ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)On March 23, 2022, the Compensation Committee of the Company’s Board of Directors took the following actions:
Named Executive Officer Base Salary Adjustments:
On March 23, 2022, the Compensation Committee approved the following adjustments to the 2022 base salaries (as previously approved by the Compensation Committee pursuant to its annual review of such salaries in November 2021) of the following officers who currently qualify as “named executive officers” of CBL pursuant to Item 402(a)(3) of Securities and Exchange Commission (“SEC”) Regulation S-K, which such adjustments to be effective as of such date of approval by the Compensation Committee:
|
|
|
Named Executive Officer |
Original 2022 Base Salary Amount |
Adjusted 2022 Base Salary Amount |
Stephen D. Lebovitz, Chief Executive Officer |
$698,803 |
$719,442 |
Michael I. Lebovitz, President |
$423,441 |
$428,691 |
As described in Item 1.01 of this report, these adjustments were made in order to reimburse such officers for income transferred to the Management Company as a result of the assignment of partnership interests they previously held in entities that operated food service establishments in certain of the Company’s malls as described in Item 1.01 above.
Approval of 2022 Annual Incentive Compensation Plan
Also effective March 23, 2022, the Compensation Committee approved the 2022 Annual Incentive Compensation Plan (the “2022 AIP”) that will be applicable to determine annual bonus compensation for performance during the Company’s fiscal year 2022 for four of the five individuals who currently qualify as “named executive officers” of the Company pursuant to Item 402(a)(3) of Securities and Exchange Commission (“SEC”) Regulation S-K and for one additional executive officer designated by the Compensation Committee as a participant in the 2022 AIP (such individuals, collectively, the “Designated Executive Officers”), all as described below.
The 2022 AIP, similar to the Annual Incentive Plans adopted for prior years beginning with fiscal year 2015, is designed to reward the Designated Executive Officers for the achievement of three annual Corporate Goals and Individual Performance Goals, as assessed by the Compensation Committee. For the Chief Executive Officer, 70% of the total AIP opportunity will be based on the Corporate Goals, which are generally quantitative, and the remaining 30% will be based on qualitative Individual Performance Goals. For the other Designated Executive Officers, 60% of the total award will be based on Corporate Goals and the remaining 40% will be based on Individual Performance Goals.
The Corporate Goals portion of the 2022 AIP awards will be allocated between three performance measures, each with an equal 1/3 weighting:
(1) Operational Goals, including goals related to (i) square footage of new and renewal leases signed, (ii) achievement of new development and redevelopment project openings, (iii) achievement of targets related to solutions for anchors and junior anchors at the Company’s properties, (iv) the successful rollout of a new budgeting system and Financial Planning and Analysis software platform to improve budgeting reporting and analysis and (v) successful completion of an Environmental Social Governance (ESG) Materiality Assessment and development of a three-year roadmap;
(2) Financial Goals, including goals related to (i) Funds From Operations (“FFO”), as adjusted, as reported in the Company’s periodic reports (Forms 10‑K and 10‑Q) filed with the SEC (the “Periodic Reports”), (ii) Net Operating Income (“NOI”), as reported in the Periodic Reports, (iii) general and administrative expenses as a percentage of revenue, as reported in the Periodic Reports, relative to a designated peer group, (iv) control of maintenance capital expenditures, as reported in the Periodic Reports, and (v) the Company’s Net Accounts Receivable balance; and
(3) Balance Sheet Goals, including goals related to (i) addressing property level mortgage maturities, (ii) achievement of targeted levels of gross asset sales and (iii) achievement of targeted levels of net debt-to-EBITDA. The remaining portion of the AIP will be based on specific Individual Goals under the qualitative portion.
The target cash bonus award levels were set by the Compensation Committee under the 2022 AIP for each of the Company’s Designated Executive Officers as specified below at amounts representing a 5% increase from the target bonus levels set under the Company’s 2021 Annual Incentive Plan, the Company’s first increase in AIP target bonus levels since 2017:
Designated Executive Officer
|
Total 2022 Target Cash Bonus Award |
Quantitative/ Corporate Goals Allocation |
Qualitative/ Individual Goals Allocation |
Stephen D. Lebovitz, Chief Executive Officer |
$1,000,650 |
70% |
30% |
Farzana Khaleel, Executive Vice President – Chief Financial Officer and Treasurer |
$328,650 |
60% |
40% |
Michael I. Lebovitz, President |
$328,650 |
60% |
40% |
Katie A. Reinsmidt, Executive Vice President – Chief Investment Officer |
$315,000 |
60% |
40% |
Jeffery V. Curry, Chief Legal Officer and Secretary |
$211,050 |
60% |
40% |
Achievement of target performance for a performance measure will result in 100% payout of the portion of the award based on that performance measure. Performance that meets threshold requirements will result in 50% (of target) payout of the portion of the award based on that performance measure and achievement of the stretch performance for a performance measure will result in 150% (of target) payout. Performance achieved between threshold and stretch level for either metric will result in a prorated bonus payout. There will be no payout for the portion of any award that is based on a performance measure for which less than the threshold level of performance is achieved. The Compensation Committee has the ability to adjust each metric, if appropriate, to account for significant unbudgeted transactions or events, such as acquisitions, dispositions, joint ventures, equity or debt issuances and other capital markets activities, mark-to-market adjustments and certain one-time extraordinary charges for purposes of determining the portion of any Corporate Goals AIP Bonus Award payment based on these metrics.
The Individual Performance Goals established by the Compensation Committee for each Designated Executive Officer under the qualitative portion of the 2022 AIP are outlined below:
Designated Executive Officer |
2022 Individual Performance Goals |
Stephen D. Lebovitz |
(1)Refining, enhancing and executing the Company’s strategic and business plans
(2)Progressing enhanced senior staffing and capabilities in financial services
(3)Coordinating closely with the Board Chairman and Lead Director and regularly communicating with other members of the Board
(4)Maintaining and enhancing key retailer, financial and other important relationships |
Farzana Khaleel |
(1)Successfully executing the Company’s Capital Plan including managing future debt maturities
(2)Progressing enhanced senior staffing and capabilities in financial services
(3)Effectively managing the accounting function including relationship with outside auditors
(4)Maintaining and improving key financial stakeholder and joint venture partner relationships
(5)Effectively overseeing cash management, insurance, real estate taxes and other key responsibilities of the CFO |
Michael I. Lebovitz |
(1)Supervising redevelopment projects with a focus on managing capital investment as well as achieving approved pro forma returns and scheduled openings
(2)Managing and enhancing anchor/department store and joint venture partner relationships
(3)Effectively overseeing of the Company’s IT and HR divisions including the implementation of technology and organizational initiatives
(4)Ongoing involvement with the leasing, marketing and management divisions of the Company |
Designated Executive Officer |
2022 Individual Performance Goals |
Katie A. Reinsmidt |
(1)Successfully executing the Company’s capital markets and disposition programs as well as coordinating and participating in development of certain required disclosures and public filings
(2)Progressing enhanced senior staffing and capabilities in financial services
(3)Effectively managing and overseeing corporate communications and investor relations programs as well as the Company’s ESG program
(4)Continuing involvement in Board material preparation and Board support
(5)Involvement in financing transactions |
Jeffery V. Curry |
(1)Overseeing and pursuing favorable resolution of litigation
(2)Effectively managing and overseeing the legal department and managing spend on outside counsel
(3)Continued involvement in Board material preparation and Board support as necessary
(4)Coordinating and supporting other members of the senior executive team |
The additional terms of the 2022 AIP are substantially similar to those of the 2021 Annual Incentive Plan for the Company’s named executive officers, as described in the proxy statement for the Company’s 2021 Annual Meeting of Stockholders previously filed with the SEC. The 2022 AIP is an unfunded arrangement and any compensation payable thereunder may be evaluated, modified or revoked at any time in the sole discretion of the Compensation Committee, which is responsible for administering the plan.
The foregoing summary description of the 2022 AIP is not complete, and is qualified in its entirety by reference to the full text of the 2022 AIP, which is filed as an exhibit to this report