The following table sets forth the compensation paid, awarded or earned with respect to each of our
non-employee
directors during 2017. We do not provide our
non-employee
directors with initial inducement awards upon joining our Board other than the regular annual equity award granted to our existing directors.
Mr. Hubbell resigned from our Board on March 29, 2018 and Ms. Alford joined our Board on March 29, 2018.
The Compensation Committee of the Board of Directors of The Macerich Company, a Maryland corporation, has reviewed and discussed the Compensation Discussion
and Analysis in this Amendment with management. Based on such review and discussion, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in our Annual Report on
Form 10-K
for the year ended December 31, 2017.
For purposes of this CD&A, we refer to the
Compensation Committee as the Committee.
In 2017, our Company continued the sector-leading progress we have made in recent years, demonstrating our
ability to consistently seize opportunities and further strengthen our Company and our growth prospects.
For additional information about the following financial metrics, see Exhibit 99.1 of this Amendment and Managements Discussion
and Analysis of Financial Condition and Results of Operations Funds for Operations in the Original Filing.
Despite our strong operating performance, our total stockholder return (TSR) in 2017 underperformed
the S&P 500 Index and FTSE NAREIT All Equity REITs Index.
In 2016 and 2017, REIT TSRs were generally lower than the broader market, and regional mall REITs in particular underperformed
other REITs. We believe that our negative TSR in 2016 and 2017 has been driven primarily by bearish investor sentiment for the mall REIT sector in general, in the wake of store closings and tenant bankruptcies announced by several high-profile
retailers. However, our performance versus other mall REITs has been strong. Over the past five years we have generated a higher total return to our stockholders than any of our direct competitors, as illustrated in the following graph.
While store closings and tenant bankruptcies have adversely impacted our short-term TSR, these bankruptcies often present
opportunities to secure more productive and more contemporary tenants that will generate higher sales productivity in the coming years. We remain well-positioned to take advantage of these opportunities.
As illustrated above, the majority of our CEOs compensation opportunity is at risk and tied to performance goals and our absolute and
relative TSR. Our
pay-for-performance
philosophy is further illustrated by comparing target total direct compensation to realizable compensation, after
taking into account actual performance.
Despite solid operating performance during 2016 and 2017, our TSR lagged the Equity Peer REITs. As a result, as
of December 31, 2017, realizable compensation for our CEO was substantially below target for each of 2016 and 2017.
Target pay includes base salary, target annual incentive, and the target grant-date fair value of long-term incentives in
each of 2016 and 2017 for Mr. A. Coppola. Realizable pay includes: (i) annual base salary earned; (ii) actual annual incentive earned in respect of the applicable year; and (iii) the value of performance-based LTIP Units
(assuming the performance period had ended December 31, 2017) and service-based LTIP Units as of December 31, 2017, including earned dividend equivalents. None of the performance-based LTIP Units granted in 2016 and only 60% of the target
number of performance-based LTIP Units granted in 2017 would have been earned at December 31, 2017 based on our relative TSR performance as of such date. The value of the service-based LTIP Units is based on our closing stock price on
December 29, 2017, the last trading day of fiscal 2017. This chart and the total realizable pay reported in this chart provides supplemental information regarding the compensation paid to our CEO and should not be viewed as a substitute for the
2017 Summary Compensation Table. We believe that showing realizable compensation illustrates for stockholders the alignment between pay and performance.
At our 2017 annual stockholders meeting, approximately 89% of the votes cast were in favor of the
non-binding
advisory resolution to approve the compensation of our named executive officers. Although the results of the
say-on-pay
vote are advisory and not binding on the Company, the Board of Directors or the Committee, the Board of Directors and the Committee value the opinions of our
stockholders and take the results of the
say-on-pay
vote into account when making decisions regarding the compensation of our named executive officers. Following our
2015 annual meeting, the Committee, working with FW Cook, made meaningful changes to our executive compensation program in response to our stockholders feedback, including switching from a
one-year
performance period for our performance-based LTIP Units to a three-year performance period. In addition, we engaged in stockholder outreach on executive compensation matters throughout 2016. The Committee has considered the result of the 2017
say-on-pay
vote and, as a result of the high percentage of votes cast in favor of this proposal, the Committee believes that the changes made to our compensation program in
2016 were supported by stockholders. Accordingly, the Committee decided to maintain our general approach to executive compensation and made no significant changes to our executive compensation program during 2017.
Throughout 2017, we continued engagement with stockholders on a variety of issues, including executive compensation and corporate governance. As part of our
commitment to ongoing, transparent communication with our stockholders, we will continue this open dialogue to ensure we understand stockholder views on these important issues.
Our executive
compensation and corporate governance programs are designed to closely link pay with operational performance and increases in long-term stockholder value while minimizing excessive risk taking. To help us accomplish these important objectives, we
have adopted the following policies and practices:
Our executive compensation program is designed to achieve the following objectives:
The Committee believes strongly in linking compensation to
corporate performance: the annual incentive awards (which for 2017 were paid entirely in the form of equity) are primarily based on overall corporate performance and the earned value of 75% of the long-term incentive equity awards depends on our
three-year TSR relative to the Equity Peer REITs. The Committee also recognizes individual performance in making its executive compensation decisions. The Committee believes this is the best program overall to attract, motivate and retain highly
skilled executives whose performance and contributions benefit our Company and our stockholders. The Committee believes it utilizes the right blend of cash and equity to provide appropriate incentives for executives while aligning their interests
with those of our stockholders and encouraging the executives long-term commitment to our Company. The Committee does not have a strict policy for allocating a specific portion of compensation to our named executive officers between cash and
non-cash
or short-term and long-term compensation. Instead, the Committee considers how each component promotes retention and/or motivates performance by the executive.
The Committee reviews and approves the compensation for our executive officers, reviews our overall compensation structure
and philosophy and administers certain of our employee benefit and stock plans, with authority to authorize awards under our incentive plans. The Committee currently consists of three independent directors, Ms. Stephen (Chair) and
Messrs. Soboroff and Hash.
Management, under the leadership of Mr. A. Coppola, develops our Companys strategy and corresponding internal business plans, which our executive
compensation program is designed to support. Mr. A. Coppola also provides the Committee with his evaluation of the performance of and his recommendations on compensation for his direct reports, including the other named executive officers.
The Committee
may, in its sole discretion, retain or obtain the advice of any compensation consultant as it deems necessary to assist in the evaluation of director or executive officer compensation and is directly responsible for the appointment, compensation and
oversight of the work of any such compensation consultant. The Committee retained FW Cook as its independent compensation consultant with respect to our compensation programs. FW Cooks role is to evaluate the existing executive and
non-employee
director compensation programs, assess the design and competitive positioning of these programs, and make recommendations for change, as appropriate. The Committee considered the independence of FW Cook
and determined that its engagement of FW Cook does not raise any conflicts of interest with our Company or any of our directors or executive officers. FW Cook provides no other consulting services to our Company, executive officers or directors.
FW Cook periodically conducts competitive reviews of our executive compensation program, including a competitive analysis of pay opportunities for our named
executive officers as compared to the relevant peer group selected by the Committee. The Committee reviews compensation practices at peer companies to inform itself and aid it in its decision-making process so it can establish compensation programs
that it believes are reasonably competitive.
FW Cook conducted a comprehensive review of our program in 2015, and made subsequent updates to competitive
data for selected positions in 2016 with competitive comparisons based on twenty U.S.-based, publicly traded REITs of reasonably similar size to our Company, as measured by total capitalization, and/or with a focus on the retail sector. The group
included our direct mall REIT competitors, both larger and smaller than us; REITs in other asset classes were primarily selected based on size. At the time FW Cook conducted the competitive reviews, our total capitalization was in the median range
compared to the peer group. The Committee believes that these REITs best reflected a complexity and breadth of operations, as well as the amount of capital and assets managed, similar to our Company at the time the studies were conducted. FW Cook
again reviewed the peer group for a comprehensive review conducted in 2017. The peer group REITs resulting from the 2017 comprehensive review were:
Relative to 2016, based on the 2017 comprehensive review FW Cook recommended and the Committee approved the following changes
to the peer group, which are reflected in the peer group listed above: Four REITs were removed as they had become much larger than us in total capitalization: AvalonBay Communities, Inc.; Equity Residential; Prologis, Inc. and Ventas, Inc. Host
Hotels & Resorts, Inc. was also removed as its asset class was deemed too different from ours. Two REITs were added, VEREIT, Inc. and Brixmor Property Group, Inc. because they are closer in size to us and have a substantial proportion of
retail assets in their portfolios, albeit primarily single-tenant and/or shopping center retail as compared to our focus on Class-A regional malls.
The
Committee does not set compensation components to meet specific benchmarks. Instead the Committee focuses on a balance of annual and long-term compensation, which is heavily weighted toward at risk performance-based compensation. Peer
group data is not used as the determining factor in setting compensation because each officers role and experience is unique. The Committee believes that ultimately the decision as to appropriate compensation for a particular officer should be
made based on a full review of that officers and our Companys performance.
Compensation opportunities for each named executive officer consisted of a base salary, an annual bonus opportunity, and long-term incentives, each of which is
described in more detail below.
As they do annually, the Committee members reviewed base salaries of the named executive officers to determine whether they remain appropriate based on the
factors identified above. Based on this review, the 2017 base salaries of our named executive officers remained unchanged from 2017.
Each executive officer has a target annual incentive opportunity,
expressed as a percentage of base salary. Consistent with prior years, target bonus is 200% of base salary for the CEO and President, and 150% of base salary for the other named executive officers. The Committee sets target bonuses for
Messrs. A. Coppola and E. Coppola at a higher percentage of base salary than the other executives because as the CEO and President, respectively, they are our strategic leaders and manage and direct our other named executive officers. Actual
bonuses can range from 0% to 200% of each executives target bonus, based on the Committees assessment of annual performance against the objectives established for the year.
Under our annual incentive program, the Committee evaluates performance against a scorecard of performance objectives established at the beginning
of the year. These rigorous scorecard goals are designed to reward the successful execution of our strategies, and were consistent with our external guidance as disclosed in the first quarter of 2017. For 2017, five corporate measures determined 80%
of each executives earned bonus; the remaining 20% was based on the Committees assessment of the executives individual performance. The 2017 corporate scorecard measures, as well as actual achievement versus each goal, are outlined
in the following table:
2017 Corporate Goals Weighted 80%
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Weighting
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2017 Goals
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2017
Actual
|
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Payout (%
of Target)
|
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Measure
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Threshold
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Target
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Max
|
|
|
|
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Payout
®
|
|
|
50%
|
|
|
100%
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|
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200%
|
|
|
|
|
|
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|
Same Center NOI Growth
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20
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%
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|
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3.0
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%
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|
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3.5
|
%
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4.0
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%
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2.73
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%
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0.0
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%
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FFO per Diluted Share (1)
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20
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%
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$
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3.90
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$
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3.95
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$
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4.00
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|
|
$
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3.95
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(2)
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100.0
|
%
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Re-leasing
Spreads
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20
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%
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|
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12
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%
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14
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%
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16
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%
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15.2
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%
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160.0
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%
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Replacing Lost Rents from bankrupt specialty store tenants
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10
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%
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50
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%
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65
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%
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|
|
80
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%
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|
|
51
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%
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|
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53.3
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%
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Succession Planning
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10
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%
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Deliver a uniform
evaluation and
documentation of a
succession plan for
each department
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Achieved
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100
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%
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(1)
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Excludes the impact of any assets returned to lenders or services and the impact of acquisitions/dispositions
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(2)
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Excludes $0.09 dilutive impact from new tax rates and $0.03 of dilution from the sales of Cascade Mall and Northgate Mall.
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At the time the goals were set, the Committee believed these goals were rigorous, in particular in the context of the anticipated slowing growth in the retail
REIT sector. For the target incentive amount to be earned, Same Center NOI in 2017 had to grow 3.5% over 2016 and the rent per square foot on new leases executed in 2017 had to increase by 14% over rent per square foot on expiring leases. Target FFO
per diluted share for 2017 was below actual 2016 FFO per share as a result of a combination of items, including the significant number of tenant bankruptcies which occurred toward the end of 2016 and additional bankruptcies which were anticipated
for 2017; asset dispositions in 2016 and anticipated for 2017; higher interest rates and reducing NOI for specific assets under development.
25
Individual PerformanceWeighted 20%
The Committee evaluated the 2017 individual performance of our named executive officers, with Mr. A. Coppola providing the Committee with his
evaluation with respect to the performance of the other executives. As part of this process, the Committee discussed with Mr. A. Coppola his evaluation of the contributions of each executive, including with respect to our 2017 corporate
achievements.
The Committee noted the following:
With respect to Mr.
E. Coppola:
his continued leadership supporting our strategic dispositions, acquisitions and
developments, including his role in the successful completion of Green Acres Commons and the redevelopment of Broadway Plaza and Sears store at Kings Plaza. Mr. E. Coppola was instrumental in building strategic relationships with key
stakeholders. His knowledge of the real estate markets as well as his strong relationships with real estate owners, partners and governmental officials were also critical to the success of our dispositions, acquisitions and development strategies.
Mr. E. Coppola was also actively involved in our Companys succession planning initiatives and talent development.
With respect to
Mr.
OHern:
his leadership in supporting and executing our strategic, financial and operational initiatives; success in maintaining the strength of our balance sheet; his continuing role in leading our
capital market efforts, including successfully financing of $800 million including a $400 million
12-year
loan in Freehold Raceway Mall at an average interest rate of 3.48%, completing the
$221 million share repurchases resulting in the retirement of 2.6% of total shares previously outstanding. Mr. OHern also led the Companys engagement and communication efforts with the investment communities and articulating
the compelling nature of our strategic plans, financial strength and business achievements.
With respect to
Mr.
Perlmutter:
his contributions with members of the Macerich team to our industry-leading results, including strong occupancy and double-digit releasing spreads. In the face of significant tenant
bankruptcies at the start of the year which increased throughout 2017, Mr. Perlmutter helped maintain, and even improve, occupancy throughout the portfolio. He was also involved in securing a commitment from Nordstrom to open at Country Club
Plaza. He facilitated continuing improvements in the property/asset management groups, joint venture relationships, implementation of talent development for the leasing organization, and continued efforts to position lower-quality assets for
disposition.
With respect to Mr.
Leanse:
his support of the executive teams efforts in responding to
and negotiating new business opportunities, his support of the Board in corporate governance issues, his work to develop a more efficient and effective way to deliver comprehensive legal services and his activities with respect to the Companys
various ongoing legal, operational and litigation matters.
With respect to Mr.
A. Coppola:
in determining
his annual incentive bonus, the Committee reviewed with Mr. A. Coppola his 2017 accomplishments against his goals. In addition to supporting our 2017 corporate goals previously described, Mr. A. Coppolas accomplishments for 2017
included his leadership in the Companys efforts to advance digitally native, vertically integrated retail strategies, revitalize tenant mix, cultivate redevelopment opportunities of existing anchor stores, continue the execution of our
long-term plan of recycling capital from
non-core
assets into our key development and redevelopment pipeline, and nurture succession planning and upward mobility throughout our Company.
Mr. A. Coppola also guided the Company to several high profile and industry leading awards in recognition of sustainability initiatives and practices.
Based on each executives accomplishments as well as considering performance scores for the employees reporting to each of the named executive officers,
the Committee scored the individual performance category at 100% of target for Messrs. A. Coppola, OHern, and Perlmutter and at 75% of target for Messrs. E. Coppola and Leanse.
Earned bonuses were awarded in the form of fully-vested LTIP Units, to further promote alignment with stockholders. Under applicable SEC rules, equity awards
are reported as compensation in the tables below for the year in which the award was granted, not the year to which the performance relates. Accordingly, the LTIP Units awarded as annual incentive compensation based on 2017 performance described
above will be reported in those tables in next years proxy statement as compensation for 2018. Thus, the compensation for our named executive officers for 2017 reflected in the Summary Compensation Table and Grants of Plan-Based Awards Table
below includes the LTIP Units awarded to each executive early in 2017 for 2016 performance. See 2017 Total Compensation below.
26
Long-Term Incentives
75% Performance-Based and Tied to Achieving Strong Relative Returns
Since 2006, our Company has utilized a long-term equity-based incentive program as an important means to align the interests of our executives and our
stockholders, to encourage our executives to adopt a longer-term perspective and to reward them for creating stockholder value in a
pay-for-performance
structure.
For 2017, the Committee approved for each named executive officer an aggregate grant date fair value for these awards, to be granted in the form of LTIP
Units. That amount was divided between two types of LTIP Units as follows:
Performance-Based LTIP Units (75%).
May be earned from 0% to
100% of the target number of units awarded based on our TSR performance relative to the Equity Peer REITs for the three-year performance period from January 1, 2017 through December 31, 2019. Payouts, as a percentage of target units, for
the performance-based LTIP Units for various levels of absolute and relative performance are outlined in the following table, with linear interpolation for performance between performance levels.
|
|
|
|
|
MACs Relative TSR
Percentile Ranking
|
|
Payout
(% of Target LTIP Units)
|
|
<25
th
Percentile
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|
|
0
|
%
|
25
th
Percentile
|
|
|
50
|
%
|
50
th
Percentile
|
|
|
100
|
%
|
³
75
th
Percentile
|
|
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150
|
%
|
Performance-based LTIP Unit grants prior to 2016 had a
one-year
performance period.
Starting with 2016 grants, we switched to a three-year performance period, to provide better alignment with long-term stockholder return performance. Due to the transition, no performance periods for performance-based LTIP units ended in 2017; as a
result, no performance-based LTIP Units vested in 2017.
Service-Based LTIP Units (25%).
Vest in equal annual installments over a three-year
period to promote retention and further alignment of our executives interests with those of our stockholders.
The Committee reviewed peer group
data relating to the allocation of long-term incentive equity awards between performance-based and service-based awards and determined that 75% performance-based was a higher percentage than the median mix between performance-based and service-based
equity among the peer group, and therefore consistent with our emphasis on at risk compensation. For the performance-based component, the Committee considered the range of potential realizable values that our executives could earn to
ensure that the awards would be both reasonably competitive and appropriate to motivate our leadership team.
2017 Total Compensation
We are including this supplemental information to provide a more meaningful view of the compensation of our named executive officers for their
performance during 2017. The table below shows each named executive officers salary, annual long-term incentive equity award grant value, bonus for services performed in 2017 and all other compensation. This table, in contrast to the Summary
Compensation Table on page 30 of this Amendment, includes equity awards granted under our annual incentive award program in March 2018 for services performed in 2017 and excludes equity awards granted under our annual incentive award program in
March 2017 for services performed in 2016.
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Executive
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Salary
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Annual
Incentive
Earned
for 2017(1)
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Long-Term
Incentive
Award
Value(2)
|
|
|
All Other
Compensation
|
|
|
Total
Compensation
|
|
Arthur M. Coppola
|
|
$
|
1,000,000
|
|
|
$
|
1,766,000
|
|
|
$
|
8,999,943
|
|
|
$
|
219,745
|
|
|
$
|
11,985,688
|
|
Edward C. Coppola
|
|
$
|
800,000
|
|
|
$
|
1,316,800
|
|
|
$
|
3,599,901
|
|
|
$
|
186,597
|
|
|
$
|
5,903,298
|
|
Thomas E. OHern
|
|
$
|
600,000
|
|
|
$
|
794,700
|
|
|
$
|
1,999,972
|
|
|
$
|
71,588
|
|
|
$
|
3,466,260
|
|
Robert D. Perlmutter
|
|
$
|
600,000
|
|
|
$
|
794,700
|
|
|
$
|
1,999,972
|
|
|
$
|
62,327
|
|
|
$
|
3,456,999
|
|
Thomas J. Leanse
|
|
$
|
500,000
|
|
|
$
|
617,250
|
|
|
$
|
1,374,934
|
|
|
$
|
57,884
|
|
|
$
|
2,550,068
|
|
27
(1)
|
Earned annual incentives were awarded in the form of fully-vested LTIP Units on March 2, 2018, with the number of LTIP Units based on the closing price of our Common Stock on the New York Stock Exchange on such
date.
|
(2)
|
These amounts represent the sum of the aggregate grant date fair value of performance-based LTIP Unit awards (75% of the aggregate grant value) and service-based LTIP Unit awards (25% of the aggregate grant value)
granted in January 2017 to each of our named executive officers, the terms of which are described above. Had the performance period for the performance-based LTIP Unit awards ended on December 31, 2017, 60% of the target number of
performance-based LTIP Units would have vested based on our 30
th
percentile relative TSR performance.
|
Executive Benefits
Certain of our named executive
officers participate in our deferred compensation plan available to all Vice Presidents and above who earn more than $115,000 annually. See the Nonqualified Deferred Compensation table on page 40 of this Amendment for more
information. We also provide our named executive officers with life insurance, medical and disability insurance, and use of a private aircraft in which our Company owns a fractional interest, to allow them to devote more time to our business. Refer
to footnote 6 to the Summary Compensation Table on page 34 of this Amendment for additional detail.
Offer Letter with Mr. OHern
In connection with Thomas E. OHerns appointment to the role of Chief Executive Officer effective January 1, 2019, the Company entered
into a letter agreement with Mr. OHern on April 26, 2018 that provides Mr. OHern with certain compensation and benefits during the period commencing April 26, 2018 and ending April 25, 2021 (the Term). During the Term, Mr.
OHerns annual rate of base salary will be $800,000 and his target annual bonus will equal 200% of his annual rate of base salary. With respect to Mr. OHerns fiscal year 2018 bonus, his bonus will reflect his base salary and
target bonus in effect during the applicable portions of the fiscal year. In addition, with respect to the annual bonuses payable in respect of fiscal years 2018, 2019 and 2020, all or a portion of his annual bonus may be paid in cash, fully vested
LTIP units, fully vested shares or a combination thereof as determined by the Compensation Committee of the Board of Directors, with such allocation subject to Mr. OHerns consent. Mr. OHern is also entitled to certain long-term
incentive compensation, as follows: (1) for each calendar year of the Term, Mr. OHern will receive an annual equity grant in the form of LTIP units having a target grant date value of $6,000,000 per year, which shall be allocated in the same
proportion, and vest on the same terms, as annual grants made to other executive officers and (2) Mr. OHern will receive a one-time grant of fully vested LTIP units on April 26, 2018 with a grant date value of $5,000,000, 50% of which will be
subject to repayment if Mr. OHern is terminated for cause or resigns without good reason (as such terms are defined in the letter agreement) on or prior to April 25, 2019.
Mr. OHern will also continue to participate in the Severance Plan (as described below) during the Term. Upon a termination of Mr. OHerns
employment without cause or his resignation with good reason (other than in a circumstance that would entitle him to severance benefits under the Severance Plan) during the Term, Mr. OHern would be entitled to receive: (a) a prorated annual
bonus for the year of termination, based on actual performance, (b) an amount equal to (i) the sum of his base salary and the average of the three annual incentive bonuses awarded to him in respect of his service as Chief Executive Officer the
immediately preceding three years (or, if such termination occurs before the fiscal year 2018 bonus is payable, his target annual bonus, or, if one or two such bonuses have been awarded, the average of such bonuses) multiplied by (ii) the quotient
of the number of days between his termination date and April 25, 2021, divided by 365, (c) a lump sum cash payment equal to the monthly COBRA continuation rate multiplied by 36, and (d) outplacement services for 12 months pursuant to our
outplacement services for senior executives.
Severance Benefits
On November 2, 2017, we adopted The Macerich Company Change in Control Severance Pay Plan for Senior Executives, which we refer to as the Severance
Plan, which covers all of our named executive officers who are not party to an individual agreement with us that provides for greater severance payments and benefits in the aggregate. The Severance Plan provides specified payments and benefits
in connection with a qualifying termination of employment following a change in control (as defined in the Severance Plan). In addition, we entered into a management continuity agreement with Mr. Leanse in connection with his hire,
which provided for certain payments and benefits upon a change in control and upon a qualifying termination following a change in control. Our goal in providing severance and change in control payments and benefits is to offer sufficient cash
continuity protection such that our named executive officers will focus their full time and attention on the requirements of the business rather than potential implications for their respective positions. We prefer to have certainty regarding the
potential severance amounts payable to our named executive officers following a change in control, rather than negotiating severance at the time that a named executive officers employment with us terminates. We have also determined that
accelerated vesting provisions with respect to equity awards in connection with a change in control of the Company are appropriate because they encourage our named executive officers to stay focused on the business in those circumstances, rather
than focusing on the potential implications for them personally. For a description of our severance and change in control agreements with certain of our named executive officers, see Potential Payments Upon Termination or Change in
Control on page 41 of this Amendment.
Compensation Governance Policies
Stock Ownership Policies
The Board believes that
our directors and executive officers should have a meaningful investment in our Common Stock in order to more closely align their interests with those of our stockholders. Accordingly, the Board has established stock ownership policies for
executives and
non-employee
directors.
Executive Stock Ownership Requirements.
Executives must own
Company Common Stock with a value equal to at least the following multiples of their respective base salaries.
28
|
|
|
|
|
Position
|
|
Ownership Requirement as
Multiple of Base Salary
|
|
Chief Executive Officer
|
|
|
6x
|
|
Other Named Executive Officers
|
|
|
3x
|
|
Non
-
Employee Director Stock Ownership Requirements.
Non-employee
directors must own Common Stock with a value equal to at least five times the annual cash retainer for Board service.
Until the required ownership level is achieved, executives and
non-employee
directors subject to the guidelines must
retain at least 50% of
net-after-tax
profit shares from equity compensation awards.
Net-after-tax
profit shares are shares from vesting of equity grants and/or shares received upon exercise of stock options, net of shares tendered or withheld for
payment of the exercise price and net of taxes. This retention requirement will also apply if an executive or director becomes
non-compliant
due to a reduction in stock price.
These policies also set forth the forms of equity interests in our Company which count toward stock ownership (any pledged securities do not count) and allow
the Board to approve exceptions from time to time for this stock ownership policy. Our policy further provides that a
non-employee
director who is prohibited by law or by the regulations of his or her employer
from having an ownership interest in our Companys securities shall be exempt. Refer to our Guidelines on Corporate Governance, which are posted on our website. All of our directors and named executive officers that are subject to these stock
ownership policies are in compliance with them.
Clawback Policy
We have a clawback policy that allows us to recover cash and equity incentive compensation paid to our executive officers if the compensation was based on
achieving financial results that were subsequently restated and the amount of the executive officers incentive compensation would have been lower had the financial results been properly reported.
Anti-Hedging/Anti-Pledging Policy
We have a
policy prohibiting all of our directors, officers and employees from engaging in any hedging or monetization transactions that are designed to hedge or offset any decrease in the market value of our securities. This policy also prohibits short sales
and the purchase and sale of publicly traded options of our Company. In addition, we have a policy (a) prohibiting all our directors and executive officers from pledging our securities if they are unable to meet our stock ownership requirements
without reference to such pledged shares and (b) recommending that our directors and executive officers not pledge our securities. Currently, no shares of our Company are pledged by our directors and executive officers.
Accounting and Tax Issues
The Committee considers
both the accounting and tax issues raised by the various compensation elements for our Company and our executives.
LTIP Units.
As described
on pages 36-37 of this Amendment, LTIP Units of our Operating Partnership are intended to qualify as profits interests for federal income tax purposes and as such initially do not have full parity, on a per unit basis, with our
common OP Units with respect to liquidating distributions. Such parity can be achieved over time through priority allocations of
book-up
gains attributable to appreciation of the Operating
Partnerships assets. LTIP Units, regardless of when they were issued, are eligible to share in allocable
book-up
gains since the most recent
book-up
or
book-down of the limited partners capital accounts.
Tax Deductibility of Compensation Expense
. Prior to December 22, 2017, when the
Tax Cuts and Jobs Act of 2017 (TCJA) was signed into law, Section 162(m) of the Internal Revenue Code generally disallowed a tax deduction to publicly held companies for compensation paid to certain executive officers in excess of $1
million per officer in any year that did not qualify as performance-based. In connection with fiscal 2017 compensation decisions, the Committee considered the potential tax deductibility of executive compensation under Section 162(m) and sought to
qualify certain elements of these applicable executives compensation as performance-based while also delivering competitive levels and forms of compensation.
Under the TCJA, the performance-based exception has been repealed and the $1 million deduction limit now applies to anyone serving as the chief executive
officer or the chief financial officer at any time during the taxable year and the top three other highest compensated executive officers serving at fiscal yearend. Additionally, any executive subject to the limit in one year will be subject to the
limit in future years, even if the executive would otherwise have been subject to the limit for the future year. The new rules generally apply to taxable years beginning after December 31, 2017, but do not apply to remuneration provided pursuant to
a written binding contract in effect on November 2, 2017 that is not modified in any material respect after that date.
Because of ambiguities and
uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, including the uncertain scope of the transition relief under the legislation repealing Section 162(m)s exception to the deduction
limit for performance-based compensation, no assurance can be given that compensation intended to satisfy the requirements for exception from the Section 162(m) deduction limit will, in fact, satisfy the exception. The Committee reserves the right
to grant or pay compensation that is not deductible as a result of Section 162(m), as well as the right to modify compensation that was initially intended to be exempt from Section 162(m) if it determines that such modifications are consistent with
the companys business needs.
29
EXECUTIVE COMPENSATION
The following table and accompanying notes show for our named executive officers as of December 31, 2017, the aggregate compensation paid, awarded or
earned with respect to such persons in 2015, 2016 and 2017.
Summary Compensation TableFiscal Years 2015-2017
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
Name and
Principal Position
|
|
Year
|
|
|
Salary
($)(1)
|
|
|
Bonus
($)(2)(3)
|
|
|
Stock
Awards
($)(2)(3)(4)
|
|
|
Change in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(5)
|
|
|
All Other
Compensation
($)(6)
|
|
|
Total
($)
|
|
Arthur M. Coppola
|
|
|
2017
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
11,614,879
|
|
|
|
|
|
|
|
219,745
|
|
|
|
12,834,624
|
|
Chairman of the Board of Directors and Chief
|
|
|
2016
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
12,299,899
|
|
|
|
|
|
|
|
238,012
|
|
|
|
13,537,911
|
|
Executive Officer
|
|
|
2015
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
11,999,938
|
|
|
|
|
|
|
|
200,767
|
|
|
|
13,200,705
|
|
Edward C. Coppola
|
|
|
2017
|
|
|
|
800,000
|
|
|
|
|
|
|
|
5,711,901
|
|
|
|
|
|
|
|
186,597
|
|
|
|
6,698,498
|
|
President
|
|
|
2016
|
|
|
|
800,000
|
|
|
|
|
|
|
|
6,239,875
|
|
|
|
|
|
|
|
139,183
|
|
|
|
7,179,058
|
|
|
|
|
2015
|
|
|
|
800,000
|
|
|
|
|
|
|
|
5,399,859
|
|
|
|
|
|
|
|
126,080
|
|
|
|
6,325,939
|
|
Thomas E. OHern
|
|
|
2017
|
|
|
|
600,000
|
|
|
|
|
|
|
|
3,187,914
|
|
|
|
|
|
|
|
71,588
|
|
|
|
3,859,502
|
|
Senior Executive Vice President, Chief
|
|
|
2016
|
|
|
|
600,000
|
|
|
|
|
|
|
|
3,361,110
|
|
|
|
|
|
|
|
73,097
|
|
|
|
4,034,207
|
|
Financial Officer and Treasurer
|
|
|
2015
|
|
|
|
550,000
|
|
|
|
|
|
|
|
2,549,796
|
|
|
|
|
|
|
|
69,256
|
|
|
|
3,169,052
|
|
Robert D. Perlmutter
|
|
|
2017
|
|
|
|
600,000
|
|
|
|
|
|
|
|
3,187,914
|
|
|
|
|
|
|
|
62,327
|
|
|
|
3,850,241
|
|
Former Senior Executive Vice President and Chief
|
|
|
2016
|
|
|
|
600,000
|
|
|
|
|
|
|
|
2,737,465
|
|
|
|
|
|
|
|
63,197
|
|
|
|
3,400,662
|
|
Operating Officer
|
|
|
2015
|
|
|
|
500,000
|
|
|
|
|
|
|
|
2,199,907
|
|
|
|
|
|
|
|
57,330
|
|
|
|
2,757,237
|
|
Thomas J. Leanse
|
|
|
2017
|
|
|
|
500,000
|
|
|
|
|
|
|
|
2,270,900
|
|
|
|
|
|
|
|
57,884
|
|
|
|
2,828,784
|
|
Former Senior Executive Vice President,
|
|
|
2016
|
|
|
|
500,000
|
|
|
|
|
|
|
|
2,612,448
|
|
|
|
|
|
|
|
45,637
|
|
|
|
3,158,085
|
|
Chief Legal Officer and Secretary
|
|
|
2015
|
|
|
|
500,000
|
|
|
|
|
|
|
|
2,449,808
|
|
|
|
|
|
|
|
45,229
|
|
|
|
2,995,037
|
|
(1)
|
Includes any amount of salary deferred under our qualified and nonqualified deferred compensation plans. See Nonqualified Deferred Compensation table below for more information.
|
(2)
|
SEC Reporting of Cash and Equity Awards
|
In reviewing the Summary Compensation Table, it
is important to note that under SEC rules, cash incentive awards are reported in the table for the year that they are earned regardless of when they are paid, while equity awards are reported in the table for the year that they are granted (as
determined in accordance with applicable accounting rules) regardless of when they are earned.
(3)
|
Annual Incentive Reported in Year 2017
|
As described in the Compensation Discussion and
Analysis above, the annual incentive compensation awards for our named executive officers for their 2017 performances were paid in the form of fully-vested LTIP Units on March 2, 2018. Accordingly, the LTIP Unit bonuses granted to these named
executive officers for their 2017 performance will be reported in the Stock Awards column for 2018.
30
Annual Incentive Reported in Year 2016
The annual incentive compensation awards for our named executive officers for their 2016 performances were paid in the form of fully-vested
LTIP Units on March 3, 2017, and were previously described in the Compensation Discussion and Analysis of our proxy statement filed on April 18, 2017. In accordance with SEC rules, the LTIP Unit bonuses granted to these named executive
officers for their 2016 performance are reported in the Stock Awards column for 2017. See also footnote (4) below.
Annual Incentive Reported in Year 2015
The annual incentive compensation awards for our named executive officers for their 2015 performance were paid in the form of fully-vested LTIP
Units on March 4, 2016 and were previously described in the Compensation Discussion and Analysis of our proxy statement filed on April 15, 2016. In accordance with SEC rules, the LTIP Unit bonuses granted to these named executive officers
for their 2015 performance are reported in the Stock Awards column for 2016. See also footnote (4) below.
(4)
|
Stock Awards Reported in Year 2017
|
The amounts reflected in this column for 2017 relate
to performance-based LTIP Units, service-based LTIP Units and fully-vested LTIP Units granted in 2017 under our LTIP and 2003 Incentive Plan. These amounts represent the value at the grant date computed in accordance with FASB ASC Topic 718,
disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions.
a.
|
Performance-Based LTIP Units
. The aggregate grant date fair values for performance-based LTIP Unit awards based upon the probable outcome of the performance conditions as of the grant date were as follows:
|
|
|
|
|
|
Arthur M. Coppola
|
|
$
|
6,749,994
|
|
Edward C. Coppola
|
|
$
|
2,699,950
|
|
Thomas E. OHern
|
|
$
|
1,499,983
|
|
Robert D. Perlmutter
|
|
$
|
1,499,983
|
|
Thomas J. Leanse
|
|
$
|
1,031,218
|
|
The maximum aggregate values for performance-based LTIP Unit awards at the grant date assuming that the highest level of
performance conditions would be achieved were as follows:
|
|
|
|
|
Arthur M. Coppola
|
|
$
|
10,141,454
|
|
Edward C. Coppola
|
|
$
|
4,056,511
|
|
Thomas E. OHern
|
|
$
|
2,253,633
|
|
Robert D. Perlmutter
|
|
$
|
2,253,633
|
|
Thomas J. Leanse
|
|
$
|
1,549,342
|
|
b.
|
Service-Based LTIP Units
. The grant date fair values for service-based LTIP Unit awards were as follows:
|
|
|
|
|
|
Arthur M. Coppola
|
|
$
|
2,249,949
|
|
Edward C. Coppola
|
|
$
|
899,951
|
|
Thomas E. OHern
|
|
$
|
499,989
|
|
Robert D. Perlmutter
|
|
$
|
499,989
|
|
Thomas J. Leanse
|
|
$
|
343,716
|
|
31
c.
|
Fully-Vested LTIP Units
. The grant date fair values for fully-vested LTIP Unit awards, which represent each named executive officers annual incentive award earned for 2016 performance, were as follows:
|
|
|
|
|
|
Arthur M. Coppola
|
|
$
|
2,614,936
|
|
Edward C. Coppola
|
|
$
|
2,112,000
|
|
Thomas E. OHern
|
|
$
|
1,187,942
|
|
Robert D. Perlmutter
|
|
$
|
1,187,942
|
|
Thomas J. Leanse
|
|
$
|
895,966
|
|
Assumptions used in the calculation of these amounts are set forth in footnote 19 to our audited financial statements for the
fiscal year ended December 31, 2017 included in our Annual Report on
Form 10-K
filed with the SEC on February 23, 2018.
Stock Awards Reported in Year 2016
The amounts reflected
in this column for 2016 relate to performance-based LTIP Units, service-based LTIP Units and fully-vested LTIP Units granted in 2016 under our LTIP and 2003 Incentive Plan. These amounts represent the value at the grant date computed in accordance
with FASB ASC Topic 718, disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions.
a.
|
Performance-Based LTIP Units
. The aggregate grant date fair values for the performance-based LTIP Unit awards based upon the probable outcome of the performance conditions as of the grant date were as follows:
|
|
|
|
|
|
Arthur M. Coppola
|
|
$
|
6,749,992
|
|
Edward C. Coppola
|
|
$
|
2,699,965
|
|
Thomas E. OHern
|
|
$
|
1,499,945
|
|
Robert D. Perlmutter
|
|
$
|
1,124,999
|
|
Thomas J. Leanse
|
|
$
|
1,031,209
|
|
The maximum aggregate values for the performance-based LTIP Unit awards at the grant date assuming that the highest level of
performance conditions would be achieved were as follows:
|
|
|
|
|
Arthur M. Coppola
|
|
$
|
10,214,870
|
|
Edward C. Coppola
|
|
$
|
4,085,890
|
|
Thomas E. OHern
|
|
$
|
2,269,890
|
|
Robert D. Perlmutter
|
|
$
|
1,702,478
|
|
Thomas J. Leanse
|
|
$
|
1,560,545
|
|
b.
|
Service-Based LTIP Units
. The grant date fair values for service-based LTIP Unit awards were as follows:
|
|
|
|
|
|
Arthur M. Coppola
|
|
$
|
2,249,960
|
|
Edward C. Coppola
|
|
$
|
899,936
|
|
Thomas E. OHern
|
|
$
|
499,955
|
|
Robert D. Perlmutter
|
|
$
|
374,966
|
|
Thomas J. Leanse
|
|
$
|
343,739
|
|
c.
|
Fully-Vested LTIP Units
. The grant date fair values for fully-vested LTIP Unit awards, which represent each named executive officers annual incentive award earned for 2015 performance, were as follows:
|
|
|
|
|
|
Arthur M. Coppola
|
|
$
|
3,299,947
|
|
Edward C. Coppola
|
|
$
|
2,639,974
|
|
Thomas E. OHern
|
|
$
|
1,361,210
|
|
Robert D. Perlmutter
|
|
$
|
1,237,500
|
|
Thomas J. Leanse
|
|
$
|
1,237,500
|
|
Assumptions used in the calculation of these amounts are set forth in footnote 18 to our audited financial statements for the
fiscal year ended December 31, 2016 included in our Annual Report on
Form 10-K
filed with the SEC on February 24, 2017.
32
Stock Awards Reported in Year 2015
The amounts reflected in this column for 2015 relate to two types of performance-based LTIP Units, service-based LTIP Units and fully-vested LTIP Units granted
in 2015 under our LTIP and 2003 Incentive Plan. These amounts represent the value at the grant date computed in accordance with FASB ASC Topic 718, disregarding for this purpose the estimate of forfeitures related to service-based vesting
conditions.
a.
|
Performance-Based LTIP Units
. The aggregate grant date fair values for the two types of performance-based LTIP Unit awards based upon the probable outcome of the performance conditions as of the grant date were
as follows:
|
|
|
|
|
|
Arthur M. Coppola
|
|
$
|
6,749,961
|
|
Edward C. Coppola
|
|
$
|
2,249,944
|
|
Thomas E. OHern
|
|
$
|
937,409
|
|
Robert D. Perlmutter
|
|
$
|
749,982
|
|
Thomas J. Leanse
|
|
$
|
937,409
|
|
The maximum aggregate values for the two types of performance-based LTIP Unit awards at the grant date assuming that the
highest level of performance conditions would be achieved were as follows:
|
|
|
|
|
Arthur M. Coppola
|
|
$
|
12,724,446
|
|
Edward C. Coppola
|
|
$
|
4,241,399
|
|
Thomas E. OHern
|
|
$
|
1,767,124
|
|
Robert D. Perlmutter
|
|
$
|
1,413,800
|
|
Thomas J. Leanse
|
|
$
|
1,767,124
|
|
b.
|
Service-Based LTIP Units
. The grant date fair values for service-based LTIP Unit awards were as follows:
|
|
|
|
|
|
Arthur M. Coppola
|
|
$
|
2,249,985
|
|
Edward C. Coppola
|
|
$
|
749,939
|
|
Thomas E. OHern
|
|
$
|
312,454
|
|
Robert D. Perlmutter
|
|
$
|
249,980
|
|
Thomas J. Leanse
|
|
$
|
312,454
|
|
c.
|
Fully-Vested LTIP Units
. The grant date fair values for fully-vested LTIP Unit awards, which represent each named executive officers annual incentive award earned for 2014 performance, were as follows:
|
|
|
|
|
|
Arthur M. Coppola
|
|
$
|
2,999,992
|
|
Edward C. Coppola
|
|
$
|
2,399,976
|
|
Thomas E. OHern
|
|
$
|
1,299,933
|
|
Robert D. Perlmutter
|
|
$
|
1,199,945
|
|
Thomas J. Leanse
|
|
$
|
1,199,945
|
|
Assumptions used in the calculation of these amounts are set forth in footnote 18 to our audited financial statements for the
fiscal year ended December 31, 2015 included in our Annual Report on
Form 10-K
filed with the SEC on February 23, 2016.
(5)
|
None of the earnings on the deferred compensation of our named executive officers for 2017 were considered above-market or preferential as determined under SEC rules.
|
33
(6)
|
All Other Compensation includes the following components for 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matching
Contributions
under
401(k) Plan
$
|
|
|
Matching
Contributions
under
Nonqualified
Deferred
Compensation
Plan
$
|
|
|
Life
Insurance
Premiums
$
|
|
|
Other
Welfare
Benefit
Premiums
$
|
|
|
Use of
Private
Aircraft
$
|
|
Arthur M. Coppola
|
|
|
|
|
|
|
|
|
|
|
3,727
|
|
|
|
29,098
|
|
|
|
186,920
|
|
Edward C. Coppola
|
|
|
10,800
|
|
|
|
|
|
|
|
2,973
|
|
|
|
29,098
|
|
|
|
143,726
|
|
Thomas E. OHern
|
|
|
10,800
|
|
|
|
30,000
|
|
|
|
1,690
|
|
|
|
29,098
|
|
|
|
|
|
Robert D. Perlmutter
|
|
|
10,800
|
|
|
|
30,000
|
|
|
|
1,007
|
|
|
|
20,520
|
|
|
|
|
|
Thomas J. Leanse
|
|
|
10,800
|
|
|
|
25,000
|
|
|
|
1,564
|
|
|
|
20,520
|
|
|
|
|
|
Matching Contributions.
Amounts shown include matching deferred compensation contributions by our Company as determined
by our Board of Directors annually under our nonqualified deferred compensation plan and matching contributions by our Company under our 401(k) Plan. The amount of the matching contributions under these plans is determined in the same manner for all
plan participants. See the Nonqualified Deferred Compensation table below.
Other Welfare Benefit Premiums.
Amounts shown reflect the
premiums paid by our Company for medical and disability insurance.
Private Aircraft Use.
Amounts shown reflect the incremental cost to our Company
of such executives personal use of a private aircraft in which our Company owns a fractional interest. The incremental cost is determined by using the amount our Company is billed for such use less the portion reimbursed by the executives and
such amount may include: landing fees, parking and flight planning expenses; crew travel expenses; supplies and catering; aircraft fuel and oil expenses; maintenance, parts and external labor (inspections and repairs); engine insurance expenses;
position flight costs; and passenger ground transportation. Since the aircraft is used primarily for business travel, our Company does not include the fixed costs that do not change based on usage, such as management fees and acquisition costs.
34
Grants of Plan-Based AwardsFiscal 2017
The following table provides information regarding performance-based LTIP Units, service-based LTIP Units and fully-vested LTIP Units granted to our named
executive officers in 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
|
Approval
Date
|
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards(1)
|
|
|
All Other Stock
Awards: Number
of Shares of Stock
or Units
(#)
|
|
|
Grant Date Fair
Value of Stock
and Option
Awards
($)(4)
|
|
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
|
|
|
|
|
|
Arthur M. Coppola
|
|
|
1/1/2017
|
|
|
|
12/14/2016
|
|
|
|
47,672
|
|
|
|
95,487
|
|
|
|
143,160
|
|
|
|
|
|
|
|
6,749,994
|
|
|
|
|
1/1/2017
|
|
|
|
12/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,761
|
(2)
|
|
|
2,249,949
|
|
|
|
|
3/3/2017
|
|
|
|
3/3/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,281
|
(3)
|
|
|
2,614,936
|
|
Edward C. Coppola
|
|
|
1/1/2017
|
|
|
|
12/14/2016
|
|
|
|
19,068
|
|
|
|
38,194
|
|
|
|
57,263
|
|
|
|
|
|
|
|
2,699,950
|
|
|
|
|
1/1/2017
|
|
|
|
12/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,704
|
(2)
|
|
|
899,951
|
|
|
|
|
3/3/2017
|
|
|
|
3/3/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,726
|
(3)
|
|
|
2,112,000
|
|
Thomas E. OHern
|
|
|
1/1/2017
|
|
|
|
12/14/2016
|
|
|
|
10,593
|
|
|
|
21,219
|
|
|
|
31,813
|
|
|
|
|
|
|
|
1,499,983
|
|
|
|
|
1/1/2017
|
|
|
|
12/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,058
|
(2)
|
|
|
499,989
|
|
|
|
|
3/3/2017
|
|
|
|
3/3/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,845
|
(3)
|
|
|
1,187,942
|
|
Robert D. Perlmutter
|
|
|
1/1/2017
|
|
|
|
12/14/2016
|
|
|
|
10,593
|
|
|
|
21,219
|
|
|
|
31,813
|
|
|
|
|
|
|
|
1,499,983
|
|
|
|
|
1/1/2017
|
|
|
|
12/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,058
|
(2)
|
|
|
499,989
|
|
|
|
|
3/3/2017
|
|
|
|
3/3/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,845
|
(3)
|
|
|
1,187,942
|
|
Thomas J. Leanse
|
|
|
1/1/2017
|
|
|
|
12/14/2016
|
|
|
|
7,283
|
|
|
|
14,587
|
|
|
|
21,871
|
|
|
|
|
|
|
|
1,031,218
|
|
|
|
|
1/1/2017
|
|
|
|
12/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,852
|
(2)
|
|
|
343,716
|
|
|
|
|
3/3/2017
|
|
|
|
3/3/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,459
|
(3)
|
|
|
895,966
|
|
(1)
|
Represents awards of performance-based LTIP Units granted under our LTIP and 2003 Incentive Plan as more fully described on pages 36-37 of this Amendment. Performance will be measured on a cumulative basis at the
end of the three-year performance period from January 1, 2017 through December 31, 2019. The number of LTIP Units reported under the Threshold (#) subcolumn represents the number of LTIP Units that would be awarded if our
performance relative to our Equity Peer REITs was at the 25th percentile, which represents the minimum percentile rank that would entitle recipients to awards under the LTIP. The number of LTIP Units reported under the Target (#)
subcolumn represents the number of LTIP Units that would be awarded if our performance relative to our Equity Peer REITs was at the 50th percentile. The number of LTIP Units reported under the Maximum (#) subcolumn represents the
number of LTIP Units that would be awarded if our performance relative to our Equity Peer REITs was at or above the 75th percentile.
|
(2)
|
Represents awards of service-based LTIP Units granted under our LTIP and 2003 Incentive Plan as more fully described on page 37 of this Amendment.
|
(3)
|
Represents awards of fully-vested LTIP Units granted under our LTIP and 2003 Incentive Plan. These awards represent each executives bonus under our annual incentive compensation program for 2016 performance and
were previously described in the Compensation Discussion and Analysis of our proxy statement filed on April 18, 2017.
|
(4)
|
The amounts reflected in this column represent the grant date fair value of these awards computed in accordance with FASB ASC Topic 718 as described in note (4) to the Summary Compensation Table above.
Assumptions used in the calculation of these amounts are set forth in footnote 19 to our audited financial statements for the fiscal year ended December 31, 2017 included in the Original Filing.
|
35
Discussion of Summary Compensation and Grants of Plan-Based Awards Table
Our executive compensation policies and practices, pursuant to which the compensation set forth in the Summary Compensation Table and the Grants of Plan-Based
Awards Table was paid, awarded or earned, are generally described under Compensation Discussion and Analysis and in the footnotes to the compensation tables. The material terms of our LTIP, pursuant to which LTIP Units are granted, are
described below. For a description of our severance and change of control agreements with certain of our named executive officers, see Potential Payments Upon Termination or Change of Control.
LTIP Unit Awards
LTIP Units of our Operating Partnership
are structured to qualify as profits interests for federal income tax purposes. Accordingly, LTIP Units initially do not have full parity, on a per unit basis, with our Operating Partnerships common OP Units with respect to
liquidating distributions. Upon the occurrence of specified events, the LTIP Units can over time achieve full parity with the common OP Units, at which time LTIP Units are convertible, subject to the satisfaction of applicable vesting conditions, on
a
one-for-one
basis into common OP Units. LTIP Units that have been converted into common OP Units and have become vested are redeemable by the holder for shares of
Common Stock on a
one-for-one
basis or the cash value of such shares, at our Companys election. LTIP Units generally may be subject to performance-based vesting or
service-based vesting.
2017 Performance-Based and Service-Based LTIP Units.
Our named executive officers were granted LTIP Units effective
January 1, 2017, with 75% of the total award consisting of performance-based LTIP Units and 25% consisting of service-based LTIP Units. Service-based awards were granted in 2017 to support the long-term retention of our executives.
a.
Performance-Based LTIP Units.
Performance-based awards were granted in 2017 to encourage executives to a longer-term perspective and to
reward them for creating stockholder value in a
pay-for-performance
structure. The 2017 performance-based LTIP Units are subject to performance-based vesting over the
three-year period from January 1, 2017 through December 31, 2019, with the number of LTIP Units vesting, if any, depending on our relative total stockholder return over the performance period as described below. These LTIP Units are
subject to forfeiture to the extent the applicable performance requirements are not achieved. Vesting of the LTIP Units is based on the percentile ranking of our total stockholder return per share of Common Stock relative to our Equity Peer REITs,
as measured at the end of the performance period. Total stockholder return will be measured by the compounded total annual return per share achieved by the shares of common stock of our Company or such Equity Peer REIT and assumed reinvestment of
all dividends and distributions.
Depending on our total stockholder return relative to the total stockholder return of our Equity Peer REITs, vesting of
these LTIP Units will occur in accordance with the schedule below, with linear interpolation between performance levels. Determination of the vesting of our performance-based LTIP Units will occur earlier in the event of a change of control or
qualified termination of employment (which generally includes a termination by our Company without cause or by the executive for good reason) based on our performance through the date of such event.
|
|
|
|
|
Company Percentile Ranking Relative to the Equity Peer REITs
|
|
Percentage of Target LTIP
Units That Vest*
|
|
Below the 25th
|
|
|
0
|
%
|
At the 25th
|
|
|
50
|
%
|
At the 50th
|
|
|
100
|
%
|
At or above the 75th
|
|
|
150
|
%
|
*
|
Linear interpolation between performance levels.
|
Prior to the vesting of the 2017 performance-based LTIP
Units, holders of the 2017 performance-based LTIP Units will be entitled to receive per unit distributions equal to 10% of the regular periodic distributions payable on a common OP Unit, but will not be entitled to receive any special distributions.
Distributions on vested LTIP Units are equal in amount to the regular distributions paid on an equal number of common OP Units, which are equal in amount to the dividends paid on an equal number of shares of Common Stock.
36
b.
Service-Based LTIP Units.
Service-based awards were granted in 2017 to support the long-term
retention of our executives. The 2017 service-based LTIP Units vest in equal annual installments over a three-year period. Vesting is conditioned upon the executive remaining an employee of our Company through the applicable vesting dates, and
subject to acceleration of vesting in the event of a change of control of our Company or the executives death or disability. Following the termination of the executives service relationship with our Company under specified circumstances,
including termination by our Company without cause, or by the executive for good reason, his service-based LTIP Units will continue to vest in accordance with the vesting schedule.
Regular and other
non-liquidating
distributions were made with respect to the service-based LTIP Units from the date
of their issuance to the executive. Distributions were in the same amount and at the same time as those made with respect to common OP Units. At the end of the vesting period, distributions will continue to be made only to the extent that the
service-based LTIP Units have become vested.
2018 Performance-Based and Service-Based LTIP Units.
The Committee continued the LTIP program
for 2018 and awarded LTIP Units to our named executive officers, with 75% of the total award consisting of performance-based LTIP Units and 25% consisting of service-based LTIP Units. The performance period for the 2018 performance-based LTIP Unit
awards is January 1, 2018 through December 31, 2020. For purposes of determining the vesting of the performance-based LTIP Units, the Equity Peer REITs will continue to be the peer group. The number of 2018 performance-based LTIP Units
that will vest will depend solely on our relative TSR versus the peer group.
Outstanding Equity Awards at December 31, 2017
The following table provides information on the holdings of our named executive officers of SARs, stock options, service-based LTIP Units and
performance-based LTIP Units as of December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards(1)
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(3)
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(4)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units
or
Other
Rights
That
Have Not
Vested
(#)(5)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)(6)
|
|
Arthur M. Coppola
|
|
|
107,679
|
(1)
|
|
|
|
|
|
|
|
|
|
|
53.947
|
(1)
|
|
|
3/7/2018
|
|
|
|
30,469
|
|
|
|
2,001,204
|
|
|
|
99,447
|
|
|
|
6,531,679
|
|
Edward C. Coppola
|
|
|
76,508
|
(1)
|
|
|
|
|
|
|
|
|
|
|
53.947
|
(1)
|
|
|
3/7/2018
|
|
|
|
12,188
|
|
|
|
800,508
|
|
|
|
39,778
|
|
|
|
2,612,619
|
|
Thomas E. OHern
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,772
|
|
|
|
444,785
|
|
|
|
22,098
|
|
|
|
1,451,397
|
|
Robert D. Perlmutter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,255
|
|
|
|
410,828
|
|
|
|
19,756
|
|
|
|
1,297,574
|
|
Thomas J. Leanse
|
|
|
10,565
|
(2)
|
|
|
|
|
|
|
|
|
|
|
56.768
|
(2)
|
|
|
9/1/2022
|
|
|
|
4,655
|
|
|
|
305,740
|
|
|
|
15,192
|
|
|
|
997,811
|
|
(1)
|
Represents SAR awards that vested on March 15, 2011 and the number and exercise price reflect certain anti-dilutive adjustments made since the date of grant under our 2003 Incentive Plan.
|
(2)
|
Represents Mr. Leanses stock option award which has vested and the number and exercise price reflect certain anti-dilutive adjustments made since the grant date under our 2003 Incentive Plan.
|
(3)
|
Represents the unvested portion of the 2016 service-based LTIP Units that will vest on December 31, 2018 and the unvested portion of the 2017 service-based LTIP Units that will vest on December 31, 2018 and
December 31, 2019.
|
37
(4)
|
Based on a price of $65.68 per unit, which was the closing price on the NYSE of one share of our Common Stock on December 29, 2017, the last trading day of 2017. Assumes that the value of LTIP Units on a per unit
basis is equal to the per share value of our Common Stock.
|
(5)
|
Represents awards of performance-based LTIP Units granted on January 1, 2016 and January 1, 2017 to our named executive officers under our LTIP and 2003 Incentive Plan. The number of LTIP Units reported in
this table represents 60% of the target number of performance-based LTIP Units granted in 2017, which is based on our performance relative to our Equity Peer REITs during 2017 at the 30
th
percentile and 50% of the target number of performance-based LTIP Units granted in 2016, which is based on our performance relative to our Equity Peer REITs at the 25
th
percentile, which is the
minimum percentile rank that would entitle recipients to awards under the LTIP. As discussed in the Compensation Discussion and Analysis above, none of the performance-based LTIP Units granted in 2016 and 60% of the target number of
performance-based LTIP Units granted in 2017 would have been earned assuming the performance period ended on December 31, 2017 based on our relative TSR performance through such date.
|
(6)
|
The vesting of the 2016 performance-based LTIP Units will be measured on a cumulative basis at the end of the three-year performance period from January 1, 2016 through December 31, 2018 and the 2017
performance-based LTIP Units will be measured on a cumulative basis at the end of the three-year performance period from January 1, 2017 through December 31, 2019. Although these LTIP Units have not vested, for purposes of this table, it
is assumed that one performance-based LTIP Unit represents the economic equivalent of one share of Common Stock. The market value is based upon the closing price of our Common Stock on the NYSE on December 29, 2017 (the last trading day of
2017) of $65.68.
|
Option Exercises and Stock VestedFiscal 2017
The following table presents information regarding vesting of LTIP Units during 2017 that were previously granted to the named executive officers. None of the
named executive officers exercised option awards during 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired
on Exercise
(#)
|
|
|
Value Realized
on Exercise
($)(1)
|
|
|
Number of
Shares
Acquired
on Vesting
(#)(2)
|
|
|
Value Realized
on Vesting
($)(2)
|
|
Arthur M. Coppola
|
|
|
|
|
|
|
|
|
|
|
68,155
|
(3)
|
|
|
4,511,380
|
|
Edward C. Coppola
|
|
|
|
|
|
|
|
|
|
|
42,675
|
(4)
|
|
|
2,831,130
|
|
Thomas E. OHern
|
|
|
|
|
|
|
|
|
|
|
23,511
|
(5)
|
|
|
1,560,085
|
|
Robert D. Perlmutter
|
|
|
|
|
|
|
|
|
|
|
22,745
|
(6)
|
|
|
1,509,774
|
|
Thomas J. Leanse
|
|
|
|
|
|
|
|
|
|
|
17,745
|
(7)
|
|
|
1,177,470
|
|
(1)
|
Represents the amounts realized based on the difference between the market price of our stock on the date of exercise and the exercise price.
|
(2)
|
This number represents (a) the vesting of service-based LTIP Units on December 29, 2017 and (b) the grant of fully-vested LTIP Units on March 3, 2017, representing the annual incentive compensation
award for 2016 performance. An individual, upon the vesting of an equity award, does not receive cash equal to the amount contained in the Value Realized on Vesting column of this table. Instead, the amounts contained in the Value Realized on
Vesting column reflect the market value of our Common Stock on the applicable vesting date. For purposes of this table, it is assumed one LTIP Unit represents the economic equivalent of one share of Common Stock. The LTIP Units do not realize their
full economic value until certain conditions are met, as described on pages 36-37 of this Amendment, and such conditions have been met for the 2015 and 2016 service-based LTIP Units included in this table.
|
38
(3)
|
This number represents (a) the vesting of 28,874 service-based LTIP Units and (b) the grant of 39,281 fully-vested LTIP Units, representing the annual incentive compensation award for 2016 performance.
|
(4)
|
This number represents (a) the vesting of 10,949 service-based LTIP Units and (b) the grant of 31,726 fully-vested LTIP Units, representing the annual incentive compensation award for 2016 performance.
|
(5)
|
This number represents (a) the vesting of 5,666 service-based LTIP Units and (b) the grant of 17,845 fully-vested LTIP Units, representing the annual incentive compensation award for 2016 performance.
|
(6)
|
This number represents (a) the vesting of 4,900 service-based LTIP Units and (b) the grant of 17,845 fully-vested LTIP Units, representing the annual incentive compensation award for 2016 performance.
|
(7)
|
This number represents (a) the vesting of 4,286 service-based LTIP Units and (b) the grant of 13,459 fully-vested LTIP Units, representing the annual incentive compensation award for 2016 performance.
|
39
Nonqualified Deferred CompensationFiscal 2017
Certain of our named executive officers participate or participated in our 2005 Deferred Compensation Plan for Senior Executives, which was amended and
restated as our 2013 Deferred Compensation Plan, effective January 1, 2013, referred to as our Deferred Compensation Plan, which also includes certain amounts deferred prior to 2005 under a predecessor plan. The following table
provides information with respect to our named executive officers for the Deferred Compensation Plan for the fiscal year 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in 2017
($)(1)
|
|
|
Registrant
Contributions
in 2017
($)(2)
|
|
|
Aggregate
Earnings
in 2017
($)(3)
|
|
|
Aggregate
Withdrawals/
Distributions
during 2017
($)
|
|
|
Aggregate
Balance
at 12/31/17
($)(4)
|
|
Arthur M. Coppola
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward C. Coppola
|
|
|
|
|
|
|
|
|
|
|
71,429
|
|
|
|
|
|
|
|
500,533
|
|
Thomas E. OHern
|
|
|
120,000
|
|
|
|
30,000
|
|
|
|
486,682
|
|
|
|
|
|
|
|
2,885,066
|
|
Robert D. Perlmutter
|
|
|
120,000
|
|
|
|
30,000
|
|
|
|
52,474
|
|
|
|
|
|
|
|
1,152,476
|
|
Thomas J. Leanse
|
|
|
100,000
|
|
|
|
25,000
|
|
|
|
98,738
|
|
|
|
|
|
|
|
798,589
|
|
(1)
|
The amounts in this column are included in the Salary column of the Summary Compensation Table.
|
(2)
|
Our Companys contributions to the Deferred Compensation Plan are included in the All Other Compensation column of the Summary Compensation Table.
|
(3)
|
None of the earnings set forth in this column are considered above-market or preferential as determined under SEC rules, and, therefore, none of such amounts are reflected in the Summary Compensation Table.
|
(4)
|
The balances shown represent compensation already reported in the Summary Compensation Table in this Amendment and prior-year proxy statements, except for any earnings that were not above-market or
preferential as determined under SEC rules.
|
Description of Our Deferred Compensation Plan
As of December 31, 2017, Messrs. E. Coppola, OHern, Perlmutter and Leanse had account balances under our Deferred Compensation Plan. Under the
Deferred Compensation Plan, our key executives who satisfy certain eligibility requirements may make annual irrevocable elections to defer a specified portion of their base salary and bonus to be earned during the following calendar year. Deferral
of amounts earned in 2017 by participants were limited to 85% of base salary and 85% of bonus. Our Company will credit an amount equal to the compensation deferred by a participant to that participants deferral account under the Deferred
Compensation Plan. In addition, our Company may credit matching amounts to an account established for each participant in an amount equal to a percentage, established by our Company in its sole discretion prior to the beginning of the plan year, of
the amount of compensation deferred by each participant under the plan. For 2017, our Company matched 25% of the amount of salary and bonus deferred by a participant up to a limit of 5% of the participants total salary and bonus.
Account balances under the Deferred Compensation Plan will be credited with income, gains and losses based on the performance of investment funds selected by
the participant from a list of funds designated by our Company. The amounts credited to participants deferred accounts and Company matching accounts are at all times 100% vested. Participants will be eligible to receive distributions of the
amounts credited to their accounts, at up to six different times that they may specify, in a lump sum or installments pursuant to elections made under the rules of the Deferred Compensation Plan. Changes to these elections under the plan may be made
under limited circumstances. Under the Deferred Compensation Plan, key employees who have elected a payment at termination of employment must generally wait six months after termination, other than as a result of death, to receive a distribution.
Our Company is contributing assets to a trust, which assets remain subject to the claims of our Companys general creditors, to provide a source of funds for payment of our Companys obligations under the Deferred Compensation Plan.
Employees who are eligible to participate in the Deferred Compensation Plan may also be eligible for life insurance coverage in an amount equal to two times their annual salaries.
40
Potential Payments Upon Termination or Change of Control
The following section describes potential payments and benefits to our named executive officers under our current compensation and benefit plans and
arrangements had a termination of employment or a change of control of our Company occurred on December 31, 2017.
On November 2, 2017, we
adopted the Change in Control Severance Pay Plan for Senior Executives (the Severance Plan) which provides for the payment and benefits set forth below upon a qualifying termination of employment following a change in control. We also
entered into a management continuity agreement with Mr. Leanse in connection with his hire.
In addition, our 2003 Incentive Plan contains provisions
regarding the acceleration of vesting and modification of equity awards. The Compensation Committee is authorized to accelerate the vesting of and modify outstanding awards as well as authorize discretionary severance payments to our named executive
officers upon termination. None of our named executive officers, other than Mr. OHern, has an employment agreement with our Company.
Regardless of
the manner in which a named executive officers employment terminates, he is entitled to receive all accrued, vested or earned but deferred compensation and benefits during his term of employment. The information below sets forth the additional
payments and/or benefits to our named executive officers under the specified circumstances.
Change in Control Severance Pay Plan
for Senior Executives
Under the Severance Plan, in the event that the employment of any of the named executive officers is terminated by us other
than for cause (as defined in the Severance Plan) or due to the executives death or total disability (as defined in the Severance Plan) or by the executive for good reason (as defined in the Severance Plan),
in each case upon or within 24 months following a change in control, the named executive officer will be entitled to the following: (i) a lump sum payment equal to three times the sum of (A) the higher of the executives annual base
salary as of the date of termination or the date of the change in control and (B) the average annual incentive bonus award to the executive in respect of the immediately preceding three fiscal years, (ii) a
pro-rated
portion of the executives target annual incentive bonus for the year of termination, payable in a lump sum, (iii) outplacement services pursuant to the Companys outplacement services
plan for a period of 12 months following termination and (iv) a lump sum payment equal to the product of (A) the total amount of COBRA continuation monthly premium rate that would have otherwise been payable by the executive for COBRA
continuation for medical, vision and dental coverage for the executive and his eligible dependents and (B) 36. The Severance Plan does not provide for an excise tax
gross-up
payment to any eligible
participant. Instead, if any payment by our Company would subject an executive to the excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, such payments shall be reduced or the full amount of such payments shall be
made, whichever leaves the executive in the best net
after-tax
position. Receipt of the payments and benefits set forth above is subject to the execution and effectiveness of a general release of claims in
favor of the Company and its affiliates.
Offer Letter with Mr. OHern
Our Company entered into an offer letter with Mr. OHern on April 26, 2018 which provides for certain benefits upon a qualifying termination of
employment, which are described above in the Compensation Discussion and Analysis under Offer Letter with Mr. OHern.
Management Continuity Agreement
Our Company entered into a management continuity agreement with Mr. Leanse in connection with his hiring as our Senior Executive Vice President, Chief
Legal Officer and Secretary, effective January 1, 2013, which provided that if, within two years following a change of control (as defined in the management continuity agreement), his employment is terminated (i) by us for no reason or any
reason other than for cause (as defined in the management continuity agreement) or by reason of death or disability (as defined in the management continuity agreement) or (ii) by Mr. Leanse for good reason (as defined in the management
continuity agreement), he would have been entitled to receive an amount equal to three times the sum of (i) his base salary; and (ii) the amount of the cash and stock/unit portion of his annual incentive bonus awarded for performance for
the fiscal year immediately preceding his termination date (including any supplemental or special cash and/or stock bonus awarded to him for the applicable year) or, if the annual incentive bonus had not yet been awarded for that fiscal year, the
amount of his annual incentive bonus awarded for performance for the second fiscal year immediately preceding his termination date.
In addition,
Mr. Leanse would have been entitled to receive all accrued obligations, including a pro rata share of his bonus amount for the year in which the termination occurred. We would also have generally continued welfare benefits for Mr. Leanse
and his family at least equal to, and at the same
after-tax
cost to him and/or his family, as those that would have been provided to them in accordance with the plans, programs, practices and policies as in
effect immediately prior to the change of control, generally until up to the third anniversary of the termination date (subject to earlier termination if the executive becomes eligible for health coverage under another employers plans).
41
Upon a change of control, any shares of restricted stock, stock units or service-based LTIP Units held by
Mr. Leanse that remained unvested would have immediately vested, any unvested stock options or SARs held by him would have vested in full and been immediately exercisable and any outstanding performance-based LTIP Units would have vested as
provided in the applicable award agreement. See Discussion of Summary Compensation and Grants of Plan-Based Awards TableLTIP Unit Awards. Any such stock options or SARs would have remained exercisable for a period at least until
the first to occur of (1) the expiration of the full term of the option or SAR and (2) one year after the date on which the change of control occurs.
Mr. Leanses management continuity agreement did not provide for an excise tax
gross-up
payment. Instead, if
any payment by our Company would have subjected Mr. Leanse to an excise tax, the payments under his management continuity agreement would have been reduced if the selected accounting firm determined that he would have received greater net after
tax aggregate payments if his payments under his management continuity agreement were so reduced.
Under the management continuity agreement,
Mr. Leanse agreed to certain covenants, including confidentiality in perpetuity and
non-solicitation
of employees for two years after the termination date. Mr. Leanse retired from our Company
effective February 28, 2018.
Treatment of Equity Awards Upon Termination or Change in Control
Upon a Termination of Employment by the Company for Cause
If a named executive officers employment is terminated with cause, he will forfeit all unvested equity awards as of the termination date.
Upon a Termination of Employment by the Company Without Cause
If a named executive officers employment is terminated for any reason, other than (i) by death, disability, resignation or retirement of such
officer or (ii) by termination with cause,
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except as provided below, his equity awards that have not vested as of such termination date will be forfeited,
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he will have three months (or such other period in the Compensation Committees discretion) from the termination date to exercise vested options and SARs, subject to specified limitations,
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his unvested performance-based LTIP Units will be eligible to vest based on performance through the executives termination date (this will also occur if the executive terminates his employment for good reason),
and
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his unvested service-based LTIP Units will continue to vest in accordance with the vesting schedule (this will also occur if the executive terminates his employment for good reason).
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Upon Resignation by the Named Executive Officer
In the event of the resignation of a named executive officer,
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his equity awards that have not vested as of such termination date will be forfeited, and
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he will have three months (or such other period in the Compensation Committees discretion) from the termination date to exercise vested options and SARs, subject to specified limitations.
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Upon Retirement
In the event of the retirement of
a named executive officer,
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under our current retirement policy and except as provided below, all outstanding equity awards will continue to vest in accordance with the vesting schedule originally set forth in his award agreement provided the
named executive officer retires at age 55 or older, has at least five years of service with our Company and has not been directly or indirectly employed by a competitor at any time after his retirement,
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42
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if a named executive officer does not meet the requirements for retirement under our current retirement policy, and the Compensation Committee does not otherwise provide,
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his equity awards that have not vested as of his retirement date will be forfeited,
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he will have 12 months from his retirement date to exercise vested options and SARs, subject to specified limitations, and
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he will forfeit all unvested performance-based and service-based LTIP Units, unless the Compensation Committee determines in its sole discretion to provide for vesting of some or all such LTIP Units.
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Upon Death or Disability
In the event of death or
disability of a named executive officer while employed,
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his benefits under our long-term disability plan or payments under our life insurance plan(s), as appropriate, will be distributed,
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except as provided below, his unvested equity awards will immediately vest,
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his unvested performance-based LTIP Units will be eligible to vest based on performance through the executives date of death or disability, and
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his vested stock options or SARs may be exercised for 12 months after the date of his disability or death.
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Termination/Change of Control Payments Table
The
following table provides the potential payments and benefits to the named executive officers, upon termination of employment or a change in control, assuming such event occurred on December 31, 2017. These numbers do not reflect the actual
amounts that may be paid to such persons, which will only be known at the time that they become eligible for payment and will only be payable if the specified event occurs.
Items Not Reflected in Table
The
following items are not reflected in the table set forth below:
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Accrued salary, bonus, personal time and vacation.
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Costs of COBRA or any other mandated governmental assistance program to former employees.
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Welfare benefits, including life insurance, provided to all salaried employees.
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Amounts outstanding under our 401(k) plan or any deferred compensation plan. There are no special or enhanced benefits under these plans for our named executive officers, and all of such participating officers are fully
vested in these plans. See Nonqualified Deferred Compensation table.
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Other Notes Applicable to the Table
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For the accelerated vesting of the unvested service-based LTIP Units, the table reflects the intrinsic value of such acceleration. The value for each unvested LTIP Unit is $65.68, which represents the closing price of
our Common Stock on the NYSE on December 29, 2017, the last trading day of 2017.
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For the accelerated vesting of Mr. Leanses unvested stock options, the table reflects the intrinsic value of such acceleration. The value for each unvested stock option is the amount by which the closing
price of our Common Stock on the NYSE on December 29, 2017 ($65.68) exceeded the exercise price of the option ($56.768).
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43
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Life insurance amounts only reflect policies paid for by our Company and in effect on December 31, 2017.
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The table assumes that a disability is of a long-term nature, which triggers vesting of unvested equity awards and the accelerated vesting determination of any unvested performance-based LTIP Units.
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Messrs. A. Coppola and E. Coppola also have death benefit coverage under a split-dollar life insurance policy. No premiums have been paid by our Company under this policy since July 30, 2002. At the time of
their death, the total premiums our Company previously paid for the policies will be recovered and the remaining death benefits will be paid to their designated beneficiaries.
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The Termination without cause and Change in Control/Termination rows in the following table include a termination by our Company without cause and a termination for good reason by the named
executive officer.
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The amounts shown are only estimates of the amounts that would be payable to the executives upon termination of employment and do not reflect tax positions we may take or the accounting treatment of such payments.
Actual amounts to be paid can only be determined at the time of separation.
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44
Termination/Change in Control Payments
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Cash
Severance
($)
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Miscellaneous
Benefits
($)
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Service-Based
Awards
($)
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Life
Insurance
Proceeds
($)
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Total
($)
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Arthur M. Coppola
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Termination with cause
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Termination without cause
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2,001,204
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(2)
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2,001,204
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Resignation
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Retirement
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Death
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2,001,204
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(3)
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2,000,000
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4,001,204
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Disability
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(1)
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2,001,204
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(3)
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2,001,204
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Change in control
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2,001,204
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(3)
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2,001,204
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Change in control/Termination
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13,914,875
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87,294
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(4)
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2,001,204
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(3)
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16,003,373
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Edward C. Coppola
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Termination with cause
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Termination without cause
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800,508
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(2)
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800,508
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Resignation
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Retirement
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Death
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800,508
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(3)
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1,600,000
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2,400,508
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Disability
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(1)
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800,508
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(3)
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800,508
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Change in control
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800,508
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(3)
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800,508
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Change in control/Termination
|
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11,151,950
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87,294
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(4)
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800,508
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(3)
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12,039,752
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Thomas E. OHern
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Termination with cause
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Termination without cause
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444,785
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(2)
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444,785
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Resignation
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|
Retirement
|
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|
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Death
|
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|
|
|
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444,785
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(3)
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1,200,000
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|
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|
1,644,785
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Disability
|
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(1)
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444,785
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(3)
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|
444,785
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|
Change in control
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444,785
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(3)
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444,785
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Change in control/Termination
|
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6,549,085
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87,294
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(4)
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|
444,785
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(3)
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7,081,164
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|
Robert D. Perlmutter
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Termination with cause
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Termination without cause
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|
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410,828
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(2)
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|
410,828
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|
Resignation
|
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|
Retirement
|
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Death
|
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|
410,828
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(3)
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|
|
1,200,000
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|
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|
1,610,828
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|
Disability
|
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|
|
|
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|
(1)
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|
410,828
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(3)
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|
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|
410,828
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|
Change in control
|
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|
410,828
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(3)
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|
410,828
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|
Change in control/Termination
|
|
|
6,325,387
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|
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|
61,560
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(4)
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|
410,828
|
(3)
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|
|
|
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|
6,797,775
|
|
Thomas J. Leanse
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Termination with cause
|
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|
Termination without cause
|
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|
|
|
|
|
|
|
305,740
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(2)
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|
|
|
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|
305,740
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|
Resignation
|
|
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
Death
|
|
|
|
|
|
|
|
|
|
|
305,740
|
(5)
|
|
|
1,000,000
|
|
|
|
1,305,740
|
|
Disability
|
|
|
|
|
|
|
|
(1)
|
|
|
305,740
|
(5)
|
|
|
|
|
|
|
305,740
|
|
Change in control
|
|
|
|
|
|
|
|
|
|
|
305,740
|
(5)
|
|
|
|
|
|
|
305,740
|
|
Change in control/Termination
|
|
|
4,805,101
|
|
|
|
66,252
|
(4)
|
|
|
305,740
|
(5)
|
|
|
|
|
|
|
5,177,093
|
|
45
(1)
|
Upon disability, the executive officer will generally receive up to $25,000 monthly until his return to employment.
|
(2)
|
Amount reflects the vesting of service-based LTIP Units. The executive officers unvested service-based LTIP Units will continue to vest in accordance with the vesting schedule upon a termination without cause or
if the executive officer terminates his employment for good reason.
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(3)
|
Amount represents the vesting of service-based LTIP Units.
|
(4)
|
Amount represents the estimated value of continuing welfare benefits for 36 months after December 31, 2017.
|
(5)
|
Amount represents the vesting of service-based LTIP Units and stock options.
|
Compensation Committee Interlocks and Insider Participation
Messrs. Hash and Soboroff and Ms. Stephen each served as a member of the Compensation Committee during 2017. No member of the Compensation Committee
is a past or present officer or employee of our Company or had any relationship with us requiring disclosure under SEC rules requiring disclosure of certain transactions with related persons. In addition, none of our executive officers served as a
director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity, the executive officer of which served as a director or member of the Compensation Committee during 2017.
CEO Compensation Pay Ratio
In
August 2015, pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), the SEC adopted a rule requiring annual disclosure of the ratio of the median employees annual total
compensation to the total annual compensation of the CEO. We believe that executive pay should be internally consistent and equitable to motivate our employees to create stockholder value. The annual total compensation for 2017 for Mr. A.
Coppola, our CEO, was $12,834,624 as reported under the heading Summary Compensation Table. Our median employees total compensation for 2017 was $75,369. As a result, we estimate that Mr. A. Coppolas 2017 total
compensation was approximately 170 times that of our median employee.
Our CEO to median employee pay ratio was calculated in accordance with Item 402(u)
of Regulation
S-K.
We identified the median employee by examining 2017 total compensation consisting of base salary, annual bonus amounts, stock-based compensation (based on the grant date fair value of awards
during 2017) and other incentive payments for all full-time, part-time, seasonal and hourly employees who were employed by the Company on December 31, 2017, other than our CEO. After identifying the median employee based on 2017 total
compensation, we calculated annual total compensation for such employee using the same methodology we use for our named executive officers as set forth in the Total column in the Summary Compensation Table.
The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules, based on our internal records and the methodology
described above. The SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations
and compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may use different
methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
46