
|
|
|
8,886
|
|
|
|
|
|
|
$
|
10.11
|
|
|
|
2/22/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,364
|
|
|
$
|
709,629
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The amounts reported in this column reflect:
|
|
|
|
|
|
for Mr. Hurwitz: 120,000 restricted shares that will vest
in equal installments on each of December 31, 2011 and
2012; 128,000 restricted shares that vest in equal installments
on each of January 1, 2011,
|
40
|
|
|
|
|
2012, 2013 and 2014; and 155,992 restricted shares that will
vest in equal installments on each of July 31, 2011, 2012,
2013 and 2014;
|
|
|
|
|
|
for Mr. Oakes: 40,000 restricted shares that will vest in
equal installments on each of December 31, 2011 and 2012;
40,000 restricted shares that vest in equal installments on each
of February 22, 2011, 2012, 2013 and 2014; 52,080
restricted shares that vest in equal installments on each of
February 22, 2011, 2012, 2013 and 2014; and 34,964
restricted shares that will vest in equal installments on each
of July 31, 2011, 2012, 2013 and 2014;
|
|
|
|
for Mr. Wolstein: 200,000 restricted shares that will vest
in equal installments on each of December 31, 2011 and
2012; and 194,988 restricted shares that will vest in equal
installments on each of July 31, 2011, 2012, 2013 and 2014;
|
|
|
|
for Mr. Freddo: 40,000 restricted shares that will vest in
equal installments on each of December 31, 2011 and 2012;
17,760 restricted shares that vest in equal installments on each
of February 22, 2011, 2012, 2013 and 2014; and 34,964
restricted shares that will vest in equal installments on each
of July 31, 2011, 2012, 2013 and 2014;
|
|
|
|
for Mr. Kokinchak: 20,000 restricted shares that will vest
in equal installments on each of December 31, 2011 and
2012; 10,684 restricted shares that vest in equal installments
on each of February 22, 2011, 2012, 2013 and 2014; and
19,500 restricted shares that will vest in equal installments on
each of July 31, 2011, 2012, 2013 and 2014;
|
|
|
|
for Mr. Schafer: 20,000 restricted shares that will vest in
equal installments on each of December 31, 2011 and 2013;
and 10,704 restricted shares that will vest in equal
installments on each of July 31, 2011, 2012, 2013 and
2014; and
|
|
|
|
for Ms. Allgood: 20,000 restricted shares that will vest in
equal installments on each of December 31, 2011 and 2012;
10,864 restricted shares that were expected to vest in equal
installments on each of February 22, 2011, 2012, 2013 and
2014 (these restricted shares were forfeited due to
Ms. Allgoods departure from the company in January
2011); and 19,500 restricted shares that will vest in equal
installments on each of July 31, 2011, 2012, 2013 and 2014.
|
|
|
|
(2)
|
|
These amounts were calculated based upon the closing price of
our common shares on December 31, 2010 of $14.09.
|
|
(3)
|
|
Outstanding and vested stock options expire within 90 days
after termination of employment.
|
Except as otherwise indicated, the information in the
Outstanding Equity Awards at 2010 Fiscal Year-End Table above is
provided as of December 31, 2010.
2010
Option Exercises and Stock Vested Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
|
|
Number of Shares
|
|
|
|
|
Acquired on
|
|
Value Realized on
|
|
Acquired on Vesting
|
|
Value Realized on
|
Name
|
|
Exercise (#)
|
|
Exercise ($)(1)
|
|
(#)
|
|
Vesting ($)(2)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
Daniel B. Hurwitz
|
|
|
0
|
|
|
|
0
|
|
|
|
130,998
|
|
|
$
|
1,584,347
|
|
David J. Oakes
|
|
|
0
|
|
|
|
0
|
|
|
|
51,761
|
|
|
$
|
613,743
|
|
Scott A. Wolstein
|
|
|
0
|
|
|
|
0
|
|
|
|
148,747
|
|
|
$
|
1,962,278
|
|
Paul W. Freddo
|
|
|
0
|
|
|
|
0
|
|
|
|
33,181
|
|
|
$
|
425,899
|
|
John S. Kokinchak
|
|
|
0
|
|
|
|
0
|
|
|
|
17,546
|
|
|
$
|
223,235
|
|
William H. Schafer
|
|
|
40,437
|
|
|
$
|
250,632
|
|
|
|
12,676
|
|
|
$
|
171,274
|
|
Joan U. Allgood
|
|
|
0
|
|
|
|
0
|
|
|
|
17,591
|
|
|
$
|
223,690
|
|
|
|
|
(1)
|
|
Computed as the number of shares multiplied by the spread
between the exercise price and market price on the exercise date.
|
|
(2)
|
|
Computed as the number of shares acquired on vesting using the
closing price of our common shares on the date of vesting.
|
41
2010
Nonqualified Deferred Compensation Table(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
|
|
|
Contributions
|
|
Contributions
|
|
Earnings in
|
|
Withdrawals/
|
|
Aggregate Balance at
|
|
|
in Last FY
|
|
in Last FY
|
|
Last FY
|
|
Distributions
|
|
Last FYE
|
Name
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)
|
|
($)(5)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
Elective Deferred Compensation Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel B. Hurwitz
|
|
$
|
96,000
|
|
|
$
|
48,900
|
|
|
$
|
36,261
|
|
|
$
|
(20,329
|
)
|
|
$
|
362,738
|
|
David J. Oakes
|
|
$
|
25,000
|
|
|
$
|
14,175
|
|
|
$
|
3,748
|
|
|
$
|
0
|
|
|
$
|
137,615
|
|
Scott A. Wolstein
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
74,136
|
|
|
$
|
0
|
|
|
$
|
460,066
|
|
Paul W. Freddo
|
|
$
|
24,000
|
|
|
$
|
12,600
|
|
|
$
|
10,543
|
|
|
$
|
0
|
|
|
$
|
79,205
|
|
John S. Kokinchak
|
|
$
|
10,000
|
|
|
$
|
6,464
|
|
|
$
|
6,100
|
|
|
$
|
0
|
|
|
$
|
55,558
|
|
William H. Schafer
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
(602
|
)
|
|
$
|
(74,987
|
)
|
|
$
|
0
|
|
Joan U. Allgood
|
|
$
|
10,542
|
|
|
$
|
7,290
|
|
|
$
|
25,374
|
|
|
$
|
0
|
|
|
$
|
211,073
|
|
Equity Deferred Compensation Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel B. Hurwitz
|
|
$
|
804,835
|
|
|
$
|
0
|
|
|
$
|
977,511
|
|
|
$
|
(1,285,823
|
)
|
|
$
|
2,610,581
|
|
David J. Oakes
|
|
$
|
270,162
|
|
|
$
|
0
|
|
|
$
|
635,039
|
|
|
$
|
0
|
|
|
$
|
2,122,687
|
|
Scott A. Wolstein
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Paul W. Freddo
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
John S. Kokinchak
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
21,484
|
|
|
$
|
0
|
|
|
$
|
62,672
|
|
William H. Schafer
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Joan U. Allgood
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
(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 and
Information above.
|
|
(2)
|
|
In accordance with deferral elections, Messrs. Hurwitz and
Schafer each elected to have his deferrals to the elective
deferred compensation plan distributed to him in 2010. The
amounts reported for our named executive officers in this column
are reported under the Salary column of the 2010
Summary Compensation Table above.
|
|
(3)
|
|
The amounts reported for our named executive officers in this
column are fully reported for each named executive officer in
the All Other Compensation column of the 2010
Summary Compensation Table above.
|
|
(4)
|
|
None of the amounts reported for our named executive officers in
this column are reported in the 2010 Summary Compensation Table.
|
|
(5)
|
|
The amounts reported for our named executive officers in this
column have been previously reported as deferred compensation in
Summary Compensation Tables included in prior years proxy
statements, except for Mr. Kokinchak and Ms. Allgood,
for whom none of these amounts have been previously reported.
|
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.
Based on a hypothetical termination
and/or
change in control occurring on December 31, 2010, the
following tables describe the potential payments upon such
termination or change in control for each named executive
officer (other than Mr. Schafer, who was no longer serving
at December 31, 2010 and for whom we disclose his actual
termination arrangement below). Dashes included in
42
a table indicate that the named executive officer is not
entitled to receive a particular benefit. We also describe
Ms. Allgoods and Mr. Schafers actual
termination arrangements due to their departures in 2011 and
2010, respectively. For information about
Mr. Wolsteins actual termination and related benefits
and payments, see the Executive Compensation Tables and
Related Disclosure Employment Agreements
Employment Agreements with Messrs. Hurwitz and
Wolstein section above.
Daniel
B. Hurwitz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
Cause
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
or Other
|
|
|
or Good
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
Executive Benefits and Payments
|
|
Voluntary
|
|
|
Reason
|
|
|
For Cause
|
|
|
(Change
|
|
|
|
|
|
|
|
Upon Termination
|
|
Termination
|
|
|
Termination
|
|
|
Termination
|
|
|
in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
4,928,000
|
|
|
$
|
0
|
|
|
$
|
4,928,000
|
|
|
$
|
0
|
|
|
$
|
2,500,000
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Restricted Shares(2)
|
|
$
|
0
|
|
|
$
|
3,494,320
|
|
|
$
|
0
|
|
|
$
|
3,494,320
|
|
|
$
|
3,494,320
|
|
|
$
|
3,494,320
|
|
Unvested VSEP Awards(3)
|
|
$
|
0
|
|
|
$
|
4,173,740
|
|
|
$
|
0
|
|
|
$
|
4,574,065
|
|
|
$
|
4,173,740
|
|
|
$
|
4,173,740
|
|
Unvested Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health and Welfare Benefits(4)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds(5)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,023,925
|
|
|
$
|
0
|
|
280G
Gross-Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Vacation(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
12,616,060
|
|
|
$
|
0
|
|
|
$
|
13,016,385
|
|
|
$
|
11,711,985
|
|
|
$
|
10,588,060
|
|
|
|
|
(1)
|
|
Reported amounts calculated pursuant to the terms of
Mr. Hurwitzs Amended and Restated Employment
Agreement and consist of two times Mr. Hurwitzs base
salary on December 31, 2010 plus two times
Mr. Hurwitzs target annual bonus for 2010
(except in the case of death, for which the amount consists of a
fixed payment amount). Assumes all accrued base salary has been
paid to Mr. Hurwitz.
|
|
(2)
|
|
Reported amounts consist of Mr. Hurwitzs 128,000
unvested promotion shares plus his 120,000 unvested retention
shares valued at our closing stock price on December 31,
2010 of $14.09 per share, which shares either accelerate and
vest or continue to vest as a result of the triggering event.
|
|
(3)
|
|
Reported amounts consist of Mr. Hurwitzs 155,992
unvested award shares under the VSEP plus 140,228 shares
(168,640 shares in the case of termination in connection
with a change in control) assumed to be earned for the
measurement period interrupted as a result of the triggering
event valued at our closing stock price on December 31,
2010 of $14.09 per share, which shares either accelerate and
vest or continue to vest as a result of the triggering event.
|
|
(4)
|
|
Reported amounts consist of our estimate of one year of
continued health and welfare benefits costs.
|
|
(5)
|
|
Reported amount consists of our estimate of the available life
insurance death benefit.
|
|
(6)
|
|
Reported amount consists of our estimate of payments for
long-term disability using a present value calculation that
takes into account (i) Mr. Hurwitzs age and
total payments over the benefit term assuming that the
disability occurs on December 31, 2010, 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.
|
|
(7)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to our vacation policy.
|
43
David
J. Oakes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
$
|
937,620
|
|
|
$
|
0
|
|
|
$
|
2,250,000
|
|
|
$
|
937,620
|
|
|
$
|
937,620
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Restricted Shares(2)
|
|
$
|
0
|
|
|
$
|
563,600
|
|
|
$
|
0
|
|
|
$
|
1,861,007
|
|
|
$
|
1,861,007
|
|
|
$
|
1,861,007
|
|
Unvested VSEP Awards(3)
|
|
$
|
0
|
|
|
$
|
935,520
|
|
|
$
|
0
|
|
|
$
|
1,025,245
|
|
|
$
|
935,520
|
|
|
$
|
935,520
|
|
Unvested Stock Options(4)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
169,548
|
|
|
$
|
169,548
|
|
|
$
|
169,548
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health and Welfare Benefits(5)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
40,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,024,427
|
|
|
$
|
0
|
|
280G
Gross-Up(8)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,189,382
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Outplacement Services(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
45,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(10)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
2,456,740
|
|
|
$
|
0
|
|
|
$
|
6,580,182
|
|
|
$
|
5,948,122
|
|
|
$
|
4,323,695
|
|
|
|
|
(1)
|
|
Reported amounts calculated pursuant to the terms of
Mr. Oakes Amended and Restated Employment Agreement
and consist of one times Mr. Oakes base salary on
December 31, 2010 plus a pro rata annual bonus for 2010
based on actual results (except in the case of termination in
connection with a change in control, in which case the amount
consists of two times Mr. Oakes base salary on
December 31, 2010 plus two times Mr. Oakes
maximum annual bonus for 2010). Assumes all accrued
base salary has been paid to Mr. Oakes.
|
|
(2)
|
|
Reported amounts consist of Mr. Oakes 40,000 unvested
promotion shares, plus 40,000 unvested retention shares, plus
52,080 unvested annual equity shares valued at our closing stock
price on December 31, 2010 of $14.09 per share, which
shares either accelerate and vest or continue to vest as a
result of the triggering event (except in the case of without
cause/good reason termination, in which case the amount consists
of Mr. Oakes 40,000 unvested retention shares valued
at our closing stock price on December 31, 2010 of $14.09
per share, which shares continue to vest as a result of the
triggering event).
|
|
(3)
|
|
Reported amounts consist of Mr. Oakes 34,964 unvested
award shares under the VSEP plus 31,432 shares
(37,800 shares in the case of termination in connection
with a change in control) assumed to be earned for the
measurement period interrupted as a result of the triggering
event valued at our closing stock price on December 31,
2010 of $14.09 per share, which shares either accelerate and
vest or continue to vest as a result of the triggering event.
|
|
(4)
|
|
Reported amounts consist of Mr. Oakes 42,600 stock
options valued at a spread of $3.98 per share based on our
closing stock price on December 31, 2010 of $14.09 per
share, which stock options accelerate as a result of the
triggering event.
|
|
(5)
|
|
Reported amounts consist of our estimate of one year of
continued health and welfare benefits costs.
|
|
(6)
|
|
Reported amount consists of our estimate of the available life
insurance death benefit.
|
|
(7)
|
|
Reported amount consists of our estimate of payments for
long-term disability using a present value calculation that
takes into account (i) Mr. Oakes age and total
payments over the benefit term assuming that the disability
occurs on December 31, 2010, 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.
|
|
(8)
|
|
The amount of Mr. Oakes 280G
gross-up
payment is calculated assuming that he is not entitled to a
gross-up
with respect to the estimated value of the excess parachute
payments attributable to his VSEP
|
44
|
|
|
|
|
awards. We note that Mr. Oakes new employment
agreement currently in effect eliminates his right to any tax
gross-up
payment.
|
|
(9)
|
|
Reported amounts consist of our estimate of one year of
outplacement service.
|
|
(10)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to our vacation policy.
|
Scott
A. Wolstein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
$
|
8,312,500
|
|
|
$
|
0
|
|
|
$
|
8,312,500
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Restricted Shares(2)
|
|
$
|
0
|
|
|
$
|
2,818,000
|
|
|
$
|
0
|
|
|
$
|
2,818,000
|
|
|
$
|
2,818,000
|
|
|
$
|
2,818,000
|
|
Unvested VSEP Awards(3)
|
|
$
|
0
|
|
|
$
|
5,217,147
|
|
|
$
|
0
|
|
|
$
|
5,717,553
|
|
|
$
|
5,217,147
|
|
|
$
|
5,217,147
|
|
Unvested Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health and Welfare Benefits(4)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds(5)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,704,440
|
|
|
$
|
0
|
|
280G
Gross-Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Vacation(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Continuing Office Support(8)
|
|
$
|
0
|
|
|
$
|
300,000
|
|
|
$
|
0
|
|
|
$
|
300,000
|
|
|
$
|
300,000
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
16,667,647
|
|
|
$
|
0
|
|
|
$
|
17,168,053
|
|
|
$
|
11,059,587
|
|
|
$
|
8,455,147
|
|
|
|
|
(1)
|
|
Reported amounts calculated pursuant to the terms of
Mr. Wolsteins Amended and Restated Employment
Agreement and consist of two times Mr. Wolsteins base
salary on December 31, 2010 plus two times
Mr. Wolsteins target annual bonus for
2010. Assumes all accrued base salary has been paid to
Mr. Wolstein.
|
|
(2)
|
|
Reported amounts consist of Mr. Wolsteins 200,000
unvested retention shares valued at our closing stock price on
December 31, 2010 of $14.09 per share, which shares either
accelerate and vest or continue to vest as a result of the
triggering event.
|
|
(3)
|
|
Reported amounts consist of Mr. Wolsteins 194,988
unvested award shares under the VSEP plus 175,285 shares
(210,800 shares in the case of termination in connection
with a change in control) assumed to be earned for the
measurement period interrupted as a result of the triggering
event valued at our closing stock price on December 31,
2010 of $14.09 per share, which shares either accelerate and
vest or continue to vest as a result of the triggering event.
|
|
(4)
|
|
Reported amounts consist of our estimate of one year of
continued health and welfare benefits costs.
|
|
(5)
|
|
Reported amount consists of our estimate of the available life
insurance death benefit.
|
|
(6)
|
|
Reported amount consists of our estimate of payments for
long-term disability using a present value calculation that
takes into account (i) Mr. Wolsteins age and
total payments over the benefit term assuming that the
disability occurs on December 31, 2010, 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.
|
|
(7)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to our vacation policy.
|
|
(8)
|
|
Reported amounts consist of our estimate of two years of
continuing office support as provided for under
Mr. Wolsteins Amended and Restated Employment
Agreement.
|
45
Paul
W. Freddo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
$
|
717,583
|
|
|
$
|
0
|
|
|
$
|
1,710,000
|
|
|
$
|
717,583
|
|
|
$
|
717,583
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Restricted Shares(2)
|
|
$
|
0
|
|
|
$
|
563,600
|
|
|
$
|
0
|
|
|
$
|
813,838
|
|
|
$
|
813,838
|
|
|
$
|
813,838
|
|
Unvested VSEP Awards(3)
|
|
$
|
0
|
|
|
$
|
935,520
|
|
|
$
|
0
|
|
|
$
|
1,025,245
|
|
|
$
|
935,520
|
|
|
$
|
935,520
|
|
Unvested Stock Options(4)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
57,825
|
|
|
$
|
57,825
|
|
|
$
|
57,825
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health and Welfare Benefits(5)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
40,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,864,481
|
|
|
$
|
0
|
|
280G
Gross-Up(8)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
861,237
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Outplacement Services(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
38,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(10)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
2,236,703
|
|
|
$
|
0
|
|
|
$
|
4,546,145
|
|
|
$
|
4,409,247
|
|
|
$
|
2,944,766
|
|
|
|
|
(1)
|
|
Reported amounts calculated pursuant to the terms of
Mr. Freddos Employment Agreement and consist of one
times Mr. Freddos base salary on December 31,
2010 plus a pro rata annual bonus for 2010 based on actual
results (except in the case of termination in connection with a
change in control, in which case the amount consists of two
times Mr. Freddos base salary on December 31,
2010 plus two times Mr. Freddos maximum
annual bonus for 2010). Assumes all accrued base salary has been
paid to Mr. Freddo.
|
|
(2)
|
|
Reported amounts consist of Mr. Freddos 40,000
unvested retention shares, plus 17,760 unvested annual equity
shares valued at our closing stock price on December 31,
2010 of $14.09 per share, which shares either accelerate and
vest or continue to vest as a result of the triggering event
(except in the case of without cause/good reason termination, in
which case the amount consists of Mr. Freddos 40,000
unvested retention shares valued at our closing stock price on
December 31, 2010 of $14.09 per share, which shares
continue to vest as a result of the triggering event).
|
|
(3)
|
|
Reported amounts consist of Mr. Freddos 34,964
unvested award shares under the VSEP plus 31,432 shares
(37,800 shares in the case of termination in connection
with a change in control) assumed to be earned for the
measurement period interrupted as a result of the triggering
event valued at our closing stock price on December 31,
2010 of $14.09 per share, which shares either accelerate and
vest or continue to vest as a result of the triggering event.
|
|
(4)
|
|
Reported amounts consist of Mr. Freddos 14,529 stock
options valued at a spread of $3.98 per share based on our
closing stock price on December 31, 2010 of $14.09 per
share, which stock options accelerate as a result of the
triggering event.
|
|
(5)
|
|
Reported amounts consist of our estimate of one year of
continued health and welfare benefits costs.
|
|
(6)
|
|
Reported amount consists of our estimate of the available life
insurance death benefit.
|
|
(7)
|
|
Reported amount consists of our estimate of payments for
long-term disability using a present value calculation that
takes into account (i) Mr. Freddos age and total
payments over the benefit term assuming that the disability
occurs on December 31, 2010, 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.
|
|
(8)
|
|
The amount of Mr. Freddos 280G
gross-up
payment is calculated assuming that he is not entitled to a
gross-up
with respect to the estimated value of the excess parachute
payments attributable to his VSEP
|
46
|
|
|
|
|
awards. We note that Mr. Freddos new employment
agreement currently in effect eliminates his right to any tax
gross-up
payment.
|
|
(9)
|
|
Reported amounts consist of our estimate of one year of
outplacement service.
|
|
(10)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to our vacation policy.
|
John
S. Kokinchak
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
$
|
528,745
|
|
|
$
|
0
|
|
|
$
|
1,260,000
|
|
|
$
|
528,745
|
|
|
$
|
528,745
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Restricted Shares(2)
|
|
$
|
0
|
|
|
$
|
281,800
|
|
|
$
|
0
|
|
|
$
|
432,338
|
|
|
$
|
432,338
|
|
|
$
|
432,338
|
|
Unvested VSEP Awards(3)
|
|
$
|
0
|
|
|
$
|
521,725
|
|
|
$
|
0
|
|
|
$
|
571,772
|
|
|
$
|
521,725
|
|
|
$
|
521,725
|
|
Unvested Stock Options(4)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
34,781
|
|
|
$
|
34,781
|
|
|
$
|
34,781
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health and Welfare Benefits(5)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
40,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,237,898
|
|
|
$
|
0
|
|
280G
Gross-Up(8)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
621,310
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Outplacement Services(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
28,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(10)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
1,352,270
|
|
|
$
|
0
|
|
|
$
|
2,988,201
|
|
|
$
|
3,775,487
|
|
|
$
|
1,937,589
|
|
|
|
|
(1)
|
|
Reported amounts calculated pursuant to the terms of
Mr. Kokinchaks Amended and Restated Employment
Agreement and consist of one times Mr. Kokinchaks
base salary on December 31, 2010 plus a pro rata annual
bonus for 2010 based on actual results (except in the case of
termination in connection with a change in control, in which
case the amount consists of two times Mr. Kokinchaks
base salary on December 31, 2010 plus two times
Mr. Kokinchaks maximum annual bonus for
2010). Assumes all accrued base salary has been paid to
Mr. Kokinchak.
|
|
(2)
|
|
Reported amounts consist of Mr. Kokinchaks 20,000
unvested retention shares, plus 10,684 unvested annual equity
shares valued at our closing stock price on December 31,
2010 of $14.09 per share, which shares either accelerate and
vest or continue to vest as a result of the triggering event
(except in the case of without cause/good reason termination, in
which case the amount consists of Mr. Kokinchaks
20,000 unvested retention shares valued at our closing stock
price on December 31, 2010 of $14.09 per share, which
shares continue to vest as a result of the triggering event).
|
|
(3)
|
|
Reported amounts consist of Mr. Kokinchaks 19,500
unvested award shares under the VSEP plus 17,528 shares
(21,080 shares in the case of termination in connection
with a change in control) assumed to be earned for the
measurement period interrupted as a result of the triggering
event valued at our closing stock price on December 31,
2010 of $14.09 per share, which shares either accelerate and
vest or continue to vest as a result of the triggering event.
|
|
(4)
|
|
Reported amounts consist of Mr. Kokinchaks 8,739
stock options valued at a spread of $3.98 per share based on our
closing stock price on December 31, 2010 of $14.09 per
share, which stock options accelerate as a result of the
triggering event.
|
|
(5)
|
|
Reported amounts consist of our estimate of one year of
continued health and welfare benefits costs.
|
|
(6)
|
|
Reported amount consists of our estimate of the available life
insurance death benefit.
|
47
|
|
|
(7)
|
|
Reported amount consists of our estimate of payments for
long-term disability using a present value calculation that
takes into account (i) Mr. Kokinchaks age and
total payments over the benefit term assuming that the
disability occurs on December 31, 2010, 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.
|
|
(8)
|
|
The amount of Mr. Kokinchaks 280G
gross-up
payment is calculated assuming that he is not entitled to a
gross-up
with respect to the estimated value of the excess parachute
payments attributable to his VSEP awards. We note that
Mr. Kokinchaks new employment agreement currently in
effect eliminates his right to any tax
gross-up
payment.
|
|
(9)
|
|
Reported amounts consist of our estimate of one year of
outplacement service.
|
|
(10)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to our vacation policy.
|
Joan
U. Allgood
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
$
|
1,098,000
|
|
|
$
|
427,000
|
|
|
$
|
427,000
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Restricted Shares(2)
|
|
$
|
0
|
|
|
$
|
281,800
|
|
|
$
|
0
|
|
|
$
|
434,874
|
|
|
$
|
434,874
|
|
|
$
|
434,874
|
|
Unvested VSEP Awards(3)
|
|
$
|
0
|
|
|
$
|
521,725
|
|
|
$
|
0
|
|
|
$
|
571,772
|
|
|
$
|
521,725
|
|
|
$
|
521,725
|
|
Unvested Stock Options(4)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
35,366
|
|
|
$
|
35,366
|
|
|
$
|
35,366
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health and Welfare Benefits(5)
|
|
$
|
0
|
|
|
$
|
11,000
|
|
|
$
|
0
|
|
|
$
|
22,000
|
|
|
$
|
11,000
|
|
|
$
|
11,000
|
|
Life Insurance Proceeds(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,241,760
|
|
|
$
|
0
|
|
280G
Gross-Up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Outplacement Services(8)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
30,500
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
1,241,525
|
|
|
$
|
0
|
|
|
$
|
2,192,512
|
|
|
$
|
2,671,725
|
|
|
$
|
1,829,965
|
|
|
|
|
(1)
|
|
Reported amounts calculated pursuant to the terms of
Ms. Allgoods Amended and Restated Employment
Agreement and consist of one times Ms. Allgoods base
salary on December 31, 2010 plus a pro rata annual bonus
for 2010 based on actual results (except in the case of
termination in connection with a change in control, in which
case the amount consists of two times Ms. Allgoods
base salary on December 31, 2010 plus two times
Ms. Allgoods maximum annual bonus for
2010). Assumes all accrued base salary has been paid to
Ms. Allgood.
|
|
(2)
|
|
Reported amounts consist of Ms. Allgoods 20,000
unvested retention shares, plus 10,864 unvested annual equity
shares valued at our closing stock price on December 31,
2010 of $14.09 per share, which shares either accelerate and
vest or continue to vest as a result of the triggering event
(except in the case of without cause/good reason termination, in
which case the amount consists of Ms. Allgoods 20,000
unvested retention shares valued at our closing stock price on
December 31, 2010 of $14.09 per share, which shares
continue to vest as a result of the triggering event).
|
|
(3)
|
|
Reported amounts consist of Ms. Allgoods 19,500
unvested award shares under the VSEP plus 17,528 shares
(21,080 shares in the case of termination in connection
with a change in control) assumed to be earned for the
measurement period interrupted as a result of the triggering
event valued at our closing stock price on December 31,
2010 of $14.09 per share, which shares either accelerate and
vest or continue to vest as a result of the triggering event.
|
48
|
|
|
(4)
|
|
Reported amounts consist of Ms. Allgoods 8,886 stock
options valued at a spread of $3.98 per share based on our
closing stock price on December 31, 2010 of $14.09 per
share, which stock options accelerate as a result of the
triggering event.
|
|
(5)
|
|
Reported amounts consist of our estimate of one year of
continued health and welfare benefits costs.
|
|
(6)
|
|
Reported amount consists of our estimate of the available life
insurance death benefit.
|
|
(7)
|
|
Reported amount consists of our estimate of payments for
long-term disability using a present value calculation that
takes into account (i) Ms. Allgoods age and
total payments over the benefit term assuming that the
disability occurs on December 31, 2010, 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.
|
|
(8)
|
|
Reported amounts consist of our estimate of one year of
outplacement service.
|
|
(9)
|
|
Assumes all vacation was either used during the fiscal year or
forfeited at year-end pursuant to our vacation policy.
|
Separation Agreements.
On January 26,
2010, we entered into a Separation Agreement and Release with
Mr. Schafer as a result of the conclusion of his employment
with us effective February 15, 2010. The separation
agreement reflected Mr. Schafers departure as a
termination without cause effective February 15, 2010,
through which date Mr. Schafer also continued to receive
his then-current compensation and benefits from us. The
separation agreement was also subject to a revocation period in
favor of Mr. Schafer pursuant to applicable law.
Pursuant to the separation agreement, Mr. Schafer received
a lump-sum payment (less applicable deductions) equal to
$1,221,000 and a payment (less applicable deductions) equal to
$122,000, or the target amount of his 2009 annual
performance bonus opportunity, in February 2010.
Mr. Schafer also received a lump-sum payment (less
applicable deductions) equal to $549,000 in August 2010.
Mr. Schafer was provided with our health and dental
benefits coverage for him and his eligible dependents for two
months following his employment on the same terms applicable to
our active employees, and was provided with one month of
outplacement services. We also agreed to cover reasonable legal
fees for Mr. Schafer in connection with the execution and
receipt of payments under his separation agreement. In
consideration of these payments and benefits, Mr. Schafer
agreed to a general release of potential claims against us and
certain related parties. The treatment of
Mr. Schafers equity and incentive awards has and will
be governed by the applicable provisions of our plans covering
such awards. We also waived Mr. Schafers one-year
non-competition covenant, but other covenants provided for in
Mr. Schafers employment agreement remain in full
force and effect, including his confidentiality,
non-solicitation and cooperation covenants.
On December 20, 2010, we entered into a Separation
Agreement and Release with Ms. Allgood as a result of the
conclusion of her employment with us effective January 31,
2011. The separation agreement reflected Ms. Allgoods
departure as a termination without cause effective
January 31, 2011, through which date Ms. Allgood also
continued to receive her then-current compensation and benefits
from us. The separation agreement was also subject to a
revocation period in favor of Ms. Allgood pursuant to
applicable law.
Pursuant to the separation agreement, Ms. Allgood received
a lump-sum payment (less applicable deductions) equal to
$1,251,000 and a payment (less applicable deductions) equal to
$122,000 for her 2010 annual performance bonus in February 2011.
Ms. Allgood will also receive a lump-sum payment (less
applicable deductions) equal to $549,000 payable after six
months from her termination date. Ms. Allgood is eligible
to receive health and dental benefit coverage for her and her
eligible dependents for up to two years following her employment
on the same terms applicable to our active employees and is
eligible to receive one year of outplacement services. We also
agreed to cover reasonable consultant fees (up to $15,000) for
Ms. Allgood in connection with the execution and receipt of
payments under her separation agreement. In consideration of
these payments and benefits, Ms. Allgood agreed to a
general release of potential claims against us and certain
related parties. The treatment of Ms. Allgoods equity
and incentive awards has and will be governed by the applicable
provisions of our plans covering such awards. We also waived
Ms. Allgoods one-year non-competition covenant, but
other covenants provided for in Ms. Allgoods
employment agreement remain in full force and effect, including
her confidentiality, non-solicitation and cooperation covenants.
49
Change in Control
Agreements.
Messrs. Wolstein and
Hurwitzs employment agreements include provisions
regarding the payments and benefits to which they are entitled
in certain circumstances in the event of a change in control.
For more information, see the Executive Compensation
Tables and Related Disclosure Employment
Agreements Employment Agreements with
Messrs. Hurwitz and Wolstein section above.
Under the change in control agreements for the other executive
officers that were in effect at December 31, 2010,
including Messrs. Oakes, Freddo and Kokinchak and
Ms. Allgood (and Mr. Schafer during his employment),
benefits were payable by us if a Triggering Event
occurs within two years after a Change in Control.
Payments were only triggered if both (1) a change in
control occurred and (2) the officer was terminated or
effectively terminated, or actions were taken that materially
and adversely impacted the officers position with us or
his or her compensation. A Triggering Event occurred
if within two years after a change in control:
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we terminated 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);
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we reduced the named executive officers title,
responsibilities, power or authority in comparison with his or
her title, responsibilities, power or authority at the time of
the change in control, and the officer then terminated his or
her employment with us;
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we assigned the named executive officer duties that were
inconsistent with the duties assigned to the named executive
officer on the date on which the change in control occurred and
which duties we persisted in assigning to the named executive
officer despite the prior written objection of that officer, and
the officer then terminated his or her employment with us;
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we (1) reduced the named executive officers base
salary, his or her annual performance-based cash bonus
percentages of salary, his or her group health, life, disability
or other insurance programs (including any such benefits
provided to the named executive officers family), his or
her pension, retirement or profit-sharing benefits or any
benefits provided by our equity-based award plans or any
substitute therefore, (2) excluded him or her from any
plan, program or arrangement in which our other executive
officers are included, (3) established 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) failed to pay the named executive officer
any annual performance bonus compensation to which the named
executive officer was entitled through the achievement of the
criteria and factors established for the payment of such bonus,
and the officer then terminated his or her employment with
us; or
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we required 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 or any approved
remote office, and the officer then terminated his or her
employment with us.
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A Change in Control occurred if:
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any person or group of persons, acting alone or together with
any of its affiliates or associates, acquired a legal or
beneficial ownership interest, or voting rights, in 20% or more
of the outstanding common shares;
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at any time during a period of two years, individuals who were
our directors at the beginning of the period no longer
constituted a majority of the members of our 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 was approved by at least two-thirds of the directors who
were in office at the time of the election or nomination and
were directors at the beginning of the period;
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a record date was 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
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50
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our Board or our shareholders approved 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.
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Upon the occurrence of a Triggering Event, we were required to
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 for Messrs. Oakes, Freddo and
Kokinchak and Ms. Allgood provided 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 (if
applicable)) constitutes excess parachute payments
under certain tax laws, we would pay the named executive officer
such additional amounts as are necessary to cause him or her to
receive the same after-tax compensation that he or she would
have but for the application of such tax laws. These change in
control agreements were subsequently terminated upon us entering
into the new employment agreements in April 2011 with Messrs.
Oakes, Freddo and Kokinchak, as discussed above.
As discussed above, in April 2011, we entered into new
employment agreements with Messrs. Oakes, Freddo and
Kokinchak. In addition, the separate change in control
agreements with Messrs. Oakes, Freddo and Kokinchak were
terminated and the substantive provisions from these agreements
were included in the new employment agreements with the
modifications discussed below. The new employment agreements are
materially consistent with the terms of our employment agreement
with Mr. Hurwitz. In particular, the new employment
agreements eliminated the tax gross-up entitlements that these
officers had under their prior employment agreements and the
prior change in control agreements and increased the threshold
for triggering a change in control as a result of the
acquisition of beneficial ownership of our outstanding
securities from 20% or more to 30% or more of the voting power
of our outstanding securities without the prior consent of our
Board, which threshold is now consistent with that under
Mr. Hurwitzs employment agreement. In addition, the
annual performance-based bonus portion of severance payable to
Messrs. Oakes, Freddo and Kokinchak in the event of a
Triggering Event was reduced from the maximum level
to the target level.
Compensation
of Directors
2010 Director
Compensation Table
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Fees Earned or
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Paid in Cash
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Stock Awards
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Total
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Name
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($)(1)
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($)(2)
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($)
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(a)
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(b)
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(c)
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(d)
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Terrance R. Ahern
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$
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220,000
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$
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220,000
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James C. Boland
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$
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83,507
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$
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83,532
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$
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167,039
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Thomas Finne
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$
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67,500
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$
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67,525
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$
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135,025
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Robert H. Gidel
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$
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165,020
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$
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165,020
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Volker Kraft
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$
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75,000
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$
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75,028
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$
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150,028
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Victor B. MacFarlane
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$
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170,000
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$
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170,000
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Craig Macnab
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$
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190,018
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$
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190,018
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Scott D. Roulston
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$
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165,000
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$
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165,000
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Barry A. Sholem
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$
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150,035
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$
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150,035
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William B. Summers, Jr.
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$
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75,000
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$
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75,028
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$
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150,028
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(1)
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All or a portion of the fees listed for Messrs. Ahern,
MacFarlane and Roulston were deferred into the Directors
Deferred Compensation Plan.
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(2)
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The amounts reported in column (c) reflect the aggregate
grant date fair value, as computed in accordance with FASB ASC
Topic 718, for stock awards granted to the non-employee
directors in 2010. The non-
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51
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employee directors had option awards outstanding as of
December 31, 2010 for the following number of shares:
Mr. Ahern, 5,000; Mr. MacFarlane, 10,000; and
Mr. Sholem, 5,000. No other option awards had been granted
to the remaining non-employee directors at December 31,
2010. None of the non-employee directors had unvested stock
awards outstanding as of December 31, 2010. The grant date
fair value of the stock awards issued to each non-employee
director in fiscal year 2010 is reflected in this column.
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Our non-employee directors receive an annual retainer of
$125,000 for the year ended each May 14. The annual
retainer is paid in either cash or our common shares, at the
directors election, provided that not less than 50% of the
fees payable to non-employee directors shall be paid in the form
of our common shares or common share equivalents, as described
below. Non-chair members of the Audit Committee and the
Executive Compensation Committees receive $25,000 as a fee for
their service on each committee. Non-chair members of the
Nominating and Corporate Governance Committee receive a fee of
$20,000, and non-chair members of the Dividend Declaration
Committee receive a fee of $10,000, for service on these
committees. Persons who chair the Audit Committee, the Executive
Compensation Committee and the Nominating and Corporate
Governance Committee are entitled to receive a fee of $40,000,
$40,000 and $30,000, respectively, for services rendered on
these committees. The lead director is entitled to receive
additional compensation of $50,000 as a fee for services
rendered as lead director. Additionally, each non-management
member of our Board who serves on the Executive Committee
receives an additional $25,000 fee for service on the Executive
Committee.
No less than 50% of the total of each directors annual
retainer and annual Board committee fees (and annual lead
director fee, if applicable) must be received in the form of our
common shares or deferred into the directors deferred
compensation plan. Under the 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 committee members, the
respective committee chairs and lead director 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 annual fees or retainers that
each 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. These common shares are 100% vested on
the date of issuance. 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 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. Ahern, MacFarlane
and Roulston elected to defer all of their 2010 fees pursuant to
our directors deferred compensation plan. During their
terms as directors, Messrs. Ahern, MacFarlane, Macnab and
Roulston have deferred compensation represented by the following
number of units:
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Number of
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Units under the
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Value of Units as of
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Directors Deferred
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the Year Ended
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Compensation Plan as of
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December 31,
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Name
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December 31, 2010
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2010 ($)
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Terrance R. Ahern
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87,661
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$
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1,235,143
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Victor B. MacFarlane
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60,902
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$
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858,108
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Craig Macnab
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17,718
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$
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249,652
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Scott D. Roulston
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16,643
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$
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234,497
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52
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. Ahern, MacFarlane and Macnab have deferred
compensation into the equity deferred compensation plan
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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2010 ($)
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Terrance R. Ahern
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1,029
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$
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14,499
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Victor B. MacFarlane
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1,029
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$
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14,499
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Craig Macnab
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695
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$
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9,793
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Vested deferred stock units under the equity deferred
compensation plan will not be distributed to participants until
the end of the deferral period selected by each participant.
Stock
Ownership Guidelines
Under the stock ownership guidelines established by our Board,
each director must own common shares or common share equivalents
with an aggregate market value of no less than $200,000 no later
than the fourth anniversary of the June 1 following the date
restricted shares or common shares comprising a component of the
directors compensation are first granted to the director,
or, if the director is elected or appointed to our Board other
than at the annual meeting, the date such director has received
compensation for four years of service, and on each June 1
thereafter. Our Board established this particular level of stock
ownership for our directors because it is reasonable evidence of
our continuing commitment to have the interests of our directors
aligned with the investment interests of our shareholders.
During the initial four-year phase-in period, each director is
required to own
one-fourth
of the requisite value of common shares and common share
equivalents on the date such director has received compensation
for one year of service as a director, one-half of the requisite
value after the receipt of compensation for two years of service
and three-fourths of the requisite value after receipt of
compensation for three years of service. 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.
All of our directors met the companys established stock
ownership guidelines as of June 1, 2010 and as of
March 15, 2011.
CERTAIN
TRANSACTIONS
In May 2009, the company entered into a $60 million
collateralized loan with an affiliate company owned by
Mr. Alexander Otto, a significant shareholder, and certain
members of his family, whom we collectively refer to as the Otto
Family, which was included in mortgage and other secured
indebtedness on the companys balance sheet. The loan had
an interest rate of 9%, and was collateralized by two shopping
centers. The company repaid this loan, at par, in May 2010 and
paid a prepayment penalty of $905,000. The company paid interest
of $1,864,110 on this loan for the year ended December 31,
2010.
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 and General Counsel. 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) of us 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
53
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, among
other things, are reviewed by the 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 our Board.
All related party transactions, whether or not those
transactions must be disclosed under federal securities laws,
are subject to prior approval by our Board pursuant to the
policy and reviewed annually with the Audit Committee.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act 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, 2010, all officers, directors, and greater
than 10% beneficial owners filed the required reports on a
timely basis, except for: Mr. Ahern for two transactions in
2010 and Mr. Kokinchak and Iris S. Wolstein each for one
transaction in 2010. In addition, we filed amended reports
during 2010 to correct clerical errors in a previous filing with
respect to one transaction for each of Messrs. Hurwitz,
Sholem and Gidel.
54
PROPOSAL TWO:
RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT ACCOUNTANTS
FOR OUR FISCAL YEAR ENDING DECEMBER 31, 2011
PricewaterhouseCoopers LLP served as our independent registered
public accounting firm in 2010 and is expected to be retained to
do so in 2011. Our Board has directed that management submit the
selection of the independent registered public accounting firm
for ratification by the shareholders at the Annual Meeting. A
representative of PricewaterhouseCoopers LLP is expected to be
present at the Annual Meeting, available to respond to
appropriate questions and have an opportunity to make a
statement, if desired.
Shareholder ratification of the selection of
PricewaterhouseCoopers LLP as our independent registered public
accounting firm is not required by our Amended and Restated Code
of Regulations or otherwise. However, our Board is 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,
2010 and 2009.
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2010
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2009
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Audit fees(1)
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$
|
1,548,489
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|
|
$
|
2,019,774
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Audit-related fees(2)
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|
$
|
1,254,323
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|
|
$
|
1,075,725
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Tax fees(3)
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$
|
238,800
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|
|
$
|
728,025
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All other fees(4)
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$
|
1,800
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|
|
$
|
1,616
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Total
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$
|
3,043,412
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|
|
$
|
3,825,140
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(1)
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Audit fees consisted principally of fees for the audit of our
financial statements, as well as audit-related tax services and
registration statement related services performed pursuant to
SEC filing requirements. Of these amounts, the
registration-related services were $186,977 and $234,769 for
2010 and 2009, respectively. In addition, of the audit fees paid
in 2010, $153,948 related to additional auditing services
provided to us in 2009 but not billed by PricewaterhouseCoopers
LLP until 2010. Similarly, of the audit fees paid in 2009,
$343,399 related to additional auditing services provided to us
in 2008 but not billed by PricewaterhouseCoopers LLP until 2009.
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(2)
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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 2010, $951,464
was for audit-related services provided to us in 2009 but not
billed by PricewaterhouseCoopers LLP until 2010. Of the
aggregate amount of audit-related fees paid in 2009, $659,194
was for audit-related services provided to us in 2008 but not
billed by PricewaterhouseCoopers LLP until 2009. 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.
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(3)
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Tax fees consisted of fees billed for professional services
rendered by PricewaterhouseCoopers LLP for tax compliance and
tax consulting services, $188,300 and $337,288 of which
consisted of tax compliance services for 2010 and 2009,
respectively. Such tax compliance fees consisted solely of fees
for separate entity and joint venture tax reviews.
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55
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(4)
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All other fees consisted of fees billed for other products and
services provided by PricewaterhouseCoopers LLP. The fees billed
in 2010 and 2009 relate primarily to software licensing for
accounting and professional standards.
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Policy on Audit Committee Pre-Approval of Audit and
Permissible Non-Audit Services of Independent
Auditors.
The Audit Committee has a policy for
the pre-approval of audit and permissible non-audit services
pursuant to which the Audit Committee pre-approves 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. The Audit Committee pre-approves specifically
described audit and permissible non-audit services, and
periodically grants general pre-approval of categories of audit
and permissible non-audit services up to specified cost
thresholds. Any services exceeding pre-approved cost levels must
be specifically pre-approved by the Audit Committee. All of the
services rendered by PricewaterhouseCoopers LLP under the
categories Audit-related fees, Tax fees
and All other fees described above were pre-approved
by the Audit Committee.
Auditor Independence.
The Audit Committee
believes that the non-audit services provided by
PricewaterhouseCoopers LLP are compatible with maintaining
PricewaterhouseCoopers LLPs independence.
Our Board Recommends That Shareholders Vote FOR Ratification
of the Selection of PricewaterhouseCoopers LLP As Our
Independent Accountants for Our Fiscal Year Ending
December 31, 2011.
56
PROPOSAL THREE:
SHAREHOLDER ADVISORY VOTE REGARDING THE COMPENSATION
OF THE COMPANYS NAMED EXECUTIVE OFFICERS
As required under the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act) and Section 14A
of the Securities Exchange Act of 1934, we are asking you to
cast an advisory (non-binding) vote on the following resolution
at the 2011 Annual Meeting:
RESOLVED, that, on an advisory basis, the compensation of our
named executive officers, as disclosed in the Compensation
Discussion and Analysis, compensation tables and related
narratives and descriptions of our proxy statement for the 2011
Annual Meeting, is hereby APPROVED.
Your
Board of Directors recommends a vote FOR this
proposal.
This advisory vote, commonly known as a
Say-on-Pay
vote, gives you the opportunity to express your views about the
compensation we pay to our named executive officers, as
described in this proxy statement. The Board believes that our
executive compensation program is designed appropriately and
working effectively to ensure that we compensate our named
executive officers for the achievement of annual and long-term
performance goals enhancing shareholder value. Before you vote,
please review the Executive Summary section, as well
as the rest, of our Compensation Discussion and Analysis above
and the tabular and narrative disclosure that follows the
Compensation Discussion and Analysis. These sections describe
our named executive officer pay programs and the rationale
behind the decisions made by our Executive Compensation
Committee.
You may vote FOR or AGAINST the
resolution or abstain from voting on the resolution. The result
of the
Say-on-Pay
vote will not be binding on us or our Board. However, the Board
values the views of its shareholders. The Board and Executive
Compensation Committee will review the results of the vote and
take them into consideration in addressing future compensation
policies and decisions.
2010
Performance
In order to respond to the economic environment and the
challenges of the U.S. retail real estate market of the
past two years, we have placed greater strategic emphasis on
operational excellence through a business strategy that focused
on (1) maintaining a prime balance sheet relative to our
peers by strengthening our credit metrics and reducing risk,
(2) operating a prime portfolio focused on market-dominant
shopping centers populated by moderate- to budget-priced
retailers with strong credit profiles and growing market share,
and (3) maintaining a prime operating platform, which means
improving property operating fundamentals.
During 2010, we made significant progress toward achieving these
goals. To strengthen our balance sheet and reduce financial
risk, we raised long-term capital, refinanced and extended the
maturities of our remaining debt, and reduced our overall
leverage ratios. To focus on our prime portfolio properties, we
reaffirmed our objective to increase our ownership and operation
of prime properties and to dispose of non-core assets that will
not contribute to long-term earnings growth. To improve our
operating platform, we have placed greater strategic emphasis on
our operations by increasing the occupancy and revenue rates for
our properties.
Some of our particular accomplishments during 2010 included,
among other things:
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executed a record number of leases, exceeding budgeted
expectations;
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increased our core portfolio leased rate over 2009, exceeding
budgeted expectations;
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achieved same store net operating income growth, exceeding
budgeted expectations;
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opportunistically raised approximately $2.9 billion of
various forms of long-term capital;
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completed over $790 million of predominantly non-prime
asset sales, of which our pro-rata share was approximately
$250 million;
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reduced consolidated indebtedness by nearly $900 million to
approximately $4.3 billion at December 31, 2010,
exceeding budgeted expectations by $100 million;
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increased the weighted average maturity of our consolidated debt
from under three years to approximately four years; and
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achieved total shareholder return performance for our common
shares for the year of 53.2%, which ranked us 5th out of 16
REITs within our peer group.
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2010
Executive Compensation Program
We believe you should vote FOR our named executive
officer compensation, which, as described more fully in
Compensation Discussion and Analysis, we have designed to help
us:
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pay for performance, by providing incentives to our named
executive officers to deliver a superior return to shareholders
through operational performance and share price
appreciation; and
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attract and retain leading industry talent, who will be able to
deliver superior returns by adopting and executing a strategy
that provides opportunity to retailers, complements our core
competencies and enables us to take advantage of new business
opportunities.
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For 2010, as further described above in Compensation Discussion
and Analysis, we made executive compensation decisions to help
us reward the achievement of our financial and strategic
objectives by linking these decisions to our key performance
metrics of:
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Same Store EBITDA;
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relative total shareholder return; and
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the achievement of clearly articulated individual objectives.
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We believe you should vote FOR the compensation of
our named executive officers because the compensation actually
earned by our named executive officers for 2010 performance, as
described in this proxy statement, was aligned with both our pay
for performance philosophy and our actual 2010 performance.
For these reasons, your Board of Directors unanimously
recommends that shareholders vote FOR the compensation of our
named executive officers, as disclosed in the Compensation
Discussion and Analysis, compensation tables and related
narratives and descriptions of our proxy statement for the 2011
Annual Meeting.
58
PROPOSAL FOUR:
SHAREHOLDER ADVISORY VOTE REGARDING THE FREQUENCY FOR FUTURE
SHAREHOLDER ADVISORY VOTES ON THE COMPENSATION OF THE
COMPANYS NAMED EXECUTIVE OFFICERS
As required under the Dodd-Frank Act and Section 14A of the
Securities Exchange Act of 1934, we are also asking you to cast
an advisory (non-binding) vote recommending the frequency with
which we should hold future shareholder advisory votes on the
compensation of our named executive officers.
This advisory vote, commonly known as a frequency or
say-when-on-pay vote, gives you the opportunity to
express your views about how frequently (but at least once every
three years) we should conduct a
Say-on-Pay
vote. You may vote for future
Say-on-Pay
votes to be held every 1 YEAR, 2 YEARS
or 3 YEARS or abstain from voting in response to
this proposal.
We believe you should vote for us to conduct
Say-on-Pay
votes every year (one year). Before you vote, we encourage you
to consider the following:
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we think that a
Say-on-Pay
vote every year provides shareholders with the most immediate
and direct way to provide input with respect to the
companys current compensation arrangements;
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we believe that a
Say-on-Pay
vote every year promotes the highest degree of transparency
regarding our compensation structure;
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we think that a
Say-on-Pay
vote every year is consistent with best practices and good
corporate governance; and
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many of the leading shareholder advisory firms and institutional
shareholders have publicly announced their support for annual
Say-on-Pay
votes.
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For these reasons, the Board unanimously recommends that
shareholders vote for us to conduct any required shareholder
advisory vote on named executive officer compensation EVERY YEAR
(1 YEAR).
Please note that shareholders are not voting to approve or
disapprove of the Boards recommendation regarding this
proposal. The results of the frequency vote will be advisory and
will not be binding upon us or our Board. However, we will take
into account the outcome of the frequency vote when determining
how frequently we will conduct future
Say-on-Pay
votes, and we will disclose our frequency decision as required
by the Securities and Exchange Commission.
SHAREHOLDER
PROPOSALS FOR 2012 ANNUAL MEETING
Any shareholder proposals intended to be presented at our 2012
annual meeting of shareholders must be received by our Secretary
at 3300 Enterprise Parkway, Beachwood, Ohio 44122, on or before
December 20, 2011, for inclusion in our proxy statement and
form of proxy relating to the 2012 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 2012 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 March 4, 2012. Even if proper
notice is received on or prior to March 4, 2012, 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 Exchange Act.
HOUSEHOLDING
The SEC permits a single set of annual reports and proxy
statements to be sent to any household at which two or more
shareholders reside if they appear to be members of the same
family. Each shareholder continues to receive a separate proxy
card. This procedure, referred to as householding, reduces the
volume of duplicate information shareholders receive and reduces
mailing and printing costs. A number of brokerage
59
firms have instituted householding. Only one copy of this proxy
statement and the accompanying annual report will be sent to
certain beneficial shareholders who share a single address,
unless any shareholder residing at that address gave contrary
instructions.
If any beneficial shareholder residing at such an address
desires at this time to receive a separate copy of this proxy
statement and the accompanying 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 Kate Deck, Investor Relations
Director, 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 our Board or the non-management directors as a
group by mailing them to our Board,
c/o Corporate
Secretary, Developers Diversified Realty Corporation, 3300
Enterprise Parkway, Beachwood, Ohio 44122. All communications
will be forwarded to our Board 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: (1) to
elect Terrance R. Ahern, James C. Boland, Thomas Finne, Robert
H. Gidel, Daniel B. Hurwitz, Volker Kraft, Victor B. MacFarlane,
Craig Macnab, Scott D. Roulston, and Barry A. Sholem as
directors; (2) to ratify the selection of
PricewaterhouseCoopers LLP as our independent accountants for
our fiscal year ending December 31, 2011; (3) to
approve the compensation of the companys named executive
officers; and (4) to vote in favor of an advisory vote on
the compensation of the companys named executive officers
every year. For information on how to obtain directions to be
able to attend the Annual Meeting and vote in person, please
contact Kate Deck, Investor Relations Director, 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
discretion. 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,
David E. Weiss
Secretary
Dated: April 18, 2011
60
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. We encourage you to take advantage of Internet or
telephone voting. Both are available 24 hours a day, 7 days a week. Internet and telephone voting
is available through 11:59 PM Eastern Time the day prior to the shareholder meeting date. YOUR VOTE
IS IMPORTANT. PLEASE VOTE TODAY. We encourage you to take advantage of Internet or telephone
voting. Both are available 24 hours a day, 7 days a week. Internet and telephone voting is
available through 11:59 PM Eastern Time the day prior to the shareholder meeting date.TELEPHONE
1-866-540-5760 Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when
you call.If you vote your proxy by Internet or by telephone, you do NOT need to mail back your
proxy card. To vote by mail, mark, sign and date your proxy card and return it in the enclosed
postage-paid envelope. Your Internet or telephone vote authorizes the named proxies to vote your
shares in the same manner as if you marked, signed and returned your proxy card. FOLD AND DETACH
HERE THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED FOR
THE ELECTION OF DIRECTORS, FOR ITEMS 2 THROUGH 3 AND FOR EVERY YEAR (1 YEAR) ON ITEM 4. 1.
ELECTION OF DIRECTORS FOR AGAINST ABSTAIN 1.1 Terrance R. Ahern 1.2 James C. Boland 1.3 Thomas
Finne 1.4 Robert H. Gidel 1.5 Daniel B. Hurwitz1.6 Volker Kraft 1.7 Victor B. MacFarlane 1.8 Craig
Macnab 1.9 Scott D. Roulston 1.10Barry A. Sholem FOR AGAINST ABSTAIN 2. Ratification of the
selection of PricewaterhouseCoopers LLP as the Companys independent accountants for the Companys
fiscal year ending December 31, 2011. 3. Shareholder advisory vote regarding the compensation of
the Companys named executive officers. 4. Shareholder advisory vote regarding the frequency for
future shareholder advisory votes regarding the compensation of the Companys named executive
officers. Mark Here for Address Change or Comments SEE REVERSE NOTE: Please sign as name appears
hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
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You can now access your Developers Diversified Realty Corporation account online. Access your
Developers Diversified Realty Corporation account online via Investor ServiceDirect
®
(ISD). BNY
Mellon Shareowner Services, the transfer agent for Developers Diversified Realty Corporation, now
makes it easy and convenient to get current information on your shareholder account. View account
status View payment history for dividends View certificate history Make address changes View
book-entry information Obtain a duplicate 1099 tax form Visit us on the web at
http://www.bnymellon.com/shareowner/equityaccess For Technical Assistance Call 1-877-978-7778
between 9am-7pm Monday-Friday Eastern Time Investor ServiceDirect
®
Available 24 hours per day, 7
days per week TOLL FREE NUMBER: 1-800-370-1163 Choose MLinkSM for fast, easy and secure 24/7 online
access to your future proxy materials, investment plan statements, tax documents and more. Simply
log on to Investor ServiceDirect
®
at www.bnymellon.com/shareowner/equityaccess where step-by-step
instructions will prompt you through enrollment. Important notice regarding the Internet
availability of proxy materials for the Annual Meeting of Shareholders. The Proxy Statement and the
2010 Annual Report to Shareholders are available at: www.proxydocs.com/ddr FOLD AND DETACH HERE
PROXY DEVELOPERS DIVERSIFIED REALTY CORPORATION Annual Meeting of Shareholders May 18, 2011 THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY The undersigned hereby appoints David
J. Oakes, David E. Weiss and Christa A. Vesy, and each of them, with power to act without the
others and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them
to represent and vote, as provided on the other side, all the Developers Diversified Realty
Corporation Common Shares that the undersigned is entitled to vote, and, in their discretion, to
vote upon such other business as may properly come before the Annual Meeting of Shareholders of the
Company to be held May 18, 2011 or at any adjournment or postponement thereof, with all powers
which the undersigned would possess if present at the Annual Meeting. BNY MELLON SHAREOWNER
SERVICES P.O. BOX 3550 SOUTH HACKENSACK, NJ 07606-9250(Continued and to be marked, dated and
signed, on the other side)
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