UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
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Simon Property Group, Inc. | ||||
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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,
David Simon
Chairman of the Board and Chief Executive Officer
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
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,
James M. Barkley
Secretary
April 1, 2016
TABLE OF CONTENTS
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 1
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 |
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MORE INFORMATION |
BOARD RECOMMENDATION |
BROKER NON-VOTES |
ABSTENTIONS |
VOTES REQUIRED FOR APPROVAL |
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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. | ||||||
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BY INTERNET USING A COMPUTER |
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Vote 24/7 www.proxyvote.com |
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Cast your ballot, sign your proxy card and send by pre-paid mail |
PLEASE VISIT OUR ANNUAL MEETING WEBSITE: annualmeeting.simon.com
2 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
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.
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:
GOVERNANCE OF THE COMPANY (page 5)
NAME OF INDEPENDENT DIRECTOR |
AGE |
OCCUPATION |
COMMITTEE MEMBERSHIPS |
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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 | ||||
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NAME OF DIRECTOR |
AGE |
OCCUPATION |
COMMITTEE MEMBERSHIPS |
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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 | |||
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SIMON PROPERTY GROUP 2016 PROXY STATEMENT 3
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.
RATIFICATION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (page 42)
VOTING PROPOSALS |
BOARD OF DIRECTORS' RECOMMENDATIONS |
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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) |
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Proposal 2 | Advisory vote to approve executive compensation | FOR (page 19) |
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Proposal 3 | Ratify the appointment of Ernst & Young, LLP as our independent registered public accounting firm for 2016 |
FOR (page 42) |
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4 SIMON PROPERTY GROUP 2016 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
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.
SUMMARY OF BOARD EXPERIENCE
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G. AEPPEL |
L. GLASSCOCK |
K. HORN |
A. HUBBARD |
R. LEIBOWITZ |
G. RODKIN |
A. SMITH |
D. SMITH |
D. SIMON |
R. SOKOLOV |
H. SIMON |
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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 | |||||||||||
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SIMON PROPERTY GROUP 2016 PROXY STATEMENT 5
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.
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
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.
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.
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
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.
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.
8 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
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:
Glyn F. Aeppel Age: 57 Director since: New Director nominee Committees Served:To be determined Other Public Directorships: AvalonBay Communities, Inc. |
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 |
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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". |
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 9
PROPOSAL 1: Election of Directors
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 |
Allan Hubbard Age: 68 Director since: 2009 Committees Served: Compensation, Governance and Nominating Other Public Directorships: None |
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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. |
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Reuben S. Leibowitz Age: 68 Director since: 2005 Committees Served: Compensation (Chair), Audit Other Public Directorships: None |
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. |
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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. |
10 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
PROPOSAL 1: Election of Directors
Daniel C. Smith, Ph.D. Age: 58 Director since: 2009 Committees Served: Compensation, Governance and Nominating Other Public Directorships: None |
J. Albert Smith, Jr. Age: 75 Director since: 1993 Committees Served: Audit (Chair), Compensation Other Public Directorships: None |
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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". |
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 11
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.
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 |
Richard S. Sokolov Class B Director Nominee Age: 66 Director since: 1996 Other Public Directorships: None Prior Directorships in Past 5 Years: WP Glimcher |
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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. |
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Herbert Simon Class B Director Nominee Age: 81 Director since: 1993 Other Public Directorships: The Cheesecake Factory Incorporated |
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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. |
12 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
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.
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:
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 13
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. |
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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. |
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THE GOVERNANCE AND NOMINATING COMMITTEE
| | |
Members: 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. |
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14 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
PROPOSAL 1: Election of Directors
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.
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 15
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) |
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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 | |||
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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) |
|
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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 | |
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16 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
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:
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.
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SHARES AND UNITS BENEFICIALLY OWNED |
UNITS BENEFICIALLY OWNED |
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NAME |
NUMBER(1)(2) |
PERCENT(3) |
NUMBER |
PERCENT(4) |
ADDITIONAL INFORMATION |
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| | | | | | | | | | |
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 |
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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. | |||||
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SIMON PROPERTY GROUP 2016 PROXY STATEMENT 17
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) | |||
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NAME AND ADDRESS |
NUMBER OF SHARES |
% |
||
| | | | |
The Vanguard Group(2) |
41,471,502 | 13.40%(3) | ||
BlackRock, Inc.(4) |
27,525,618 | 8.90%(3) | ||
Melvin Simon & Associates, Inc., et al.(5) |
26,973,313(6) | 8.06%(7) | ||
Cohen & Steers, Inc., et al.(8) |
18,491,275 | 5.91%(3) | ||
State Street Corporation and Subsidiaries(9) |
17,870,026 | 5.78%(3) | ||
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18 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
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 10Directors, 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:
"RESOLVED, that the compensation of the named executive officers of the Company, as disclosed in this Proxy Statement under the headings 'Compensation Discussion and Analysis' and 'Executive Compensation,' including the compensation tables and their accompanying narrative discussion, is approved."
The Board of Directors Unanimously Recommends that Stockholders Vote FOR the approval of our Executive Compensation.
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
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 19
COMPENSATION DISCUSSION AND ANALYSIS
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 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.
The graph above shows the compound annual return of our common stock (SPG) versus two key benchmarksthe S&P 500 Index and RMS.
20 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
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.
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 21
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:
22 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
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 elementsBase Salary, Annual Cash Incentive Compensation, and Performance-Based Long-Term Incentives.
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OBJECTIVES |
KEY FEATURES |
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Base Salary | Provide an appropriate level of fixed compensation that will promote executive recruitment and retention. |
Fixed compensation. |
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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. |
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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. |
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| | | | |
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:
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 23
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:
24 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
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.
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|
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NAMED EXECUTIVE OFFICER |
2015 KEY INDIVIDUAL GOALS AND PERFORMANCE |
|
2015 ANNUAL CASH INCENTIVE COMPENSATION AWARD |
|
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| | | | | | | | |
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:
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
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 25
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).
|
|
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 |
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| | | | | | | | | | | | |
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 | % | ||
| | | | | | | | | | | | |
26 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
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%) |
|
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | |
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) |
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| | | | | | | | | | | | | | | | |
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 | ||||||||
| | | | | | | | | | | | | | | | |
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.
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 27
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) |
|
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| | |
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 | |
| | |
28 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
STOCKHOLDER/GOVERNANCE FRIENDLY ASPECTS OF OUR CURRENT COMPENSATION PROGRAM
| | | | | | | | | | | | | | | | |
WHAT WE DO | WHAT WE DON'T DO | |||||||||||||||
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Pay for PerformanceAnnual Cash Incentive Program. Heavy emphasis on performance-based compensation. Annual Cash Incentive compensation is paid only if certain FFO targets are achieved. | 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. | |||||||||||||||
| | | | | | | | | | | | | | | | |
Pay for PerformanceLTIP 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. |
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. | |||||||||||||||
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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. | Limited Retirement and Health Benefits. The Company has never had a traditional or defined benefit plan. | |||||||||||||||
| | | | | | | | | | | | | | | | |
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. | No Hedging or Pledging of Company Stock. Our NEOs and Directors are prohibited from engaging in any hedging or pledging of Company stock. | |||||||||||||||
| | | | | | | | | | | | | | | | |
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. | ||||||||||||||||
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Clawback Policy. Applies in the event of any material restatement of Company's financials beginning in FY2012, whether or not fraud/misconduct is involved. | ||||||||||||||||
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Independent Compensation Consultant. The Compensation Committee has utilized an independent compensation consulting firm, Semler Brossy, since the end of 2011. | ||||||||||||||||
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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.
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 29
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.
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 |
|||
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| | | | |
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.
30 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
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:
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 31
COMPENSATION DISCUSSION AND ANALYSIS
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
EXECUTIVE COMPENSATION TABLES
NAME (A) |
YEAR (B) |
SALARY (C) |
NON-EQUITY INCENTIVE COMPENSATION(1) ($) (D) |
STOCK AWARDS(2) ($) (E) |
ALL OTHER COMPENSATION(3) ($) (F) |
TOTAL ($) (G) |
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| | | | | | | | | | | | |
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 | ||||||
PresidentSimon 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 | ||||||
| | | | | | | | | | | | |
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 | ||
| | | | | |
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 ($)(J)(3) |
||||
---|---|---|---|---|---|---|---|---|
| | | | | | | | |
David Simon |
2/26/15 | LTIP Units | 116,904 | 9,470,774 | ||||
Andrew A. Juster |
2/26/15 | LTIP Units | 30,764 | 2,492,309 | ||||
Richard S. Sokolov |
2/26/15 | LTIP Units | 61,529 | 4,984,618 | ||||
James M. Barkley |
2/26/15 | LTIP Units | 30,764 | 2,492,309 | ||||
David J. Contis |
2/26/15 | LTIP Units | 27,688 | 2,243,078 | ||||
| | | | | | | | |
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 33
EXECUTIVE COMPENSATION TABLES
OUTSTANDING EQUITY AWARDS AT 2015 FISCAL YEAR-END
|
STOCK AWARDS | |||||||
---|---|---|---|---|---|---|---|---|
|
NUMBER OF SHARES OR UNITS EARNED THAT HAVE NOT VESTED (#)(1) (K) |
MARKET VALUE OF SHARES OR UNITS THAT HAVE NOT VESTED ($)(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 | ||||
| | | | | | | | |
|
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 | ||
| | | | |
34 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
EXECUTIVE COMPENSATION TABLES
|
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 | ||
| | | | |
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 | ||
| | | | |
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 | |||||
| | | | | | | | | | | | | | | |
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 35
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) | ||||
| | | | | | | | | | | |
36 SIMON PROPERTY GROUP 2016 PROXY STATEMENT
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 | ||||||
| | | | | | | | | | | | | | | | |
SIMON PROPERTY GROUP 2016 PROXY STATEMENT 37
EXECUTIVE COMPENSATION TABLES
control vest as of the date of the event. The amounts include the earned LTIP units in the three-year 2011, 2012 and 2013 LTIP programs and pro-rated portions of the unearned three-year 2014 and 2015 LTIP programs.
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