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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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Definitive Proxy Statement

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Soliciting Material under §240.14a-12

 

Simon Property Group, Inc.

(Name of Registrant as Specified In Its Charter)

 

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GRAPHIC


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LOGO

April 1, 2016

Dear Fellow Stockholders:

Please join me and the Board of Directors at our 2016 Annual Meeting of Stockholders on May 11, 2016 at our headquarters in Indianapolis, Indiana. The business to be conducted at the meeting is explained in the attached Notice of Annual Meeting and Proxy Statement. We are pleased to furnish proxy materials to our stockholders over the Internet. We believe that this e-proxy process expedites stockholders' receipt of proxy materials, while also lowering the costs and reducing the environmental impact of our Annual Meeting.

2015 was an excellent year for Simon Property Group, and I would like to thank our employees for their hard work and dedication and our stockholders for their continued interest and support of our Company.

Whether or not you plan to attend the meeting in person, please read the Proxy Statement and vote your shares. Instructions for Internet and telephone voting are included in your Notice of Internet Availability of Proxy Materials or proxy card (if you receive your materials by mail). We hope that after you have reviewed the Proxy Statement you will vote at the meeting in accordance with the Board's recommendations. Your vote is important to us and our business.

Sincerely,

GRAPHIC

David Simon
Chairman of the Board and Chief Executive Officer

   




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GRAPHIC

  NOTICE OF ANNUAL MEETING
  OF STOCKHOLDERS

MAY 11, 2016
8:30 A.M. (EDT)

Simon Property Group Headquarters
225 West Washington Street, Indianapolis, Indiana 46204

ITEMS OF BUSINESS

1.
Elect the eleven directors named in this Proxy Statement, including three directors to be elected by the voting trustees who vote the Class B common stock;

2.
Advisory vote to approve executive compensation;

3.
Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2016; and

4.
Other business as may properly come before the meeting or any adjournments or postponements of the meeting.

RECORD DATE

You can vote if you are a stockholder of record on March 14, 2016 (the "Record Date").

ANNUAL REPORT

Our 2015 Annual Report to Stockholders accompanies, but is not part of or incorporated into, these proxy materials.

PROXY VOTING

On or about April 1, 2016, a Notice of Internet Availability of Proxy Materials and Notice of Annual Meeting of Stockholders (the "Notice") is first being mailed to our stockholders of record as of the Record Date and our proxy materials are first being posted on the website referenced in the Notice ( www.proxyvote.com). As more fully described in the Notice, all stockholders may choose to access our proxy materials on the website referred to in the Notice or may request a printed set of our proxy materials. In addition, the Notice and website provide information regarding how you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. For those stockholders who previously requested to receive proxy materials in printed form by mail or electronically by email on an ongoing basis, you will receive those materials as you requested.

Stockholders as of the Record Date are invited to attend the Annual Meeting, but if you cannot attend in person, please vote in advance of the meeting by using one of the methods described in the Proxy Statement. Stockholders may vote their shares (1) in person at the Annual Meeting, (2) by telephone, (3) through the Internet or (4) by completing and mailing a proxy card if you receive your proxy materials by mail. Specific instructions for voting by telephone or through the Internet are included in the Notice. If you attend and vote at the meeting, your vote at the meeting will replace any earlier vote you cast.

By order of the Board of Directors,

GRAPHIC

James M. Barkley
Secretary

April 1, 2016

   





TABLE OF CONTENTS

PLEASE VOTE 

  2

PROXY SUMMARY 

 
3

PROXY STATEMENT 

 
5

CORPORATE GOVERNANCE OF THE COMPANY 

 
5

Board Leadership Structure 

  5

Board's Role in Oversight of Risk Management 

  6

Director Independence 

  6

Policies on Corporate Governance 

  6

Majority Vote Standard for Election of Directors 

  7

Nominations for Directors 

  7

Communications with the Board 

  7

Stockholder Engagement and Outreach 

  8

Section 16(a) Beneficial Ownership Reporting Compliance 

  8

Transactions With Related Persons 

  8

PROPOSAL 1:      Election of Directors 

 
9

Nominees for Director to Be Elected by Holders of Voting Shares 

  9

Nominees for Director to Be Elected by the Voting Trustees Who Vote the Class B Common Stock 

  12

Meetings and Committees of the Board 

  13

Committee Function and Membership 

  14

Director Compensation 

  15

Ownership of Equity Securities of the Company 

  17

PROPOSAL 2:      Advisory Vote to Approve Executive Compensation 

 
19

COMPENSATION COMMITTEE REPORT 

 
19

COMPENSATION DISCUSSION AND ANALYSIS 

 
20

Executive Summary 

  20

Summary Compensation Table 

  33

Grants of Plan-Based Awards in 2015 

  33

Outstanding Equity Awards At 2015 Fiscal Year-End 

  34

Option Exercises and Stock Vested in 2015 

  35

Nonqualified Deferred Compensation in 2015 

  35

Role of the Independent Compensation Consultant 

  41

PROPOSAL 3:      Ratification of Independent Registered Public Accounting Firm 

 
42

REPORT OF THE AUDIT COMMITTEE 

 
42

ADDITIONAL INFORMATION 

 
44

FREQUENTLY ASKED QUESTIONS AND ANSWERS 

 
45


SIMON PROPERTY GROUP   2016 PROXY STATEMENT    1


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PLEASE VOTE

It is very important that you vote to play a part in the future of your Company. New York Stock Exchange ("NYSE") rules provide that if your shares are held through a broker, bank or other nominee, they cannot vote on your behalf on non-discretionary matters without your instruction.

PROPOSALS WHICH REQUIRE YOUR VOTE

PROPOSAL
   
  MORE
INFORMATION

  BOARD
RECOMMENDATION

  BROKER
NON-VOTES

  ABSTENTIONS
  VOTES REQUIRED
FOR APPROVAL

1   Elect the eleven directors named in this Proxy Statement, including three directors to be elected by the voting trustees who vote the Class B common stock   Page 9   FOR
all nominees
  Do not impact outcome   Do not impact outcome   More votes FOR than AGAINST. Under our By-Laws, a nominee who receives more AGAINST votes than FOR votes will be required to tender his or her resignation.
2   Advisory vote to approve executive compensation   Page 19   FOR   Do not impact outcome   Do not impact outcome   Majority of votes cast.
3   Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2016   Page 42   FOR   N/A   Do not impact outcome   Majority of votes cast.



BY INTERNET USING A COMPUTER

 


 

BY TELEPHONE

 


 

BY MAIL


GRAPHIC





 


GRAPHIC





 


GRAPHIC

Vote 24/7
www.proxyvote.com


 


 

Dial toll-free 24/7
1-800-690-6903


 


 

Cast your ballot, sign your proxy card
and send by pre-paid mail

PLEASE VISIT OUR ANNUAL MEETING WEBSITE:   annualmeeting.simon.com

Review and download easy to read versions of our Proxy Statement and Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the "Annual Report").

Sign up for future electronic delivery to reduce the impact on the environment.


2     SIMON PROPERTY GROUP   2016 PROXY STATEMENT


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PROXY SUMMARY

This proxy summary highlights information which may be contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. Page references are supplied to help you find further information in this Proxy Statement.

ELIGIBILITY TO VOTE (page 45)

You can vote if you were a stockholder of record at the close of business on March 14, 2016.

HOW TO CAST YOUR VOTE (page 2)

You can vote by any of the following methods:

Internet: www.proxyvote.com until 11:59 P.M. EDT on May 10, 2016;

Telephone: 1-800-690-6903 until 11:59 P.M. EDT on May 10, 2016; or

Mail: Completing, signing and returning your proxy or voting instruction card.

GOVERNANCE OF THE COMPANY (page 5)

We pride ourselves on continuing to observe and implement best practices in our corporate governance.

BOARD NOMINEES (page 9)

NAME OF
INDEPENDENT DIRECTOR

  AGE
  OCCUPATION
  COMMITTEE MEMBERSHIPS

Glyn F. Aeppel

  57   President and CEO of Glencove Capital   To be determined

Larry C. Glasscock

    68   Retired Chairman of WellPoint, Inc. (now Anthem, Inc.)   Lead Independent Director, Audit, Governance and Nominating

Karen N. Horn, Ph.D.

  72   Retired President, Global Private Client Services and Managing Director, Marsh, Inc.   Governance and Nominating (Chair)

Allan Hubbard

    68   Co-Founder, Chairman and Chief Executive Officer of E&A Industries, Inc.   Compensation, Governance and Nominating

Reuben S. Leibowitz

  68   Managing Member of JEN Partners   Compensation (Chair), Audit

Gary M. Rodkin

    64   Retired Chief Executive Officer and Director of ConAgra Foods, Inc.   To be determined

Daniel C. Smith, Ph.D.

  58   Professor of Marketing at the Kelley School of Business, Indiana University, and President and CEO of the Indiana University Foundation   Compensation, Governance and Nominating

J. Albert Smith, Jr.

    75   Chairman, Chase Bank in Central Indiana and Managing Director of J.P. Morgan Private Bank   Audit (Chair), Compensation

 

NAME OF DIRECTOR
  AGE
  OCCUPATION
  COMMITTEE MEMBERSHIPS

David Simon

  54   Chairman of the Board and Chief Executive Officer of the Company   None

Richard S. Sokolov

    66   President and Chief Operating Officer of the Company   None

Herbert Simon

  81   Chairman Emeritus of the Board of the Company   None


SIMON PROPERTY GROUP   2016 PROXY STATEMENT    3


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PROXY SUMMARY

COMPENSATION DISCUSSION AND ANALYSIS (page 20)

2015 was an exceptional year for our Company, and we continue to have strong alignment between our executive compensation and the interests of our stockholders. Our outstanding one-year total stockholder return ("TSR") performance in 2015 reinforced our compensation decisions and programs for our Named Executive Officers ("NEOs"). The amount of LTIP awards that were earned under the 2013-2015 LTIP program was less than the target amount because our three-year TSR performance did not meet or exceed the rigorous performance measures for one component of the LTIP program.

As you will see in the COMPENSATION DISCUSSION AND ANALYSIS section included in this Proxy Statement, our Compensation Committee continues to consider the input received during our ongoing stockholder engagement. The Compensation Committee believes that appropriate actions have been taken to address the interests of our stockholders and ensure strong alignment of interests between our stockholders and our executive compensation program. The Compensation Committee is confident that our executive compensation program is appropriately designed to incent strong performance over the longer term. The Compensation Committee will continue to consider stockholder feedback in its ongoing review of our executive compensation program.

SAY ON PAY (page 19)

RATIFICATION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (page 42)

VOTING
PROPOSALS

  BOARD OF DIRECTORS'
RECOMMENDATIONS

Proposal 1   Elect the eleven directors named in this Proxy Statement, including three directors to be elected by the voting trustees who vote the Class B common stock   FOR
All nominees
(page 9)
Proposal 2   Advisory vote to approve executive compensation   FOR
(page 19)
Proposal 3   Ratify the appointment of Ernst & Young, LLP as our independent registered public accounting firm for 2016   FOR
(page 42)


4     SIMON PROPERTY GROUP   2016 PROXY STATEMENT


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LOGO


PROXY STATEMENT

This Proxy Statement and accompanying proxy are being made available to stockholders on or about April 1, 2016 in connection with the solicitation by the Board of Directors (the "Board") of Simon Property Group, Inc. ("Simon", "SPG", "we", "us", "our" or the "Company") of proxies to be voted at the 2016 Annual Meeting of Stockholders to be held at the corporate headquarters of the Company located at 225 West Washington Street, Indianapolis, Indiana 46204 on May 11, 2016 at 8:30 a.m. (EDT). As required by rules adopted by the U.S. Securities and Exchange Commission (the "SEC"), the Company is making this Proxy Statement and its Annual Report available to stockholders electronically via the Internet. In addition, SPG is using the SEC's "Notice and Access" rules to provide stockholders with more options for receipt of these materials. Accordingly, on April 1, 2016, the Company will begin mailing the Notice to stockholders containing instructions on how to access this Proxy Statement and the Company's Annual Report via the Internet, how to vote online or by telephone, and how to receive paper copies of the documents and a proxy card.


CORPORATE GOVERNANCE OF THE COMPANY

BOARD LEADERSHIP STRUCTURE

Our Governance Principles provide for a strong Lead Independent Director role.

The Lead Independent Director presides over all meetings of the Board at which the Chairman is not present, including the regularly conducted executive sessions of the independent directors, sets Board agendas and facilitates interactions between the independent directors and the senior management team.

In March of 2014 Larry C. Glasscock was appointed by our independent directors to serve as our Lead Independent Director. David Simon has served since 2007 as the Chairman of the Board of Directors and Chief Executive Officer. The Board of Directors continues to believe that having David Simon fill these two leadership roles is an appropriate and efficient leadership structure. Together, our Lead Independent Director and the Chairman and Chief Executive Officer, facilitate clear leadership, responsibility and accountability, effective decision-making and a cohesive corporate strategy.

8 of our director nominees are independent under the requirements set forth in the NYSE Listed Company Manual.

All of the members of the Audit Committee, Governance and Nominating Committee, and Compensation Committee are independent directors under the listing requirements and rules of the NYSE and other applicable laws, rules and regulations.

Effective as of the 2016 Annual Meeting of Stockholders, Melvyn E. Bergstein, one of our independent directors, will retire from the Board. The Board of Directors has nominated Glyn F. Aeppel for election to the Board seat that will be vacant upon Mr. Bergstein's retirement. Mr. Rodkin and Ms. Aeppel were nominated for election to the Board of Directors upon the recommendation of the Governance and Nominating Committee who in 2014 retained an internationally recognized search firm to assist the Committee in its efforts to source high quality candidates for election to the Board. That search firm sourced both Ms. Aeppel and Mr. Rodkin as candidates for Board membership.

SUMMARY OF BOARD EXPERIENCE

 
  G.
AEPPEL

  L.
GLASSCOCK

  K.
HORN

  A.
HUBBARD

  R.
LEIBOWITZ

  G.
RODKIN

  A.
SMITH

  D.
SMITH

  D.
SIMON

  R.
SOKOLOV

  H.
SIMON

High level of financial literacy and capital market experience   X   X   X     X   X   X     X    
Relevant Chief Executive Officer/President Experience   X   X   X   X   X   X   X   X   X   X    
Retail real estate or commercial real estate   X   X       X     X     X   X   X
Broad international exposure   X       X           X       X   X       X
Marketing/marketing-related technology experience         X     X     X      
Governmental or geopolitical expertise           X   X                       X    
Risk oversight/management expertise   X   X   X   X   X   X   X   X   X   X   X


SIMON PROPERTY GROUP   2016 PROXY STATEMENT    5


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CORPORATE GOVERNANCE OF THE COMPANY

THE BOARD OF DIRECTORS BELIEVES THAT ITS MEMBERS SHOULD:

exhibit high standards of independent judgment and integrity;

have a strong record of achievements;

have an understanding of our business and the competitive environment in which we operate;

 

have diverse experiences and backgrounds, including racial and gender diversity; and

be committed to enhancing stockholder value on a long-term basis and have sufficient time to carry out their duties.

In addition, the Board of Directors has determined that the Board, as a whole, should strive to have the right mix of characteristics and skills necessary to effectively perform its oversight responsibilities. The Board believes that directors with one or more of the following professional skills can assist in meeting this goal:

leadership of large and complex organizations;

accounting and finance;

e-commerce related internet-based businesses;

capital markets;

retail marketing;

strategic planning;

 

relevant industries;

real estate acquisitions, development and operations;

banking, legal and corporate governance;

government and governmental relationships; and

international business.

BOARD'S ROLE IN OVERSIGHT OF RISK MANAGEMENT

While risk management is primarily the responsibility of our management, the Board of Directors provides overall risk oversight focusing on the most significant risks we face. We have implemented a Company-wide enterprise risk management process to identify and assess the major risks we face and develop strategies for controlling, mitigating and monitoring risk. As part of this process, we gather information throughout our Company to identify and prioritize these major risks. The identified risks and risk mitigation strategies are validated with management and discussed with the Audit Committee on an ongoing basis.

The Audit Committee reviews our risk management programs and reports on these items to the full Board. Our Vice President of Audit Services is responsible for supervising the enterprise risk management process and in that role reports directly to the Audit Committee. Other members of senior management who have responsibility for designing and implementing various aspects of our risk management process also regularly meet with the Audit Committee. The Audit Committee discusses our identified financial and operational risks with our Chief Executive Officer and Chief Financial Officer and receives reports from other members of senior management with regard to our identified risks.

The Compensation Committee is responsible for overseeing any risks relating to our compensation policies and practices. Specifically, the Compensation Committee oversees the design of incentive compensation arrangements of our executive officers to implement our pay-for-performance philosophy without encouraging or rewarding excessive risk-taking by our executive officers.

Our management regularly conducts additional reviews of risks, as needed, or as requested by the Board or Audit Committee.

DIRECTOR INDEPENDENCE

The Board has adopted standards to assist it in making determinations of director independence. These standards incorporate, and are consistent with, the definition of "independent" contained in the NYSE Listed Company Manual and other applicable laws, rules and regulations in effect from time to time regarding director independence. These standards are included in our Governance Principles, which are available at governanceprinciples.simon.com. In March 2014, the Board amended and restated the Governance Principles to strengthen the role of the Lead Independent Director. The Board has affirmatively determined that each of the persons nominated by the Board for election as directors by the holders of voting shares meets these standards and is independent.

David Simon, Richard Sokolov and Herbert Simon are our employees and are not considered independent directors.

POLICIES ON CORPORATE GOVERNANCE

Good corporate governance is important to ensure that the Company is managed for the long-term benefit of its stockholders and to enhance the creation of long-term stockholder value. Each year, the Board or one of its committees reviews our Governance Principles, the written charters for each of the Board's standing committees at committeecomposition.simon.com and our Code of


6     SIMON PROPERTY GROUP   2016 PROXY STATEMENT


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CORPORATE GOVERNANCE OF THE COMPANY

Business Conduct and Ethics which can be found at codeofconduct.simon.com. The current version of each of these documents is available by clicking on any of the previous links or by visiting www.simon.com, by visiting the Corporate Governance section at investors.simon.com, or by requesting a copy in print without charge upon written request to our Secretary at 225 West Washington Street, Indianapolis, Indiana 46204.

We will also either disclose on Form 8-K and/or post on our Internet website any substantive amendment to, or waiver from, a provision of the Code of Business Conduct and Ethics that applies to any of our directors or executive officers.

MAJORITY VOTE STANDARD FOR ELECTION OF DIRECTORS

Our By-Laws provide for a majority voting standard for the election of directors, provided a quorum is present. This means that any director who, in an uncontested election, receives a greater number of "against" votes than "for" votes must promptly tender his or her resignation to the Board of Directors, subject to its acceptance. The Governance and Nominating Committee will promptly consider the tendered resignation and recommend to the Board whether to accept or reject it. Both the Governance and Nominating Committee and the Board may consider any factors they deem appropriate and relevant to their actions.

The Board will act on the tendered resignation, taking into account the Governance and Nominating Committee's recommendation. The affected director cannot participate in any part of the process. We will publicly disclose the Board's decision by a press release, a filing with the SEC or other broadly disseminated means of communication within 90 days after the vote is certified.

In a contested election (in which the number of nominees exceeds the number of directors to be elected), the standard for election of directors will be a plurality of the votes cast by the holders of shares entitled to vote on the election of directors, provided a quorum is present.

NOMINATIONS FOR DIRECTORS

The Governance and Nominating Committee will consider director nominees recommended by stockholders in accordance with the requirements of our By-Laws. A stockholder who wishes to recommend a director candidate should send such recommendation to our Secretary at 225 West Washington Street, Indianapolis, Indiana 46204, who will forward it to the Governance and Nominating Committee. Any such recommendation shall include a description of the candidate's qualifications for Board service, the candidate's written consent to be considered for nomination and to serve if nominated and elected, as well as the addresses and telephone numbers for contacting the stockholder and the candidate for more information. A stockholder who wishes to nominate an individual as a director candidate at the annual meeting of stockholders, rather than recommend the individual to the Governance and Nominating Committee as a nominee, shall comply with the requirements described above and in addition must comply with the advance notice requirements for stockholder nominations set forth in our By-Laws.

Our Governance Principles provide that all candidates for election as members of the Board should possess high personal and professional ethics, integrity and values and be committed to representing the long-term interests of our stockholders and otherwise fulfilling the responsibilities of directors as described in our Governance Principles. In 2016, we amended our Governance Principles to clearly reflect and communicate the Board's long-standing diversity goals including, without limitation, the pursuit of racial and gender diversity taking into account the skills and other attributes the Board believes are required for any new Director. Our Governance Principles further provide that if our directors simultaneously serve on more than four boards of public companies, including our Board, then the Board or Governance and Nominating Committee must determine that serving on more than four public company boards does not impair the ability of the director to serve as an effective member of our Board. In recommending candidates to the Board for election as directors, the Governance and Nominating Committee will consider the foregoing minimum qualifications as well as each candidate's credentials, keeping in mind our desire, as stated in our Governance Principles, to have a Board representing diverse experiences and backgrounds, as well as expertise in or knowledge of specific areas that are relevant to our business activities.

COMMUNICATIONS WITH THE BOARD

The Board has implemented a process by which our stockholders and other interested parties may communicate with one or more members of our Board, its committees or the independent directors as a group in a writing addressed to Simon Property Group, Inc., Board of Directors, c/o Secretary, 225 West Washington Street, Indianapolis, Indiana 46204. The Board has instructed our Secretary to promptly forward all such communications to the specified addressees thereof.


SIMON PROPERTY GROUP   2016 PROXY STATEMENT    7


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CORPORATE GOVERNANCE OF THE COMPANY

STOCKHOLDER ENGAGEMENT AND OUTREACH

The Company continued to engage with stockholders in 2015 and early 2016 concerning, among other things, the issuance of the Company's Sustainability Report. In addition, since our 2015 annual meeting, our executive officers and certain independent members of our Board of Directors have considered the input received from stockholders (in face-to-face discussions, conference calls and/or written communication) representing approximately 25.6% of the shares outstanding and entitled to vote at the 2016 Annual Meeting of Stockholders.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires our directors, executive officers and beneficial owners of more than 10% of our capital stock to file reports of ownership and changes of ownership with the SEC and the NYSE. Based on our records and other information, we believe that during the year ended December 31, 2015 all applicable Section 16(a) filing requirements were met.

TRANSACTIONS WITH RELATED PERSONS

On an annual basis, each director and executive officer is obligated to complete a director and officer questionnaire, which requires disclosure of any transactions with us in which the director or executive officer, or any member of his or her immediate family, has or will have an interest. Pursuant to our Code of Business Conduct and Ethics at codeofconduct.simon.com, which is also available in the Corporate Governance section at investors.simon.com, the Audit Committee must review and approve all related person transactions in which any executive officer, director, director nominee or more than 5% stockholder of the Company, or any of their immediate family members, had, has or will have a direct or indirect material interest. Pursuant to the charter of the Audit Committee, which is available in the Corporate Governance section at investors.simon.com, the Audit Committee may not approve a related person transaction unless (1) it is in, or not inconsistent with, our best interests and (2) where applicable, the terms of such transaction are at least as favorable to us as could be obtained from an unrelated third party. Our Restated Certificate of Incorporation requires that at least a majority of our directors be neither our employees nor members or affiliates of members of the Simon family. Our Restated Certificate of Incorporation further requires that transactions involving us in our capacity as general partner of our wholly owned subsidiary, Simon Property Group, L.P. (the "Operating Partnership"), and any entity in which any of the Simons has an interest must, in addition to any other vote that may be required, be approved in advance by a majority of such independent directors. We currently have eight independent directors serving on the Board.

Our General Counsel is charged with reviewing any conflict of interest involving any other employee.

TRANSACTIONS WITH THE SIMONS

Pursuant to management agreements that provide for our receipt of a management fee and reimbursement of our direct and indirect costs, we have managed since 1993 two shopping centers owned by entities in which David Simon and Herbert Simon have ownership interests that were not contributed to the Operating Partnership. In addition, in 2015 we assisted Melvin Simon & Associates, Inc. ("MSA") and certain of its affiliates with placement of the property and casualty insurance programs required for certain retail and other commercial buildings and improvements owned by MSA or its affiliates. In 2015, we received $4,323,754 in fees and reimbursements from MSA and its affiliates for rendering management and insurance-related services to MSA and its affiliates. These agreements have been reviewed and approved by the Audit Committee. In 2015, we reimbursed David Simon $2,415,337 for the Company-related business use of his personal aircraft. Our reimbursement for use of David Simon's personal aircraft is based upon a below-market hourly cost of operating the aircraft and the verified number of hours of our business use, plus reimbursement for certain out-of-pocket expenses. These reimbursements were reviewed and approved by the Audit Committee.

We provide MSA with office space and legal, human resource administration, property specific financing and other support services, and MSA paid us $600,000 for these services in 2015, which is net of our reimbursement of Herbert Simon for costs incurred to operate his personal aircraft when used for Company related business purposes. These payments and reimbursements were reviewed and approved by the Audit Committee.


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PROPOSAL 1:      Election of Directors

The Board of Directors currently consists of eleven members, Melvyn E. Bergstein, one of our independent directors, will retire from the Board. The Board of Directors has nominated Glyn F. Aeppel for election to the Board seat that will be vacant upon Mr. Bergstein's retirement. Based on the recommendation of the Governance and Nominating Committee, the Board has nominated the following eight persons listed as "Nominees for Director to be Elected by Holders of Voting Shares." All of the nominees are current directors, except for Ms. Aeppel who is a first time nominee.

We expect each nominee for election as a director named in this Proxy Statement will be able to serve if elected. If any nominee is not able to serve, proxies will be voted in favor of the remainder of those nominated and may be voted for substitute nominees.

The names, principal occupations and certain other information about the nominees for director, as well as key experiences, qualifications, attributes and skills that led the Governance and Nominating Committee to conclude that such person is currently qualified to serve as a director, are set forth on the following pages.

NOMINEES FOR DIRECTOR TO BE ELECTED BY HOLDERS OF VOTING SHARES

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE FOLLOWING INDEPENDENT DIRECTOR NOMINEES:

PHOTO  
Glyn F. Aeppel
Age: 57
Director since: New Director nominee
Committees Served:—To be determined
Other Public Directorships: AvalonBay Communities, Inc.
  PHOTO  
Larry C. Glasscock
Age: 68
Director since: 2010
Committees Served: Lead Independent Director, Audit, Governance and Nominating
Other Public Directorships: Zimmer Holdings, Inc. and Sysco Corporation

President and Chief Executive Officer of Glencove Capital, a lifestyle hospitality investment and advisory company that she founded, since 2010. From October 2008 to May 2010, Ms. Aeppel served as Chief Investment Officer of Andre Balazs Properties, an owner, developer and operator of lifestyle luxury hotels. From April 2006 to October 2008, she served as Executive Vice President of Acquisitions and Development for Loews Hotels and was a member of its executive committee. From April 2004 to April 2006, she was a principal of Aeppel and Associates, a hospitality advisory development company, during which time she assisted Fairmont Hotels and Resorts in expanding in the United States and Europe. Prior to April 2004, Ms. Aeppel held executive positions with Le Meridien Hotels, Interstate Hotels & Resorts, Inc., FFC Hospitality, LLC, Holiday Inn Worldwide and Marriott Corporation. Ms. Aeppel currently serves on the board of directors of AvalonBay Communities, Inc., where she is a member of the audit and chair of the investment and finance committees. She also serves on the board of Exclusive Resorts, LLC, a privately held company. Ms. Aeppel previously served on the boards of Key Hospitality Acquisition Corporation, Loews Hotels Corporation and Sunrise Senior Living, Inc.
 
SPECIFIC QUALIFICATIONS AND EXPERIENCE OF PARTICULAR RELEVANCE TO OUR COMPANY
Ms. Aeppel has more than 30 years of experience in property acquisitions, development and financing. Ms. Aeppel has experience in both public and private companies focusing on the acquisition, operation and branding of hotel properties, including serving as Chief Investment Officer at Andre Balazs Properties and Executive Vice President, Acquisitions and Development, of Loews Hotel Corporation. The Board has concluded that Ms. Aeppel should serve as a director based on her broad background and long experience in property acquisitions, development, branding and financing.

 

Former Chairman of WellPoint, Inc. (now Anthem, Inc.) a healthcare insurance company, from November 2005 to March 2010. Mr. Glasscock also served as President and Chief Executive Officer of WellPoint, Inc. from 2004 to 2007. Mr. Glasscock previously served as Chairman, President and Chief Executive Officer of Anthem, Inc. from 2003 to 2004 and served as President and Chief Executive Officer of Anthem,  Inc. from 2001 to 2003. Mr. Glasscock also previously served as a director of Anthem, Inc.
 
SPECIFIC QUALIFICATIONS AND EXPERIENCE OF PARTICULAR RELEVANCE TO OUR COMPANY
Mr. Glasscock served as the Chief Executive Officer of the nation's leading health benefits company for many years. He has experience in leading a large public company, setting and implementing strategic plans, developing and implementing turnaround and growth strategies, and developing talent and participating in successful leadership transitions. Mr. Glasscock also has experience leading acquisitions of companies, particularly over the last 10 years. In addition, he worked in financial services for 20 years and can identify meaningful metrics to assess a company's performance. He also serves, and has served for over 15 years, as a director of other public companies. Mr. Glasscock serves as our Lead Independent Director and serves on our Governance and Nominating Committee and Audit Committee. The Board of Directors has determined that he is an "audit committee financial expert".


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Table of Contents

PROPOSAL 1:      Election of Directors


GRAPHIC

 


Karen N. Horn, Ph.D.
Age: 72
Director since: 2004
Committees Served: Governance and Nominating (Chair)
Other Public Directorships: Eli Lilly and Company, Norfolk Southern Corporation, T. Rowe Price Mutual Funds

 

GRAPHIC

 


Allan Hubbard
Age: 68
Director since: 2009
Committees Served: Compensation, Governance and Nominating
Other Public Directorships: None

Retired President, Global Private Client Services and Managing Director, Marsh, Inc., a subsidiary of MMC, having served in these positions from 1999 to 2003. Prior to joining Marsh, she was Senior Managing Director and Head of International Private Banking at Bankers Trust Company; Chairman and Chief Executive Officer, Bank One, Cleveland, N.A.; President of the Federal Reserve Bank of Cleveland; Treasurer of Bell of Pennsylvania; and Vice President of First National Bank of Boston. Dr. Horn has served as Senior Managing Director of Brock Capital Group, a corporate advisory and investment banking firm, since 2003. She is also Vice Chairman of the U.S.-Russia Foundation and a member of the board of the National Bureau of Economic Research and most recently was appointed Vice Chairman. She previously served as a director of Georgia-Pacific Corporation and Fannie Mae.
 
SPECIFIC QUALIFICATIONS AND EXPERIENCE OF PARTICULAR RELEVANCE TO OUR COMPANY
Dr. Horn has more than 30 years of experience in international finance and management, including her service as President of the Federal Reserve Bank of Cleveland and as a senior executive of a number of financial institutions. These experiences provide her with expertise in financial management and economic policy and an in-depth knowledge of the capital markets in which we actively participate. Dr. Horn serves as a director of several other publicly-held companies. She is a member of our Governance and Nominating Committee, which she chairs.

 

Co-Founder and Chairman of E&A Companies, a privately-held holding company that acquires and operates established companies, since 1977. Mr. Hubbard served as Assistant to the President for Economic Policy and director of the National Economic Council for the George W. Bush administration. He also served as Executive Director of the President's Council on Competitiveness for the George H.W. Bush administration. Mr. Hubbard previously served as a director of Acadia Healthcare, Anthem, Inc., PIMCO Equity Series and PIMCO Equity Series VIT.
 
SPECIFIC QUALIFICATIONS AND EXPERIENCE OF PARTICULAR RELEVANCE TO OUR COMPANY
Mr. Hubbard has more than 30 years' experience as an entrepreneur having founded and led a company that acquires and grows companies in North America and Europe. He served on the board of directors of a major, publicly-held healthcare company for a number of years during which time he served on that board's audit, compensation and governance committees. Mr. Hubbard also has extensive government and economic policy experience, having held key economic positions in the administrations of two U.S. Presidents. He is an honors graduate of Harvard Business School with an emphasis in finance and an honors graduate of Harvard Law School. Mr. Hubbard serves on our Compensation Committee and Governance and Nominating Committee.

GRAPHIC

 


Reuben S. Leibowitz
Age: 68
Director since: 2005
Committees Served: Compensation (Chair), Audit
Other Public Directorships: None

 

GRAPHIC

 


Gary M. Rodkin
Age: 64
Director since: 2015
Committees Served: To be determined
Other Public Directorships: None
Prior Public Directorships in Past Years: ConAgra Foods, Inc., Avon Products, Inc.

Managing Member of JEN Partners, a private equity firm, since 2005. Mr. Leibowitz was a Managing Director of Warburg Pincus from 1984 to 2005. He was a director of Chelsea Property Group, Inc. from 1993 until it was acquired by the Company in 2004 and previously served as a director of AV Homes, Inc.

SPECIFIC QUALIFICATIONS AND EXPERIENCE OF PARTICULAR RELEVANCE TO OUR COMPANY
Mr. Leibowitz led a major private equity firm's real estate activities for many years and in that role was responsible for developing long-term corporate strategies. Mr. Leibowitz practiced 15 years as a CPA, including a number of years specializing in tax issues, and is an attorney. He has an in-depth understanding of our Premium Outlets® platform, having served as a director of Chelsea Property Group, the publicly-held company we acquired in 2004. He serves on our Audit Committee and Compensation Committee, which he chairs. The Board of Directors has determined that he is an "audit committee financial expert".

 

Chief Executive Officer and member of the board of ConAgra Foods, Inc. from 2005 until his retirement in May 2015. Mr. Rodkin was Chairman and Chief Executive Officer of PepsiCo Beverages and Foods North America from February 2003 to June 2005. Mr. Rodkin joined PepsiCo in 1998, after it acquired Tropicana, where Mr. Rodkin had served as President since 1995. From 1979 to 1995, Mr. Rodkin held marketing and general management positions of increasing responsibility at General Mills, with his last three years at the company as President, Yoplait-Colombo. The Board appointed Mr. Rodkin as a director in July 2015, and he is now standing for election to a full term.
 
SPECIFIC QUALIFICATIONS AND EXPERIENCE OF PARTICULAR RELEVANCE TO OUR COMPANY
Mr. Rodkin has extensive experience in the leadership and management of a large packaged food company and expertise in branding and marketing of food and foodservice operations globally as the former Chief Executive Officer of ConAgra Foods, Inc. Mr. Rodkin was appointed to the Board in July 2015, and he is now standing for election to a full term.


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Table of Contents

PROPOSAL 1:      Election of Directors


GRAPHIC

 


Daniel C. Smith, Ph.D.
Age: 58
Director since: 2009
Committees Served: Compensation, Governance and Nominating
Other Public Directorships: None

 

GRAPHIC

 


J. Albert Smith, Jr.
Age: 75
Director since: 1993
Committees Served: Audit (Chair), Compensation
Other Public Directorships: None

Professor of Marketing at the Kelley School of Business, Indiana University, and President and Chief Executive Officer of the Indiana University Foundation. Served as Dean of the Kelley School from 2005 - 2012 and as Chief Executive Officer of the Indiana University Foundation since 2012. Dr. Smith joined the faculty of the Kelley School in 1996 and has served as Chair of the Marketing Department, Chair of the MBA Program, and Associate Dean of Academic Affairs.
 
SPECIFIC QUALIFICATIONS AND EXPERIENCE OF PARTICULAR RELEVANCE TO OUR COMPANY
Dr. Smith has spent over 30 years teaching, conducting research, and consulting in the areas of marketing strategy, brand management, financial management, compensation, human resource development and corporate governance. He served as Dean of one of the country's top-rated and largest business schools and now is the Chief Executive Officer of one of the nation's largest university foundations with $2.0 billion of assets. Both as Dean and Foundation Chief Executive Officer, he was/is responsible for financial oversight and long-term financial planning, hiring and retention policies, compensation policies, public relations and overall long-term strategy. He serves on our Governance and Nominating Committee and Compensation Committee.

 

Chairman, Chase Bank in Central Indiana since 2014 and Managing Director of J.P. Morgan Private Bank since 2005. Mr. Smith was President of Bank One Central Indiana from 2001 to 2005; Managing Director of Banc One Corporation from 1998 to 2001; President of Bank One, Indiana, NA from 1994 to 1998; and President of Banc One Mortgage Corporation from 1974 to 1994.
 
SPECIFIC QUALIFICATIONS AND EXPERIENCE OF PARTICULAR RELEVANCE TO OUR COMPANY
Mr. Smith has served as Chairman, President and Managing Director of the Midwest operations of a major financial institution for a number of years during which time he has been involved in real estate lending activities. Through these experiences he has developed expertise in financial management and credit markets. He served as our Lead Independent Director until March 2014 and currently serves on our Compensation Committee and our Audit Committee, which he chairs. The Board of Directors has determined that he is an "audit committee financial expert".


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Table of Contents

PROPOSAL 1:      Election of Directors

NOMINEES FOR DIRECTOR TO BE ELECTED BY THE VOTING TRUSTEES WHO VOTE THE CLASS B COMMON STOCK

The voting trustees who vote the Class B common shares, and who have the right to elect four directors, nominated the three persons listed below as "Nominees for Director to be Elected by the Voting Trustees Who Vote the Class B Common Stock". All of the nominees are currently Class B directors.

Our employment agreement with Richard Sokolov contemplates that he will be elected to the Board of Directors, and the voting trustees who vote the Class B common shares have agreed to elect Richard Sokolov to the Board. The voting trustees have an agreement requiring that each of them vote for each other as Class B director nominees.

GRAPHIC  
David Simon
Class B Director Nominee
Age: 54
Director since: 1993
Other Public Directorships: Klépierre, S.A
Prior Directorships in Past 5 Years: WP Glimcher
  GRAPHIC  
Richard S. Sokolov
Class B Director Nominee
Age: 66
Director since: 1996
Other Public Directorships: None
Prior Directorships in Past 5 Years: WP Glimcher

Chairman of the Board of the Company since 2007 and Chief Executive Officer of the Company or its predecessor since 1995; a director of the Company or its predecessor since its incorporation in 1993; President of the Company's predecessor from 1993 to 1996. From 1988 to 1990, Mr. Simon was Vice President of Wasserstein Perella & Company. From 1985 to 1988, he was an Associate at First Boston Corp. He is the son of the late Melvin Simon and the nephew of Herbert Simon.
 
SPECIFIC QUALIFICATIONS AND EXPERIENCE OF PARTICULAR RELEVANCE TO OUR COMPANY
Mr. Simon has served as our Chief Executive Officer or the Chief Executive Officer of our predecessor for over 20 years. During that time he has provided leadership in the development and execution of our successful growth strategy, overseeing numerous strategic acquisitions that have been consolidated into what is recognized as the nation's leading retail real estate company. He gained experience in mergers and acquisitions while working at major Wall Street firms before joining his father and uncle. Mr. Simon serves on the National Association of Real Estate Investment Trusts' board of governors, which gives him an industry-wide perspective that extends beyond our own operations.

 

President and Chief Operating Officer and a director of the Company or its predecessor since 1996. President and Chief Executive Officer of DeBartolo Realty Corporation from its incorporation in 1994 until it merged with our predecessors in 1996. Mr. Sokolov joined its predecessor, The Edward J. DeBartolo Corporation, in 1982 as Vice President and General Counsel and was named Senior Vice President, Development and General Counsel in 1986.
 
SPECIFIC QUALIFICATIONS AND EXPERIENCE OF PARTICULAR RELEVANCE TO OUR COMPANY
Mr. Sokolov has served as our President and Chief Operating Officer since 1996 immediately following our acquisition of DeBartolo Realty Corporation. Mr. Sokolov had served as Chief Executive Officer and President of DeBartolo Realty Corporation and Senior Vice President Development and General Counsel of its predecessor operations for a number of years. Mr. Sokolov is a past Chairman of the International Council of Shopping Centers ("ICSC") and currently serves as a trustee and a member of the ICSC Nominating Committee.

GRAPHIC

 


Herbert Simon
Class B Director Nominee
Age: 81
Director since: 1993
Other Public Directorships: The Cheesecake Factory
Incorporated

Chairman Emeritus of the Board of the Company since 2007. Co-Chairman of the Board of the Company or its predecessor from 1995 to 2007. Mr. Simon was Chief Executive Officer and a director of the Company's predecessor from its incorporation in 1993 to 1995. He also serves on the Board of Governors for the National Basketball Association and as Chairman of the Board of MSA.

SPECIFIC QUALIFICATIONS AND EXPERIENCE OF PARTICULAR RELEVANCE TO OUR COMPANY
Herbert Simon is our co-founder and Chairman Emeritus. The retail real estate business that he and his brother, the late Melvin Simon, started decades ago established the foundation for all of our current operations and record of achievement. Mr. Simon's leadership of the Indiana Pacers National Basketball Association ("NBA") basketball franchise has led to his service on the Board of Governors of the NBA.

 

 

 

 


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Table of Contents

PROPOSAL 1:      Election of Directors

MEETINGS AND COMMITTEES OF THE BOARD

MEETINGS AND ATTENDANCE

Our business, property and affairs are managed under the direction of our Board of Directors. Members of our Board of Directors are kept informed of our business through discussions with our Chairman and Chief Executive Officer, other executive officers and our Lead Independent Director, by reviewing materials provided to them concerning the business, by visiting our offices and properties, and by participating in meetings of the Board and its committees. Directors are also expected to use reasonable efforts to attend the annual meeting of stockholders.

All but one of our Directors attended the 2015 annual meeting. During 2015, the Board of Directors met eight times.

Our directors participated in more than 75% of the aggregate number of meetings of the Board and more than 75% of the committees on which they serve.

EXECUTIVE SESSIONS OF INDEPENDENT DIRECTORS

The independent directors meet in executive session without management present in connection with each regularly scheduled Board meeting. During 2015, the independent directors held four executive sessions. The Lead Independent Director presides over these executive sessions.

The name of the current Lead Independent Director is posted in the Corporate Governance section at investors.simon.com. The Board's Lead Independent Director is appointed by the independent members of the Board and the effectiveness of the Lead Independent Director shall be discussed in the Proxy Statement provided to stockholders in connection with each annual meeting.

In March 2014, we amended and restated our Governance Principles to strengthen the role of the Lead Independent Director. The Lead Independent Director performs the duties specified in these Governance Principles and such other duties as are assigned from time to time by the independent directors of the Board.

We believe that our Lead Independent Director is performing his duties in an effective manner. Under our Governance Principles, the Lead Independent Director is empowered to:

preside at all meetings of the Board at which the Chairman is not present, including executive sessions of the Independent Directors;

serve as a liaison between the Chairman and the independent directors, including by facilitating communication and sharing of views between the independent directors and the Chairman;

approve materials sent to the Board and advise on such information;

approve meeting agendas for the Board and coordinate with the Chairman with respect to developing such agendas;

approve meeting schedules for the Board to assure there is sufficient time for discussion of all agenda items and coordinate with the Chairman with respect to developing such schedules;

call meetings of the independent directors;

if requested by major stockholders, ensures that he or she is available for consultation and direct communication; and

retain outside advisors and consultants to report directly to the Board on Board-wide matters.


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Table of Contents

PROPOSAL 1:      Election of Directors

COMMITTEE FUNCTION AND MEMBERSHIP

THE AUDIT COMMITTEE

Members:
J. Albert Smith, Jr. (Chair)
Larry C. Glasscock
Reuben S. Leibowitz
Melvyn E. Bergstein(1)

Nine meetings during 2015.





 
The Audit Committee assists the Board in monitoring the integrity of our financial statements, the qualifications, independence and performance of our independent registered public accounting firm, the performance of our internal audit function and our compliance with legal and regulatory requirements. The Audit Committee has sole authority to appoint, or replace our independent registered public accounting firm and pre-approves the auditing services and permitted non-audit services to be performed by our independent registered public accounting firm, including the fees and terms thereof. The Audit Committee has authority to retain legal, accounting or other advisors. The Audit Committee reviews and discusses with management and our independent registered public accounting firm our annual audited financial statements, our quarterly earnings releases and financial statements, significant financial reporting issues and judgments made in connection with the preparation of our financial statements and any major issues regarding the adequacy of our internal controls. It also issues the report on its activities which appears in this Proxy Statement. The charter of the Audit Committee requires that each member meet the independence and experience requirements of the NYSE, the Exchange Act and the rules and regulations of the SEC.

The Board of Directors has determined that each of the current members of the Audit Committee qualifies as an "audit committee financial expert" as defined by rules of the SEC.

THE COMPENSATION COMMITTEE

Members:
Reuben S. Leibowitz (Chair)
Allan Hubbard
Daniel C. Smith, Ph.D.
J. Albert Smith, Jr.

Four meetings during 2015.





 
The Compensation Committee (1) sets remuneration levels for our executive officers, (2) reviews significant employee benefit programs, (3) establishes and administers our executive compensation program and our stock incentive plan, (4) discusses with management the Compensation Discussion and Analysis, and, if appropriate, recommends its inclusion in our Annual Report and Proxy Statement, and (5) issues the report on its activities which appears in this Proxy Statement. The charter of the Compensation Committee requires that each member meet the independence requirements of the NYSE and the rules and regulations of the SEC.

The Compensation Committee has authority to retain the advice and assistance of compensation consultants and legal, accounting or other advisors. The committee retained its current consultant, Semler Brossy Consulting Group, LLC, in December 2011. Semler Brossy does not provide any other services to management of the Company. The consultant assists the committee in the review and design of our executive compensation program. No member of the Compensation Committee during 2015 was an officer, employee or former officer of us or any of our subsidiaries or had any relationship requiring disclosure in this Proxy Statement pursuant to SEC regulations. None of our executive officers served as a member of a compensation committee or a director of another entity under the circumstances requiring disclosure in this Proxy Statement pursuant to SEC regulations.

THE GOVERNANCE AND NOMINATING COMMITTEE

Members:
Karen N. Horn, Ph.D. (Chair)
Larry C. Glasscock
Allan Hubbard
Daniel C. Smith, Ph.D.
Melvyn E. Bergstein(1)

Three meetings during 2015.






 

The Governance and Nominating Committee nominates persons to serve as directors and, in accordance with our Governance Principles, proscribes appropriate qualifications for Board members. The committee develops and recommends to the Board the Governance Principles applicable to the Company and the Board, leads the Board in its annual evaluation of the Board's performance, oversees the assessment of the independence of each director, reviews compliance with stock ownership guidelines and makes recommendations regarding compensation for non-employee directors. Members of the Governance and Nominating Committee are responsible for screening director candidates, but may solicit advice from our Chief Executive Officer and other members of the Board. The Governance and Nominating Committee has the authority to retain legal, accounting or other advisors, and has sole authority to approve the fees and other terms and conditions associated with retaining any such external advisors. The charter of the Governance and Nominating Committee requires that each member meet the independence requirements of the NYSE, and any other legal and regulatory requirements.

(1)
Mr. Bergstein will not stand for reelection to the Board of Directors at the Annual Meeting of Stockholders.


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Table of Contents

PROPOSAL 1:      Election of Directors

DIRECTOR COMPENSATION

COMPENSATION OF INDEPENDENT DIRECTORS

The Board of Directors believes that competitive compensation arrangements are necessary to attract and retain qualified independent directors. On July 22, 2015, after conducting a year-long market review with respect to other leading companies of similar size to the Company, under the supervision of the Governance and Nominating Committee, and upon recommendation of the Company's independent compensation consultant, the Board approved changes to the compensation arrangements for the independent directors of the Company. The Board also eliminated meeting fees with respect to meetings of the Board and its committees in favor of annual retainers, which the Board believes is consistent with market practice. These are the first changes made to the overall compensation program for the Board's independent directors since 2007.

The Company now provides each independent director an annual cash retainer of $100,000 and an annual restricted stock award with a grant date value of $150,000. The Board set annual retainers for the Audit, Compensation, and Nominating and Governance committee chairs at $35,000, $35,000 and $25,000, respectively. The Board also approved fixed annual retainers for service on the Audit, Compensation and Nominating and Governance committees of $15,000, $15,000, and $10,000, respectively. The Board also set the annual retainer for the Independent Lead Director at $50,000. These retainers will be paid 50% in cash and 50% in restricted stock.

DIRECTOR STOCK OWNERSHIP GUIDELINES

We have a stringent stock retention policy that further aligns our Board of Directors' interests with our stockholders. Also, on July 22, 2015, the Board approved modifications to the Company's stock ownership guideline for its independent directors. These modifications were the result of a market review, conducted at the same time as the review of independent director compensation, with respect to other leading companies of similar size to the Company, under the supervision of the Governance and Nominating Committee and upon recommendation of the Company's independent compensation consultant. The Company has determined that it is advisable for its independent directors to retain a fixed dollar amount of Company common stock as opposed to a fixed number of common shares. The stock ownership guideline for each of the Company's independent directors is now $850,000 worth of common stock of the Company (or the equivalent amount of limited partnership units of the Operating Partnership) owned not later than six years after the date he or she is elected to the Board. The prior guideline was ownership of not less than 3,000 shares of our common stock or units of the Operating Partnership within two years after he or she was initially elected to the Board and not less than 5,000 shares of our common stock within three years from such date.

As of March 14, 2016, all of the Board's current independent directors, other than Mr. Rodkin, comply with the new guideline. New independent directors, like Mr. Rodkin and Ms. Aeppel, will have up to six years from the date of their initial election to the Board to comply with the stock ownership guideline.

Any director who is prohibited by law or by applicable regulation of his or her employer from having an ownership interest in our securities will be exempt from this requirement until the restriction is lifted, at which time he or she will have the following six-year period to comply with the ownership guidelines. Stock options and unvested shares of restricted stock do not count toward these goals. The Company may grant exceptions on a case by case basis.

Like the old guidelines, the new guidelines require independent directors to hold vested restricted stock awards received as compensation for their service on the Board and its committees, together with all dividends paid on such awards utilized to purchase additional shares of the Company's common stock, in the director account of the Company deferred compensation plan until the director retires, dies or becomes disabled, or otherwise no longer serves as a director.


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Table of Contents

PROPOSAL 1:      Election of Directors

2015 INDEPENDENT DIRECTOR COMPENSATION

The following table sets forth information regarding the compensation we paid to our independent directors for 2015:

NAME (a)(1)
  FEES EARNED OR
PAID IN CASH ($) (b)

  STOCK AWARDS(2) ($) (c)
  TOTAL ($) (d)

Melvyn E. Bergstein

  105,700   148,785   254,485

Larry C. Glasscock

  129,200   171,559   300,759

Karen N. Horn Ph.D.

  107,900   153,986   261,886

Allan Hubbard

  109,700   148,785   258,485

Reuben S. Leibowitz

  123,300   167,333   290,633

Gary M. Rodkin

  44,000   124,566   168,566

Daniel C. Smith, Ph.D.

  107,700   148,785   256,485

J. Albert Smith, Jr.

  125,300   167,333   292,633
(1)
David Simon, Richard S. Sokolov and Herbert Simon, who were also directors during 2015, are not included in this table because they are not independent directors and did not receive any additional compensation for their service as directors. In 2015, Herbert Simon received $100,000 in employment compensation for his service as our Chairman Emeritus. The compensation received by David Simon and Richard Sokolov is shown in the Summary Compensation Table in this Proxy Statement.

(2)
Represents the ASC 718 grant date fair value of the restricted stock awards to the directors. Restricted stock awards granted to directors must be held in the director deferred compensation account and dividends on the restricted shares must be reinvested in additional shares of common stock which also must be held in the director deferred compensation account. One of our directors elected to defer their cash compensation and reinvest it in common stock beginning in the first quarter of 2015. These shares are the only other assets in the director deferred compensation account.

The following table sets forth the aggregate number of shares of our restricted common stock held by each independent director as of December 31, 2015.

NAME OF INDEPENDENT DIRECTOR
  NUMBER OF SHARES OF
RESTRICTED STOCK(1)

Melvyn E. Bergstein

  12,345

Larry C. Glasscock

  4,294

Karen N. Horn, Ph.D.

  11,245

Allan Hubbard

  5,587

Reuben S. Leibowitz

  9,610

Gary M. Rodkin

  683

Daniel C. Smith, Ph.D.

  5,587

J. Albert Smith, Jr.

  14,796
(1)
The amounts shown above include the restricted shares granted under our independent director compensation program, as described in this Proposal. The amounts shown above do not include shares acquired from the reinvestment of dividends which is required, as explained in footnote (2) of the previous table, and do not include other shares owned by independent directors. See, Ownership of Equity Securities of the Company by Directors and Executive Officers on page 17.


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PROPOSAL 1:      Election of Directors

OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY

DIRECTORS AND EXECUTIVE OFFICERS

As of March 14, 2016, the existing directors, director nominees and executive officers identified below:

Owned beneficially the indicated number and percentage of common shares and Class B common stock treated as a single class; and

Owned beneficially the indicated number and percentage of units which are exchangeable for common shares on a one-for-one basis or cash, as determined by the Company. The number of units includes earned and fully vested performance-based LTIP units which are convertible at the option of the holder into units on a one-for-one basis.

Unless otherwise indicated in the footnotes to the table, shares or units are owned directly and the indicated person has sole voting and investment power.

 
  SHARES AND UNITS
BENEFICIALLY OWNED
  UNITS BENEFICIALLY
OWNED
   
NAME
  NUMBER(1)(2)
  PERCENT(3)
  NUMBER
  PERCENT(4)
  ADDITIONAL INFORMATION

David Simon

  26,973,313   8.06%   25,440,966   7.03%   Includes common shares, shares of Class B common stock and units beneficially owned by the MSA group. See "PRINCIPAL STOCKHOLDERS."

Glyn F. Aeppel

           

Melvyn E. Bergstein

  25,508   *      

Larry C. Glasscock

  8,365   *        

Karen N. Horn, Ph.D.

  14,881   *      

Allan Hubbard

  8,673   *        

Reuben S. Leibowitz

  32,868   *       Does not include 6,000 shares of common stock held by charitable foundations of which Mr. Leibowitz is an officer or trustee. Mr. Leibowitz disclaims beneficial ownership of these shares.

Gary M. Rodkin

  693   *            

Daniel C. Smith, Ph.D.

  8,314   *      

J. Albert Smith, Jr.

  35,953   *        

Herbert Simon

  26,973,313   8.06%   25,440,966   7.03%   Includes common shares, shares of Class B common stock and units beneficially owned by the MSA group. See "PRINCIPAL STOCKHOLDERS."

Richard S. Sokolov

  686,893   *   342,487   *    

James M. Barkley

  331,360   *   240,075   *  

Andrew A. Juster

  111,692   *   97,504   *    

David J. Contis

  57,762   *   31,599    

All Directors and executive officers as a group (18 people)

  28,534,812   8.50%   26,324,328   7.28%   Does not include 4,172,426 units beneficially owned by or for the benefit of Simon family members as to which members of the MSA group do not have voting or dispositive power.
*
Less than one percent

(1)
Includes the following common shares that may be issued upon exchange of units (including vested LTIP units) held by the following persons on March 14, 2016: David Simon, Herbert Simon and other members of the MSA group (as defined in the Principal Stockholders table on page 18—25,440,966; Richard S. Sokolov—342,487; James M. Barkley—240,075; Andrew A. Juster—97,504; David J. Contis—31,599; and all directors and executive officers as a group—26,324,328. Units are exchangeable either for common shares (on a one-for-one basis) or for cash.

(2)
Includes the following restricted shares which are subject to vesting requirements: Melvyn E. Bergstein—810; Larry C. Glasscock—934; Karen N. Horn, Ph.D.—838; Allan Hubbard—810; Reuben S. Leibowitz—911; Gary M. Rodkin—683; Daniel C. Smith, Ph.D.—810; J. Albert Smith, Jr.—911; David J. Contis—1,654; and all directors and executive officers as a group—10,481. Includes shares acquired through the reinvestment of dividends on common shares held in the Director Deferred Compensation Plan.

(3)
At March 14, 2016, there were 309,408,836 shares of common stock and 8,000 shares of Class B common stock outstanding. Upon the occurrence of certain events, shares of Class B common stock convert automatically into common shares (on a one-for-one basis). These percentages assume the exchange of units for common shares only by the applicable beneficial owner.

(4)
At March 14, 2016, Simon Property Group, L.P. had 361,712,755 units outstanding, of which we owned, directly or indirectly, 309,416,836 or 85.5%. These percentages assume that no units held by limited partners are exchanged for common shares. The number of units shown does not include any unvested LTIP units awarded under a long-term incentive performance program as described in the COMPENSATION DISCUSSION AND ANALYSIS section included in this Proxy Statement because the unvested LTIP units are subject to performance and/or time-based vesting requirements.


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PROPOSAL 1:      Election of Directors

OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information concerning each person (including any group) known to us to beneficially own more than five percent (5%) of any class of our voting securities as of March 14, 2016. Unless otherwise indicated in the footnotes, shares are owned directly and the indicated person has sole voting and investment power.

 
  SHARES(1)
NAME AND ADDRESS
  NUMBER OF SHARES
  %

The Vanguard Group(2)
100 Vanguard Boulevard
Malvern, PA 19355



 
41,471,502   13.40%(3)

BlackRock, Inc.(4)
55 East 52nd Street
New York, NY 10055

  27,525,618   8.90%(3)

Melvin Simon & Associates, Inc., et al.(5)
225 West Washington Street
Indianapolis, IN 46204



 
26,973,313(6)   8.06%(7)

Cohen & Steers, Inc., et al.(8)
280 Park Avenue
10th Floor
New York, NY 10017

  18,491,275   5.91%(3)

State Street Corporation and Subsidiaries(9)
State Street Financial Center
One Lincoln Street
Boston, MA 02111




 
17,870,026   5.78%(3)
(1)
Voting shares include shares of common stock and Class B common stock. Upon the occurrence of certain events, Class B common stock converts automatically into shares of our common stock (on a one-for-one basis). The amounts in the table also include shares of common stock that may be issued upon the exchange of units of limited partnership interest, or units, of Simon Property Group, L.P., or the Operating Partnership, that are exchangeable either for shares of common stock (on a one-for-one basis) or for cash, as determined by the Company.

(2)
Based solely on information provided by The Vanguard Group and Vanguard Specialized Funds—Vanguard REIT Index Fund in two Schedule 13G/As filed with the Securities and Exchange Commission on February 11, 2016 and February 9, 2016, respectively. The Vanguard Group has the sole power to vote 1,043,669 shares of common stock and dispose of 40,598,334 shares, including 22,278,419 shares reported by Vanguard REIT Index Fund, and shared power to dispose of 873,168 shares.

(3)
Based on the assumption that the principal shareowner continued to own the number of shares reflected in the table above on March 14, 2016.

(4)
Based solely on information provided by BlackRock, Inc. in a Schedule 13G/A filed with the Securities and Exchange Commission on January 27, 2016.

(5)
This group, or the MSA group, consists of Melvin Simon & Associates, Inc., David Simon, Herbert Simon, two voting trusts, and other entities and trusts controlled by or for the benefit of MSA, David Simon or Herbert Simon. David Simon is an executive officer and director and Herbert Simon is one of our directors. MSA is owned 30.94% by a trust for the benefit of Herbert Simon, 3.04% by a trust for the benefit of David Simon, and by certain other stockholders. A total of 890,120 common shares included in the amount reported for the group and 8,000 shares of Class B common stock are subject to the two voting trusts as to which David Simon and Herbert Simon are the voting trustees.

(6)
Includes 1,524,347 common shares currently outstanding; 25,440,966 common shares issuable upon exchange of units; and 8,000 shares of Class B common stock. Does not include 4,172,426 units that are held by or for the benefit of Simon family members as to which MSA, David Simon or Herbert Simon do not have voting or dispositive power.

(7)
Assumes the exchange of units by the subject holder only.

(8)
Based solely on information provided by Cohen & Steers, Inc., Cohen & Steers Capital Management, Inc., Cohen & Steers UK Limited in a Schedule 13G/A filed with the Securities and Exchange Commission on February 16, 2016. Cohen & Steers, Inc. has the sole power to vote 10,063,568 shares of common stock and to dispose of 18,491,275 shares; Cohen & Steers Capital Management, Inc. has the sole power to vote 9,952,886 shares of common stock and to dispose of 18,284,230 shares; and Cohen & Steers UK Limited has the sole power to vote 110,682 shares of common stock and to dispose of 207,045 shares.

(9)
Based solely on information provided by State Street Corporation in a Schedule 13G/A filed with the Securities and Exchange Commission on February 16, 2016.


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PROPOSAL 2:      Advisory Vote to Approve Executive Compensation

Our executive compensation program is designed to facilitate long-term stockholder value creation. Our focus on pay-for-performance and on corporate governance ensures alignment with the interests of the Company's stockholders.

We are asking for stockholder approval, on an advisory or non-binding basis, of the compensation of our Named Executive Officers, or "NEOs", as disclosed in this Proxy Statement pursuant to Section 14A of the Exchange Act, commonly known as a "Say-on-Pay" vote. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the compensation policies and practices described in this Proxy Statement. For information on our NEOs, please refer to the Company's 2015 10-K, Part III, Item 10—Directors, Executive Officers and Corporate Governance.

We will evaluate whether any actions are necessary to address significant concerns as a result of this advisory vote. We currently conduct annual advisory votes on executive compensation, and we expect to conduct the next advisory vote at our 2017 Annual Meeting of Stockholders.

For the reasons discussed above and in this Proxy Statement under the headings "Compensation Discussion and Analysis" and "Executive Compensation," the Board intends to introduce the following resolution at the annual meeting:

The Board of Directors Unanimously Recommends that Stockholders Vote FOR the approval of our Executive Compensation.


COMPENSATION COMMITTEE REPORT

At our 2015 annual meeting, over 96% of the shares voting approved our advisory Say-on-Pay vote. The Compensation Committee believes that this support demonstrates a strong alignment between our stockholders, our performance, and our executive compensation program.

The Committee held four meetings during 2015. The meetings were designed, among other things, to facilitate and encourage free and frank discussion among Committee members, executive management, the Committee's compensation consultant and other Company personnel involved in executive compensation matters.

The Committee reviewed and discussed with management the COMPENSATION DISCUSSION AND ANALYSIS section included in this Proxy Statement. Based on its review and these discussions with management, the Committee recommended to the Board of Directors that it be incorporated by reference into the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and included in the Proxy Statement for the 2016 Annual Meeting of Stockholders. The Committee remains committed to ongoing engagement and dialogue with our stockholders in the future.

The Compensation Committee:

Reuben S. Leibowitz, Chairman
Allan Hubbard
Daniel C. Smith, Ph.D.
J. Albert Smith

April 1, 2016


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COMPENSATION DISCUSSION AND ANALYSIS

EXECUTIVE SUMMARY

We continue to have strong alignment between our executive compensation and the interests of our stockholders. 2015 was an exceptional year for our Company.

The Company delivered a total return to stockholders of 10.2% in 2015, outpacing the MSCI U.S. REIT Index (RMS) return of 2.5% and the S&P 500 Index return of 1.4%. The Company has outperformed the S&P 500 13 times in the last 15 years.

Funds from operations ("FFO") increased to a record $3.6 billion, or $9.86 per share, and grew 10.8% per share compared to 2014. Please refer to the FFO graph on the following page.

We also increased our dividend by 17.5% over 2014 to a total of $6.05 per common share. Our U.S. Malls and Premium Outlets once again delivered strong financial and operational results:

o
Occupancy ended the year at 96.1%;

o
The releasing spread for the rolling 12 months of $10.62 per square foot; rent for spaces leased in 2015 was 18.0% higher than prior rent paid for the same spaces; and

o
As a result of the strong performance of our properties, comparable property net operating income ("NOI") grew 3.7% for our U.S. Malls, Premium Outlets and The Mills.

At the end of 2015, we had redevelopment and expansion projects underway at 27 properties in the U.S. at a cost of approximately $1.5 billion.

The Compensation Committee believes our underlying compensation programs are designed responsibly and effectively to incent strong performance over the long-term and serve our stockholders' interests. The Compensation Committee will continue to consider stockholder feedback in its ongoing review of our executive compensation program.

For example, even with positive absolute TSR and strong relative performance, the number of units earned in our 2013-2015 LTIP program was below the target opportunity as we did not outperform the S&P 500 index performance measure. Our use of absolute and relative TSR metrics over a three-year performance period, along with the stringent goals, continues to be a significant way to incent the performance of our executives. Please refer to the TSR graph below.


Total Stockholder Returns(1)

GRAPHIC

(1)
Total stockholder returns include reinvestment of all dividends on the ex-dividend date, including the spin-off distribution of Washington Prime Group, Inc., now known as WP Glimcher ("WPG") in 2014.

(2)
RMS is the MSCI U.S. REIT Index.

The graph above shows the compound annual return of our common stock (SPG) versus two key benchmarks—the S&P 500 Index and RMS.


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COMPENSATION DISCUSSION AND ANALYSIS


FFO PER SHARE

GRAPHIC

ALIGNMENT OF PAY WITH PERFORMANCE

Executive Compensation Mix. The Committee designs our NEO compensation program to provide pay outcomes which are aligned with and react to our operating, financial and market performance in both good and challenging times. A significant majority of our NEO compensation is "at-risk" in the form of variable pay (annual and long-term incentives) to emphasize our commitment to rewarding excellent performance and penalizing poor performance. In 2015, performance-based components comprised 91% of our CEO's 2015 compensation and 86% of our NEOs' Average Pay Mix. See the chart below.

GRAPHIC


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COMPENSATION DISCUSSION AND ANALYSIS

Annual Cash Incentive Compensation is paid subject to achievement of our annual financial and operating goals, as well as an assessment of the executives' performance against individual and company performance goals. The 2015 Annual Incentive Compensation awards made to our NEOs reflect our continued positive performance in 2015. For 2015, our CEO's Annual Cash Incentive compensation remained consistent with the 2014 payout of $3,500,000. Mr. Contis received an increase in his Annual Cash Incentive compensation for his outstanding performance in 2015, from $500,000 in 2014 to $1,250,000. For our other NEOs, the Annual Cash Incentive Compensation declined as compared to 2014.

For more information on our Annual Cash Incentive Compensation, see page 24.

Performance-Based LTIP Awards are granted to NEOs based on three-year TSR performance on both an absolute basis and relative to the S&P 500 Index and MSCI U.S. REIT Index (RMS). Earned LTIP awards have a two-year post-performance service vesting requirement. The 2013-2015 LTIP program resulted in below-target payouts as our three-year TSR did not meet the required performance measure for one component of our LTIP program. For more information on our performance-based LTIP program see page 25.

OBJECTIVES OF OUR EXECUTIVE COMPENSATION PROGRAM

Our executive compensation program is designed to accomplish the following objectives:

Retain a group of highly-experienced executives who have worked together as a team for a long period of time and who make major contributions to our success.

Attract other highly qualified executives to strengthen that team.

Motivate executives to contribute to the achievement of corporate and business unit goals as well as individual goals.

Emphasize equity-based incentives with long-term performance measurement periods and vesting conditions.

Align interests of executives with stockholders by linking payouts to performance measures that promote the creation of long-term stockholder value.


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COMPENSATION DISCUSSION AND ANALYSIS

WHAT WE PAY AND WHY: PRINCIPAL ELEMENTS OF COMPENSATION

To accomplish our compensation objectives, we designed our executive compensation program with three major elements—Base Salary, Annual Cash Incentive Compensation, and Performance-Based Long-Term Incentives.

 
  OBJECTIVES
  KEY FEATURES
Base Salary  

Provide an appropriate level of fixed compensation that will promote executive recruitment and retention.

 

Fixed compensation.

Annual Cash Incentives  

Reward achievement of our annual financial and operating goals based on the Compensation Committee's quantitative and qualitative assessment of the executives' contributions to that performance.

 

Variable, short-term cash compensation.

Funded upon achievement of threshold FFO level.

Allocated based on objective and subjective evaluation of Company, business unit, and individual performance.

Performance-Based
Long-Term Incentives

 

Promote the creation of long-term stockholder value.

Align the interests of our executives with the interests of our stockholders.

Promote the retention of our executives through multi-year service vesting requirements after they are earned.

 

Variable, performance-based long-term equity compensation.

Amount is earned over a three-year Performance Period based on:

Absolute TSR (weighted 20%);

Relative TSR

MSCI U.S. REIT Index (RMS) (weighted 60%); and

TSR Relative to S&P 500 Index (weighted 20%).

Additional two years of service-vesting.

Maximum amount that may be earned is 100% of the target amount of performance-based LTIP units awarded.

Based on the pay outcomes relative to performance and the Compensation Committee's assessment of the overall design of our compensation programs, including changes we made to our compensation practices in previous years, the Compensation Committee believes that our executive officers' pay is well-aligned with our stockholders' interests.

The Compensation Committee monitors the effectiveness of our compensation program on an ongoing basis. For these plans to be effective, we believe it is necessary for our compensation to be competitive with other real estate companies and also with other large public and private enterprises with which we compete for executive talent. The Compensation Committee will continue to study and, where appropriate, implement improvements to our compensation practices.

ROLE OF MANAGEMENT IN COMPENSATION DECISIONS

Our Chief Executive Officer provides recommendations to the Compensation Committee on the compensation of each of the other NEOs. The Chief Executive Officer develops recommendations using third-party data, assessments of executives' individual performance and achievement of the Company's strategic and tactical plans, and input from our human resources department on various factors (e.g., compensation history, tenure, responsibilities, market data for competitive positions and retention concerns). The Compensation Committee considers our Chief Executive Officer's recommendations together with the input of our independent compensation consultant; however, all final compensation decisions affecting executive officer pay are made by the Compensation Committee itself. Additionally, all aspects of the Chief Executive Officer's compensation and resulting compensation decisions are determined by the Compensation Committee.

COMPANY PEER GROUP AND COMPENSATION ASSESSMENT

The Compensation Committee uses an industry peer group as a source of data for assessing and determining pay levels for our executive officers. The peer group is reviewed annually by our independent compensation consultant. Developing a relevant peer group is challenging for the Company because there are no retail REITs of comparable size, complexity and breadth. Non-retail REITs are not always directly comparable to us because of the different underlying business fundamentals. Therefore, we do not explicitly set target pay opportunities or actual pay to a specific positioning against these companies; rather, this peer group is intended to provide the Compensation Committee, with insight into overall market pay levels, market trends, "best" governance practices, and overall industry performance. We confirmed the use of this peer group by considering the methodology used by Institutional Shareholder Services, or "ISS."

The peer group is comprised of the 16 largest companies in the Real Estate industry by Market Capitalization with some restrictions to maintain a balanced mix. Specifically, the group includes:

The six largest (by market capitalization) retail REIT companies;

The six largest (by market capitalization) non-retail REITs (excluding all retail REITs); and

The four largest companies from the broader Real Estate Industry.


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COMPENSATION DISCUSSION AND ANALYSIS

The compensation peer group used for evaluating 2015 compensation decisions consisted of the companies in the Real Estate industry set forth below. The companies included in the 2015 compensation peer group were:

2015 PEER GROUP

(In $MMs unless otherwise noted)

PEER COMPANY
  MARKET
CAPITALIZATION
(12/31/15)

  ASSETS
(12/31/15)

  COMPANY TYPE

Public Storage (NYSE:PSA)

  $ 42,833   $ 9,778   Specialized REITs

American Tower Corp. (NYSE:AMT)

  $ 41,096   $ 26,904   Specialized REITs

Equity Residential (NYSE:EQR)

  $ 29,760   $ 23,157   Residential REITs

Crown Castle International Corp. (NYSE:CCI)

  $ 28,855   $ 22,036   Specialized REITs

Welltower, Inc. (NYSE:HCN)

  $ 24,136   $ 29,024   Health Care REITs

General Growth Properties, Inc. (NYSE:GGP)

  $ 24,010   $ 24,074   Retail REITs

Prologis, Inc. (NYSE:PLD)

  $ 22,512   $ 31,395   Industrial REITs

Realty Income Corp. (NYSE:O)

  $ 12,929   $ 11,866   Retail REITs

Macerich Co. (NYSE:MAC)

  $ 12,459   $ 11,259   Retail REITs

CBRE Group, Inc. (NYSE:CBG)

  $ 11,558   $ 11,018   Real Estate Services

Kimco Realty Corp. (NYSE:KIM)

  $ 10,939   $ 11,344   Retail REITs

Federal Realty Investment Trust (NYSE:FRT)

  $ 10,153   $ 4,912   Retail REITs

Jones Lang LaSalle, Inc. (NYSE:JLL)

  $ 7,202   $ 6,205   Real Estate Services

DDR Corp. (NYSE:DDR)

  $ 6,136   $ 9,097   Retail REITs

Realogy Holdings Corp. (NYSE:RLGY)

  $ 5,381   $ 7,531   Real Estate Services

The Howard Hughes Corp. (NYSE:HHC)

  $ 4,494   $ 6,029   Real Estate Development

Simon Property Group

  $ 70,321   $ 30,651   Retail REITs

COMPENSATION IN 2015

The Compensation Committee made decisions impacting the compensation paid to our NEOs as reported in the 2015 Summary Compensation Table. These include: base salaries, Annual Cash Incentive Compensation for 2015 performance, and long-term equity incentive opportunities in the form of performance-based LTIP unit awards.

In making decisions for 2015, the Compensation Committee took into account each NEO's individual performance goals and objectives for our Annual Cash Incentive Compensation program and its assessment of the executives' contributions to the performance of the Company. In particular, the Compensation Committee considered the Company's performance and achievements as discussed in the "Executive Summary" section of the COMPENSATION DISCUSSION AND ANALYSIS.

2015 BASE SALARIES

During 2015, we maintained 2014 base salary levels for all but one of our NEOs to emphasize variable performance-based incentive pay. The Compensation Committee periodically reviews base salaries for the executive officers and makes adjustments to reflect market conditions, changes in responsibilities, and merit increases.

2015 ANNUAL CASH INCENTIVE COMPENSATION

The Compensation Committee rewards executives with Annual Cash Incentive Compensation for achieving the Company's financial and operating plan as well as an assessment of each individual executive officer's contributions to those achievements. Payouts under our Annual Cash Incentive Compensation program are the result of both the Company and the individuals reaching established performance targets. The Compensation Committee follows a 2-step process to determine what awards will be paid under the Annual Cash Incentive Compensation program each year:

1.
The Company must deliver certain FFO performance during the year before any payments may be made under the plan. If threshold performance is not achieved, no payments are made. For 2015, reported FFO of $9.86 per share exceeded the threshold FFO performance of $9.45 per share. Therefore, the Compensation Committee moved to step two in this process.

2.
Each individual's performance is assessed by the Chief Executive Officer and the Compensation Committee against defined goals and objectives which are evaluated at the beginning of each year. The assessment delivers a total score for each individual. Each individual's total score then determines the portion of their target Annual Incentive Compensation that has been earned.


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COMPENSATION DISCUSSION AND ANALYSIS

A summary of the Named Executive Officers' 2015 key performance objectives along with their 2015 Annual Cash Incentive Compensation payments may be found in the table below.

 
   
   
   
   
NAMED EXECUTIVE OFFICER
  2015 KEY INDIVIDUAL GOALS AND PERFORMANCE
   
  2015
ANNUAL CASH INCENTIVE
COMPENSATION AWARD

   
       
David Simon  

Comparable NOI growth goal met in all platforms (Combined NOI of 3.7%).

Reported FFO of $9.86 per share.

Acquired The Mills at Jersey Gardens and University Park Village for $1.09 billion.

Formed two strategic joint ventures; one with the Hudson's Bay Company and the other with Seritage Growth Properties.

Completed several successful openings, expansions, transformations and renovations.

    $3,500,000  
Richard S. Sokolov  

Comparable NOI growth goal met in all platforms (Combined NOI of 3.7%).

Disposed of non-core assets including two malls and one community center.

New projects initiated, including Brickell City Centre and The Shops at Clearfork.

      $1,250,000    
James M. Barkley  

Successfully completed new mortgage and loan transactions and senior debt issuances.

Successfully achieved an underwriting profit in the Risk Management group.

Successfully completed the joint venture formations with Hudson's Bay Company and Seritage Growth Properties and related acquisitions.


 
  $800,000  
Andrew A. Juster  

Executed two senior notes offerings comprising $1.9 billion.

Redeemed four series of senior notes comprising $1.7 billion.

Successfully completed $4.3 billion of secured financings.

Maintained stable outlook and existing ratings from various agencies.

      $650,000    
David J. Contis  

Exceeded EBITDA growth budget.

Reduced operating costs by over $26 million and improved margins.

Completed several successful openings, expansions, transformations, and renovations.



 
  $1,250,000  

We pay Annual Cash Incentive Compensation to executive officers in the first calendar quarter of the following year so the Compensation Committee has sufficient time to assess our financial performance and the executives' contributions for the preceding year.

Pursuant to David Simon's employment agreement, his target Annual Cash Incentive Compensation is 200% of his base salary. However, the Compensation Committee will determine his actual Annual Incentive Compensation, which may be more or less than target, based on his and the Company's performance.

PERFORMANCE-BASED LTIP AWARDS

The Compensation Committee believes the performance-based LTIP program design reflects our pay-for-performance philosophy and high expectations:

Performance requirements are rigorous, promoting long-term creation of stockholder value. For example, performance that only matches the MSCI U.S. REIT Index (RMS) or the S&P 500 Index will pay out at 33% of target and performance that lags the indices by more than 1% or 2%, respectively, will not result in any LTIP units being earned.

The Compensation Committee is responsible for setting performance targets each year, and expects to continue to establish challenging targets that require excellent long-term TSR performance in order to earn long-term incentive payouts.

The three-year performance period and an additional two-year vesting period ensures longer term alignment with stockholders' interests. Earned LTIP units will vest on January 1 of the second and third years following the end of the performance period, with 50% vesting each year if the participant is still a Company employee through those dates.

The Compensation Committee believes that as the responsibilities of our executives increase, the proportion of their total compensation that is at risk and dependent on our performance should also increase. The 1998 Plan authorizes a variety of awards, including stock options, restricted stock and LTIP units which represent interests in the Operating Partnership and are subject to performance conditions and/or time-based vesting requirements. Since 2010, the Compensation Committee has awarded performance-based LTIP units to the NEOs. These awards require achievement of objective performance measures over three years and vest equally in two annual installments, subject to the executive maintaining employment with the Company.

LTIP units are a type of limited partnership interest issued by the Operating Partnership. Under the performance-based LTIP program, LTIP awards can be earned, in whole or in part, if our total stockholder return, or TSR (representing the difference between a baseline value and valuation date based on price appreciation of our common stock plus cumulative dividends we pay on


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COMPENSATION DISCUSSION AND ANALYSIS

our common stock without reinvestment or compounding), exceeds the relative and absolute performance targets set by the Compensation Committee for the relevant performance period.

Because of the multiple-year performance timeframe, the Compensation Committee does not consider these awards as 2015 compensation, but rather views them as "at-risk" compensation subject to performance and vesting conditions that must be met in order for the executive to realize any value from the awards. However, the rules of the Securities and Exchange Commission require us to include all LTIP units granted in 2015 as 2015 compensation in the Summary Compensation Table.

The number of performance-based LTIP awards earned is determined by the Compensation Committee at the end of the performance period using payout matrices (with linear interpolation between the specified payout percentages).


LTIP PAYOUT MATRICES

 
   
  RELATIVE TSR
ABSOLUTE TSR
WEIGHT 20%

  VS. MSCI REIT INDEX
WEIGHT 60%

  VS. S&P 500 INDEX
WEIGHT 20%

PERFORMANCE   PAYOUT % OF TARGET   PERFORMANCE   PAYOUT % OF TARGET   PERFORMANCE   PAYOUT % OF TARGET
£ 20%   0.0%   Index –1%   0.0%   Index –2%   0.0%
24%   33.3%   Index   33.3%   Index   33.3%
27%   50.0%   Index +1%   50.0%   Index +2%   100.0%
30%   66.7%   Index +2%   66.7%    
33%   83.3%   Index +3%   100.0%    
³ 36%   100.0%        

The LTIP units are designed to qualify as "profits interests" in the Operating Partnership for federal income tax purposes. During the performance period, holders of LTIP units will be allocated taxable profits and losses equal to one-tenth of the amounts allocated to a unit and will receive distributions equal to one-tenth of the amount of regular quarterly distributions paid on a unit, but will not receive any special distributions. As a general matter, the profits interest characteristics of the LTIP units mean that initially they will not be economically equivalent in value at the time of award to the economic value of a unit. The value of the LTIP units can increase over time until the value of the LTIP units is equivalent to the value of the units on a one-for-one basis.

After the end of the performance period, to the extent that the required performance has been achieved, holders of earned LTIP awards, both vested and unvested, will be entitled to receive distributions in an amount per LTIP award equal to the distributions, both regular and special, payable on a unit. Vested LTIP units are exchangeable for shares of the Company's common stock on a one-for-one basis, or cash as selected by the Company.

ACHIEVEMENT OF 2013-2015 PERFORMANCE-BASED LTIP AWARDS

The Compensation Committee instructed our independent registered public accounting firm, Ernst & Young LLP, to perform certain agreed upon procedures to corroborate the extent to which the performance measures established for the three-year Series 2013 LTIP program had been achieved. In March 2016, the Compensation Committee used that analysis to determine that performance during the three-year performance period ending December 31, 2015 resulted in the payouts as shown in the table below.

2013-2015 PERFORMANCE-BASED LTIP
ACTUAL PERFORMANCE RESULTS

   
   
   
   
 
COMPONENT
  WEIGHTING(1)
  PERFORMANCE REQUIRED TO
EARN MAXIMUM

  ACTUAL
PERFORMANCE

  % EARNED
 
Absolute TSR   20 % >36%   40.1 % 100 %
Relative TSR vs. MSCI U.S. REIT Index (RMS)     60 % 3 percentage points over the Index     Index +5 %   100 %
Relative TSR vs. S&P 500 Index   20 % 2 percentage points over the Index   Index –13 % 0 %
(1)
The weighting reflects the percentage allocated to the total dollar amount of total awards for LTIP participants. The actual number of Target LTIP Units for each component is determined by applying the results of Deloitte's Monte Carlo analysis to the dollar value of the awards for each performance component. This may result in a percentage of earned LTIP unit awards that is different from the grant date fair value weighting percentages.


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COMPENSATION DISCUSSION AND ANALYSIS

The LTIP units earned during the 2013-2015 Performance Period are shown in the table below and will vest in equal portions on January 1, 2017 and January 1, 2018. The recipient must maintain continuous service through each vesting date, except for termination of service resulting from death or disability or, in the Compensation Committee's sole discretion, upon retirement. In addition, all of our NEOs (including our CEO) are subject to certain stock retention requirements.

The Compensation Committee determined the Achievement of the Performance Conditions for the 2013-2015 Performance-Based LTIP awards in the following amounts for our Named Executive Officers, subject to further vesting requirements:

2013-2015 PERFORMANCE-BASED LTIP PAYOUT RESULTS

PERFORMANCE METRICS:
  Absolute TSR
(20%)

  Relative TSR vs. MSCI U.S.
REIT Index (RMS)
(60%)

  Relative TSR vs. S&P 500
Index
(20%)

   
   

EXECUTIVE

  TARGET
UNITS
  EARNED
UNITS
(100%)
  TARGET
UNITS
  EARNED
UNITS
(100%)
  TARGET
UNITS
  EARNED
UNITS
(0%)
  TOTAL
TARGET
LTIP UNITS
  TOTAL
EARNED
LTIP UNITS(1)

David Simon

  44,692   44,692   143,362   143,362   38,895   0   226,949   188,054

Richard S. Sokolov

  21,402   21,402   68,653   68,653   18,625   0   108,680   90,055

James M. Barkley

  15,565   15,565   49,930   49,930   13,546   0   79,041   65,495

Andrew A. Juster

  9,728   9,728   31,206   31,206   8,466   0   49,400   40,934

David J. Contis

  7,782   7,782   24,965   24,965   6,773   0   39,520   32,747
(1)
The weighting reflects the percentage allocated to the total dollar amount of total awards for LTIP participants. The actual number of Target LTIP Units for each component is determined by applying the results of Deloitte's Monte Carlo analysis to the dollar value of the awards for each performance component. This may result in a percentage of earned LTIP unit awards that is different from the grant date fair value weighting percentages.

Pursuant to David Simon's employment agreement, during the term of the agreement, he will continue to participate in annual LTIP programs on the same terms as other senior executives. His original employment agreement stipulated that the grant date fair value of his annual award would be not less than $12.0 million. In 2013, Mr. Simon voluntarily agreed with us to modify his employment agreement to provide that his annual performance-based LTIP awards will be proportionally reduced when the Company's LTIP awards to other executives made in a calendar year are less than $35.0 million. As a result, Mr. Simon's 2013-2015, 2014-2016 and 2015-2017 target LTIP awards were less than $12.0 million because, in each instance, the total value of LTIP units granted to other executives was less than $35.0 million.


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Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS

COMPENSATION DECISIONS FOR 2016

In March 2016, the Compensation Committee made decisions related to our NEOs' base salaries and long-term incentive opportunities. At this meeting, the Compensation Committee also approved explicit funding goals under our Annual Cash Incentive Compensation program.

2016 BASE SALARIES

The Compensation Committee has determined that the base salaries for our CEO and all NEOs will be unchanged for 2016.

2016 ANNUAL CASH INCENTIVE COMPENSATION PROGRAM

The 2016 Annual Cash Incentive Compensation Program is substantially similar to the 2015 Annual Cash Incentive Compensation section on page 24.

The 2016 Annual Cash Incentive Compensation program FFO goals were approved early in 2016 and will be disclosed in our 2017 Proxy Statement.

2016-2018 PERFORMANCE-BASED LTIP AWARDS

The Compensation Committee approved performance-based LTIP awards for the 2016-2018 performance cycle for our NEOs as follows in the table below. The number of LTIP units earned under the 2016-2018 LTIP program will depend on our actual TSR performance for the three-year performance period measured against the relative indices mentioned on page 26.

NAMED EXECUTIVE OFFICER
  2016-2018 PERFORMANCE-BASED
LTIP AWARD OPPORTUNITY(1)

 

David Simon

  $9,500,000

Richard S. Sokolov

  $3,000,000

James M. Barkley(2)

  $0

Andrew A. Juster

  $2,500,000

David J. Contis

  $2,500,000
(1)
Amounts shown have not been reduced to reflect the purchase price of $0.25 per unit.

(2)
Mr. Barkley elected not to participate in the 2016-2018 LTIP program because he is contemplating retirement.


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Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS

STOCKHOLDER/GOVERNANCE FRIENDLY ASPECTS OF OUR CURRENT COMPENSATION PROGRAM

    WHAT WE DO               WHAT WE DON'T DO    
 
    GRAPHIC   Pay for Performance—Annual Cash Incentive Program. Heavy emphasis on performance-based compensation. Annual Cash Incentive compensation is paid only if certain FFO targets are achieved.               GRAPHIC   No Annual Grants of Time-Vested Restricted Stock or Options to our NEOs. We amended our stock incentive plan to require that awards of performance units, including LTIP units, must be conditional upon attainment of performance goals, unless stockholders vote to approve non-performance-based units.    
 
    GRAPHIC   Pay for Performance—LTIP Plan. Our Long-Term Incentive Plan (LTIP) is 100% performance-based and is tied to rigorous absolute (weighted 20%) and relative (weighted 80%) stock price performance goals.

A significant majority of our NEO compensation is "at-risk" based on performance. For 2015, 91% of our CEO's pay mix and 86% of our other NEOs pay mix were variable and performance-based.

Our 2011 CEO Retention Agreement is based on FFO performance in addition to service requirements.

              GRAPHIC   No Excess Perquisites and No Gross-Ups. No supplemental executive retirement plans, company cars, club memberships or other significant perquisites. We also have never had any arrangements requiring us to gross-up compensation to cover taxes owed by the executives, including excise taxes payable by the executive in connection with a change in control.    
 
    GRAPHIC   Post-Performance Time-Based Vesting on Earned LTIP Units. LTIP Units are earned based on specific performance criteria, measured over a three-year period. Once earned, executives must remain with the Company to obtain the units over the two-year vesting period.               GRAPHIC   Limited Retirement and Health Benefits. The Company has never had a traditional or defined benefit plan.    
 
    GRAPHIC   Stock Ownership Guidelines. Stock ownership guidelines for our CEO and other NEOs are 6x and 3x base salary, respectively. In addition, the CEO and other NEOs must retain shares until he or she retires, dies, becomes disabled or is no longer our employee. All non-employee Directors must hold common stock while they serve as a Director.               GRAPHIC   No Hedging or Pledging of Company Stock. Our NEOs and Directors are prohibited from engaging in any hedging or pledging of Company stock.    
 
    GRAPHIC   Double Trigger Equity Acceleration Upon a Change in Control. Beginning with 2013 grants and included in our 2011 CEO Retention Agreement. During 2014, we amended earlier equity grants to include similar double trigger provisions.                        
 
    GRAPHIC   Clawback Policy. Applies in the event of any material restatement of Company's financials beginning in FY2012, whether or not fraud/misconduct is involved.                        
 
    GRAPHIC   Independent Compensation Consultant. The Compensation Committee has utilized an independent compensation consulting firm, Semler Brossy, since the end of 2011.                        
 
    GRAPHIC   Compensation Risk Assessments. Conducted annually to ensure the executive compensation program does not encourage excessively risky behaviors.                        
 

OTHER ELEMENTS OF COMPENSATION

Retirement and Health and Welfare Benefits. We have never had a traditional or defined benefit pension plan. We maintain a 401(k) retirement plan in which all salaried employees can participate on the same terms. During 2015, our basic contribution to the 401(k) retirement plan was equal to 1.0% of the participant's base salary and Annual Cash Incentive Compensation which vests 20% after the completion of two years and an additional 20% after each additional year of service until fully vested after six years. We match 100% of the first 3% of the participant's contribution and 50% of the next 2% of the participant's contribution. Our matching contributions are vested when made. Our basic and matching contributions are subject to applicable IRS limits and regulations. The limit for Company contributions for any participant in 2015 was $13,250. The contributions we made to the 401(k) accounts of the NEOs are shown in the All Other Compensation column of the Summary Compensation Table on page 33. Executive officers also participate in health and welfare benefit plans on the same terms as other salaried employees.


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COMPENSATION DISCUSSION AND ANALYSIS

No Gross-Up for Excess Parachute Payments. David Simon and Mr. Sokolov have employment agreements; no other NEOs currently have employment agreements. There are no arrangements requiring us to gross-up compensation to cover taxes owed by the executives, including excise taxes payable by the executive in connection with a change in control.

If David Simon would become subject to the excise tax on certain "excess parachute payments" pursuant to Section 4999 of the Internal Revenue Code, his employment agreement provides that payments which would be subject to the excise tax will be reduced if he retains a greater after-tax amount after such reduction; otherwise, no reduction will be made. The employment agreement does not contain a gross-up for this excise tax.

Deferred Compensation Plan. We maintain a nonqualified deferred compensation plan that permits senior executives, key employees and directors to defer all or part of their compensation, including awards under the 1998 Plan. There is an account for the executives and employees and a separate account for the non-employee directors. Although we have the discretion to contribute a matching amount or make additional incentive contributions, we have never done either. As a result, the amounts disclosed in the Nonqualified Deferred Compensation in 2015 Table on page 35 consist entirely of compensation earned by, but not yet paid to, the executives and any earnings on such deferred compensation. A participant's deferrals are fully vested, except for restricted stock awards that still have vesting requirements. Upon death or disability of the participant, or our insolvency, or a change in control affecting us, a participant becomes 100% vested in his account.

No Stock Option Grants. The Compensation Committee has not granted any stock options to executives or other employees since 2001.

OTHER POLICIES

EQUITY AWARD GRANT PRACTICES

We make equity-based incentive awards in first calendar quarter after financial results for the preceding year have been released.

EXECUTIVE EQUITY OWNERSHIP GUIDELINES

We believe the financial interests of our executives should be aligned with the long-term interests of our stockholders. We also believe that requiring our executives to own a significant number of shares of our common stock, combined with our rigorous stock retention policy, serves as a strong motivator for each executive to be prudent in their operation of the Company. Therefore, in addition to long-term incentives, our Board of Directors has established equity ownership guidelines for key executives, including the NEOs.

The current ownership guidelines require the executives to maintain ownership of our stock or any class of our equity securities or units of the Operating Partnership having a value expressed as a multiple of their base salary for as long as they remain our employees. Our current guidelines for the Chief Executive Officer and other executive officers are as follows:

POSITION
  VALUE AS A MULTIPLE OF BASE SALARY
 

Chief Executive Officer

  6.0x  

Executive Officers

    3.0x  

Certain Executive Vice Presidents

  3.0x  

In addition, these executives are required to retain ownership of a sufficient number of shares received in the form of restricted share awards representing at least 50% of the after-tax value of their awards or 25% of the pre-tax value of such awards. These shares are to be retained by the executive until he or she retires, dies, becomes disabled, or is no longer our employee.

Ownership of any class of our equity securities or units of the Operating Partnership counts toward fulfillment of these guidelines, including securities held directly, securities held indirectly by or for the benefit of immediate family members, shares of restricted stock that have been earned, even if not vested, and shares held following the exercise of stock options. Unexercised stock options do not count toward these goals. Each of our NEOs currently meets or exceeds these guidelines.


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COMPENSATION DISCUSSION AND ANALYSIS

CLAWBACKS OF INCENTIVE COMPENSATION

In 2013, the Compensation Committee approved a clawback policy that applies to all of our current and former NEOs in the event of any material restatement of the Company's financial statements beginning in 2012 whether or not fraud or misconduct is involved. The clawback policy applies to cash amounts received through annual or long-term incentive plans, where payouts were based upon the restated financial results.

In addition, David Simon's employment agreement and the post-2010 LTIP program award agreements for all NEOs, including our CEO, provide that in the event of a financial restatement, the Company may recoup the employee's Annual Cash Incentive Compensation and other equity and non-equity compensation tied to the achievement of earnings targets if the compensation would not have been earned as a result of the financial restatement. These provisions will be superseded by any broader recoupment policy that the Company adopts pursuant to expected regulations that are mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Future awards under the 1998 Plan will also include provisions expressly acknowledging the applicability of any such recoupment policy to the award.

HEDGING POLICY AND PLEDGING RESTRICTIONS

Our insider trading policy prohibits employees and directors from hedging the ownership of Company securities. In addition, we do not permit our executive officers to pledge shares.

SECTION 162(m)

Substantially all of the services rendered by our executive officers were performed on behalf of the Operating Partnership. The Internal Revenue Service has issued a series of private letter rulings which indicate that compensation paid by an operating partnership to executive officers of a REIT that serves as its general partner is not subject to limitation under Section 162(m) to the extent such compensation is attributable to services rendered to the operating partnership. Although we have not obtained a ruling on this issue, we believe the positions taken in the rulings would apply to our Operating Partnership as well. Accordingly, we believe that the compensation we paid to our executive officers for 2015 will not be limited by Section 162(m). We reserve the right to approve and pay non-deductible compensation.

If we hereafter determine that Section 162(m) is applicable, then this could result in an increase to our income subject to federal income tax and could require us to increase distributions to our stockholders in order for us to maintain our qualification as a REIT.

ASSESSMENT OF COMPENSATION-RELATED RISKS

Our senior management team conducts an ongoing assessment of the risks related to our compensation policies and practices. This team reviews and discusses the various design features and characteristics of our Company-wide compensation policies and programs. The team also considers the elements of our compensation program for our senior executives including the performance measures used for the Annual Cash Incentive Compensation program and our long-term incentive programs. Senior management obtains and evaluates data from a REIT peer group reflecting a comparison of compensation practices and pay levels for comparable positions within that group to assess the competitiveness of our compensation levels.

The Compensation Committee is responsible for overseeing the risks relating to compensation policies and practices affecting senior management on an ongoing basis. In performing this responsibility, the Compensation Committee utilized the services of a consultant to obtain advice and assistance in the design and implementation of incentive compensation programs for our executives. The consultant does no work for management, unless requested by the Chairman of the Compensation Committee. In reviewing whether our compensation policies and practices encourage excessive risk-taking, the Compensation Committee also considers senior management's assessment described above. We believe the following factors reduce the likelihood that our compensation policies and practices would encourage excessive risk-taking:

Our compensation mix is designed in large part to reward long-term performance and is balanced among (i) fixed cash components, (ii) incentives that reward improvements in total Company performance and business unit performance, (iii) components measured by individual performance, and (iv) performance-based incentive opportunities that may be realized in the future.

Our policies and programs are intended to encourage retention of our executives so that they can focus on achieving long-term objectives.

Our overall compensation is maintained at levels that are competitive with the market.


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COMPENSATION DISCUSSION AND ANALYSIS

Our Annual Cash Incentive Compensation is weighted based on the achievement of several different financial and operational performance measures; the Compensation Committee has ultimate oversight in determining the Annual Cash Incentive Compensation allocation, thereby mitigating the risk that any one measure can dominate the payouts based on any formula.

Our LTIP programs use both absolute and relative TSR performance measures over three-year performance periods and additional two-year vesting requirements.

Awards under David Simon's 2011 CEO Retention Agreement are subject to performance conditions and post-earning vesting requirements. The awards will be earned if performance measures are achieved.

All NEO equity-based awards are subject to multi-year performance requirements, as well as post-earning vesting requirements.

Executive officers are subject to minimum stock ownership guidelines, equity award multi-year vesting requirements and limitations on trading our securities, including prohibitions on hedging our securities, under our Insider Trading Policy.

The Compensation Committee has discretion to decrease incentive performance targets and payouts when it determines that such adjustments would be in the best interests of us and our stockholders.

All LTIP unit awards contain "double trigger" change in control provisions.

All award agreements we entered into with executive officers contain clawback provisions permitting the Company to recoup compensation tied to the achievement of financial targets if the compensation would not have been earned based on restated financial results.

Based on the foregoing, we believe that our compensation policies and programs are not reasonably likely to have a material adverse effect on us.


32     SIMON PROPERTY GROUP   2016 PROXY STATEMENT


Table of Contents

EXECUTIVE COMPENSATION TABLES

SUMMARY COMPENSATION TABLE

NAME
(A)

  YEAR
(B)

  SALARY
(C)

  NON-EQUITY
INCENTIVE
COMPENSATION(1)
($)
(D)

  STOCK
AWARDS(2)
($)
(E)

  ALL OTHER
COMPENSATION(3)
($)
(F)

  TOTAL
($)
(G)

David Simon

  2015   1,250,000   3,500,000   9,470,774   13,433   14,234,207

Chairman of the Board and Chief Executive Officer

  2014   1,250,000   3,500,000   9,972,444   16,802   14,739,246

  2013   1,250,000   3,000,000   11,428,976   16,552   15,695,528

Andrew A. Juster

  2015   500,000   650,000   2,492,309   13,433   3,655,742

Executive Vice President and Chief Financial Officer

  2014   450,000   690,000   2,243,795   17,704   3,401,499

  2013          

Richard S. Sokolov

  2015   800,000   1,250,000   4,984,618   332,718   7,367,336

President and Chief Operating Officer

  2014   800,000   1,380,000   5,484,814   333,900   7,998,714

  2013   800,000   1,200,000   5,472,820   345,538   7,818,358

James M. Barkley

  2015   566,500   800,000   2,492,309   13,433   3,872,242

General Counsel and Secretary

  2014   566,500   948,750   3,988,957   19,156   5,523,363

  2013   566,500   825,000   3,980,287   18,906   5,390,693

David J. Contis

  2015   750,000   1,250,000   2,243,078   13,946   4,257,024

President—Simon Malls

  2014   750,000   500,000   2,493,175   13,696   3,756,871

  2013   750,000   950,000   1,990,118   13,446   3,703,564
(1)
Bonuses earned with respect to the indicated year were paid in the following year under our Annual Cash Incentive Compensation program. See the "2015 Annual Cash Incentive Compensation" section in the Compensation Discussion and Analysis for information about how we determined the payments for 2015.

(2)
Represents the total grant date fair value of all equity-based awards made during 2015 determined in accordance with ASC 718. These include (a) for 2015 and 2014, the maximum awards under the 2015 and 2014 LTIP programs, respectively (even though those LTIP units remain subject to performance measures during a three-year performance period that has not yet ended and, once earned, are subject to further vesting requirements), and (b) for 2013, the earned awards under the 2013 LTIP Program (even though those LTIP units remain subject to vesting requirements).


We engaged Deloitte LLP, who is not our independent registered public accounting firm, to develop the grant date fair values of the LTIP programs using a Monte Carlo simulation. Three simulations were conducted using assumptions regarding the total stock return on the Company's common stock and the relative total returns of the S&P 500 Index and MSCI U.S. REIT Index (RMS), as well as expected volatility, risk-free investment rates, correlation coefficients, dividend reinvestment, and other factors. The grant date fair values of the awards in the 2015 LTIP program, as of February 26, 2015, were as follows (net of the purchase price of $0.25 per unit paid by the participant):

NAME
  NUMBER OF
AWARD UNITS

  GRANT DATE FAIR
VALUE OF 2015
LTIP PROGRAM

David Simon

  116,904   $ 9,470,774

Andrew A. Juster

  30,764     2,492,309

Richard S. Sokolov

  61,529   4,984,618

James M. Barkley

  30,764     2,492,309

David J. Contis

  27,688   2,243,078

As explained in the Compensation Discussion and Analysis section included in this Proxy Statement, the Compensation Committee determined that our performance for the three-year period ended December 31, 2015, resulted in a 82.9% payout of the three-year 2013 LTIP program. The number of LTIP units awarded under the three-year 2014 LTIP program and the 2015 LTIP program that may be earned in the future will depend upon the extent to which we achieve the performance measures during three-year performance periods that end on December 31, 2016 and 2017, respectively. If our performance for those periods results in a payout of less than 100%, the number of LTIP units earned would be less than the maximum amounts shown. Once earned, one-half of the LTIP units in the programs will vest on January 1 of the second and third years following the end of the applicable performance period. The recipient must maintain continuous service through each vesting date, except for termination of service resulting from death or disability or, in the Compensation Committee's sole discretion, upon retirement. The grant date fair values of the LTIP units are reported in column (E) net of the purchase price of $0.25 per unit.

(3)
Amounts reported in 2015 include the following:


ALL OTHER COMPENSATION

NAME
  EMPLOYEE LIFE
INSURANCE PREMIUMS

  USE OF
CHARTER AIRCRAFT

  401(K)
CONTRIBUTION

David Simon

  $183   $—   13,250

Andrew A. Juster

  183     13,250

Richard S. Sokolov

  183   319,285   13,250

James M. Barkley

  183     13,250

David J. Contis

  696     13,250

GRANTS OF PLAN-BASED AWARDS IN 2015

NAME
  GRANT
DATE(1)
(H)

  TYPE OF
AWARD

  ESTIMATED FUTURE PAYOUTS
UNDER EQUITY INCENTIVE
PLAN AWARDS MAXIMUM
(#)
(I)(2)

  GRANT DATE FAIR
VALUE OF STOCK AND
OPTION AWARDS
($)(J)(3)

David Simon

  2/26/15   LTIP Units   116,904   9,470,774

Andrew A. Juster

  2/26/15   LTIP Units   30,764   2,492,309

Richard S. Sokolov

  2/26/15   LTIP Units   61,529   4,984,618

James M. Barkley

  2/26/15   LTIP Units   30,764   2,492,309

David J. Contis

  2/26/15   LTIP Units   27,688   2,243,078
(1)
Represents the date that the award was made.

(2)
Column (I) represents the number of LTIP units the NEO would earn if our performance for the three-year period ended December 31, 2017 would result in a 100% payout. Once earned, the LTIP units will vest in equal parts on January 1 of the second and third years following the end of the performance period. The recipient must maintain continuous service through each vesting date, except for termination of service resulting from death or disability or, in the Compensation Committee's sole discretion, upon retirement.

(3)
The grant date fair values of the 2015 LTIP program awards are shown here net of the $0.25 per unit purchase price.


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EXECUTIVE COMPENSATION TABLES

OUTSTANDING EQUITY AWARDS AT 2015 FISCAL YEAR-END

 
  STOCK AWARDS
 
  NUMBER OF SHARES OR
UNITS EARNED THAT
HAVE NOT VESTED
(#)(1)
(K)

  MARKET VALUE OF SHARES
OR UNITS THAT HAVE NOT
VESTED
($)(2)
(L)

  EQUITY INCENTIVE PLAN
AWARDS: NUMBER OF UNEARNED
SHARES, UNITS OR OTHER RIGHTS
THAT HAVE NOT VESTED
(#)(3)
(M)

  EQUITY INCENTIVE PLAN AWARDS:
MARKET OR PAYOUT VALUE OF
UNEARNED SHARES, UNITS OR OTHER
RIGHTS THAT HAVE NOT VESTED
($)(4)
(N)

David Simon

  766,154   148,779,445   866,997   168,362,147

Andrew A. Juster

  72,740   14,125,381   55,535   10,784,342

Richard S. Sokolov

  196,240   38,107,846   122,080   23,706,715

James M. Barkley

  156,370   30,365,490   74,801   14,525,606

David J. Contis

  67,395   13,087,849   55,212   10,721,618
(1)
Consists of the following shares of restricted stock and LTIP units that have been earned but not vested as of December 31, 2015:

 
  TYPE OF AWARD
  NUMBER OF SHARES OR UNITS

David Simon

  2011-2013 LTIP units   80,545

  2012-2014 LTIP units   137,555

  2013-2015 LTIP units   188,054

  Class A Units-2011 CEO Retention
Agreement LTIP Units
  360,000

Andrew A. Juster

  2011-2013 LTIP units   11,746

  2012-2014 LTIP units   20,060

  2013-2015 LTIP units   40,934

Richard S. Sokolov

  2011-2013 LTIP units   40,273

  2012-2014 LTIP units   65,912

  2013-2015 LTIP units   90,055

James M. Barkley

  2011-2012 LTIP units   33,560

  2012-2014 LTIP units   57,315

  2013-2015 LTIP units   65,495

David J. Contis

  Restricted Stock Granted in 2012   1,654

  2011-2013 LTIP units   10,068

  2012-2014 LTIP units   22,926

  2013-2015 LTIP units   32,747

One-half of the LTIP units vest on January 1 of the second and third years following the end of the performance period assuming continued service.



Additionally, for David Simon, column (K) does not include 87,313 shares of common stock that were acquired by reinvesting a portion of the funds from cash distributions on his unvested 2011 CEO Retention Agreement LTIP units in accordance with the terms of the award.

(2)
The amounts are calculated by multiplying $194.44, the closing price of our common stock as reported by the NYSE for December 31, 2015, by the applicable number of shares or LTIP units. The amounts for LTIP unit awards are net of the $0.25 per unit purchase price.


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EXECUTIVE COMPENSATION TABLES

(3)
Consists of the following LTIP units that have not been earned:

 
  TYPE OF AWARD
  NUMBER OF UNITS

David Simon(5)

  2014-2016 LTIP units   110,093

  2015-2017 LTIP units   116,904

  Class A Units-2011 CEO Retention
Agreement LTIP units

 
640,000

Andrew A. Juster

  2014-2016 LTIP units   24,771

  2015-2017 LTIP units   30,764

Richard S. Sokolov

  2014-2016 LTIP units   60,551

  2015-2017 LTIP units   61,529

James M. Barkley

  2014-2016 LTIP units   44,037

  2015-2017 LTIP units   30,764

David J. Contis

  2014-2016 LTIP units   27,524

  2015-2017 LTIP units   27,688
(4)
The amounts are calculated by multiplying $194.44, the closing price of our common stock as reported by the NYSE for December 31, 2015, by the applicable number of LTIP units, net of the $0.25 per unit purchase price.

(5)
For David Simon, the 2011 CEO Retention Agreement LTIP units are subject to satisfaction of certain performance conditions and maintenance of continuous service through the vesting dates. The 360,000 units awarded on December 31, 2013, were earned during 2015 and are scheduled to vest on January 1, 2018. Assuming all performance and retention requirements under the Agreement are satisfied, the 360,000 units awarded January 1, 2014, will vest on January 1, 2019 and the 280,000 units awarded January 1, 2015, will vest on June 30, 2019. See page 38 for a description of vesting upon certain terminations of employment.

OPTION EXERCISES AND STOCK VESTED IN 2015(1)

 
  STOCK AWARDS(2)
NAME
(A)

  NUMBER OF SHARES
ACQUIRED ON VESTING
(#)
(D)(3)

  VALUE REALIZED
ON VESTING
($)(4)
(E)

David Simon

  0   0

Andrew A. Juster

  0   0

Richard S. Sokolov

  0   0

James M. Barkley

  0   0

David J. Contis(4)

  7,904   1,461,776
(1)
Our NEOs held no stock options at any time during 2015.

(2)
Includes awards of restricted stock.

(3)
Includes awards of restricted stock made to Mr. Contis in 2011 and 2012. 6,250 shares awarded to Mr. Contis in 2011 vested on January 1, 2015, and 1,654 shares awarded in 2012 vested on April 1, 2015.

(4)
Value realized upon vesting of Mr. Contis' 2011 shares is calculated by multiplying $182.11, the closing price of our common stock as reported by the NYSE on December 31, 2014 by the number of shares that vested on January 1, 2015. Value realized upon vesting of Mr. Contis' 2012 shares is calculated by multiplying $195.64, the closing price of our common stock as reported by the NYSE on March 31, 2015, by the number of shares that vested on April 1, 2015.

NONQUALIFIED DEFERRED COMPENSATION IN 2015

NAME
(A)

  EXECUTIVE
CONTRIBUTIONS
IN LAST FY
($)
(B)

  REGISTRANT
CONTRIBUTIONS
IN LAST FY
($)
(C)

  AGGREGATE
EARNINGS
(LOSSES)
IN LAST FY
($)(1)
(D)

  AGGREGATE
WITHDRAWALS/
DISTRIBUTIONS
($)
(E)

  AGGREGATE
BALANCE
AT LAST FYE
($)(2)
(F)

David Simon

      833,625   1,832,596   10,001,004

Andrew A. Juster

            0     0     0

Richard S. Sokolov

      0   0   0

James M. Barkley

            401,452     1,983,358     4,509,060

David J. Contis

  150,000     (11,800)   0   677,768
(1)
Aggregate earnings include dividends paid on, and appreciation of, shares of our common stock held in the plan.

(2)
Of the amounts in this column, the following amounts are or were previously reported in the Summary Compensation Table: David Simon—$9,282,181; Mr. Sokolov—$0; Mr. Barkley—$5,141,862; and Mr. Contis—$449,000.


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EXECUTIVE COMPENSATION TABLES

The assets of our deferred compensation plan are held in what is commonly referred to as a "rabbi trust" arrangement. This means the assets of the plan are subject to the claims of our general creditors in the event of our insolvency. The plan assets are invested by the trustee in its sole discretion. Payments of a participant's elective deferrals are made as elected by the participant. These amounts would be paid earlier in the event of termination of employment or death of the participant, an unforeseen emergency affecting the participant as determined by the committee appointed to administer the plan or a change in control affecting us.

We have not made any contributions to the executive account of our deferred compensation plan since its inception in 1995. As a result, the contributions and aggregate balances shown in the table above are composed entirely of contributions made by the executives from their salary, bonus or restricted stock awards for prior years and earnings on those amounts. The earnings do not represent above-market or preferential rates. The executives may vote and are entitled to receive dividends on their restricted stock awards in the plan.

Deferral elections are made by eligible executives in June of each year for amounts to be earned or granted in the following year. An executive may defer all or a portion of salary, Annual Cash Incentive Compensation or awards under the 1998 Plan.

The investment options available to an executive under the deferral program vary depending upon the type of compensation being deferred.

EQUITY COMPENSATION PLAN INFORMATION

The following table gives information about our common stock that may be issued upon the exercise of options, warrants and rights under our existing equity compensation plans as of December 31, 2015. We have made no grants of stock options since 2001, and there are currently no stock options outstanding under the 1998 Plan.

PLAN CATEGORY
  NUMBER OF SECURITIES TO
BE ISSUED UPON EXERCISE
OF OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS
(#)

  WEIGHTED-AVERAGE
EXERCISE PRICE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS
($)

  NUMBER OF SECURITIES REMAINING
AVAILABLE FOR FUTURE ISSUANCE
UNDER EQUITY COMPENSATION PLANS
(#)

   

Equity compensation plans approved by security holders(1)

  0   0   3,767,178 (2)  

Equity compensation plans not approved by security holders

    0     0        

TOTAL(1)

  0   0   3,767,178 (2)  
(1)
Consists of the 1998 Plan, which was approved by stockholders at the 2012 Annual Meeting held on May 17, 2012, and was ratified at our Annual Meeting in 2014.

(2)
The 1998 Plan provides for the grant of incentive stock options, nonqualified stock options, SARs, restricted stock and performance units, including LTIP units. The Compensation Committee has not made any stock option awards to executives since 2001 and has never made any awards of SARs.


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EXECUTIVE COMPENSATION TABLES

ESTIMATED POST-EMPLOYMENT PAYMENTS UNDER ALTERNATIVE TERMINATION SCENARIOS

The following table sets forth the value of the benefits that would have been payable to each of the NEOs, assuming that the following events occurred on December 31, 2015. We do not disclose payments or other benefits under our 401(k) retirement plan and health and welfare plans because all salaried employees are entitled to the same benefits under those plans. Also, we do not include distributions from our deferred compensation plan because the amounts in that plan consist entirely of contributions made by the executives and earnings on those contributions. 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.

 
  VOLUNTARY
RESIGNATION OR
RETIREMENT
($)

  TERMINATION BY THE
COMPANY WITHOUT
CAUSE OR RESIGNATION
WITH GOOD REASON
($)

  DEATH OR
DISABILITY
($)

  CHANGE IN
CONTROL
($)

  TERMINATION BY THE
COMPANY WITHOUT
CAUSE OR RESIGNATION
WITH GOOD REASON
FOLLOWING CHANGE IN
CONTROL
($)

 

David Simon(1)

                     

Severance Payment(2)

        7,500,000     0     0     7,500,000  

Benefit Continuation

    44,856   0   0   44,856  

Restricted Stock(3)

        0     0     0     0  

Annual LTIP(4)

    0   98,901,752   100,690,978   100,690,978  

Retention LTIP(5)

        107,209,063     194,190,000     0     194,190,000  

TOTAL

  $   $ 114,753,919   $ 293,091,752   $ 100,690,978   $ 302,425,834  

Andrew A. Juster

                               

Severance Payment(6)

    153,846   0   0   153,846  

Restricted Stock(3)

        0     0     0     0  

Annual LTIP(4)

    0   18,897,335   19,323,588   19,323,588  

2015 Annual Cash Incentive Compensation(7)

        0     650,000     0     650,000  

TOTAL

  $   $ 153,846   19,547,335   $ 19,323,588   $ 20,127,434  

Richard S. Sokolov

                               

Severance Payment(8)

    1,400,000   0   0   1,400,000  

Restricted Stock(3)

        0     0     0     0  

Annual LTIP(4)

    0   48,960,170   49,929,550   49,929,550  

2015 Annual Cash Incentive Compensation(7)

          0     1,250,000     0     1,250,000  

TOTAL

  $   $ 1,400,000   50,210,170   $ 49,929,550   $ 52,579,550  

James M. Barkley

                               

Severance Payment(6)

    174,308   0   0   174,308  

Restricted Stock(3)

        0     0     0     0  

Annual LTIP(4)

    0   37,427,196   38,057,971   38,057,971  

2015 Annual Cash Incentive Compensation(7)

        0     800,000     0     800,000  

TOTAL

  $   $ 174,308   38,227,196   $ 38,057,971   $ 39,032,279  

David J. Contis

                               

Severance Payment(6)

    72,115   0   0   72,115  

Restricted Stock(3)

        0     321,604     321,604     321,604  

Annual LTIP(4)

    0   17,682,595   20,076,851   20,076,851  

2015 Annual Cash Incentive Compensation(7)

        0     1,250,000     0     1,250,000  

TOTAL

  $   $ 72,115   19,254,199   $ 20,398,455   $ 21,720,570  
(1)
The terms of the employment agreement with David Simon are described in the "Termination-Related Provisions of Employment Agreement with David Simon," below. This table describes termination scenarios as of December 31, 2015 and the terms of his employment agreement as of that date.

(2)
Paid in equal installments over two years and subject to confidentiality and one- or two-year non-competition provisions in David Simon's employment agreement.

(3)
Amount represents the value of shares of restricted stock held by the executive that would be deemed vested fully as a result of the specified termination event. Value is based on a stock price of $194.44, the closing price of our common stock as reported by the NYSE for December 31, 2015. Pursuant to the 1998 Plan and the terms of award agreements, if an executive's employment terminates for any reason other than death, disability or change in control, unvested restricted stock awards terminate.

(4)
Amount represents the value of LTIP units held by the executive that would be deemed fully vested as a result of the termination event. Value is based on a stock price of $194.44, the closing price of our common stock as reported by the NYSE for December 31, 2015, net of the purchase price of $0.25 per unit. The award agreements or, in the case of David Simon, his employment agreement, provide the following benefits if the executive's employment terminates due to death or disability or if we experience a change in control: (a) any unearned LTIP units would vest pro rata based on the actual performance during the applicable period and the number of days worked over the total days in the performance period (if the performance period has ended, there is no pro-ration of the award), and (b) any LTIP units earned before the date of death, disability or change in


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EXECUTIVE COMPENSATION TABLES

(5)
Pursuant to the 2011 CEO Retention Agreement, (i) if we terminated Mr. Simon's employment without cause, or if he resigned his employment for good reason, in each case on December 31, 2015, then subject to the achievement of the required Termination FFO, the Unvested LTIP units that would vest is equal to 552,083, which is 100% of the units prorated based on the number of months from July 11, 2011 to December 31, 2015. and one-half of the shares that were in escrow (43,657) would vest, (ii) if Mr. Simon's employment was terminated as a result of death or disability, or if both a change in control occurred and we terminated his employment without cause or he resigned for good reason, in each case on December 31, 2015, then 100% of the LTIP Units (1,000,000) would vest and 100% of the shares in the escrow (87,313) would vest. Value is based on a stock price of $194.44, the closing price of our common stock as reported by the NYSE for December 31, 2015, net of the purchase price of $0.25 per unit (with no net reduction for the escrowed shares).

(6)
Determined by our current severance policy under which we pay severance to full-time employees (not covered by a collective bargaining agreement) whose employment is involuntarily terminated in the event of certain reductions in force, mergers or outsourcings. The amount of the severance is one week of pay for every year of service up to a maximum of sixteen years.

(7)
We paid our 2015 bonuses in 2016. Our Annual Cash Incentive Compensation program does not expressly address the consequences of a termination of employment prior to payment of the bonus. However, for the purposes of this table, we have assumed the Compensation Committee would approve paying the earned bonus to an executive who, as of the end of the year, died or became disabled or whose employment was terminated without cause or good reason following a change in control, other than David Simon, whose employment agreement contains provisions regarding the payment of bonuses.

(8)
Based on Richard Sokolov's employment agreement which is described below under "Employment Agreement with Richard Sokolov."

EMPLOYMENT AGREEMENT WITH DAVID SIMON

On July 6, 2011, the Compensation Committee unanimously approved entering into a new long-term employment agreement with David Simon, commencing on July 6, 2011 and ending on July 5, 2019. Pursuant to the employment agreement, David Simon serves as the company's Chief Executive Officer, a member of the Board of Directors and, except under certain circumstances described in the employment agreement, Chairman of the Board of Directors. The employment agreement provides David Simon with an annual base salary of $1,250,000, subject to annual review and increase, but not decrease, by the Committee. The agreement also provides that he is eligible to receive an annual target cash bonus of 200% of his base salary, based on the degree to which reasonably attainable performance goals are achieved.

Termination-related provisions of employment agreement with David Simon. If David Simon is terminated by us without "Cause" or by him for "Good Reason," (each as defined in David Simon's Employment Agreement) subject to his execution of a release of claims against us, he will receive severance in an amount equal to two times the sum of his annual base salary and his target Annual Cash Incentive Compensation paid in equal installments over a two-year period.

In addition, also subject to his execution of a release of claims against us, if he is terminated after June 30, 2015 then a portion of the remaining unvested LTIP units granted under the 2011 CEO Retention Agreement will become vested LTIP units if the Termination FFO equals or exceeds a specified FFO amount. For details regarding the Termination FFO, the Specified FFO and the portion that can be earned upon various terminations please see page 40 of this Proxy Statement.

If David Simon is terminated due to disability or if he dies, he would be entitled to receive (A) the payments described in footnotes (2), (3), and (4) in the Estimated Post-Employment Payments Under Alternative Termination Scenarios table above, (B) pursuant to the terms of his annual performance-based LTIP program award agreements, a number of LTIP units under the annual LTIP program determined at the end of the applicable performance period based on actual performance for that period and then prorated by a partial service factor based on the number of days during the performance period prior to his death or disability, (C) pursuant to the terms of his restricted stock award agreements, full vesting (in the event of death) or continued vesting over the four year schedule (in the event of disability) of his restricted shares, and (D) full vesting of his 2011 CEO Retention Agreement.

If David Simon is terminated by us without "cause" or by him for "good reason" following a change in control, he would be entitled to receive (A) the payments described in (2), (3), and (4) in the Estimated Post- Employment Payments Under Alternative Termination Scenarios table above, (B) all of the unvested LTIP units under the 2011 CEO Retention Agreement fully vest (these also vest if such termination is during the six month period prior to a change in control if such change in control occur), (C) pursuant to the terms of his annual performance-based LTIP unit awards, any unearned LTIP units multiplied by a partial service factor based on the number of days during the performance period to the date of the change in control, and (D) pursuant to the terms of his restricted stock award agreements, full vesting of his restricted stock. If there is a change in control, but David Simon is not terminated, he is entitled to the payments described in subsection (C), and (D) of this paragraph.

Amendments to the 2011 CEO Retention Agreement. Effective as of December 31, 2013 David Simon, the Operating Partnership and the Company amended and restated the Series CEO LTIP Unit Award Agreement dated as of July 6, 2011, as amended on December 22, 2011, March 29, 2013 as further amended and restated effective as of December 31, 2013 (as amended and restated, the "2011 CEO Retention Agreement").

The 2011 CEO Retention Agreement, which was previously entirely service-based, will now become eligible to vest based on the attainment of Company based performance goals, in addition to a service-based vesting requirement. The 2011 CEO Retention Agreement provides that if the relevant performance criteria are not achieved, Mr. Simon will forfeit all or a portion of