The Board regularly evaluates the Company's corporate governance policies and benchmarks those policies against the rules and regulations of governmental authorities, the best practices of other public companies and suggestions received from various authorities. The Board has adopted the Company's Guidelines on Corporate Governance, as amended. The Company's Guidelines on Corporate Governance require that a majority of the directorsDirectors be independent within the meaning of NYSENew York Stock Exchange ("NYSE") standards. The Company’s common stock ("Common StockStock") is listed on the NYSE under the ticker symbol "ELS." The Company has also adopted a Business Ethics and Conduct Policy, which applies to all directors,Directors, officers and employees of the Company. We will disclose on our website any amendment to, or waiver of, any provision of the Business Ethics and Conduct Policy applicable to our directorsDirectors and executive officers ("Executive Officers" or "NEOs") that would otherwise be required to be disclosed under the rules of the SECSecurities and Exchange Commission ("SEC") or NYSE.
the Lead Director and the status of such communications will be reported to the Board or the non-management directorsDirectors (as applicable) on a quarterly basis. The Lead Director may direct special treatment, including the retention of outside advisors or counsel, for any such concern or inquiry.
The Board and our management value the perspectives of our stockholders. Accordingly, we maintain an active dialogue with our investors, which includes meetings with investors and regular participation in investor conferences. We are open to investor feedback, including with respect to corporate governance, ESG and executive compensation matters. Management periodically discusses feedback, including key themes and insights gained from our investor outreach at Board and Board Committee meetings, as appropriate. Additionally, the Compensation Committee takes into consideration the results of the annual advisory vote on the Company's executive compensation. At the 20172020 annual meeting of stockholders, over 95%91% of all the votes cast approved the compensation program described in the proxy statement for the 20172020 annual meeting of stockholders.
The Company has separated the positions of chairman of the board and chief executive officer since 1996. Samuel Zell currently serves as Chairman of the Board, and Marguerite Nader currently serves as our President and Chief Executive Officer ("CEO") and is a member of the Board. Mr. Zell has served as Chairman of the Board since March 19931995, and was previously Co-Chairman of the Board from December 1992 to March 1995, and is uniquely qualified to serve in this capacity. Mr. Zell is an active investor in public and private companies around the world to which he provides strategic direction, hedirection. He has more than 50 years of experience as a chairman, director and executive of various companies, has managed billions of dollars in global investments and has a strong track record of stewarding companies towards the maximization of their potential. Mr. Zell is recognized as a founder of the modern real estate investment trust industry and is a champion for increased transparency by public companies. As our Chairman, Mr. Zell presides over meetings of the Board, stewards the Company, regularly counsels executive management regarding strategy and provides executive management with a network of resources across the industry. Ms. Rosenberg,Mr. Calian, an independent director,Director, serves as the Board's Lead Director as discussed above. The Board has determined that this leadership structure is appropriate as it allows the CEO to focus on our day-to-day business, while allowing the Chairman of the Board to lead the Board in its fundamental role of providing advice to and independent oversight of management.
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. The Company faces a number of risks, including economic, environmental and regulatory risks, and others such as the impact of competition and weather conditions. The Company believes one way to manage risk is to maintain balance sheet flexibility and evaluate major capital items, including dividend policy, debt policy, acquisitions and dispositions, and equity and debt issuances, in light of the potential impact on financial flexibility. Management is responsible for the day-to-day management of risks the Company faces, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board has the responsibility to satisfy itself that the risk management processes designed by management are adequate and functioning as designed.
The Board believes that establishing the right "tone at the top" and full and open communications between management and the Board are essential for effective risk management and oversight. Our CEO meets quarterly with Board Committee chairpersons, updating them on a variety of matters, including risk management and related controls. Our executive officersCEO also meets monthly with our Lead Director. Our Executive Officers attend each quarterly Board meeting and are available to address any questions or concerns raised by the Board on risk management-related and any other matters. At the quarterly Board meetings, the Board receives presentations from our executive officersExecutive Officers on strategic matters involving the Company’sCompany's operations.
While the Board is ultimately responsible for risk oversight at the Company, our four Board Committees assist the Board in fulfilling its oversight responsibilities in certain areas of risk. The Audit Committee of the Board (the "Audit Committee") assists the Board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls, compliance with legal and regulatory requirements, and cybersecurity;requirements; and, in accordance with NYSE requirements, discusses policies with respect to risk assessment and risk management.management, including, but not limited to, insurance coverage, interest rate risk management, cyber technology, human rights and ESG risks. Our management regularly provides risk assessment reports to the Audit Committee, including reports relating to regulatory environmental and cybersecurity matters. With respect to cybersecurity matters, the reports provided by management to the Audit Committee include cybersecurity risks facing the Company and the measures the Company is taking to mitigate such risks, as well as updates as to changes to the Company's cybersecurity risk profile or certain newly identified risks. The Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs and risks associated with Board organization, membership and structure, succession planning, and corporate governance. The Executive Committee of the Board (the "Executive Committee") assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated with the acquisition, disposition and financing of investments for the Company. The Strategic Planning Committee of the Board (the "Strategic Planning Committee") assists the Board in fulfilling its oversight responsibilities with respect to the management of risks related to Company strategy and potential strategic transactions.initiatives.
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▪ | Pledging of our shares of Common Stock and OP Units by directors and executive officers is not permitted without the prior approval of the Audit Committee. |
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▪ | For shares of Common Stock held in brokerage accounts, margin loans using our shares of Common Stock as collateral are prohibited. |
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▪ | When considering whether to permit a proposed pledge, the Audit Committee shall consider factors that it deems relevant, which may include, but are not limited to: |
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◦ | the number of shares of Common Stock or OP Units to be pledged and the aggregate market value of the position; |
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◦ | the percentage of the Company’s outstanding shares of Common Stock, on an as-converted basis, represented by the equity to be pledged; |
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◦ | the value of the equity to be pledged as compared to the net worth of the individual and other factors bearing on the ability of the individual to prevent a forced sale of the pledged position; |
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◦ | the number of days required to unwind the proposed pledge; |
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◦ | the structural protections in the borrowing arrangement to guard against foreclosure on the pledged position, including whether there are other assets securing the loan; and |
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◦ | on the ability of the individual to prevent a forced sale of the pledged position; •the number of days required to unwind the proposed pledge; •the structural protections in the borrowing arrangement to guard against foreclosure on the pledged position, including whether there are other assets securing the loan; and •historical share prices and trends in trading volumes with respect to the Company’s equity. |
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▪ | For any new loan which includes a proposed pledge of our shares of Common Stock and/or OP Units to be considered by the Audit Committee, the loan must contain the following structural parameters intended to mitigate the risk of a forced sale as a result of a decline in the market price of our Common Stock and OP Units: |
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◦ | the loans must be compliant with the requirements of Federal Reserve Regulation U, limiting the amount of any such loan to a maximum 50% of the value of collateral, as measured at the time of borrowing; and |
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◦ | the loan and pledge arrangements may not contain provisions requiring automatic or forced sales, prior to notice and a cure period of not less than three business days between when specific loan-to-value thresholds are exceeded and when lenders have the right to exercise remedies under the pledge arrangement. |
Notwithstanding the adoption of the Securities Pledging Policy, in connection with our 2017 annual meeting of stockholders, ISS again issued a report recommending withhold votes with respect to each memberthe Company’s equity.
■For any new loan which includes a proposed pledge of our shares of Common Stock and/or OP Units to be considered by the Audit Committee. SimilarCommittee, the loan must contain the following structural parameters intended to mitigate the risk of a forced sale as a result of a decline in the market price of our Common Stock and OP Units:
•the loans must be compliant with the requirements of Federal Reserve Regulation U, limiting the amount of any such loan to a maximum 50% of the value of collateral, as measured at the time of borrowing; and
•the loan and pledge arrangements may not contain provisions requiring automatic or forced sales, prior to notice and a cure period of not less than three business days between when specific loan-to-value thresholds are exceeded and when lenders have the right to exercise remedies under the pledge arrangement.
Political Contributions Policy
The Company has a robust policy governing political expenditures. Under the policy approved by the Board, any political spending by the Company must be legitimately linked to the results ofCompany's business purposes and strategic intent, approved by the 2016 annual meeting of stockholders, despite ISS' recommendation to withhold votes for members of our Audit Committee, each member of our Audit Committee was re-elected at the 2017 annual meeting of stockholders. As described above,Chief Executive Officer, and reviewed annually by the Compensation Committee thoroughly analyzed and examined a number of factors bearingCommittee. The policy is available on policy design, and the Board uponCompany's website at www.equitylifestyleproperties.com in the recommendation from the Compensation Committee determined and continues to believe, in its business judgment, that the Securities Pledging Policy continues to appropriately protect stockholder interests.investor relations section under "Corporate Governance."
Committees of the Board; Meetings
Meetings:During the year ended December 31, 2017,2020, the Board held four meetings. Each of the directorsDirectors attended 75% or more100% of the total number of the meetings of the Board and the committees on which he or she served. The members of the Board committees are elected by the Board each year at the Board meeting that is held after the annual meeting of stockholders.
Executive Committee: The Executivefour standing committees of the Board are: Audit Committee, is currently comprised of Howard Walker (Chair), Mr. Zell, Ms. Rosenberg and Thomas Heneghan. The Executive Committee has the authority to authorize the acquisition, disposition and financing of investments by the Company (including the issuance of additional limited partnership interests of MHC Operating Limited Partnership) and to authorize contracts and agreements, including those related to the borrowing of money by the Company, in each case, below certain thresholds set by the Board.
Compensation, Nominating and Corporate Governance Committee: The Compensation Committee, is currently comprised of Ms. Rosenberg (Chair), David ContisExecutive Committee, and William Young.Strategic Planning Committee. The Board has determined that each of the Compensation Committee members is an "independent" director within the meaning set forth in the NYSE listing standards. The Compensation Committee is governed by the Charter of the Compensation, Nominating and Corporate Governance Committee, a copy of which is available on our website. The Compensation Committee determines compensation for our executive officers and exercises the powers of the Board in connection with compensation matters, including incentive compensation and benefit plans. The Compensation Committee receives recommendations regarding executive compensation from our CEO and considers these recommendations in determining appropriate compensation plans. The Compensation Committee does not delegate its authority in regards to establishing executive compensation. The Compensation Committee has the authority to grant stock awards under our equity compensation plans, such as the 2014 Equity Incentive Plan. All stock award grants to independent members of the Board are recommended by the Compensation Committee and approved by the Board. In addition, the Compensation Committee identifies
and recommends qualified individuals to become Board members (as described further below), develops and recommends the Guidelines on Corporate Governance applicable to the Company, recommends to the Board director nominees for each committee of the Board and directs the Board in an annual review of its performance. During the year ended December 31, 2017, the Compensation Committee held five meetings. The "Compensation Committee Report" is included herein. On February 27, 2018, Mr. Young informed the Board that he will not stand for reelection at the Company's Annual Meeting.
Audit Committee: The Audit Committee is currently comprised of Philip Calian (Chair), Mr. Contis and Tao Huang. The Board has determined that eachmember of the Audit Committee membersand Compensation Committee is an "independent" directorDirector within the meaning set forth in the NYSE listing standards and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Board has also determined that Mr. Calian, Mr. Contis and Mr. Huang are each an "audit committee financial expert" as that term is defined by the SEC in Item 407(d)(5) of Regulation S-K. The Audit Committee isand Compensation Committee each are governed by a charter which generally states the Audit Committee Charter, a copypurpose of which isthe committee and outlines the committee's structure and responsibilities. These charters are available on our website. The current membership information for our Board committees is presented below. On February 9, 2021, Mr. Huang informed the Board that he will not stand for reelection at the Company's Annual Meeting.
Executive Committee
Members:Thomas Heneghan (Chair), Samuel Zell, Philip Calian
•Authorizes the acquisition, disposition and financing of investments by the Company (including the issuance of additional limited partnership interests of MHC Operating Limited Partnership), in each case, below certain thresholds set by the Board, without the need for further Board approval.
•Authorizes contracts and agreements, including those related to the borrowing of money by the Company, in each case, below certain thresholds set by the Board, without the need for further Board approval.
Audit Committee is responsible for, among other things, engaging
Members:Philip Calian (Chair), David Contis, Tao Huang, Scott Peppet
Number of Meetings in 2020: 10
•Engages our Independent Accountants, reviewingAccountants.
•Reviews with our Independent Accountants the plans for and results of the audit engagement, approvingengagement.
•Approves professional services provided by our Independent Accountants, reviewingAccountants.
•Reviews the independence of our Independent Accountants, considering the range of audit and non-audit fees and reviewingAccountants.
•Reviews the adequacy of the Company’s internal accounting controls and accounting and reporting practices and assessing the quality and integrity of our audited financial statements. The Audit Committee has also established
•Establishes procedures for the processing of complaints received from employees regarding internal control, accounting and auditing matters. During
•Reviews policies with respect to risk assessment and risk management, including, but not limited to, insurance coverage, interest rate risk management, cyber technology, human rights and ESG risks.
•All committee members are designated by the year ended December 31, 2017,Board as "audit committee financial experts" in accordance with SEC regulations and meet the Audit Committee held eight meetings. independence, experience and financial literacy requirements of the NYSE and Section 10A of the Exchange Act.
•Compliance with financial, legal and regulatory requirements.
•The "Audit Committee Report" is included herein.
Compensation, Nominating and Corporate Governance Committee
Strategic Planning Committee: Members:David Contis (Chair), Philip Calian, Constance Freedman, Sheli Rosenberg
Number of Meetings in 2020: 5
•Determines compensation for our NEOs and exercises the powers of the Board in connection with compensation matters, including incentive compensation and benefit plans.
•Receives recommendations regarding executive compensation from our CEO and considers these recommendations in determining appropriate compensation plans.
•Does not delegate its authority in regard to establishing executive compensation.
•Authorizes grants of stock awards under our equity compensation plans, such as the 2014 Equity Incentive Plan.
•All stock award grants to independent Directors are recommended by the Compensation Committee and approved by the Board.
•Develops and recommends to Board succession plans for the CEO and other senior executive officers.
•Identifies and recommends qualified individuals to become Directors.
•Develops and recommends the Guidelines on Corporate Governance applicable to the Company.
•Reviews ESG strategy, initiatives and policies.
•Recommends to the Board Director nominees for each committee of the Board.
•Directs the Board in an annual review of its performance.
•All members meet the independence requirements of the NYSE.
•The "Compensation Committee Report" is included herein.
Strategic Planning Committee is currently comprised of Mr.
Members:Thomas Heneghan (Chair), Mr. Walker and Mr. Young. The Strategic Planning Committee setsAndrew Berkenfield, Constance Freedman, Scott Peppet
Number of Meetings in 2020: 5
•Sets specific broad strategic goals for the executive team that are re-assessed on an annual basis. The Strategic Planning Committee meets
•Meets with the executive team to discuss and evaluate the progress with respect to these strategic goals. The Strategic Planning Committee also has the responsibility to review
•Reviews strategy and make recommendations to the Board or the Executive Committee, as appropriate, regardingprogress on initiatives related to:
◦technology, innovation and security;
◦development, acquisitions dispositions, joint ventures of real and investments;
◦utilities and energy;
◦legal proceedings;
◦property and other assets or investments by the Company,casualty insurance; and any equity and debt financing considerations related to such transactions, as well as other potential strategic transactions in connection therewith, and any further responsibilities as may be delegated or designated by the Board from time to time. During the year ended December 31, 2017, the Strategic Planning Committee held four meetings. On February 27, 2018, Mr. Young informed the Board that he will not stand for reelection at the Company's Annual Meeting.
◦any other matters which may impact the overall strategy of the Company. •All members meet the independence requirements of the NYSE.
Board Member NominationsComposition and Refreshment
Nominees for directorDirector are selected by the Compensation Committee, which will consider nominees recommended by stockholders. If you wish to recommend a person whom you consider qualified to serve on the Board, you must give written notice to our Corporate Secretary in accordance with the requirements described in "Stockholder Proposals." This notice must contain: (i) as to each nominee, all information that would be required to be disclosed in a proxy statement with respect to the election of directorsDirectors pursuant to the Exchange Act, (ii) the name and address of the stockholder giving the notice, (iii) the number of shares of Common Stock owned beneficially and of record by such stockholder, and (iv) the written consent of each nominee to serve as a directorDirector if so elected. The Compensation Committee will consider and evaluate persons recommended by stockholders in the same manner as potential nominees identified by the Board and/or the Compensation Committee. For the
upcoming Annual Meeting, the Compensation Committee did not receive any recommendations for nominees from stockholders.
The Compensation Committee identifies nominees for directorDirector from various sources. In 2017, the Compensation Committee initiated efforts to identify a director nominee. Through referrals and recommendations from members of our Board and management, the Compensation Committee recommended appointing Constance Freedman. The Board approved this recommendation and appointed Ms. Freedman to the Board, effective October 31, 2017. In assessing potential directorDirector nominees, the Compensation Committee considers the character, background and professional experience of candidates. All nominees should possess good judgment and an inquiring and independent mind. Familiarity with the issues affecting the Company is among the relevant criteria. All directorDirector nominees must possess a reputation for the highest personal and professional ethics, integrity and values. The Compensation Committee will also carefully consider any potential conflicts of interest. Nominees must also be willing and able to devote sufficient time and effort to carrying out the duties and responsibilities of a directorDirector effectively and should be committed to serving on the Board for an extended period of time. Neither the Company nor theThe Compensation Committee has a formal policy with regard to the consideration ofconsiders diversity in identifying and evaluating director nominees, although both may consider diversity when identifying and evaluating potential directorDirector nominees. As detailed above, theThe Compensation Committee strives to nominate directorsDirectors with a variety of complementary skills so that, if elected, the Board will contain the appropriate mix of diversity in background and experience to oversee the Company’sCompany's business.
Based on referrals and recommendations, the Compensation Committee recommended appointing Derrick Burks. The Board approved this recommendation and appointed Mr. Burks to the Board, effective February 9, 2021.
Biographical Information
Set forth below are biographies of each of the Company's current executive officers.EXECUTIVE OFFICERS' BIOGRAPHICAL INFORMATION
Biographies of the director nominees are set forth below in Proposal 1.
our current Executive Officers,
other than Ms. Marguerite Nader, 49, has beenare presented below. Information for Ms. Nader is included under "Director Nominees' Biographical Information" in this Proxy Statement. All of our Executive Officers are named executive officers ("NEOs").
Paul Seavey - Executive Vice President and Chief Financial Officer
Mr. Seavey, 52, has been Executive Vice President and Chief Financial Officer of the Company since February 2013. For her biographical information, please see Proposal 1 below.
Paul Seavey, 49, has been2020. He was Executive Vice President, Chief Financial Officer and Treasurer of the Company sincefrom January 2014. He2014 to February 2020. Mr. Seavey was Senior Vice President, Chief Financial Officer and Treasurer from October 2012 to January 2014. Mr. Seavey was2014; Senior Vice President of Finance and Treasurer from May 2012 to October 2012; Senior Vice President and Treasurer from December 2011 to May 2012; Vice President of Financial Planning and Treasurer from January 2009 to December 2011; and Vice President of Financial Planning from December 2001 to January 2009. Mr. Seavey has been employed with the Company since 1994.
Patrick Waite, 51, - Executive Vice President and Chief Operating Officer
Mr. Waite, 54, has been Executive Vice President and Chief Operating Officer of the Company since January 2015. He was Executive Vice President - Property Operations from January 2014 to January 2015 and Senior Vice President of Operations from February 2013 to January 2014. Prior to joining the Company, Mr. Waite was senior vice president of asset management at American Residential Communities, a private operator of manufactured housing communities, from January 2010 through January 2013. He was vice president of Riverside Communities, a manufactured home community affiliate of Helix Funds LLC, from August 2004 to January 2010. Mr. Waite co-founded Continental Communities, a private operator of manufactured home communities, and managed its acquisition program from 1997 to 2001. Mr. Waite was the Director of Acquisitions for the Company from 1993 to 1997.
Roger Maynard 60,- Executive Vice President - Investments
Mr. Maynard, 63, has been Executive Vice President - Investments of the Company since March 2016. He was Executive Vice President - Asset Management from February 2009 to March 2016. Mr. Maynard was Executive Vice President and Chief Operating Officer from December 2005 to February 2009; Chief Operating Officer from January 2004 to December 2005; and Senior Vice President for national operations from January 2003 to December 2003. Mr. Maynard was Senior Regional Vice President for the Company’s Eastern division from September 2001 to December 2002, and Senior Regional Vice President for the Company’sCompany's Southeastern region from January 2000 to September 2001. Mr. Maynard was Regional Vice President for the Company’sCompany's Southeastern region from June 1998 to December 1999, and Regional Vice President for the Company’sCompany's Northeastern region from October 1997 to June 1998.
David Eldersveld - Executive Vice President, Chief Legal Officer and Secretary
Mr. Eldersveld, 47, has been Executive Vice President, Chief Legal Officer and Secretary since February 2021. He was Executive Vice President, General Counsel and Secretary from June 2015 to February 2021. Prior to joining the Company, Mr. Eldersveld held various senior management positions at Tribune Company where he worked from 2005 through 2013, including serving as executive vice president, general counsel and corporate secretary at Tribune Company from July 2011 to January 2013 and senior vice president, general counsel and corporate secretary from September 2010 to July 2011. From 1999 to 2005, Mr. Eldersveld was an associate at the law firm of Sidley Austin LLP in Chicago, Illinois, where his principal practice areas were mergers and acquisitions, securities and corporate finance and corporate governance.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Independence of Directors
Pursuant to the Company's Guidelines on Corporate Governance, which require that a majority of our directorsDirectors be independent within the meaning of NYSE standards and do not include any additional categorical standards other than those required by the NYSE, the Board undertook a review of the independence of directorsDirectors nominated for reelection at the upcoming Annual Meeting. During this review, the Board considered transactions and relationships, if any, during the prior year between each directorDirector or any member of his or her immediate family and the Company, including those reported under "Certain Relationships and Related Transactions" below. As provided in the Guidelines, the purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the directorDirector is independent.
As a result of this review, the Board affirmatively determined that all the directorsDirectors nominated for election at the Annual Meeting are independent of the Company and its management with the exception of our Chairman, Mr. Zell, and our CEO, Marguerite Nader. The Board determined that none of the independent directorsDirectors has or had a material relationship with the Company other than being a directorDirector and/or a stockholder of the Company.
The Board specifically considered Mr. Zell's affiliation to Two North Riverside Plaza Joint Venture Limited Partnership, which provides office space to the Company as further described in "Certain Relationships and Related Transactions" below. The Board determined that this relationship between the Company and Two North Riverside Joint Venture Plaza does not breach NYSE bright line tests and did not hinder Mr. Zell's independence. The Board considered the payments to Two North Riverside Joint Venture Plaza in relation to Mr. Zell's considerable net worth. The Board further considered Mr. Zell's priorHeneghan's role as interimformer CEO for the eighteen-month period from March 1995 to August 1996, to allow time for transition to a new CEO. During such time, Mr. Zell did not receive compensation for his role as interim CEO and was not subject to an employment agreement, nor did he receive
any severance, long-term health or pension benefits. The Board determined that Mr. Zell's prior role as interim CEO did not hinder Mr. Zell's independence.
The Board specifically considered Mr. Walker's and Mr. Heneghan's respective roles as former CEOs of the Company and determined that these rolesthis role did not hinder Mr. Walker's or Mr. Heneghan's independence within the meaning of the NYSE listing standards.
GeneralNominee Information, about the NomineesQualifications, Skills and Experience
The Company's Board currently consists of ten directors.eleven Directors. On February 27, 2018,9, 2021, Mr. YoungHuang informed the Board that he willwould not stand for reelection at the Annual Meeting. Accordingly, Mr. Young’sHuang’s service as a member of the Board will cease at the Annual Meeting scheduled to be held on May 1, 2018,April 27, 2021, at which time the Board will be reduced from teneleven directors to nineten directors. Mr. Young’sHuang’s decision not to stand for reelection is not a result of any disagreement with other Board members or with our management.
The Company's Charter currently provides for the annual election of all directors.Directors. All the nominees are presently directors,Directors, and each nominee has consented to be named in this Proxy Statement and to serve if elected.
Biographical Information
Set forthIn addition to each Director nominee's qualifications, skills and experience outlined in their biographical data below, are biographies ofthe Company's Board looked for certain attributes in each of the Director nominees and based on these attributes, concluded that each Director nominee should serve on the Board. The Board does not require that the Director nominees possess each attribute, but rather the Board is looking for director.a mix of attributes among the Directors. These attributes include: (i) prior experience on the Board and other relevant board level experience; (ii) real estate industry experience; (iii) transactional experience especially within the real estate industry; (iv) relevant experience in property operations; (v) financial expertise; (vi) legal and/or regulatory experience; (vii) knowledge of and experience with corporate governance matters; (viii) experience with executive compensation matters; and (ix) prior experience in risk management. The following table shows the attributes of each Director nominee.
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| Board Experience | Real Estate Industry | Transactional | Property Operations | Financial Expertise | Legal / Regulatory | Corporate Governance | Executive Compensation | Risk Management | |
Samuel Zell | X | X | X | X | X | X | X | X | X | |
Thomas Heneghan | X | X | X | X | X | X | X | X | X | |
Andrew Berkenfield | X | | X | | X | | X | X | X | |
Derrick Burks | X | X | X | | X | X | X | X | X | |
Philip Calian | X | X | X | X | X | X | X | X | X | |
David Contis | X | X | X | X | X | X | X | X | X | |
Constance Freedman | X | X | X | | X | | X | X | X | |
Marguerite Nader | X | X | X | X | X | X | X | X | X | |
Scott Peppet | X | | X | | X | X | X | X | X | |
Sheli Rosenberg | X | X | X | | X | X | X | X | X | |
Nominees' Biographical Information
Samuel Zell 76,
Chairman of Board
Executive Committee
Age 79
Director since 1992
Mr. Zell has been Chairman of the Board of the Company since March 1995 and was CEO from March 1995 to August 1996. Mr. Zell was Co-Chairman of the Board from December 1992 until March 1995. Mr. Zell was a director of Mobile Home Communities, Inc., the former manager of the Company’s manufactured home communities, from 1983 until its dissolution in 1993. Mr. Zell has servedserves as chairman of Equity Group Investments ("EGI"), athe private investment company andfirm he founded more than 50 years ago. EGI is a division of Chai Trust Company, LLC ("Chai Trust"), since January 2012. EGI is the private investment firm that manages Sam Zell's and served as chairman and president of EGI from 1999 through 2011. EGI provides investment management and accounting services to the Zell family trusts.Family's wealth. Mr. Zell is also the co-founder and chairman of Equity International, a private investment firm focused on real estate-related companies outside the United States. For more than the past five years, Mr. Zell has served as chairman of the board of Anixter International, Inc.Equity Distribution Acquisition Corp., a publicly traded global supplier of communications and security products; and asspecial purpose acquisition company targeting opportunities to apply technological advancement within the industrial industry, since 2020. Mr. Zell has been chairman of the board of Equity Residential, a publicly traded real estate investment trust ("REIT") that, which owns and operates apartment properties.properties, since 1993. Mr. Zell has been chairman of the board of Equity Commonwealth, a publicly traded office REIT, since May 2014. Mr. Zell has been chairman of the board of Covanta Holding Corporation, a publicly traded international leader in converting waste to energy, since September 2005, was previously a director from 1999 until 2004, and served as its president, chairman and chief executive officer from July 2002 to October 2004. Mr. Zell served as chairman of the board of Capital Trust,Anixter International, Inc., a specialized finance company ("Capital Trust")publicly traded global supplier of communications and security products from 1984 until December 2012. Mr. Zell served as a director of Tribune Company, a private media conglomerate, from May 2007 to December 2012, as chairman from December 2007 to December 2012, and as chief executive officer from December 2007 to December 2009. In December 2008, Tribune Company filed for protection under Chapter 11 of the Bankruptcy Code.its sale in June 2020. Mr. Zell was a trustee and chairman of the board of trustees of Equity Office Properties Trust, a publicly traded REIT primarily focused on office buildings, from October 1996 until its sale in February 2007, and was its chief executive officer from April 2002 to April 2003, and its president from April 2002 to November 2002. Mr. Zell is an active philanthropist with a focus on entrepreneurial education. Through the Zell Family Foundation, he has led the sponsorship of several leading entrepreneurship programs, including: the Zell/Lurie Institute for Entrepreneurial Studies at University of Michigan’s Ross School of Business; the Zell Fellows Program at Northwestern University’s Kellogg School of Management; and the Zell Entrepreneurship Center at the Interdisciplinary Center Herzliya (IDC). The Zell Global Entrepreneur Network (ZGEN) unites the students and alumni of these programs and actively provides them with connections, opportunities, mentorship and support. Mr. Zell also sponsors the Samuel Zell/Robert Lurie Real Estate Center at University of Pennsylvania’s Wharton Real Estate Center. Mr. Zell is the father-in-law of Mr. Scott Peppet, who serves on the Board.
Howard Walker, 78, has been Co-ViceThomas Heneghan
Vice Chairman of the Board of the Company
Executive Committee (Chair)
Strategic Planning Committee (Chair)
Age 57
Director since February 2013, was2004
Mr. Heneghan has been Vice Chairman of the Board fromsince May 2003 to February 2013,2018 and has been Chair of the Board’s Executive Committee since January 2004. Mr. Walker has been a director of the Company since November 1997. Mr. Walker has been retired from the Company since December 2003. Mr. Walker was Chief Executive Officer of the Company from December 1997 to December 2003. Mr. Walker was President of the Company from September 1997 to May 2000, and President of Realty Systems, Inc., an affiliate of the Company, from March 1995 to April 2000. Mr. Walker was a Vice President of the Company from January 1995 to March 1995.
Thomas Heneghan, 54, has been Co-Vice Chairman of the Board since Februaryfrom 2013 and a director of the Company since March 2004.to 2018. Mr. Heneghan has been chief executive officer of Equity International, a private investment firm focused on real estate-related companies, outside the United States, since February 2013. Mr. Heneghan was Chief Executive Officer of the Company from January 2004 to February 2013 and President of the Company from February 2011 to May 2012. He was also
President of the Company from January 2004 to January 2008. Mr. Heneghan was President and Chief Operating Officer of the Company from May 2000 to December 2003. He was Executive Vice President, Chief Financial Officer and Treasurer of the Company from April 1997 to May 2000, and Vice President, Chief Financial Officer and Treasurer of the Company from February 1995 to March 1997. Mr. Heneghan has been a director of Farmland Partners Inc., a publicly traded real estate company that owns and seeks to acquire high-quality North American farmland, since December 2020. He is a senior managing director of Chai Trust. He is a member of the Urban Land Institute’s Global Exchange Council, and a board member of the Global Real Estate Institute.Council.
Philip Calian,
Andrew Berkenfield
Strategic Planning Committee
Age 55
Director since 2020
Mr. Berkenfield has been a partner and the chief executive officer of Duncan Channon, a nationally acclaimed, independent advertising agency, since January 2009. Mr. Berkenfield joined Duncan Channon in January 2000 as the agency’s general manager. Prior to 2000, Mr. Berkenfield held senior positions at Foote, Cone & Belding, a global advertising agency, and Lintas: NY, an advertising communications company.
Derrick Burks
Age 64
Director since 2021
Mr. Burks was a partner at Ernst & Young, LLP, a public accounting firm, from 2002 until his retirement in 2017 and served as the managing partner of the Indianapolis office from 2004 to 2017. Mr. Burks was employed by Arthur Andersen, a public accounting firm, from 1978 to 2002, where he served for three years as the managing partner of the Indianapolis office. Mr. Burks was a director of Vectren Corporation, a publicly traded regional energy company, from 2017 until the Companytime of its sale in 2019 and was a member of its Audit Committee and Finance Committee. Mr. Burks’ business experience spans small businesses, large international corporations and public companies. He has extensive merger and acquisition, capital markets, enterprise risk and SEC expertise. Throughout his career he has served companies in various industries, including energy, manufacturing, mass merchandising, and logistics with a focus for more than 25 years in real estate (REITs).
Philip Calian
Lead Director
Audit Committee (Chair)
Compensation, Nominating & Corporate Governance Committee
Executive Committee
Age 58
Director since October 2005.2005
Mr. Calian has been the Board's Lead Director since 2019. Mr. Calian has been founder and managing partner of Kingsbury Partners LLC since January 2003, and an operating partner of Waveland Investments LLC since July 2004.2002. Kingsbury Partners LLC is a private equity and consulting firm focused on providing capital and ownership skills to middle market distressed businesses andbusinesses. Mr. Calian also served as operating partner of Waveland Investments LLC, is a Chicago-based private equity firm with committed equity capital.capital, from July 2003 until December 2019. Prior to founding Kingsbury Partners LLC, Mr. Calian was chief executive officer of American Classic Voyages Co., a publicly-tradedpublicly traded travel and leisure company, from 1995 until 2002. Mr. Calian is managing member of MCS Investment Group, LLC, a private producer and seller of mineral well brine; Hudson Lock, LLC, a private lock and hardware manufacturer; and Lewis County Press, LLC, a community newspaper publisher.
David Contis, 59, has been Mr. Calian is a directormember of the Companyboard of directors of CC - Development Group, Inc., a private owner and operator of senior living communities.
David Contis
Compensation, Nominating & Corporate Governance Committee (Chair)
Audit Committee
Age 62
Director since February 2009.2009
Mr. Contis has been a principal of Agora Advisors, Inc., which provides consulting services to domestic and international real estate and retail companies, since May 2017. Mr. Contis was president - mall platform and senior executive vice president of Simon Properties Group, Inc., a publicly-tradedpublicly traded retail REIT, from May 2011 to May 2017. Mr. Contis was president of real estate for EGI from November 2006 to May 2011. He was executive vice president and chief operating officer of The Macerich Company, a publicly-tradedpublicly traded shopping center REIT, from May 1997 to October 2006. Mr. Contis was employed in various capacities by affiliates of EGI from 1980 to 1997, including as vice chairman, executive vice president and chief operating officer of Equity Properties & Development L.P., from 1992 to 1997. He served on the board of directors of BRMalls, Brazil’s largest shopping center company from 2008 to 2011. Mr. Contis was a director and served as a member of the board of directors, compensation committee and audit committee of Dundee Realty Corp., a Canadian-based real estate company, from 1997 to 2003. In addition, he wasHe is a trustee of the International Council of Shopping Centers.
Constance Freedman, age 42, has been asenior managing director of the CompanyChai Trust.
Constance Freedman
Compensation, Nominating & Corporate Governance Committee
Strategic Planning Committee
Age 45
Director since October 2017.2017
Ms. Freedman is the founder and managing partner of Moderne Ventures, an early stage investment fund she founded in 2015 that is focused on technology companies in and around real estate, finance, insurance and home services. Prior to Moderne Ventures, Ms. Freedman was the vice president of strategic investments for the National Association of Realtors where she launched the investment fund Second Century Ventures in 2008, and founded REach, its technology accelerator, in 2012.
Tao Huang, 55, has been a director of the CompanyMarguerite Nader
President and Chief Executive Officer
Age 52
Director since November 2015. Mr. Huang is a founder and managing partner of Range Light, LLC, an investment firm. He was previously the chief operating officer of Morningstar, Inc., a leading independent provider of investment research, from October 2000 until his retirement in December 2010. Mr. Huang spent almost 20 years with Morningstar, taking on increasing levels of responsibility from his start as an entry level technical programmer. He was named director of technology in 1992 and chief technology officer in 1996; he started Morningstar’s international operation in 1998, and was promoted to chief operating officer in October 2000. Mr. Huang is a director of Armstrong World Wide Industries, a publicly traded building materials company since 2010.2013
Marguerite Nader, 49, has been a director of the Company since March 2013. Ms. Nader has been President and CEO of the Company since February 2013. She was President and Chief Financial Officer from May 2012 to October 2012 and Executive Vice President and Chief Financial Officer from December 2011 to May 2012. Ms. Nader was Executive Vice President - New Business Development from February 2011 to December 2011. She was Executive Vice President - Sales and Marketing from February 2009 to February 2011. Ms. Nader was Senior Vice President of New Business Development from January 2007 to February 2009. She was Vice President of New Business Development from January 2001 to January 2007. Ms. Nader was Vice President of Asset Management from January 1998 to January 2001. She has been employed with the Company since 1993. Ms. Nader has been a director of Ventas, a publicly traded healthcare REIT since 2020. Ms. Nader was a trustee of Liberty Property Trust, a publicly traded industrial REIT, sincefrom June 2017.2017, until its sale in 2020. Ms. Nader has servedserves as First Vice Chair on the National Association of Real Estate Investment Trust ("NAREIT") BoardExecutive Board.
Scott Peppet
Audit Committee
Strategic Planning Committee
Age 51
Director since 2018
Mr. Peppet is president and senior managing director of Governors since 2013.
Sheli Rosenberg, 76,Chai Trust. Mr. Peppet has been a member of the ownership committee of Equity International since 2012. Mr. Peppet was a director of Anixter International, Inc., a publicly traded global distributor of network, electronic and utility power solutions, from 2014 until its sale in June 2020. Mr. Peppet brings experience in contracts, negotiations, complex transactions, legal ethics, privacy law and technology to the CompanyBoard along with an outstanding record of leadership and deep experience in the legal field. Mr. Peppet is the son-in-law of Mr. Samuel Zell, who serves as Chairman of the Board. Mr. Peppet was a Professor of Law at the University of Colorado Law School from 2000 to 2019.
Sheli Rosenberg
Compensation, Nominating and Corporate Governance Committee
Age 79
Director since August 1996 and has been
Ms. Rosenberg was the Board’sBoard's Lead Director since 2002.from 2002 to 2019. Ms. Rosenberg was a consultant to Skadden, Arps, Slate, Meagher & Flom LLP from January 2014 through 2016 and was Of Counsel at Skadden, Arps, Slate, Meagher & Flom LLP from May 2011 to December 2013. She is the former president, chief executive officer and vice chairman of EGI. Ms. Rosenberg joined EGI in 1980 as the company’scompany's general counsel and rose to become chief executive officer from 1990 to 2000 and vice chairman from 2000 to 2003 before retiring in 2003. Ms. Rosenberg was a principal of the law firm of Rosenberg & Liebentritt from 1980 to 1997. Ms. Rosenberg is a director of Spirit Realty Capital, Inc., a publicly traded net-lease REIT.REIT, Rush Street Interactive, Inc., an online casino and sports betting gaming company, and is a member of Equity International's ownership committee. Ms. Rosenberg was the lead director of Strategic Hotels & Resorts, Inc., a publicly traded hotel REIT, until its sale in 2015, and Cellular Dynamics International, a publicly traded producer of stem cells utilized primarily in research, until its sale in 2015. She is a former director of General Growth Properties, Inc., CVS Caremark Corporation, Capital Trust, Inc., Avis Budget Group, Inc., Nanosphere, Inc., and Ventas, Inc., and a former trustee of Equity Residential and Equity Office Properties, all of which were publicly traded companies. Ms. Rosenberg was an adjunct professor at Northwestern
University’s University's J.L. Kellogg Graduate School of Management from 2003 until 2007. A recognized advocate for
women in business, she is a co-founder and former president of the Center for Executive Women at the Kellogg School, where she continues to serve on the Center’s steering committee.
In addition to each director nominee's qualifications, experience and skills outlined in their biographical data above, the Company’s Board looked for certain attributes in each of the nominee directors and based on these attributes, concluded that each director nominee should serve on the Board. The Board does not require that the director nominees possess each attribute, but rather the Board is looking for a mix of attributes across the board members. These attributes include: (i) prior experience on the Board and other relevant board level experience, (ii) real estate industry experience, (iii) transactional experience especially within the real estate industry; (iv) relevant experience in property operations; (v) financial expertise; (vi) legal and/or regulatory experience; (vii) knowledge of and experience with corporate governance matters, (viii) experience with executive compensation matters, and (ix) prior experience in risk management.
The following table shows the attributes of each director nominee.
|
| | | | | | | | | |
| Board Experience | Real Estate Industry | Transactional | Property Operations | Financial Expertise | Legal / Regulatory | Corporate Governance | Executive Compensation | Risk Management |
Samuel Zell | X | X | X | X | X | X | X | X | X |
Howard Walker | X | X | X | X | X | X | X | X | X |
Thomas Heneghan | X | X | X | X | X | X | X | X | X |
Philip Calian | X | X | X | X | X | X | X | X | X |
David Contis | X | X | X | X | X | X | X | X | X |
Constance Freedman | X | X | X |
| X |
| X | X | X |
Tao Huang | X |
|
|
| X |
|
| X | X |
Marguerite Nader | X | X | X | X | X | X | X | X | X |
Sheli Rosenberg | X | X | X |
| X | X | X | X | X |
Director Compensation
The following table includes compensation information for the year ended December 31, 20172020 for each non-employee member of the Board.non-executive Director.
| | Name | | Fees Earned or Paid in Cash ($) (1) | | Stock Awards ($) (2) | | Option Awards ($) (2) | | Non-Equity Incentive Plan Compensation ($) | | All Other Compensation ($) (3) | | Total ($) | Name | | Fees Earned or Paid in Cash ($) (1) | | Stock Awards ($) (2) | | Option Awards ($) (2) | | Non-Equity Incentive Plan Compensation ($) | | All Other Compensation ($) (3) | | Total ($) |
Andrew Berkenfield | | Andrew Berkenfield | | 65,000 | | | — | | 221,535 | | — | | — | | 286,535 | |
Derrick Burks(4) | | Derrick Burks(4) | | — | | | — | | — | | — | | — | | — | |
Philip Calian | | 65,000 |
| | 139,984 |
| | — | | — | | — | | 204,984 |
| Philip Calian | | 65,000 | | | 195,018 | | | — | | — | | — | | 260,018 | |
David Contis | | 65,000 |
| | 119,940 |
| | — | | — | | — | | 184,940 |
| David Contis | | 65,000 | | | 152,527 | | | — | | — | | — | | 217,527 | |
Thomas Dobrowski(4) | | 21,786 |
| | — |
| | — | | — | | — | | 21,786 |
| |
Constance Freedman(5) | | 10,833 |
| | 16,634 |
| | — | | — | | — | | 27,467 |
| | 65,000 | | | — | | | 254,460 | | — | | — | | 319,460 | |
Thomas Heneghan | | 65,000 |
| | 127,406 |
| | — | | — | | — | | 192,406 |
| Thomas Heneghan | | 65,000 | | | 139,967 | | | — | | — | | — | | 204,967 | |
Tao Huang(5) | | 65,000 |
| | — |
| | 76,230 | | — | | — | | 141,230 |
| | 65,000 | | | 112,508 | | | — | | — | | — | | 177,508 | |
Scott Peppet | | Scott Peppet | | 65,000 | | | 119,991 | | | — | | — | | — | | 184,991 | |
Sheli Rosenberg | | 65,000 |
| | 167,412 |
| | — | | — | | — | | 232,412 |
| Sheli Rosenberg | | 65,000 | | | 107,497 | | | — | | — | | — | | 172,497 | |
Howard Walker | | 65,000 |
| | 127,406 |
| | — | | — | | — | | 192,406 |
| |
Matthew Williams(6) | | 65,000 |
| | 107,441 |
| | — | | — | | — | | 172,441 |
| |
William Young | | 65,000 |
| | 114,908 |
| | — | | — | | — | | 179,908 |
| |
Samuel Zell | | 65,000 |
| | 3,578,066 |
| | — | | — | | — | | 3,643,066 |
| Samuel Zell | | 65,000 | | | 3,192,516 | | | — | | — | | — | | 3,257,516 | |
___________
| |
(1) | For 2017, the Company paid each of its non-employee directors an annual fee of $65,000. Ms. Freedman received a pro-rated fee of $10,833 for her services rendered from the time of her election on October 31, 2017 through December 31, 2017. |
| |
(2) | These amounts reflect the grant date fair value, as calculated in accordance with FASB ASC Topic 718 "Stock Compensation" ("FASB ASC 718"), related to grants of restricted stock and options to purchase shares of Common Stock made in 2017. |
(1) For 2020, the Company paid each of its non-executive Directors an annual fee of $65,000.
(2) These amounts reflect the grant date fair value, as calculated in accordance with FASB ASC Topic 718 "Stock Compensation" ("FASB ASC 718"), related to grants of restricted stock and options to purchase shares of Common Stock made in 2020.
Refer to Note 14,2, "Summary of Significant Accounting Policies" and Note 13, "Equity Incentive Awards," in the Notes to the Consolidated Financial Statements included in the Company's 20172020 Form 10-K filed on February 28, 201823, 2021 for the relevant assumptions used to determine the valuation of our restricted stock and stock option awards.
The Board historically has approved an annual award of Restricted Common Stock to non-executive Board members in conjunction with their reelection at the annual meeting of stockholders. In light of the pandemic, the Board postponed this approval after the annual meeting of stockholders held on April 28, 2020. On May 2, 2017,July 28, 2020, upon recommendation of the Compensation Committee and after consideration of the pandemic on the results of operations of the Company, the Board approved the following awards of Restricted Common Stock to non-employee directorsnon-executive Directors then in office. Each recipient was allowed to take these shares as Stock Options equal to five times the number of shares of Restricted Common Stock that would have been awarded. All shares were granted at a per share price of $81.15,$66.81, the NYSE closing price of the Company’s Common Stock on May 2, 2017.July 28, 2020. The number of shares of Restricted Common Stock awarded was determined by dividing the dollar value of the award by the closing price of the Company's Common Stock on the grant date or $81.15.
$66.81.
▪•The following Directors: (i) the Chairman of the Board, (ii) the Audit Committee Chairperson and Lead Director, (iii) the Compensation Committee Chairperson, and Lead Director,(iv) the Executive Committee Chairperson theand Strategic Planning Committee Chairperson and the Audit Committee Chairperson each received an award of Restricted Common Stock for their services rendered in such capacity in 2017.2020. Each recipient elected to take their award as Restricted Common Stock.
Mr. Zell was awarded 40,000 shares of Restricted Common Stock valued at $3,085,000 for services rendered as Chairman of the Board for 2017.2020. Accordingly, Mr. Zell was awarded 46,176 shares of Restricted Common Stock. The Compensation Committee determined that Mr. Zell’s compensation in consideration for his serviceemployment as Chairman of the Board is appropriate and in the best interests of our Company and our stockholders given his ongoing extraordinary contributions to the Company. Mr. Zell's financial acumen, extensive investment and management experience, business and strategic expertise and network of resources across the real estate industry provide significant benefits and unique opportunities to the Company and the Board. Mr. Zell brings a well-recognized brand value to the Company from his more than fifty years of experience in the real estate business and his unparalleled role in the evolution of the REIT industry. Mr. Zell has regular interactions with the Company's executive management team, including with respect to operational strategy, acquisition opportunities and balance sheet management. In addition, Mr. Zell has a distinguished track record and reputation for successfully leading companies with a focus on corporate governance and proper alignment of management and stockholder interests.
Ms. Rosenberg, Mr. Walker,Calian, Mr. Contis, and Mr. Heneghan and Mr. Calian were each awarded shares of Restricted Common Stock for services rendered as Committee Chairpersons valued at $60,000, $20,000, $20,000$80,000, $40,000 and $40,000, respectively. The number ofAccordingly, Mr. Calian, Mr. Contis and Mr. Heneghan were each awarded 1,198, 599 and 598 shares of Restricted Common Stock, awarded to Ms. Rosenberg, Mr. Walker, Mr. Heneghan and Mr. Calian was determined by dividing the value of the award by the closing price of the Company's Common Stock on the grant date or $81.15. Ms. Rosenberg, Mr. Walker, Mr. Heneghan and Mr. Calian were each awarded 739, 246, 246 and 493 shares of Restricted Common Stock, respectively.
One-third of these shares of Restricted Common Stock will vest on May 2, 2018,July 28, 2021, one-third will vest on May 2, 2019,July 28, 2022, and one-third will vest on May 2, 2020.July 28, 2023.
▪•With the exception of the Committee Chairpersons, each member of the Audit Committee received an award of 154187 shares of Restricted Common Stock valued at $12,500 and each member of the Compensation Committee, the Executive Committee and the Strategic Planning Committee received an award of 92112 shares of Restricted Common Stock valued at $7,500 for their services on their respective Committees in 2017. Mr. Huang2020. Ms. Freedman elected to take histhese shares as Stock Options and heshe received an award of 7701,120 Stock Options. These shares of Restricted Common Stock and Stock Options will vest 100% on May 2, 2018.July 28, 2021.
▪
•Each non-employee directornon-executive Director received an award of Restricted Common Stock for their services rendered as a Board memberDirector during 2017.2020. With the exception of Mr. Huang,Berkenfield and Ms. Freedman, each recipient elected to take this award as Restricted Common Stock. Mr. Zell received an award of 4,000 shares of Restricted Common Stock. Mr. Calian, Mr. Contis, Mr. Heneghan, Mr. Huang, Mr. Peppet, Ms. Rosenberg Mr. Walker, and Mr. YoungZell each received an award of 1,2321,497 shares of Restricted Common Stock valued at $100,000. Mr. HuangBerkenfield and Ms. Freedman elected to take these shares as Stock Options and hethey each received an award of 6,1607,485 Stock Options. One-third of these shares of Restricted Common Stock and Stock Options vested on November 2, 2017,January 28, 2021, one-third will vest on May 2, 2018July 28, 2021 and one-third will vest on May 2, 2019.July 28, 2022.
On October 31, 2017, upon recommendation of the Compensation Committee, the Board approved an award of Restricted Common Stock to be granted to Ms. Freedman as a new Board member for her services rendered for the remainder of 2017. The number of shares of Restricted Common Stock awarded was determined by dividing $100,000 by the closing price of the Company's Common Stock on October 31, 2017, the grant date, of $88.48 and pro-rated for her time served in 2017. Ms. Freedman was allowed to take these shares as Stock Options equal to five times the number of shares of Restricted Common Stock that would have been awarded. Ms. Freedman chose an award of 188 shares of Restricted Common Stock. One-third of these shares of Restricted Common Stock will vest on April 30, 2018, one-third will vest on October 31, 2018 and one-third will vest on October 31, 2019.
As of December 31, 2017,2020, each non-employee directornon-executive Director had the following unexercised Stock Options and unvested Restricted Stock awards outstanding:
| | | | | | | | | | | | | | | | | | | | |
Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | |
Number of Shares of Stock That Have Not Vested |
Andrew Berkenfield | | — | | | 7,485 | | | — | |
Derrick Burks | | — | | | — | | | — | |
Philip Calian | | — | | | — | | | 4,705 | |
David Contis | | — | | | — | | | 3,313 | |
Constance Freedman | | — | | | 8,605 | | | 572 | |
| | | | | | |
Thomas Heneghan | | — | | | — | | | 3,310 | |
Tao Huang | | 41,500 | | | — | | | 2,256 | |
Scott Peppet | | — | | | — | | | 2,368 | |
Sheli Rosenberg | | — | | | — | | | 2,628 | |
Samuel Zell | | — | | | — | | | 110,272 | |
|
| | | | | | | | | |
Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | |
Number of Shares of Stock That Have Not Vested |
Philip Calian | | — |
| | — |
| | 2,406 |
|
David Contis | | 5,600 |
| | — |
| | 1,516 |
|
Constance Freedman | | — |
| | — |
| | 188 |
|
Thomas Heneghan | | — |
| | — |
| | 1,787 |
|
Tao Huang | | 7,366 |
| | 7,114 |
| | — |
|
Marguerite Nader | | — |
| | — |
| | — |
|
Sheli Rosenberg | | — |
| | — |
| | 2,744 |
|
Howard Walker | | — |
| | — |
| | 2,251 |
|
William Young | | — |
| | — |
| | 1,454 |
|
Samuel Zell | | 200,000 |
| | — |
| | 57,427 |
|
(3) During the year ended December 31, 2020, Directors did not receive any perquisites or other compensation. The Company reimburses the Directors for travel expenses incurred in connection with their activities on behalf of the Company. | |
(3) | During the year ended December 31, 2017, directors did not receive any perquisites or other compensation. The Company reimburses the directors for travel expenses incurred in connection with their activities on behalf of the Company. |
| |
(4) | Mr. Dobrowski retired from the Board effective May 2, 2017. |
| |
(5) | Ms. Freedman joined the Board effective October 31, 2017. |
| |
(6) | Mr. Williams resigned from the Board effective December 18, 2017, and his unvested shares of Restricted Common Stock were forfeited at that time. |
(4) Mr. Burks joined the Board effective February 9, 2021; therefore, he did not receive any Director compensation for 2020.
(5) On February 9, 2021, Mr. Huang informed the Board that he would not stand for reelection at the Company's Annual Meeting.
Vote Required
A plurality of the votes cast in person or by proxy at the Annual Meeting is required for the election of directors. Although we know of no reason why any nominee would not be able to serve, if any nominee should become unavailable for election, the persons named as proxies will vote your shares of Common Stock to approve the election of any substitute nominee proposed by the Board.
Board Recommendation
The Board unanimously recommends that you vote "FOR" each of the nineten nominees for director to serve until the next annual meeting of stockholders and until his or her successor is duly elected and qualified.qualifies.
PROPOSAL NO. 2
RATIFICATION OF THE SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board recommends that the stockholders ratify the selection of Ernst & Young as the Company's Independent Accountants for the fiscal year ending December 31, 2018.2021. As a matter of good corporate governance, the selection of Ernst & Young is being submitted to stockholders for ratification. In the event of a negative vote on such ratification, the Audit Committee will reconsider its selection. Even if Ernst & Young is ratified as Independent Accountants by the stockholders, the Audit Committee, at its discretion, may direct the appointment of different Independent Accountants at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.
Ernst & Young has advised us that neither it nor any member thereof has any financial interest, direct or indirect, in the Company or any of its subsidiaries in any capacity. There have been no disagreements between the Company and Ernst & Young relating to accounting procedures, financial statement disclosures or related items. Representatives of Ernst & Young are expected to be available at the Annual Meeting. These representatives will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Audit and Non-Audit Fees
Audit Fees. The aggregate fees billed (or expected to be billed) for fiscal years 20172020 and 20162019 for professional services rendered by the Independent Accountants for the audit of the Company’s financial statements, for the audit of internal controls relating to Section 404 of the Sarbanes-Oxley Act and for the reviews by the Independent Accountants of the financial statements included in the Company’s Quarterly Reports on Form 10-Q were approximately $1,193,100$1,312,850 and $1,113,400,$1,266,900, respectively.
Audit-Related Fees. The aggregate fees billed (or expected to be billed) for fiscal years 20172020 and 20162019 for assurance and related services by the Independent Accountants that are reasonably related to the performance of the audit or review of the Company’s financial statements that are not reported as "Audit Fees" above were approximately $57,200$51,100 and $45,500,$48,650, respectively. These fees consist primarily of fees for services provided to assist the Company with attestation services related to audits of subsidiaries and benefit plans and other accounting consultations.
Tax Fees. The aggregate fees billed (or expected to be billed) for fiscal years 20172020 and 20162019 for professional services rendered by the Independent Accountants for tax compliance, tax advice and tax planning were approximately $130,000$52,000 and $146,434,$117,000, respectively.
All Other Fees. There were no other fees billed to the Company by the Independent Accountants in fiscal years 20172020 and 2016.2019.
Auditor Independence. The Audit Committee has determined that the Independent Accountants’Accountants' provision of the non-audit services described above is compatible with maintaining the Independent Accountants’ independence.
Policy on Pre-Approval. The Company and the Audit Committee are committed to ensuring the independence of the Company’s Independent Accountants, both in fact and in appearance. In this regard, the Audit Committee has established a pre-approval policy in accordance with the applicable rules of the SEC and the NYSE. The Audit Committee must pre-approve all audit services and permissablepermissible non-audit services provided by the Independent Accountants, except for any de minimis non-audit services. The Audit Committee may delegate to one or more of its members who is an independent director the authority to grant pre-approvals. All services provided by Ernst & Young in 20172020 were pre-approved by the Audit Committee.
Vote Required
The affirmative vote of a majority of the votes cast by stockholders of record is necessary to ratify the selection of Ernst & Young.
Board Recommendation
The Board unanimously recommends that you vote "FOR" ratification of the selection of Ernst & Young as the Company's Independent Accountants for the year ending December 31, 2021.
2018.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board is composed of threefour Directors, each of whom the Board has determined meets the independence and financial literacy requirements of the NYSE and Rule 10A-3 under the Exchange Act. In addition, the Board has determined that each of these threefour Directors qualifies as an "audit committee financial expert" as defined by the SEC rules. No member of the Audit Committee is a current or former officer or employee of the Company, and no member serves on more than two other public company audit committees.
The Audit Committee oversees the Company’s financial reporting processand enterprise risk processes on behalf of the Board. The Company’sCompany's management has the primary responsibility for the financial statements, for maintaining effective internal control over financial reporting, and for assessing the effectiveness of internal control over financial reporting. The Audit Committee is governed by a written charter approved by the Board, which is posted on the Company's website. In accordance with this charter, the Audit Committee oversees the accounting, auditing, and financial reporting, and risk management practices of the Company. The Audit Committee is responsible for the appointment, retention, compensation, and oversight of the work of the Independent Accountants. The Audit Committee pre-approves the services of the Independent Accountants in accordance with the applicable rules of the SEC and the NYSE. The Audit Committee has also established procedures for processing complaints received from employees regarding internal control, accounting, and auditing matters. The Audit Committee held eightten meetings during 2017.2020.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 20172020 (the "2017"2020 Form 10-K") with the Company’sCompany's management, including a discussion of the quality, not just the acceptability, of the accounting principles; the reasonableness of significant judgments; and the clarity of disclosures in the financial statements. The Audit Committee also reviewed and discussed management’s report on its assessment of the effectiveness of the Company’s internal control over financial reporting and the Independent Accountant’s report on the Company’s internal control over financial reporting with management, the internal auditors and the Independent Accountants.
The Independent Accountants are responsible for expressing an opinion on the conformity of the Company's audited financial statements with generally accepted accounting principles. The Audit Committee reviewed with the Independent Accountants their judgments as to the quality, not just the acceptability, of the Company’sCompany's accounting principles and such other matters as are required to be discussed with the Audit Committee by standards of the Public Company Accounting Oversight Board ("PCAOB"), rules of the SEC, and other applicable regulations. In addition, the Audit Committee has discussed independence with the Independent Accountants. These discussions included the Independent Accountant’s independence from the Company’s management and the Company, including the matters in the letter from the Independent Accountants required by the PCAOB regarding the Independent Accountant’s communications with the Audit Committee concerning independence. The Audit Committee also considered the compatibility of non-audit services provided to the Company by the Independent Accountants with the Independent Accountant’s independence.
The Audit Committee discussed with the Independent Accountants the overall scope and plans for their audit. The Audit Committee met with the Independent Accountants, with and without management present, to discuss the results of their examinations; their evaluation of the Company’sCompany's internal controls, including internal control over financial reporting; and the overall quality of the Company’sCompany's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, that the audited financial statements and management’smanagement's assessment of the effectiveness of the Company’s internal control over financial reporting be included in the 20172020 Form 10-K for filing with the SEC. The Audit Committee and the Board have recommended that stockholders ratify the selection of Ernst & Young as the Company’s Independent Accountants for the year ending December 31, 2018.2021.
Respectfully submitted,
Philip Calian, Chair
David Contis
Tao Huang
Scott Peppet
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary.The purpose of this Compensation Discussion and Analysis ("CD&A") is to provide stockholders with a description of the Company's executive compensation philosophy, objectives of the Company's compensation program and the material elements of the Company's compensation program for the following individuals who were the Company's NEOs as of December 31, 2020:
Marguerite Nader........................... President and Chief Executive Officer
Paul Seavey.................................... Executive Vice President and Chief Financial Officer
Patrick Waite.................................. Executive Vice President and Chief Operating Officer
Roger Maynard.............................. Executive Vice President – Investments
The Compensation Committee took into account the stockholder advisory vote approving executive compensation at the last annual meeting of stockholders held in April 2020 and incorporated that as one of many factors it considered in connection with the discharge of its responsibilities. 91% of all the votes cast at last year's annual meeting of stockholders approved the compensation program described in the proxy statement for the 2020 annual meeting of stockholders. The Compensation Committee believes that this support level demonstrates a strong alignment among our stockholders, the Company's performance, and our executive compensation program and, accordingly, the Compensation Committee did not make any changes to the Company's executive compensation program in response to the 2020 "Say-on-Pay" vote.
![chart-c152c2f11e4747f2a1b1a.jpg](https://capedge.com/proxy/DEF 14A/0000895417-21-000021/chart-c152c2f11e4747f2a1b1a.jpg)
The core principle of the Company's executive compensation program for 2020 continued to be pay for performance, and the framework of the executive compensation program includes the governance features discussed below:
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What We Do | ■The Compensation Committee is comprised solely of independent Directors. ■Do engage an independent compensation consultant to advise the Compensation Committee. ■Do an annual review of the Company's compensation strategy that includes a review of compensation-related risk management. ■Do have a strong pay for performance compensation philosophy with 59% of the NEOs pay tied solely to performance. ■Do enhance executive retention with time-based, multi-year vesting schedules for equity incentive awards, which comprise a large percentage of total compensation. ■Do have performance-based cash bonus compensation. ■Do have meaningful share ownership guidelines for our executives and directors. ■Do have a hedging policy that is included in the Company's Policy on Securities Trading and reads as follows: "Directors and officers (and any member of the director's or officer's family sharing the same household) are prohibited from engaging in short sales (including buying puts or selling calls) or any other hedging transactions with respect to any equity securities of the Company held by them, which includes the purchase of any financial instrument (including, but not limited to, prepaid variable forward contracts, equity swaps, collars, and exchange funds) designed to hedge or offset any decrease in the market value of such equity securities." ■Do have a Securities Pledging Policy that requires Audit Committee approval of any pledging of our shares of Common Stock or OP Units by directors or NEOs and the satisfaction of certain other conditions. ■Do have a Business Ethics and Conduct Policy, which all employees must follow. |
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What We Don't Do | ■No employment agreements. ■No compensation incentives that encourage excessive risk taking. ■No hedging of Company shares allowed. ■No excise tax gross-up in any change in control agreements. ■No excessive perks to our NEOs. ■No personal benefits to NEOs that are not otherwise available to all employees. |
The Compensation Committee takes into consideration the overall performance of the Company when establishing the compensation program and determining final payments to the NEOs. This review of overall Company performance is in addition to specific goals and targets that are set for each NEO. We continued our strong performance in 2020 amidst the COVID-19 pandemic as further described in the "Proxy Statement Summary" section of this Proxy Statement. The impact of the pandemic on the Company's operations for 2020, the Company's response to the various state and local restrictions and efforts to ensure the health and safety of our employees and customers were key priorities in 2020. The following tables show the Company's historical stock price, annual dividends, Normalized FFO and Normalized FFO per share of Common Stock and related compounded annual growth rates ("CAGR"). Normalized FFO is a non-GAAP financial measure. The Company believes that Normalized FFO is generally an appropriate measure of performance of an equity REIT. Appendix A to this Proxy Statement includes the definition of Normalized FFO and a reconciliation of Normalized FFO to net income, the most comparable GAAP measure.
On October 15, 2019, we effected a two-for-one stock split of our Common Stock (see Note 5 in the Notes to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2019). All Common Stock and per share data in this CD&A for periods prior to this date have been adjusted retroactively to reflect the stock split.
This chart shows the stock price growth over the last ten years. Stock prices are as of December 31 of each year.
This chart shows the Company's annual dividend per share growth over the last ten years.
This chart shows the Company's annual Normalized FFO growth over the last ten years.
This chart shows the Company's Normalized FFO per Share growth over the last ten years.
Philosophy.The Compensation Committee determines and approves the compensation of the Company's NEOs and guides the Company's overall philosophy towards the compensation of its employees. The Compensation Committee believes that the compensation of the Company's NEOs should be both competitive and based on individual and Company performance. The Compensation Committee believes that the compensation of the NEOs should reflect their success as a management team in attaining certain operational goals, which leads to the success of the Company and serves the best interests of its stockholders. The Compensation Committee consults with the CEO regarding both NEOs and non-executive employee compensation plans and programs, including administering the Company's equity incentive plan.
In 2017, the Company retained, at the direction of the Compensation Committee, Willis Towers Watson as its independent outside compensation consultant to provide an independent analysis and recommendation concerning the Company's long-term executive compensation plan. The analysis was used in establishing executive compensation for 2018, 2019 and 2020. In 2020, Willis Towers Watson provided an independent analysis and recommendation concerning the approved payout of the 2020 cash bonus and the vesting of the performance-based portion of the Restricted Common Stock awards, taking into consideration the impact of the COVID-19 pandemic on the Company's performance targets. The Compensation Committee has the authority to engage Willis Towers Watson as its independent outside compensation consultant or hire additional consultants at any time. Willis Towers Watson did not provide any additional services to the Compensation Committee and did not provide any services to the Company other than those it provided to the Compensation Committee described above. The sole role of Willis Towers Watson has been to advise the Compensation Committee with respect to compensation. The ultimate determination of total compensation and the elements that comprise total compensation for our NEOs is made solely by our Compensation Committee. In addition, the Compensation Committee compared the NEOs total compensation to the NAREIT Compensation Survey and to the salaries of executives at other REITs as obtained from the SNL Financial database.
Objectives of the Compensation Program.The primary objective of the Company's compensation program is to attract and retain highly qualified executives by providing competitive Base Salaries and meaningful Cash Bonus and Equity Compensation. In addition, the compensation program is structured to hold the NEOs accountable for the performance of the Company by tying the substantial majority of their annual Cash Bonus and a substantial portion of their Equity Compensation to performance targets. The compensation program is also designed to promote an ownership mentality among the NEOs. The Compensation Committee recognizes that the interests of stockholders are best served by giving our NEOs the opportunity to participate in the appreciation of the Company's Common Stock. The Board has established stock ownership guidelines for each of the NEO positions and Directors. Under these guidelines, all of the NEOs and Directors are required to own a minimum amount of the Company’s Common Stock within four years from their first appointment as an NEO or Director, valued at the time of purchase, and to maintain this minimum amount throughout their tenure as a NEO or Director. Such ownership guidelines are as follows: five times the Base Salary for the CEO; three times the Base Salary for each of the other NEOs; and three times the annual retainer for each Director. Furthermore, any stock pledged by a Director or NEO is excluded from the computation. Hedges by Directors and NEOs are prohibited by our policy. With the exception of Mr. Berkenfield, who was appointed to the Board in February 2020 and Mr. Burks who was appointed to the Board in February 2021, each of the Directors and NEOs currently own shares of Common Stock that exceed the minimum established guidelines.
The following table shows the value of shares of Common Stock of the Company, including shares upon exercise of options, beneficially owned as of February 19, 2021 (the "Record Date") by each of the NEOs as a multiple of their 2020 base salary.
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Name | | Shares of Common Stock (1) | | Shares of Common Stock Upon Exercise of Options (2) | | Total Shares of Common Stock | | Value of Shares Owned ($) (3) | | Base Salary ($) | | Stock Ownership Value/Base Salary (4) |
Marguerite Nader | | 249,141 | | — | | | 249,141 | | 15,785,574 | | | 586,500 | | | 27x |
Paul Seavey | | 144,017 | | — | | | 144,017 | | 9,124,917 | | | 387,600 | | | 24x |
Patrick Waite | | 206,102 | | — | | | 206,102 | | 13,058,623 | | | 387,600 | | | 34x |
Roger Maynard | | 273,898 | | — | | | 273,898 | | 17,354,177 | | | 387,600 | | | 45x |
All NEOs as a group (5) | | 873,158 | | — | | | 873,158 | | 55,323,291 | | | 1,749,300 | | | 32x |
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(1) Shares of Common Stock beneficially owned as of the Record Date.
(2) The amounts shown in this column reflect shares of Common Stock, subject to options, which are currently exercisable or exercisable within 60 days of the Record Date.
(3) The value of the total shares beneficially owned as of the Record Date using the Company’s Common Stock closing stock price of $63.36 on December 31, 2020.
(4) The value of total shares beneficially owned as of the Record Date as compared to the NEO's 2020 Base Salary.
(5) Effective February 9, 2021, Mr. David Eldersveld was appointed Executive Vice President, Chief Legal Officer and Corporate Secretary. Mr. Eldersveld was not an NEO for 2020, therefore, he is not included in this table.
What Our Compensation Program is Designed to Reward. Our compensation program is designed to reward the NEOs for their contributions to the Company and for achieving improvements in the Company's performance during the year. The Compensation Committee deliberately kept Base Salaries at a relatively small percentage of total compensation. This enables the Compensation Committee to reward each NEO’s performance through annual Cash Bonus awards and equity incentives such as Restricted Common Stock awards. The annual Cash Bonus plan for each NEO is established by the Compensation Committee after a review of performance goal recommendations from the CEO, who receives input on such performance goal recommendations from each NEO.Restricted Common Stock awards are designed to provide incentives to the NEOs to ensure the successful implementation of long-term strategic goals of the Company and to provide for the retention of such NEOs. Awards of Restricted Common Stock are determined and approved by the Compensation Committee with input from the CEO.
Peer Group. The Company's peer group of sixteen companies remained consistent with prior years.
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Peer Company | REIT Type |
American Campus Communities, Inc. (ACC) | Residential |
Apartment Investment and Management Company (AIV) | Residential |
Camden Property Trust (CPT) | Residential |
Corporate Office Properties Trust (OFC) | Office |
CubeSmart (CUBE) | Self-Storage |
Duke Realty Corporation (DRE) | Industrial |
Equity Residential (EQR) | Residential |
Essex Property Trust, Inc. (ESS) | Residential |
Extra Space Storage, Inc. (EXR) | Self-Storage |
First Industrial Realty Trust (FR) | Industrial |
Highwoods Properties, Inc. (HIW) | Office |
Mack-Cali Realty Corporation (CLI) | Diversified |
Regency Centers Corporation (REG) | Retail |
Simon Property Group (SPG) | Retail |
UDR, Inc. (UDR) | Residential |
Vornado Realty Trust (VNO) | Diversified |
When selecting and re-assessing this peer group, the Compensation Committee took into consideration factors including market capitalization, three-year and five-year total returns, dividend yields, compounded annual funds from operations growth rates, and multiples. The following table shows the Company's one-year, three-year and five-year stockholder returns in comparison to the median and average stockholder returns for the peer group.
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Total Stockholder Returns |
| One-Year | Three-Year | Five Year |
ELS | (7.89) | % | 52.07 | % | 112.69 | % |
ELS Annualized | (7.89) | % | 15.00 | % | 16.30 | % |
Peer Group Median | (14.75) | % | 2.45 | % | 4.15 | % |
Peer Group Average | (12.48) | % | 0.93 | % | 3.23 | % |
Elements of Compensation. During the year ended December 31, 2020, there were three major components of executive compensation: Base Salary, performance-based Cash Bonus, and performance and time-based Equity Compensation. In conjunction with the CEO, the Compensation Committee reviews our executive salary structure on an annual basis with the use of a tally sheet. The tally sheet summarizes total compensation for each NEO, including Base Salary, Equity Compensation award values, Cash Bonus performance metrics, and all other compensation for the current and prior years. The Compensation Committee uses the tally sheet to quantify each NEO's total compensation and to compare it to the salaries of executives of the companies in our peer group and at other REITs as obtained from the SNL Financial database (www.snl.com) and to the amounts in the NAREIT Compensation Survey.
The compensation philosophy takes into account a review of executive compensation and performance data on publicly traded REITs obtained from the SNL Financial database and the NAREIT Compensation Survey. The Compensation Committee believes the executive compensation information derived from the SNL Financial database for the Company's peer group and the NAREIT Compensation Survey provide relevant salary data for the Company. The Compensation Committee takes into account the relevant compensation data for each NEO position when designing the compensation program. Where salary information is unavailable for a particular position in the SNL Financial database, other positions having similar responsibilities are used. Compensation increases are based upon overall Company performance and upon each NEO’s performance, established goals, and contribution to the Company’s performance. In addition, the Compensation Committee considered the CEO Pay Ratio as described more fully under "CEO Pay Ratio" of this Proxy Statement.
Aggregate total compensation for each NEO for 2020 was split among Base Salary, performance-based Cash Bonus, and Equity Compensation, as shown in the following chart. All other compensation was less than 1% of the total compensation. The increase in total executive compensation from 2019 to 2020 for the NEOs in the aggregate reflects a 2.0% increase in base salaries, an increase in Equity Compensation as a result of the increase in the grant date stock price and the restructuring of the restricted stock award program in 2018 as further described below, and an increase in performance-based Cash Bonus.
Base Salary.The Compensation Committee deliberately keeps Base Salaries at a relatively small percentage of total compensation. For 2020, the Compensation Committee concluded that Base Salaries of $586,500 for Ms. Nader and $387,600 for each of Mr. Seavey, Mr. Waite and Mr. Maynard were appropriate in this regard. These Base Salaries reflect a 2.0% increase in 2020 from 2019.
Non-Equity Incentive Compensation (Cash Bonus).The Compensation Committee's practice is to award annual Cash Bonuses based on certain performance targets established by the Compensation Committee for each year after consultation with the CEO. The amount paid to each NEO is subject to the discretion of the Compensation Committee. The Compensation Committee selected short-term annual performance metrics for management's focus that support and ensure the Company's long-term success and profitability. Performance targets were established and communicated to the NEOs when the outcome of the performance targets was substantially uncertain. Performance targets were consistent with earnings guidance expectations publicly disclosed by the Company. The final payout of 2020 Cash Bonuses to the NEOs was in January 2021, after finalization of the Company's year-end earnings results.
The total 2020 maximum Cash Bonus potential for the NEOs set by the Compensation Committee was approximately $4,497,515 and was comprised of a $4,259,011 bonus potential ("2020 Bonus Potential"), a $119,252 MH revenue stretch goal and a $119,252 resort revenue stretch goal ("2020 Stretch Goals"). The Compensation Committee has discretion to determine an appropriate award for each NEO based on an evaluation of each of the target areas. Consistent with the recommendation from Willis Towers Watson, the Compensation Committee approved the payout of the portion of the Cash Bonus for which the financial targets were met and the full amount of the discretionary portion of the Cash Bonus. The Cash Bonus paid to each NEO was based on the pre-established targets approved in February 2020 and no adjustments were made relating to (or due to) the COVID-19 pandemic despite the Company's strong performance. On a percentage basis, the bonus payments to the Company's employees were generally at or above that of the NEOs.
The following table shows the 2020 Bonus Potential for each NEO and the percentage attributed to each performance target and the discretionary portion. The total Cash Bonus paid to all NEOs was approximately $2.9 million, or 68%, as compared to the $4,259,011 aggregate potential. The 2020 Stretch Goals required certain increases in the Company’s core manufactured home ("MH") revenues, which target was not met, and certain increases in core resort revenues, which target was not met and therefore no amount was paid with respect to the 2020 Stretch Goals.
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Name | | 2020 Bonus Potential (Amount x Base Salary) | |
Core MH Revenue Target (1) | | Core Resort Revenue Target (2) | | Dues Target (3) | | Core Net Operating Income Target (4) | | Rentals/Working Capital Target (5) | | Discretionary(6) |
Marguerite Nader | | 2.9 | | 14.0% | | 14.0% | | 14.0% | | 14.0% | | 14.0% | | 30.0% |
Paul Seavey | | 2.2 | | 14.0% | | 14.0% | | 14.0% | | 14.0% | | 14.0% | | 30.0% |
Patrick Waite | | 2.2 | | 14.0% | | 14.0% | | 14.0% | | 14.0% | | 14.0% | | 30.0% |
Roger Maynard | | 2.2 | | 14.0% | | 14.0% | | 14.0% | | 14.0% | | 14.0% | | 30.0% |
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(1)This target required achieving a 4.4% increase in core MH base rent growth for the year ended December 31, 2020 as compared to the year ended December 31, 2019, which target was met. The total paid for this target was approximately $596,000.
(2)This target required that the Company’s core resort revenues increase 5.6% for the year ended December 31, 2020 as compared to December 31, 2019, which target was not met. No amounts were paid to the NEOs for this target.
(3)This target was comprised of three equal components related to: (i) dues revenues; (ii) the number of paid member sales units; and (iii) RV dealer activations, which component targets were all met. The total paid to the NEOs for this target was approximately $596,000.
(4)This target was comprised of two equal components related to: (i) core net operating income, excluding property management expense, to increase 5.5% for the year ended December 31, 2020 as compared to the year ended December 31, 2019, which target was not met; and (ii) core expense growth less than 2.9% for the year ended December 31, 2020 as compared to the year ended December 31, 2019, which target was not met. No amounts were paid to the NEOs for this target.
(5)This target was comprised of four equal components related to: (i) reduction of working capital commitment, which portion of the target was not met; (ii) an increase in occupancy from homeowners, which portion of the target was met; (iii) reduction of rental expenses, which portion of the target was not met; and (iv) management of chattel financing, which portion of the target was met. As a result, the NEOs were paid 75% of this target or approximately $447,000.
(6)At the beginning of 2020, the Compensation Committee, in consultation with Ms. Nader, developed strategic initiatives upon which each NEO would be evaluated and which would be used in determining their discretionary bonuses. Management focused on key strategic areas for the Company including, but not limited to, revenue management, home and membership sales, expense management, property maintenance and improvements, portfolio assessment, property development, innovation and technology, ESG initiatives and employee relations. Throughout 2020, each NEO met with Ms. Nader to discuss achievement of these discretionary goals. The Compensation Committee reviewed these evaluations and considered the results of these evaluations in the overall assessment of each NEO’s performance.Payment of the discretionary component is at the discretion of the Compensation Committee based on its assessment of the strategic initiatives established for the executive officer team, as a whole, including the discretion to apportion the aggregate discretionary bonus amount amongst the eligible executives. As a result, Mr. Seavey, Mr. Waite and Mr. Maynard each received 100% of the discretionary bonus potential for 2020.
The Compensation Committee’s evaluation of Ms. Nader’s achievements included a review of the Company’s overall performance, as well as the attainment of the strategic initiative goals by each of the other NEOs. Ms. Nader received 100% of her discretionary bonus potential for 2020.
The total paid to all NEOs for discretionary targets was approximately $1.3 million.
Equity-Based Retention and Incentive Compensation (Equity Compensation).The Company has made Restricted Common Stock grants to provide long-term incentives for the NEOs, align interests with stockholders, and to retain qualified officers. The Company recognizes that the interests of stockholders are best served by giving our NEOs the opportunity to participate in the appreciation of the Company’s Common Stock.
On May 13, 2014, our stockholders approved the Company's 2014 Equity Incentive Plan. The Company has awarded Restricted Common Stock to our NEOs in accordance with and pursuant to the authority set forth in the 2014 Equity Incentive Plan. The Restricted Common Stock grants have each been awarded at the closing price of the Company’s Common Stock on the NYSE on the date of grant (the "Grant Date Fair Value"). Upon vesting of these stock awards, at the NEOs option, the Company will buy back a portion of the stock to provide the NEO with the ability to receive the vested stock, net of applicable tax effects. The Restricted Common Stock grants awarded in 2018, 2019 and 2020 vest, provided the NEO is employed through the end of the year prior to the vesting date (the "Explicit Service Period"), in addition to other criteria as further described below.
Prior to 2018, the Compensation Committee awarded Restricted Common Stock to our NEOs on an annual basis with one-year time-based vesting. In 2017, Willis Towers Watson provided to the Compensation Committee an independent analysis and recommendation concerning long-term executive compensation. Based upon this recommendation and to further align the interests of our NEOs with our stockholders by linking a larger portion of our NEOs' compensation to their performance and to create stronger retention incentives, in 2018 the Compensation Committee began the practice of awarding Restricted Common Stock to the NEOs on an annual basis with long term vesting. These annual awards have vesting periods longer than one year and include a time-based vesting component, subject to satisfaction of continuous employment by the NEO during the Explicit Service Period and a performance-based vesting component, subject to the satisfaction of performance conditions and Explicit Service Period requirements.
In 2018, an award of Restricted Common Stock (the "Transition Award") was approved as a transition from our prior practice of granting restricted stock awards on an annual basis with one-year vesting to annual awards with three-year vesting
and a performance-based component. These Transition Awards were intended to mitigate the impact of a reduction in the realized pay for our NEOs in 2018 and 2019 resulting from the three-year vesting period for the annual award granted in 2018.
Information regarding the Transition Awards and the annual awards of Restricted Stock for 2018, 2019 and 2020 (the "2018 Award", the "2019 Award" and the "2020 Award"), respectively, and collectively, the "Restricted Stock Awards" along with the status of achievement of the annual performance conditions as to which each of these awards are subject, is set forth below.
Transition Awards
In 2018, the Compensation Committee approved the 2018 Transition Awards. The Transition Awards were not subject to performance goals. The Compensation Committee did not view these awards as a continuing feature of the Company's Restricted Stock Award Program, and there is no intent to replicate these Transition Awards in future years.
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Approval Date: January 29, 2018 | |
Award Date: February 1, 2018 | |
Award Date Fair Value: $42.33 | |
| 2018 Transition Award (# of Shares) | Time-Based Vesting (# of Shares) (a) |
Marguerite Nader | 39,000 | | 39,000 | |
Paul Seavey | 32,000 | | 32,000 | |
Patrick Waite | 32,000 | | 32,000 | |
Roger Maynard | 17,500 | | 17,500 | |
Total | 120,500 | | |
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(a) Two-thirds vested on December 28, 2018, and the remaining one-third vested on January 31, 2020. |
Annual Awards
On January 29, 2018, the Compensation Committee approved the 2018 Award and the NEOs were awarded shares of Restricted Common Stock as follows:
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Award Date: February 1, 2018 | | |
Award Date Fair Value: $42.33 | | |
| 2018 Award (# of Shares) | Time-Based Vesting (a) | Performance-Based Vesting (b) |
Marguerite Nader | 39,000 | | 26,000 | | 13,000 | |
Paul Seavey | 32,000 | | 21,332 | | 10,668 | |
Patrick Waite | 32,000 | | 21,332 | | 10,668 | |
Roger Maynard | 17,500 | | 11,666 | | 5,834 | |
Total | 120,500 | | | |
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(a) 50% of the time-based awards vested on December 28, 2018, 25% vested on January 31, 2020 and 25% vested on January 29, 2021. (b) 50% vested on January 31, 2020 and a portion of the remaining 50% scheduled to vest on January 29, 2021 vested, in each case based on satisfaction of performance conditions as further discussed below. |
On January 23, 2019, the Compensation Committee approved the 2019 Award and the NEOs were awarded shares of Restricted Common Stock as follows:
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Award Date: February 1, 2019 | | |
Award Date Fair Value: $52.84 | | |
| 2019 Award (# of Shares) | Time-Based Vesting (a) | Performance-Based Vesting (b) |
Marguerite Nader | 33,000 | | 16,500 | | 16,500 | |
Paul Seavey | 27,200 | | 13,598 | | 13,602 | |
Patrick Waite | 27,200 | | 13,598 | | 13,602 | |
Roger Maynard | 15,000 | | 7,500 | | 7,500 | |
Total | 102,400 | | | |
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(a) One-third of the time-based awards vested on January 31, 2020, one-third vested on January 29, 2021 and one-third vests on January 31, 2022. (b) One-third vested on January 31, 2020, a portion of the one-third scheduled to vest on January 29, 2021 vested, and one-third vests on January 31, 2022, in each case subject to the satisfaction of performance conditions as further discussed below. |
On February 10, 2020, the Compensation Committee approved the 2020 Award. To ensure the Award Date Fair Value of the award of Restricted Common Stock for 2020 aligned with the prior year, the number of shares of Restricted Common Stock awarded in 2020 was determined by dividing the dollar value of the award by the closing price of the Company's Common Stock on the grant date. The NEOs were awarded shares of Restricted Common Stock under the 2020 Award as follows:
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Award Date: February 11, 2020 | | |
Award Date Fair Value: $73.46 | | |
| 2020 Awards (# of Shares) | Time-Based Vesting (a) | Performance-Based Vesting (b) |
Marguerite Nader | 24,758 | | 12,379 | 12,379 |
Paul Seavey | 19,563 | | 9,781 | 9,782 |
Patrick Waite | 19,563 | | 9,781 | 9,782 |
Roger Maynard | 10,789 | | 5,394 | 5,395 |
Total | 74,673 | | | |
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(a) One-third of the time-based awards vested on January 29, 2021, one-third vests on January 31, 2022 and one-third vests on January 27, 2023. (b) A portion of the one-third scheduled to vest on January 29, 2021 vested, one-third vests on January 31, 2022, and one-third vests on January 27, 2023, in each case subject to the satisfaction of performance conditions as further discussed below. |
Performance Conditions
In accordance with FASB ASC 718, the performance-based portion of the 2018 Awards, 2019 Awards and 2020 Awards are deemed granted on the date the performance conditions are approved by the Compensation Committee and, accordingly, are included in the Summary Compensation Table of this Proxy Statement in the year of approval of the performance conditions. The value of the performance-based portion of these awards is based on the closing price of the Company's stock on the date of approval of the performance conditions and that amount is shown in the Summary Compensation Table, even if the awards are subsequently forfeited.
2019 Performance Conditions: Effective February 11, 2019, the Compensation Committee established the following performance conditions for the performance-based portion of the 2018 Awards and the 2019 Awards with a performance period January 1, 2019 through December 31, 2019:
"Achieve Normalized Funds From Operations (“Normalized FFO”) per Common Share (fully diluted)
for the year ending December 31, 2019 between $2.04 and $2.09."
As such, this portion of the 2018 Awards and 2019 Awards was deemed granted on February 11, 2019 with a Grant Date Fair Value of $54.90 per share. On January 21, 2020, the Compensation Committee determined that such vesting criteria had been met and all of this portion of the 2018 Awards and 2019 Awards vested on January 31, 2020 as follows:
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| # of Shares Vested - 2019 Performance Period |
| 2018 Award | 2019 Award |
Marguerite Nader | 6,500 | | 5,500 | |
Paul Seavey | 5,334 | | 4,534 | |
Patrick Waite | 5,334 | | 4,534 | |
Roger Maynard | 2,917 | | 2,500 | |
2020 Performance Conditions: Effective February 11, 2020, the Compensation Committee established the following performance condition for the performance-based portion of the 2018 Awards, the 2019 Awards and 2020 Awards with a performance period January 1, 2020 through December 31, 2020:
"Achieve Normalized Funds From Operations ("Normalized FFO") per Common Share (fully diluted)
for the year ending December 31, 2020 between $2.19 and $2.25."
As such, this portion of the 2018 Awards, 2019 Awards and 2020 Awards was deemed granted on February 11, 2020 with a grant date value of $73.46 per share. We continued our strong performance in 2020 amidst the COVID-19 pandemic as further described in the “Proxy Statement Summary” section of this Proxy Statement. Due to the impact of the pandemic on our business, our Normalized FFO for the year ended December 31, 2020 was $2.17 per Common Share (fully diluted) or $0.02 below the performance target. We achieved 99% of the Normalized FFO per Common Share target. In 2020, the Compensation Committee engaged Willis Towers Watson in order to assist with the Committee’s evaluation of the achievement of the 2020 performance target and to provide a recommendation on the vesting of the 2020 performance-based portion of the Restricted Stock Awards.
The Committee reviewed the Company’s 2020 performance and taking into account (a) the impact of the COVID-19 pandemic on the Company’s business, (b) management’s diligent efforts to mitigate the impact of the pandemic and (c) that Normalized FFO for the year ended December 31, 2020 was approximately 1% below the Normalized FFO target range, and the Committee determined that the 2020 performance-based vesting condition had been partially achieved such that a portion of the Restricted Stock Awards scheduled to vest on January 29, 2021 would partially vest as shown in the following table.The remainder of the Restricted Stock Awards subject to the 2020 performance conditions did not vest and were forfeited.
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| # of Shares Vested - 2020 Performance Period |
| 2018 Award | 2019 Award | 2020 Award |
Marguerite Nader | 6,305 | | 5,335 | | 4,002 | |
Paul Seavey | 5,174 | | 4,398 | | 3,162 | |
Patrick Waite | 5,174 | | 4,398 | | 3,162 | |
Roger Maynard | 2,829 | | 2,425 | | 1,744 | |
2021 and 2022 Performance Conditions: The Compensation Committee established performance conditions effective February 9, 2021 for the performance period January 1, 2021 through December 31, 2021 as follows:
"Achieve Normalized Funds From Operations (“Normalized FFO”) per Common Share (fully diluted)
for the year ending December 31, 2021 between $2.26 and $2.36."
The Compensation Committee will establish performance conditions at the beginning of 2022 for the performance period January 1, 2022 through December 31, 2022. If these performance conditions are satisfied as determined by the Compensation Committee in its discretion, the relevant portion of the performance-based portion of the 2019 Awards and 2020 Awards will vest on January 31, 2022 and January 27, 2023.
CEO Compensation.Ms. Nader’s 2020 compensation consisted of a Base Salary of $586,500 and a performance-based Cash Bonus award of $1,165,082. During the year ended December 31, 2020, Ms. Nader acquired 37,000 shares of Restricted Common Stock upon vesting with a value of $2,705,440. The Compensation Committee established Ms. Nader’s compensation based on the principles previously discussed in this CD&A. Ms. Nader received no compensation or stock grants for her service on the Board.
Accounting and Tax Considerations.The Company accounts for its stock awards in accordance with FASB ASC 718. On December 20, 2019, the Internal Revenue Service (IRS) issued proposed regulations under Internal Revenue Code section 162(m) which were finalized on December 18, 2020.While the final regulations substantially adopt the regulations as proposed, there are several modifications and clarifications.The final regulations modify the applicability date of the definition of compensation related to partnerships to provide additional transition relief.The definition of compensation includes an amount equal to a publicly held corporation’s distributive share of a partnership’s deduction for the compensation expense attributable to the compensation paid by the partnership after December 18, 2020. Internal Revenue Code section 162(m) limits the annual compensation expense deduction available to publicly traded companies to $1 million for certain “covered employees.”
Severance Benefits. None of the Company’s NEOs have any arrangements that provide for payment of severance benefits.
Non-Qualified Deferred Compensation. The Company does not provide any non-qualified defined contribution or other deferred compensation plans.
Post-Employment Compensation.All of the Company's employees, including its NEOs, are employees-at-will and as such do not have employment contracts with the Company. The Company does not provide post-employment health coverage or other benefits.
Change in Control.None of the Company's NEOs are entitled to any payment upon a change in control of the Company. However, the vesting of Restricted Common Stock grants is subject to acceleration upon a change in control of the Company or in the event of the death or disability of the recipient. As of December 31, 2020, non-vested restricted stock awards for the NEOs were as shown in the "Outstanding Equity Awards at Fiscal Year-End" table in this Proxy Statement.
Perquisites and Other Benefits.The Company's NEOs do not receive benefits that are not otherwise available to all of its employees. All employees who participated in the 401(k) plan received a matching contribution equal to 100% of the first 3%, and 50% of the next 2%, of the participant's eligible earnings that were contributed to the plan, up to a maximum matching contribution of $11,400. Additionally, the Company may make a discretionary contribution annually for each participant in an amount, if any, as determined by the Company, and no such contributions were made in 2020.
The Company has provided each of the NEOs with an indemnification agreement, however, the Company has paid no amounts under such agreements.
The Company has a non-qualified Employee Stock Purchase Plan ("ESPP") in which certain employees and all the Directors may participate. Participants may acquire up to $250,000 of Common Stock annually through the ESPP at a 15% discount. Discounts on such stock purchases are not considered a perquisite and are not included in the Summary Compensation Table as such discount is available to all salaried employees who elect to participate in the ESPP.
2021 Executive Compensation. Effective February 9, 2021, Mr. David Eldersveld was appointed Executive Vice President, Chief Legal Officer and Corporate Secretary and became a NEO. On February 8, 2021, the Compensation Committee approved the 2021 Base Salaries of $600,000 for Ms. Nader and $395,300 for each of Mr. Seavey, Mr. Waite, Mr. Maynard and Mr. Eldersveld. On February 8, 2021, the Compensation Committee approved the Executive Bonus Plan for 2021 (the "2021 Plan"). Information regarding the 2021 Plan was filed on Form 8-K with the SEC on February 10, 2021. Under the 2021 Plan, the annual 2021 Cash Bonus potential is based on the achievement of certain performance targets. The total 2021 Cash Bonus potential under the 2021 Plan is as follows:
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Name | Title | Bonus Potential |
Marguerite Nader | President and Chief Executive Officer | 290% of annual salary |
Paul Seavey | Executive Vice President and Chief Financial Officer | 220% of annual salary |
Patrick Waite | Executive Vice President and Chief Operating Officer | 220% of annual salary |
Roger Maynard | Executive Vice President - Investments | 220% of annual salary |
David Eldersveld | Executive Vice President and Chief Legal Officer | 220% of annual salary |
Under the Plan, payment of 70% of the 2021 Cash Bonus potential is contingent upon the achievement of certain operational targets, including goals related to core community base rental income, core resort base rental income, site and member optimization, core net operating income and expense control, and working capital. The Compensation Committee will have discretion at the end of 2021 to determine an appropriate award based on an evaluation of each of the established goals. Payment of the remaining 30% of the 2021 Cash Bonus potential is at the discretion of the Compensation Committee based on its assessment of various strategic initiatives established for the NEOs, as a whole, including the discretion to apportion the
aggregate discretionary bonus amount amongst the eligible executives. The amount paid to each NEO is subject to the discretion of the Compensation Committee. In addition, if the NEOs exceed by specified amounts certain operational targets relating to core community base rental income and core resort base rental income, the total 2021 Cash Bonus potential may be increased by up to an additional $292,244, which would be shared amongst the NEOs. 2021 Cash Bonus payments will be made in cash and will be paid subsequent to the year ending December 31, 2021 after finalization of the Company’s results of operations and upon review and approval by the Compensation Committee.
On February 8, 2021, the Compensation Committee approved the 2021 Restricted Stock Award (the "2021 Award") in accordance with and pursuant to the authority set forth in the 2014 Equity Incentive Plan. On February 9, 2021, the NEOs were awarded 99,764 shares of Restricted Common Stock in accordance with the 2021 Award as follows: Ms. Nader was awarded 28,516 shares, Mr. Seavey was awarded 22,532 shares, Mr. Waite was awarded 22,532 shares, Mr. Maynard was awarded 12,426 shares and Mr. Eldersveld was awarded 13,758 shares. The number of shares of Restricted Common Stock awarded was determined by dividing the dollar value of the award by the closing price of the Company's Common Stock on February 9, 2021, or $63.78 per share. 50% of the 2021 Stock Awards are time-based and will vest in equal annual installments on January 31, 2022, January 27, 2023, and January 26, 2024, subject to satisfaction of continuous employment by the NEO during such explicit service period (the "Service Period Requirement"). The time-based portion of the 2021 Awards have a Grant Date Fair Value of $63.78 per share. The remaining one-half of the 2021 Awards provide for performance-based vesting and will vest in equal annual installments on January 31, 2022, January 27, 2023 and January 26, 2024, subject to the satisfaction of the Service Period Requirement and the performance conditions to be established by the Compensation Committee at the beginning of each performance period in 2021, 2022 and 2023. Effective February 9, 2021, the Compensation Committee established the performance conditions for the 2021 performance period as follows: "Achieve Normalized Funds From Operations ("Normalized FFO") per Common Share (fully diluted) for the year ending December 31, 2021 between $2.26 and $2.36."
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement on Schedule 14A and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Respectfully submitted,
David Contis, Chair
Philip Calian
Constance Freedman
Sheli Rosenberg
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary. The purpose of this Compensation Discussion and Analysis ("CD&A") is to provide stockholders with a description of the Company's executive compensation philosophy, objectives of the Company's compensation program and the material elements of the Company's compensation program for the following individuals who were the Company’s named executive officers (NEOs) as of December 31, 2017:
Marguerite Nader........................... President and Chief Executive Officer
Paul Seavey.................................... Executive Vice President, Chief Financial Officer and Treasurer
Patrick Waite.................................. Executive Vice President and Chief Operating Officer
Roger Maynard.............................. Executive Vice President – InvestmentsTransition Awards
TheIn 2018, the Compensation Committee took into account the stockholder advisory vote approving executive compensation at the last annual meeting of stockholders held in May 2017 and incorporated that as one of many factors it considered in connection with the discharge of its responsibilities. Among other considerations, due to the fact that 95% of all the votes cast at last year's annual meeting of stockholders approved the compensation program described in the proxy statement for the 2017 annual meeting of stockholders, the2018 Transition Awards. The Transition Awards were not subject to performance goals. The Compensation Committee did not make any substantive changes to the 2017 executive compensation program.
The core principleview these awards as a continuing feature of the Company’s executive compensation program for 2017 continuesCompany's Restricted Stock Award Program, and there is no intent to be pay for performance,replicate these Transition Awards in future years.
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Approval Date: January 29, 2018 | |
Award Date: February 1, 2018 | |
Award Date Fair Value: $42.33 | |
| 2018 Transition Award (# of Shares) | Time-Based Vesting (# of Shares) (a) |
Marguerite Nader | 39,000 | | 39,000 | |
Paul Seavey | 32,000 | | 32,000 | |
Patrick Waite | 32,000 | | 32,000 | |
Roger Maynard | 17,500 | | 17,500 | |
Total | 120,500 | | |
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(a) Two-thirds vested on December 28, 2018, and the remaining one-third vested on January 31, 2020. |
Annual Awards
On January 29, 2018, the Compensation Committee approved the 2018 Award and the frameworkNEOs were awarded shares of Restricted Common Stock as follows:
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Award Date: February 1, 2018 | | |
Award Date Fair Value: $42.33 | | |
| 2018 Award (# of Shares) | Time-Based Vesting (a) | Performance-Based Vesting (b) |
Marguerite Nader | 39,000 | | 26,000 | | 13,000 | |
Paul Seavey | 32,000 | | 21,332 | | 10,668 | |
Patrick Waite | 32,000 | | 21,332 | | 10,668 | |
Roger Maynard | 17,500 | | 11,666 | | 5,834 | |
Total | 120,500 | | | |
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(a) 50% of the time-based awards vested on December 28, 2018, 25% vested on January 31, 2020 and 25% vested on January 29, 2021. (b) 50% vested on January 31, 2020 and a portion of the remaining 50% scheduled to vest on January 29, 2021 vested, in each case based on satisfaction of performance conditions as further discussed below. |
On January 23, 2019, the Compensation Committee approved the 2019 Award and the NEOs were awarded shares of Restricted Common Stock as follows:
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Award Date: February 1, 2019 | | |
Award Date Fair Value: $52.84 | | |
| 2019 Award (# of Shares) | Time-Based Vesting (a) | Performance-Based Vesting (b) |
Marguerite Nader | 33,000 | | 16,500 | | 16,500 | |
Paul Seavey | 27,200 | | 13,598 | | 13,602 | |
Patrick Waite | 27,200 | | 13,598 | | 13,602 | |
Roger Maynard | 15,000 | | 7,500 | | 7,500 | |
Total | 102,400 | | | |
_______ | | | |
(a) One-third of the time-based awards vested on January 31, 2020, one-third vested on January 29, 2021 and one-third vests on January 31, 2022. (b) One-third vested on January 31, 2020, a portion of the one-third scheduled to vest on January 29, 2021 vested, and one-third vests on January 31, 2022, in each case subject to the satisfaction of performance conditions as further discussed below. |
On February 10, 2020, the Compensation Committee approved the 2020 Award. To ensure the Award Date Fair Value of the executive compensation program includesaward of Restricted Common Stock for 2020 aligned with the governance features discussed below:prior year, the number of shares of Restricted Common Stock awarded in 2020 was determined by dividing the dollar value of the award by the closing price of the Company's Common Stock on the grant date. The NEOs were awarded shares of Restricted Common Stock under the 2020 Award as follows:
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▪ | The Compensation Committee is comprised solely of independent directors. |
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▪ | The Compensation Committee’s annual review and approval | | | | | | | | | | | | Award Date: February 11, 2020 | | | Award Date Fair Value: $73.46 | | | | 2020 Awards (# of Shares) | Time-Based Vesting (a) | Performance-Based Vesting (b) | Marguerite Nader | 24,758 | | 12,379 | 12,379 | Paul Seavey | 19,563 | | 9,781 | 9,782 | Patrick Waite | 19,563 | | 9,781 | 9,782 | Roger Maynard | 10,789 | | 5,394 | 5,395 | Total | 74,673 | | | | _______ | | | | (a) One-third of the time-based awards vested on January 29, 2021, one-third vests on January 31, 2022 and one-third vests on January 27, 2023. (b) A portion of the one-third scheduled to vest on January 29, 2021 vested, one-third vests on January 31, 2022, and one-third vests on January 27, 2023, in each case subject to the satisfaction of performance conditions as further discussed below. |
Performance Conditions In accordance with FASB ASC 718, the performance-based portion of the 2018 Awards, 2019 Awards and 2020 Awards are deemed granted on the date the performance conditions are approved by the Company's compensation strategy includes a review of compensation-related risk management. In this regard, the Compensation Committee reviews the Company's executive compensation program, including base salary ("Base Salary"), annual performance-based non-equity incentive compensation ("Cash Bonus"), equity-based retention and incentive compensation ("Equity Compensation"), and personal benefits. The Compensation Committee does not believe that the compensation program creates risks that are reasonably likely to have a material adverse effect on the Company. |
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▪ | The NEOs have no employment agreements or severance agreements. |
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▪ | The NEOs are subject to share ownership guidelines as further described below. |
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▪ | The Company's hedging policy is included in the Company's Policy on Securities Trading and reads as follows: "Directors and officers (and any member of the director's or officer's family sharing the same household) are prohibited from engaging in short sales (including buying puts or selling calls) or any other hedging transactions with respect to any equity securities of the Company held by them, which includes the purchase of any financial instrument (including prepaid variable forward contracts, equity swaps, collars, and exchange funds) designed to hedge or offset any decrease in the market value of such equity securities." |
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▪ | The Company's Securities Pledging Policy, which is described in greater detail in the "Securities Pledging Policy" section of this Proxy Statement, requires Audit Committee approval of any pledging of our shares of Common Stock or OP Units by directors or executive officers and the satisfaction of certain other conditions.
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▪ | The NEOs must follow the requirements of the Company's Business Ethics and Conduct Policy.
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The Compensation Committee takes into considerationand, accordingly, are included in the overall performanceSummary Compensation Table of this Proxy Statement in the year of approval of the Company when establishingperformance conditions. The value of the compensation programperformance-based portion of these awards is based on the closing price of the Company's stock on the date of approval of the performance conditions and determining final payments tothat amount is shown in the NEOs. This reviewSummary Compensation Table, even if the awards are subsequently forfeited.
2019 Performance Conditions: Effective February 11, 2019, the Compensation Committee established the following performance conditions for the performance-based portion of overall Companythe 2018 Awards and the 2019 Awards with a performance is in addition to specific goalsperiod January 1, 2019 through December 31, 2019:
"Achieve Normalized Funds From Operations (“Normalized FFO”) per Common Share (fully diluted)
for the year ending December 31, 2019 between $2.04 and targets$2.09."
As such, this portion of the 2018 Awards and 2019 Awards was deemed granted on February 11, 2019 with a Grant Date Fair Value of $54.90 per share. On January 21, 2020, the Compensation Committee determined that are setsuch vesting criteria had been met and all of this portion of the 2018 Awards and 2019 Awards vested on January 31, 2020 as follows:
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| # of Shares Vested - 2019 Performance Period |
| 2018 Award | 2019 Award |
Marguerite Nader | 6,500 | | 5,500 | |
Paul Seavey | 5,334 | | 4,534 | |
Patrick Waite | 5,334 | | 4,534 | |
Roger Maynard | 2,917 | | 2,500 | |
2020 Performance Conditions: Effective February 11, 2020, the Compensation Committee established the following performance condition for each NEO. The following tables show the Company’s historical stock price, annual dividends,performance-based portion of the 2018 Awards, the 2019 Awards and 2020 Awards with a performance period January 1, 2020 through December 31, 2020:
"Achieve Normalized Funds From Operations ("Normalized FFO"). per Common Share (fully diluted)
for the year ending December 31, 2020 between $2.19 and $2.25."
As such, this portion of the 2018 Awards, 2019 Awards and 2020 Awards was deemed granted on February 11, 2020 with a grant date value of $73.46 per share. We continued our strong performance in 2020 amidst the COVID-19 pandemic as further described in the “Proxy Statement Summary” section of this Proxy Statement. Due to the impact of the pandemic on our business, our Normalized FFO is a non-GAAP financial measure. The Company believes thatfor the year ended December 31, 2020 was $2.17 per Common Share (fully diluted) or $0.02 below the performance target. We achieved 99% of the Normalized FFO is generally an appropriate measure of performance of an equity REIT. Appendix A to this proxy statement includesper Common Share target. In 2020, the definition of Normalized FFO and a reconciliation of Normalized FFO to net income, the most comparable GAAP measure.
On July 15, 2013, we effected a two-for-one stock split of our Common Stock. All Common Stock and per share data in this CD&A for periods prior to this date have been adjusted retroactively to reflect the stock split.
Note: This chart shows the ELS stock price from January 2013 through January 2018.
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Note: This chart shows the Company's annual dividend per share growth over the last five years. | | Note: This chart shows the Company's annual Normalized FFO growth over the last five years. |
General Philosophy. The Compensation Committee determines and approves the compensation of the Company's NEOs and guides the Company's overall philosophy towards the compensation of its employees. The Compensation Committee believes that the compensation of the Company's NEOs should be both competitive and based on individual and Company performance. The Compensation Committee believes that the compensation of the NEOs should reflect their success as a management team in attaining certain operational goals, which leads to the success of the Company and serves the best interests of its stockholders. The Compensation Committee consults with executive management regarding both executive and non-executive employee compensation plans and programs, including administering the Company's equity incentive plan. The Company did not consult with an outside advisor or compensation consultant regarding 2017 compensation. The Company retained, at the direction of the Compensation Committee,engaged Willis Towers Watson in 2017 as its independent outside compensation consultantorder to provide an independent analysis and recommendation concerningassist with the 2018 long-term executive compensation plan as further discussed in "2018 Changes to Executive Compensation" below. Willis Towers Watson did not provide any additional services to the Compensation Committee and did not provide any services to the Company other than those it provided to the Compensation Committee. The sole role of Willis Towers Watson was to advise the Compensation Committee with respect to the 2018 long-term executive compensation plan. The ultimate determination of total compensation and the elements that comprise total compensation for our NEOs is made solely by our Compensation Committee.
ObjectivesCommittee’s evaluation of the Compensation Program. The primary objectiveachievement of the Company's compensation program is to attract and retain highly qualified executives by providing competitive Base Salaries and meaningful Cash Bonus and Equity Compensation. In addition, the compensation program is structured to hold the NEOs accountable for the2020 performance of the Company by tying the substantial majority of their annual Cash Bonus to performance targets. The compensation program is also designed to promote an ownership mentality among executives. The Compensation Committee recognizes that the interests of stockholders are best served by giving our NEOs the opportunity to participate in the appreciation of the Company's Common Stock. In October 2005, the Board established stock ownership guidelines for each of the executive officer positions and directors. Under these guidelines, all of the executive officers and directors are required to own a minimum amount of the Company’s Common Stock within four years from their first appointment as an executive officer or director, valued at the time of purchase,
and to maintain this minimum amount throughout their tenure as an executive officer or member of the Board. Such ownership guidelines are as follows: five times the Base Salary for the CEO; three times the Base Salary for each of the other executive officers; and three times the annual retainer for each Board member. In March 2013, the Board approved a revision to the established stock ownership guidelines to exclude from the computation any stock pledged or hedged by a director or executive officer. Each of the NEOs and Board members currently own shares of Common Stock that exceed the minimum established guidelines.
The following table shows the value of shares of Common Stock of the Company, including shares upon exercise of options, beneficially owned as of the Record Date by each of the NEOs as a multiple of their 2017 base salary.
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Name | | Shares of Common Stock (1) | | Shares of Common Stock Upon Exercise of Options (2) | | Total Shares of Common Stock | | Value of Shares Owned ($) (3) | | Base Salary ($) | | Stock Ownership Value/Base Salary (4) |
Marguerite Nader | | 116,550 | | — |
| | 116,550 | | 10,375,281 |
| | 400,000 |
| | 26x |
Paul Seavey | | 72,060 | | — |
| | 72,060 | | 6,414,781 |
| | 360,000 |
| | 18x |
Patrick Waite | | 96,160 | | — |
| | 96,160 | | 8,560,163 |
| | 360,000 |
| | 24x |
Roger Maynard | | 166,489 | | — |
| | 166,489 | | 14,820,851 |
| | 360,000 |
| | 41x |
All NEOs as a group | | 451,259 | | — |
| | 451,259 | | 40,171,076 |
| | 1,480,000 |
| | 27x |
________________________
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(1) | Shares of Common Stock beneficially owned as of the Record Date. |
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(2) | The amounts shown in this column reflect shares of Common Stock, subject to options, which are currently exercisable or exercisable within 60 days of the Record Date. |
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(3) | The value of the total shares beneficially owned as of the Record Date using the Company’s Common Stock closing stock price of $89.02 on December 31, 2017. |
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(4) | The value of total shares beneficially owned as of the Record Date as compared to the NEO's 2017 Base Salary. |
What Our Compensation Program is Designed to Reward. Our compensation program is designed to reward the NEOs for their contributions to the Company and for achieving improvements in the Company's performance during the year. The Compensation Committee deliberately kept Base Salaries at a relatively small percentage of total compensation. This allows the Compensation Committee to reward each NEO’s performance through annual Cash Bonus awards and equity incentives such as Restricted Common Stock Awards. The annual Cash Bonus plan for each NEO is established by the Compensation Committee after a review of performance goal recommendations from the CEO, who receives input on such performance goal recommendations from each NEO.Restricted Common Stock Awards are designed to provide incentives to the executives to ensure the successful implementation of long-term strategic goals of the Companytarget and to provide fora recommendation on the retentionvesting of such executives.the 2020 performance-based portion of the Restricted Stock Awards.
Elements
The Committee reviewed the Company’s 2020 performance and taking into account (a) the impact of Compensation. Duringthe COVID-19 pandemic on the Company’s business, (b) management’s diligent efforts to mitigate the impact of the pandemic and (c) that Normalized FFO for the year ended December 31, 2017, there were three major components of executive compensation: Base Salary,2020 was approximately 1% below the Normalized FFO target range, and the Committee determined that the 2020 performance-based Cash Bonus, and Equity Compensation. In conjunction with the CEO, the Compensation Committee reviews our executive salary structure on an annual basis with the use ofvesting condition had been partially achieved such that a tally sheet. The tally sheet summarizes total compensation for each NEO, including Base Salary, Equity Compensation award values, Cash Bonus performance metrics, and all other compensation for the current and prior years. The tally sheet allows the Compensation Committee to quantify each NEO's total compensation for use in comparison to the salaries of executives at other REITs as obtained from the SNL Financial database (www.snl.com).
The compensation policy takes into account a review of executive compensation and performance data on publicly traded REITs obtained from the SNL Financial database. The Compensation Committee believes the executive compensation information derived from the SNL Financial database for the selected peer group of REITs provides comparable salary data for the Company. The compensation program is based on a reviewportion of the median and average total compensation for each NEO position and allows each NEORestricted Stock Awards scheduled to attain compensation in alignment with the average and median compensation of the peer group, and basedvest on the Company's performance. This is achieved through the issuance of Restricted Common Stock Awards. Where salary information is unavailable for a particular position in the SNL Financial database, other positions having similar responsibilities are used. Salary increases are based upon overall Company performance and upon each NEO’s performance, established goals, and contribution to the Company’s performance.
The Company's peer group consists of seventeen companiesJanuary 29, 2021 would partially vest as shown in the following table.The Company's peer group for 2017 remained consistent with prior years, withremainder of the exception of one peer which was acquired by another peer in March 2017. When selecting and re-assessing this peer group, the Compensation Committee took into consideration factors including market capitalization, three-year and five-year total returns, dividend yields, compounded annual funds from operations growth rates, and multiples. As of December 31, 2017, the Company's one-year, three-year and five-year total shareholder return were 26%, 86% and 201%, respectively. As of December 31, 2017, the one-year, and annualized three-year and five-year total shareholder return for the Company were 26%, 23% and 25%, respectively, as comparedRestricted Stock Awards subject to the median total shareholder return for the peer group of 4%, 9%,2020 performance conditions did not vest and 12%, respectively,were forfeited.
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| # of Shares Vested - 2020 Performance Period |
| 2018 Award | 2019 Award | 2020 Award |
Marguerite Nader | 6,305 | | 5,335 | | 4,002 | |
Paul Seavey | 5,174 | | 4,398 | | 3,162 | |
Patrick Waite | 5,174 | | 4,398 | | 3,162 | |
Roger Maynard | 2,829 | | 2,425 | | 1,744 | |
2021 and the average annual total shareholder return for the peer group of 4%, 9% and 12%, respectively.
PEER GROUP
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Apartment Investment and Management Company (AIV) | First Industrial Realty Trust (FR) |
American Campus Communities, Inc. (ACC) | Highwoods Properties, Inc. (HIW) |
Camden Property Trust (CPT) | Liberty Property Trust (LPT) |
CubeSmart (CUBE) | Mack-Cali Realty Corporation (CLI) |
Corporate Office Properties Trust (OFC) | Regency Centers Corporation (REG) |
Duke Realty Corporation (DRE) | Simon Property Group (SPG) |
Equity Residential (EQR) | UDR, Inc. (UDR) |
Essex Property Trust, Inc. (ESS) | Vornado Realty Trust (VNO) |
Extra Space Storage, Inc. (EXR) | |
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Total compensation for the NEOs as set forth in the Summary Compensation Table was approximately $8.9 million and $8.3 million for 2017 and 2016, respectively. Total compensation for 2017 was split between Base Salary, performance-based Cash Bonus, and Equity Compensation, as shown in the following chart. All other compensation was less than 1% of the total compensation. The total median compensation for the top five executives for the selected peer group for 2016, based on the latest reportable data in the SNL Financial database, was approximately $11.7 million and the average was approximately $13.9 million. The increase in total executive compensation from 2016 to 2017 for the NEOs in the aggregate reflects an increase in performance-based Cash Bonus, and an increase in our stock price on the restricted stock grant dates.
![elementsofcompa01.jpg](https://capedge.com/proxy/DEF 14A/0000895417-18-000020/elementsofcompa01.jpg)
Base Salary.2022 Performance Conditions: The Compensation Committee deliberately keeps Base Salaries at a relatively small percentage of total compensation. For 2017,established performance conditions effective February 9, 2021 for the Compensation Committee concluded that Base Salaries of $400,000 for Ms. Nader and $360,000 for each of Mr. Seavey, Mr. Waite and Mr. Maynard were appropriate in this regard. These Base Salaries reflected no increase in 2017 from 2016.performance period January 1, 2021 through December 31, 2021 as follows:
Non-Equity Incentive Compensation (Cash Bonus). The Compensation Committee's practice is to award annual Cash Bonuses based on certain performance targets established by"Achieve Normalized Funds From Operations (“Normalized FFO”) per Common Share (fully diluted)
for the Compensation Committee for each year after consultation with the CEOending December 31, 2021 between $2.26 and executive officers, but subject to the discretion of the Compensation Committee. $2.36."
The Compensation Committee selectedwill establish performance conditions at the beginning of 2022 for the performance targets,period January 1, 2022 through December 31, 2022. If these performance conditions are satisfied as they believe management should focus on short-term annual performance metrics that support and ensure the Company’s long-term success and profitability. Performance targets were established and communicated to the NEOs in February 2017 when the outcome of the performance targets was substantially uncertain. Performance targets were consistent with earnings guidance expectations publicly disclosed by the Company. The final payout of 2017 Cash Bonuses to the NEOs was in February 2018, after finalization of the Company’s year-end earnings results.
The total 2017 maximum Cash Bonus potential for the NEOs setdetermined by the Compensation Committee in February 2017 was approximately $2,565,200 and was comprised of a $2,420,000 bonus potential ("2017 Bonus Potential") and a $72,600 MH revenue stretch goal and a $72,600 resort revenue stretch goal ("2017 Stretch Goals"). The following table showsits discretion, the 2017 Bonus Potential for each NEO and the percentage attributed to each performance target and the discretionary portion. The total Cash Bonus paid to all NEOs was approximately $2.4 million, which included a payment of $72,600 for the 2017 Stretch Goals. The 2017 Stretch
Goals required certain increases in the Company’s core manufactured home ("MH") revenues, which target was met, and certain increases in core resort revenues, which target was not met.
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Name | | 2017 Bonus Potential (Amount x Base Salary) | |
Core MH Revenue Target (1) | | Core Resort Revenue Target (2) | | Dues Target (3) | | Core Net Operating Income Target (4) | | Rentals/Working Capital Target (5) | | Discretionary(6) |
Marguerite Nader | | 2.0 | | 15.0% | | 15.0% | | 15.0% | | 15.0% | | 15.0% | | 25.0% |
Paul Seavey | | 1.5 | | 15.0% | | 15.0% | | 15.0% | | 15.0% | | 15.0% | | 25.0% |
Patrick Waite | | 1.5 | | 15.0% | | 15.0% | | 15.0% | | 15.0% | | 15.0% | | 25.0% |
Roger Maynard | | 1.5 | | 15.0% | | 15.0% | | 15.0% | | 15.0% | | 15.0% | | 25.0% |
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(1) | This target required achieving a 4.2% increase in core MH base rent growth for the year ended December 31, 2017 as compared to the year ended December 31, 2016, which target was met. The total paid for this target was approximately $363,000. |
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(2) | This target required that the Company’s core resort revenues increase 4.4% for the year ended December 31, 2017 as compared to December 31, 2016, which target was met. The total paid to the NEOs for this target was approximately $363,000. |
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(3) | This target was comprised of three equal components related to: (i) dues revenues; (ii) the number of paid member sales units; and (iii) dues attrition, which component targets were all met. The total paid to the NEOs for this target was approximately $363,000. |
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(4) | This target required core net operating income, excluding property management expense, to increase 4.3% for the year ended December 31, 2017 as compared to the year ended December 31, 2016, which target was met. The total paid to the NEOs for this target was approximately $363,000. |
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(5) | This target was comprised of four equal components related to: (i) reduction of working capital commitment, which portion of the target was met; (ii) an increase in occupancy from homeowners in 2017, which portion of the target was met; (iii) reduction of rental expenses, which portion of the target was not met; and (iv) management of chattel financing, which portion of the target was met. As a result, the NEOs were paid 75% of this target or approximately $272,250. |
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(6) | At the beginning of 2017, the Compensation Committee, in consultation with Ms. Nader, developed strategic initiatives upon which each executive officer would be evaluated and which would be used in determining their discretionary bonuses. Management focused on key strategic areas for the Company including, but not limited to, revenue management, sales, expense management, property maintenance and improvements, portfolio assessment, development, technology and employee relations. Throughout 2017, each NEO met with Ms. Nader to discuss achievement of these discretionary goals. The Compensation Committee reviewed these evaluations and considered the results of these evaluations in the overall assessment of each NEO’s performance.As a result, Mr. Seavey, Mr. Waite and Mr. Maynard each received 100% of the discretionary bonus potential for 2017.
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The Compensation Committee’s evaluation of Ms. Nader’s achievements included a review of the Company’s overall performance, as well as the attainment of the strategic initiative goals by each of the other executive officers. Ms. Nader received 100% of her discretionary bonus potential for 2017.
The total paid to all executive officers for discretionary targets was approximately $605,000.
Equity-Based Retention and Incentive Compensation (Equity Compensation).The Company has made Restricted Common Stock grants to provide long-term incentives for executive officers and to retain qualified officers. The Company recognizes that the interests of stockholders are best served by giving our executives the opportunity to participate in the appreciation of the Company’s Common Stock.
On May 13, 2014, our stockholders approved the Company’s 2014 Equity Incentive Plan. The Company has granted Restricted Common Stock to our NEOs in accordance with the 2014 Equity Incentive Plan since its approval.
The Restricted Common Stock grants were awarded at the closing price of the Company’s Common Stock on the NYSE on the date of grant. The Company has never granted options with an exercise price that is less than the closing price of the Company’s Common Stock on the NYSE on the grant date, nor have options been granted on a date other than the grant date. Upon vesting of these stock awards, the Company may buy back arelevant portion of the stock to provideperformance-based portion of the executive officer with the ability to receive the vested stock net of applicable tax effects.2019 Awards and 2020 Awards will vest on January 31, 2022 and January 27, 2023.
On January 23, 2017, the Compensation Committee approved the 2017 Restricted Stock Award (the "2017 Award") pursuant to the authority set forth in the 2014 Equity Incentive Plan. On February 1, 2017, the NEOs were granted 68,000 shares of Restricted Common Stock in accordance with the 2017 Award with a grant date fair value per share of $72.61 as follows: Ms. Nader was granted 22,000 shares; Mr. Seavey was granted 18,000 shares; Mr. Waite was granted 18,000 shares; and Mr. Maynard was granted 10,000 shares. Such shares vested on December 31, 2017.
CEO Compensation. Ms. Nader’s 20172020 compensation consisted of a Base Salary of $400,000$586,500 and a performance-based Cash Bonus award of $794,000.$1,165,082. During the year ended December 31, 2017,2020, Ms. Nader acquired 22,00037,000 shares of Restricted Common Stock upon vesting with a value of approximately $1,958,440.$2,705,440. The Compensation Committee established Ms. Nader’s compensation based on the principles previously discussed in this CD&A. Ms. Nader received no compensation or stock grants for her service on the Board.
Accounting and Tax Considerations.The Company accounts for its stock options and stock awards in accordance with FASB ASC 718. On December 20, 2019, the Internal Revenue Service (IRS) issued proposed regulations under Internal Revenue Code section 162(m) which were finalized on December 18, 2020.While the final regulations substantially adopt the regulations as proposed, there are several modifications and clarifications.The final regulations modify the applicability date of the definition of compensation related to partnerships to provide additional transition relief.The definition of compensation includes an amount equal to a publicly held corporation’s distributive share of a partnership’s deduction for the compensation expense attributable to the compensation paid by the partnership after December 18, 2020. Internal Revenue Code section 162(m) limits the annual compensation expense deduction available to publicly traded companies to $1 million for certain “covered employees.”
Severance Benefits. None of the Company’s NEOs have any arrangements that provide for payment of severance benefits.
Non-Qualified Deferred Compensation. The Company does not provide any non-qualified defined contribution or other deferred compensation plans.
Post-Employment Compensation.All of the Company's employees, including its NEOs, are employees-at-will and as such do not have employment contracts with the Company. The Company also does not provide post-employment health coverage or other benefits.
Change in Control. None of the Company's NEOs are entitled to payment of any benefitspayment upon a change in control of the Company. TheHowever, the vesting of Restricted Common Stock grants is subject to acceleration upon a change ofin control of the Company or in the event of the death or disability and involuntary termination not for cause.of the recipient. As of December 31, 2017, there were no unexercised stock options or2020, non-vested restricted stock awards for any of the NEOs.NEOs were as shown in the "Outstanding Equity Awards at Fiscal Year-End" table in this Proxy Statement.
Perquisites and Other Benefits.The Company’sCompany's NEOs do not receive benefits that are not otherwise available to all of its employees. All employees who participated in the 401(k) plan received a matching contribution equal to 100% of the first 3%, and 50% of the next 2%, of the participant’sparticipant's eligible earnings that were contributed to the plan, up to a maximum matching contribution of $10,800.$11,400. Additionally, the Company may make a discretionary contribution annually for each participant in an amount, if any, as determined by the Company. Company, and no such contributions were made in 2020.
The Company has provided each of the NEOs with an indemnification agreement, however, the Company has paid no amounts under such agreements.
The Company has a non-qualified Employee Stock Purchase Plan ("ESPP") in which certain employees and all the directorsDirectors may participate. Participants may acquire up to $250,000 of Common Stock annually through the ESPP at a 15% discount. Discounts on such stock purchases are not considered a perquisite and are not included in the Summary Compensation Table as such discount is available to all salaried employees who elect to participate in the ESPP.
2018 Changes to2021 Executive Compensation. Effective February 9, 2021, Mr. David Eldersveld was appointed Executive Vice President, Chief Legal Officer and Corporate Secretary and became a NEO. On March 9, 2018,February 8, 2021, the Compensation Committee approved the 20182021 Base Salaries of $600,000 for Ms. Nader and $395,300 for each of Mr. Seavey, Mr. Waite, Mr. Maynard and Mr. Eldersveld. On February 8, 2021, the Compensation Committee approved the Executive Bonus Plan for 2021 (the "Plan""2021 Plan"). Information regarding the 2021 Plan was filed on Form 8-K with the SEC on March 12, 2018.February 10, 2021. Under the 2021 Plan, the annual 20182021 Cash Bonus potential was establishedis based on the achievement of certain performance targets. The total 20182021 Cash Bonus potential under the 2021 Plan for each eligible executiveis as follows:
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| | | | | | | |
Name | Title | Bonus Potential |
Marguerite Nader | President and Chief Executive Officer | 250%290% of annual salary |
Paul Seavey | Executive Vice President and Chief Financial Officer and Treasurer | 190%220% of annual salary |
Patrick Waite | Executive Vice President and Chief Operating Officer | 190%220% of annual salary |
Roger Maynard | Executive Vice President - Investments | 190%220% of annual salary |
David Eldersveld | Executive Vice President and Chief Legal Officer | 220% of annual salary |
Under the Plan, payment of 70% of the 20182021 Cash Bonus potential is contingent upon achievingthe achievement of certain operational targets, including goals related to core community base rental income, core resort base rental income, membership dues revenues,site and member optimization, core net operating income and expense control, and working capital. The Compensation Committee will have discretion at the end of 20182021 to determine an appropriate award based on an evaluation of each of the target areas.established goals. Payment of the remaining 30% of the 20182021 Cash Bonus potential is at the discretion of the Compensation Committee based on anits assessment of discretionary objectivesvarious strategic initiatives established for the executive officer team,NEOs, as a whole.whole, including the discretion to apportion the
aggregate discretionary bonus amount amongst the eligible executives. The amount paid to each NEO is subject to the discretion of the Compensation Committee. In addition, if the Company exceedsNEOs exceed by specified amounts certain operational targets relating to core community base rental income and core resort base rental income, the total 20182021 Cash Bonus potential may be increased by up to an additional $186,540,$292,244, which would be shared pro-rata byamongst the NEOs. 20182021 Cash Bonus payments will be made in cash and will be paid subsequent to the year ending December 31, 20182021 after finalization of the Company’s results of operations and upon review and approval by the Compensation Committee.
On January 29, 2018, in order to further align the interests of our NEOs with our stockholders and to create stronger retention incentives,February 8, 2021, the Compensation Committee in consultation with Willis Towers Watson, its independent, outside compensation consultant, approved the 20182021 Restricted Stock Award Program (the “2018 Restricted Stock Program”"2021 Award") in accordance with and pursuant to the authority set forth in the 2014 Equity Incentive Plan.
2018 Awards
The 2018 Restricted Stock Award Program provides for restricted stock awards for On February 9, 2021, the NEOs were awarded 99,764 shares of Restricted Common Stock in accordance with a three-year vesting period (the "2018 Awards"), with one-third vesting on December 28, 2018the 2021 Award as follows: Ms. Nader was awarded 28,516 shares, Mr. Seavey was awarded 22,532 shares, Mr. Waite was awarded 22,532 shares, Mr. Maynard was awarded 12,426 shares and Mr. Eldersveld was awarded 13,758 shares. The number of shares of Restricted Common Stock awarded was determined by dividing the remaining two-thirds vesting on each of December 28, 2019 and December 28, 2020, respectively (the "Extended Vesting Portion"). One-halfdollar value of the Extended Vesting Portionaward by the closing price of the 2018Company's Common Stock on February 9, 2021, or $63.78 per share. 50% of the 2021 Stock Awards provide solely forare time-based vesting and will vest in equal annual installments on December 28, 2019January 31, 2022, January 27, 2023, and December 28, 2020.January 26, 2024, subject to satisfaction of continuous employment by the NEO during such explicit service period (the "Service Period Requirement"). The time-based portion of the 2021 Awards have a Grant Date Fair Value of $63.78 per share. The remaining one-half of the Extended Vesting Portion of the 20182021 Awards provide for performance-based vesting and will vest in equal annual installments on January 31, 2022, January 27, 2023 and January 26, 2024, subject to the satisfaction of the Service Period Requirement and the performance conditions to be established by the Compensation Committee at the beginning of each performance period in equal installments2021, 2022 and 2023. Effective February 9, 2021, the Compensation Committee established the performance conditions for the 2021 performance period as follows: "Achieve Normalized Funds From Operations ("Normalized FFO") per Common Share (fully diluted) for the year ending December 31, 2021 between $2.26 and $2.36."
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement on Schedule 14A and in the Company’s Annual Report on Form 10-K for the year ended December 28, 2019 and December 28,31, 2020.
Respectfully submitted,
David Contis, Chair
Philip Calian
Constance Freedman
Sheli Rosenberg
Transition Awards
Each of our NEOs also received a one-time transition award of time-based restricted stock (the “Transition Awards”) as a transition from our prior practice of granting annual restricted stock awards which vested in full on December 31 of In 2018, the relevant grant year. These Transition Awards are intended to mitigate the impact of a reduction in the realized pay for our NEOs in 2018 and 2019 resulting from the three-year vesting period forCompensation Committee approved the 2018 Awards. Two-thirds of each Transition Award will vest on December 28, 2018, and the remaining one-third will vest on December 28, 2019.Awards. The Transition Awards arewere not subject to performance goals. The Compensation Committee doesdid not view these awards as a continuing feature of the 2018Company's Restricted Stock Award Program, and there is no intent to replicate these Transition Awards in future years.
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Approval Date: January 29, 2018 | |
Award Date: February 1, 2018 | |
Award Date Fair Value: $42.33 | |
| 2018 Transition Award (# of Shares) | Time-Based Vesting (# of Shares) (a) |
Marguerite Nader | 39,000 | | 39,000 | |
Paul Seavey | 32,000 | | 32,000 | |
Patrick Waite | 32,000 | | 32,000 | |
Roger Maynard | 17,500 | | 17,500 | |
Total | 120,500 | | |
_______ | | |
(a) Two-thirds vested on December 28, 2018, and the remaining one-third vested on January 31, 2020. |
Annual Awards
On February 1,January 29, 2018, the Compensation Committee approved the 2018 Award and the NEOs were grantedawarded shares of Restricted Common Stock as follows:
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Award Date: February 1, 2018 | | |
Award Date Fair Value: $42.33 | | |
| 2018 Award (# of Shares) | Time-Based Vesting (a) | Performance-Based Vesting (b) |
Marguerite Nader | 39,000 | | 26,000 | | 13,000 | |
Paul Seavey | 32,000 | | 21,332 | | 10,668 | |
Patrick Waite | 32,000 | | 21,332 | | 10,668 | |
Roger Maynard | 17,500 | | 11,666 | | 5,834 | |
Total | 120,500 | | | |
_______ | | | |
(a) 50% of the time-based awards vested on December 28, 2018, 25% vested on January 31, 2020 and 25% vested on January 29, 2021. (b) 50% vested on January 31, 2020 and a portion of the remaining 50% scheduled to vest on January 29, 2021 vested, in each case based on satisfaction of performance conditions as further discussed below. |
On January 23, 2019, the Compensation Committee approved the 2019 Award and the NEOs were awarded shares of Restricted Common Stock as follows:
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Award Date: February 1, 2019 | | |
Award Date Fair Value: $52.84 | | |
| 2019 Award (# of Shares) | Time-Based Vesting (a) | Performance-Based Vesting (b) |
Marguerite Nader | 33,000 | | 16,500 | | 16,500 | |
Paul Seavey | 27,200 | | 13,598 | | 13,602 | |
Patrick Waite | 27,200 | | 13,598 | | 13,602 | |
Roger Maynard | 15,000 | | 7,500 | | 7,500 | |
Total | 102,400 | | | |
_______ | | | |
(a) One-third of the time-based awards vested on January 31, 2020, one-third vested on January 29, 2021 and one-third vests on January 31, 2022. (b) One-third vested on January 31, 2020, a portion of the one-third scheduled to vest on January 29, 2021 vested, and one-third vests on January 31, 2022, in each case subject to the satisfaction of performance conditions as further discussed below. |
On February 10, 2020, the Compensation Committee approved the 2020 Award. To ensure the Award Date Fair Value of the award of Restricted Common Stock for 2020 aligned with the prior year, the number of shares of Restricted Common Stock awarded in 2020 was determined by dividing the dollar value of the award by the closing price of the Company's Common Stock on the grant date. The NEOs were awarded shares of Restricted Common Stock under the 2020 Award as follows:
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Award Date: February 11, 2020 | | |
Award Date Fair Value: $73.46 | | |
| 2020 Awards (# of Shares) | Time-Based Vesting (a) | Performance-Based Vesting (b) |
Marguerite Nader | 24,758 | | 12,379 | 12,379 |
Paul Seavey | 19,563 | | 9,781 | 9,782 |
Patrick Waite | 19,563 | | 9,781 | 9,782 |
Roger Maynard | 10,789 | | 5,394 | 5,395 |
Total | 74,673 | | | |
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(a) One-third of the time-based awards vested on January 29, 2021, one-third vests on January 31, 2022 and one-third vests on January 27, 2023. (b) A portion of the one-third scheduled to vest on January 29, 2021 vested, one-third vests on January 31, 2022, and one-third vests on January 27, 2023, in each case subject to the satisfaction of performance conditions as further discussed below. |
Performance Conditions
In accordance with FASB ASC 718, the performance-based portion of the 2018 Restricted Stock Award ProgramAwards, 2019 Awards and 2020 Awards are deemed granted on the date the performance conditions are approved by the Compensation Committee and, accordingly, are included in the Summary Compensation Table of this Proxy Statement in the year of approval of the performance conditions. The value of the performance-based portion of these awards is based on the closing price of the Company's stock on the date of approval of the performance conditions and that amount is shown in the Summary Compensation Table, even if the awards are subsequently forfeited.
2019 Performance Conditions: Effective February 11, 2019, the Compensation Committee established the following performance conditions for the performance-based portion of the 2018 Awards and the 2019 Awards with a performance period January 1, 2019 through December 31, 2019:
"Achieve Normalized Funds From Operations (“Normalized FFO”) per Common Share (fully diluted)
for the year ending December 31, 2019 between $2.04 and $2.09."
As such, this portion of the 2018 Awards and 2019 Awards was deemed granted on February 11, 2019 with a Grant Date Fair Value of $54.90 per share. On January 21, 2020, the Compensation Committee determined that such vesting criteria had been met and all of this portion of the 2018 Awards and 2019 Awards vested on January 31, 2020 as follows:
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| # of Shares Vested - 2019 Performance Period |
| 2018 Award | 2019 Award |
Marguerite Nader | 6,500 | | 5,500 | |
Paul Seavey | 5,334 | | 4,534 | |
Patrick Waite | 5,334 | | 4,534 | |
Roger Maynard | 2,917 | | 2,500 | |
2020 Performance Conditions: Effective February 11, 2020, the Compensation Committee established the following performance condition for the performance-based portion of the 2018 Awards, the 2019 Awards and 2020 Awards with a performance period January 1, 2020 through December 31, 2020:
"Achieve Normalized Funds From Operations ("Normalized FFO") per Common Share (fully diluted)
for the year ending December 31, 2020 between $2.19 and $2.25."
As such, this portion of the 2018 Awards, 2019 Awards and 2020 Awards was deemed granted on February 11, 2020 with a grant date fair value of $84.65$73.46 per shareshare. We continued our strong performance in 2020 amidst the COVID-19 pandemic as further described in the “Proxy Statement Summary” section of this Proxy Statement. Due to the impact of the pandemic on our business, our Normalized FFO for the year ended December 31, 2020 was $2.17 per Common Share (fully diluted) or $0.02 below the performance target. We achieved 99% of the Normalized FFO per Common Share target. In 2020, the Compensation Committee engaged Willis Towers Watson in order to assist with the Committee’s evaluation of the achievement of the 2020 performance target and to provide a recommendation on the vesting of the 2020 performance-based portion of the Restricted Stock Awards.
The Committee reviewed the Company’s 2020 performance and taking into account (a) the impact of the COVID-19 pandemic on the Company’s business, (b) management’s diligent efforts to mitigate the impact of the pandemic and (c) that Normalized FFO for the year ended December 31, 2020 was approximately 1% below the Normalized FFO target range, and the Committee determined that the 2020 performance-based vesting condition had been partially achieved such that a portion of the Restricted Stock Awards scheduled to vest on January 29, 2021 would partially vest as shown in the following table.The remainder of the Restricted Stock Awards subject to the 2020 performance conditions did not vest and were forfeited.
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| # of Shares Vested - 2020 Performance Period |
| 2018 Award | 2019 Award | 2020 Award |
Marguerite Nader | 6,305 | | 5,335 | | 4,002 | |
Paul Seavey | 5,174 | | 4,398 | | 3,162 | |
Patrick Waite | 5,174 | | 4,398 | | 3,162 | |
Roger Maynard | 2,829 | | 2,425 | | 1,744 | |
2021 and 2022 Performance Conditions: The Compensation Committee established performance conditions effective February 9, 2021 for the performance period January 1, 2021 through December 31, 2021 as follows:
"Achieve Normalized Funds From Operations (“Normalized FFO”) per Common Share (fully diluted)
for the year ending December 31, 2021 between $2.26 and $2.36."
The Compensation Committee will establish performance conditions at the beginning of 2022 for the performance period January 1, 2022 through December 31, 2022. If these performance conditions are satisfied as determined by the Compensation Committee in its discretion, the relevant portion of the performance-based portion of the 2019 Awards and 2020 Awards will vest on January 31, 2022 and January 27, 2023.
CEO Compensation.Ms. Nader’s 2020 compensation consisted of a Base Salary of $586,500 and a performance-based Cash Bonus award of $1,165,082. During the year ended December 31, 2020, Ms. Nader acquired 37,000 shares of Restricted Common Stock upon vesting with a value of $2,705,440. The Compensation Committee established Ms. Nader’s compensation based on the principles previously discussed in this CD&A. Ms. Nader received no compensation or stock grants for her service on the Board.
Accounting and Tax Considerations.The Company accounts for its stock awards in accordance with FASB ASC 718. On December 20, 2019, the Internal Revenue Service (IRS) issued proposed regulations under Internal Revenue Code section 162(m) which were finalized on December 18, 2020.While the final regulations substantially adopt the regulations as proposed, there are several modifications and clarifications.The final regulations modify the applicability date of the definition of compensation related to partnerships to provide additional transition relief.The definition of compensation includes an amount equal to a publicly held corporation’s distributive share of a partnership’s deduction for the compensation expense attributable to the compensation paid by the partnership after December 18, 2020. Internal Revenue Code section 162(m) limits the annual compensation expense deduction available to publicly traded companies to $1 million for certain “covered employees.”
Severance Benefits. None of the Company’s NEOs have any arrangements that provide for payment of severance benefits.
Non-Qualified Deferred Compensation. The Company does not provide any non-qualified defined contribution or other deferred compensation plans.
Post-Employment Compensation.All of the Company's employees, including its NEOs, are employees-at-will and as such do not have employment contracts with the Company. The Company does not provide post-employment health coverage or other benefits.
Change in Control.None of the Company's NEOs are entitled to any payment upon a change in control of the Company. However, the vesting of Restricted Common Stock grants is subject to acceleration upon a change in control of the Company or in the event of the death or disability of the recipient. As of December 31, 2020, non-vested restricted stock awards for the NEOs were as shown in the "Outstanding Equity Awards at Fiscal Year-End" table in this Proxy Statement.
Perquisites and Other Benefits.The Company's NEOs do not receive benefits that are not otherwise available to all of its employees. All employees who participated in the 401(k) plan received a matching contribution equal to 100% of the first 3%, and 50% of the next 2%, of the participant's eligible earnings that were contributed to the plan, up to a maximum matching contribution of $11,400. Additionally, the Company may make a discretionary contribution annually for each participant in an amount, if any, as determined by the Company, and no such contributions were made in 2020.
The Company has provided each of the NEOs with an indemnification agreement, however, the Company has paid no amounts under such agreements.
The Company has a non-qualified Employee Stock Purchase Plan ("ESPP") in which certain employees and all the Directors may participate. Participants may acquire up to $250,000 of Common Stock annually through the ESPP at a 15% discount. Discounts on such stock purchases are not considered a perquisite and are not included in the Summary Compensation Table as such discount is available to all salaried employees who elect to participate in the ESPP.
2021 Executive Compensation. Effective February 9, 2021, Mr. David Eldersveld was appointed Executive Vice President, Chief Legal Officer and Corporate Secretary and became a NEO. On February 8, 2021, the Compensation Committee approved the 2021 Base Salaries of $600,000 for Ms. Nader and $395,300 for each of Mr. Seavey, Mr. Waite, Mr. Maynard and Mr. Eldersveld. On February 8, 2021, the Compensation Committee approved the Executive Bonus Plan for 2021 (the "2021 Plan"). Information regarding the 2021 Plan was filed on Form 8-K with the SEC on February 10, 2021. Under the 2021 Plan, the annual 2021 Cash Bonus potential is based on the achievement of certain performance targets. The total 2021 Cash Bonus potential under the 2021 Plan is as follows:
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Name | Title | 2018 Award | Transition AwardBonus Potential |
Marguerite Nader | President and Chief Executive Officer | 19,500 Shares | 19,500 Shares290% of annual salary |
Paul Seavey | Executive Vice President and Chief Financial Officer and Treasurer | 16,000 Shares | 16,000 Shares220% of annual salary |
Patrick Waite | Executive Vice President and Chief Operating Officer | 16,000 Shares | 16,000 Shares220% of annual salary |
Roger Maynard | Executive Vice President - Investments | 8,750 Shares220% of annual salary |
David Eldersveld | 8,750 SharesExecutive Vice President and Chief Legal Officer | 220% of annual salary |
Under the Plan, payment of 70% of the 2021 Cash Bonus potential is contingent upon the achievement of certain operational targets, including goals related to core community base rental income, core resort base rental income, site and member optimization, core net operating income and expense control, and working capital. The Compensation Committee will have discretion at the end of 2021 to determine an appropriate award based on an evaluation of each of the established goals. Payment of the remaining 30% of the 2021 Cash Bonus potential is at the discretion of the Compensation Committee based on its assessment of various strategic initiatives established for the NEOs, as a whole, including the discretion to apportion the
aggregate discretionary bonus amount amongst the eligible executives. The amount paid to each NEO is subject to the discretion of the Compensation Committee. In addition, if the NEOs exceed by specified amounts certain operational targets relating to core community base rental income and core resort base rental income, the total 2021 Cash Bonus potential may be increased by up to an additional $292,244, which would be shared amongst the NEOs. 2021 Cash Bonus payments will be made in cash and will be paid subsequent to the year ending December 31, 2021 after finalization of the Company’s results of operations and upon review and approval by the Compensation Committee.
On February 8, 2021, the Compensation Committee approved the 2021 Restricted Stock Award (the "2021 Award") in accordance with and pursuant to the authority set forth in the 2014 Equity Incentive Plan. On February 9, 2021, the NEOs were awarded 99,764 shares of Restricted Common Stock in accordance with the 2021 Award as follows: Ms. Nader was awarded 28,516 shares, Mr. Seavey was awarded 22,532 shares, Mr. Waite was awarded 22,532 shares, Mr. Maynard was awarded 12,426 shares and Mr. Eldersveld was awarded 13,758 shares. The number of shares of Restricted Common Stock awarded was determined by dividing the dollar value of the award by the closing price of the Company's Common Stock on February 9, 2021, or $63.78 per share. 50% of the 2021 Stock Awards are time-based and will vest in equal annual installments on January 31, 2022, January 27, 2023, and January 26, 2024, subject to satisfaction of continuous employment by the NEO during such explicit service period (the "Service Period Requirement"). The time-based portion of the 2021 Awards have a Grant Date Fair Value of $63.78 per share. The remaining one-half of the 2021 Awards provide for performance-based vesting and will vest in equal annual installments on January 31, 2022, January 27, 2023 and January 26, 2024, subject to the satisfaction of the Service Period Requirement and the performance conditions to be established by the Compensation Committee at the beginning of each performance period in 2021, 2022 and 2023. Effective February 9, 2021, the Compensation Committee established the performance conditions for the 2021 performance period as follows: "Achieve Normalized Funds From Operations ("Normalized FFO") per Common Share (fully diluted) for the year ending December 31, 2021 between $2.26 and $2.36."
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement on Schedule 14A and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.2020.
Respectfully submitted,
David Contis, Chair
Philip Calian
Constance Freedman
Sheli Rosenberg Chair
David Contis
SUMMARY
EXECUTIVE COMPENSATION TABLE
Summary Compensation Table
The following table includes information concerning compensation paid to or earned for the year ended December 31, 20172020 by the Company's Chief Executive Officer, Chief Financial Officer, and those other persons who were, at December 31, 2017, executive officers2020, Executive Officers of the Company, (the "NEOs").which we refer to as the NEOs.
The Company has not entered into any employment agreements with any of the NEOs. When setting total compensation for each of the NEOs, the Compensation Committee reviews all components of compensation, including equity and non-equity based compensation.
The NEOs were not entitled to receive non-performance based payments, which are characterized as "Bonus" payments in the table below for the years ended December 31, 2017, 2016 and 2015. In January 2016, 20172019, 2020 and 2018,2021, the Compensation Committee approved the final short-term incentive plan Cash Bonus payments for each NEO, with the substantial majority of such payments being based on pre-established performance targets. Such annual performance-based Cash Bonus payments are characterized as "Non-Equity Incentive Plan Compensation - STIP" in the table. As the NEOs did not receive cash bonus payments without performance targets, there are no amounts shown in the "Bonus" column in the table. Total compensation amounts include the fair value of the stock awards and option awards granted to the NEOs, with such grants being shown in the table in the year of grant. The number of shares shown in the following tables have been adjusted for our 2-for-1 stock split that was effected by and in the form of a stock dividend on October 15, 2019.
For the years ended December 31, 2017, 20162020, 2019 and 2015,2018, Base Salary (Salary) accounted for approximately 17%16%, 18%19% and 18%11%, respectively, of total compensation; Equity Compensation (Stock Awards) accounted for approximately 56%58%, 55%51% and 52%65%, respectively, of total compensation; and Cash Bonus (Non-Equity Incentive Plan Compensation - STIP) accounted for approximately 27%26%, 26%30% and 29%24%, respectively, of total compensation.
| |
Name and Principal Position | |
Year | |
Salary ($) | |
Bonus ($)(1) | |
Stock Awards ($)(2) | |
Option Awards ($)(3) | | Non-Equity Incentive Plan Compensation | | All Other Compensation ($)(6) | |
Total ($) | |
| STIP ($)(4) | | LTIP ($)(5) | | |
Name and Principal Position(1) | |
Name and Principal Position(1) | |
Year | |
Salary ($) | |
Bonus ($)(2) | |
Stock Awards ($)(3) | |
Option Awards ($)(4) | | Non-Equity Incentive Plan Compensation | | All Other Compensation ($)(7) | |
Total ($) |
| | STIP ($)(5) | | LTIP ($)(6) | |
Marguerite Nader | | 2017 | | 400,000 |
| | — |
| | 1,597,420 |
| | — |
| | 794,000 |
| | — |
| | 10,800 |
| | 2,802,220 |
| Marguerite Nader | | 2020 | | 586,500 | | | — | | | 2,093,977 | | | — | | | 1,165,082 | | | — | | | 11,400 | | | 3,856,959 | |
President and | | 2016 | | 400,000 |
| | — |
| | 1,483,240 |
| | — |
| | 724,004 |
| | — |
| | 10,600 |
| | 2,617,844 |
| President and | | 2019 | | 575,000 | | | — | | | 1,530,528 | | | — | | | 1,125,562 | | | — | | | 11,200 | | | 3,242,290 | |
Chief Executive Officer | | 2015 | | 385,000 |
| | — |
| | 1,208,460 |
| | — |
| | 758,450 |
| | — |
| | 10,400 |
| | 2,362,310 |
| Chief Executive Officer | | 2018 | | 400,000 | | | — | | | 2,751,015 | | | — | | | 995,000 | | | — | | | 11,000 | | | 4,157,015 | |
| | | | | | | | | | | | | | | | | |
Paul Seavey | | 2017 | | 360,000 |
| | — |
| | 1,306,980 |
| | — |
| | 535,950 |
| | — |
| | 10,800 |
| | 2,213,730 |
| Paul Seavey | | 2020 | | 387,600 | | | — | | | 1,682,895 | | | — | | | 584,113 | | | — | | | 11,400 | | | 2,666,008 | |
Executive Vice President, | | 2016 | | 360,000 |
| | — |
| | 1,213,560 |
| | — |
| | 488,703 |
| | — |
| | 10,600 |
| | 2,072,863 |
| |
Chief Financial Officer and | | 2015 | | 350,000 |
| | — |
| | 988,740 |
| | — |
| | 517,125 |
| | — |
| | 10,400 |
| | 1,866,265 |
| |
Treasurer | | | | | | | | | | | | | | | | | |
Executive Vice President and | | Executive Vice President and | | 2019 | | 380,000 | | | — | | | 1,260,195 | | | — | | | 565,326 | | | — | | | 11,200 | | | 2,216,721 | |
Chief Financial Officer | | Chief Financial Officer | | 2018 | | 370,000 | | | — | | | 2,257,243 | | | — | | | 699,485 | | | — | | | 11,000 | | | 3,337,728 | |
| | | | | | | | | | | | | | | | | |
Patrick Waite | | 2017 | | 360,000 |
| | — |
| | 1,306,980 |
| | — |
| | 535,950 |
| | — |
| | 10,800 |
| | 2,213,730 |
| Patrick Waite | | 2020 | | 387,600 | | | — | | | 1,682,895 | | | — | | | 584,113 | | | — | | | 11,400 | | | 2,666,008 | |
Executive Vice President and | | 2016 | | 360,000 |
| | — |
| | 1,213,560 |
| | — |
| | 488,703 |
| | — |
| | 10,600 |
| | 2,072,863 |
| Executive Vice President and | | 2019 | | 380,000 | | | — | | | 1,260,195 | | | — | | | 565,326 | | | — | | | 11,200 | | | 2,216,721 | |
Chief Operating Officer | | 2015 | | 350,000 |
| | — |
| | 988,740 |
| | — |
| | 517,125 |
| | — |
| | 10,400 |
| | 1,866,265 |
| Chief Operating Officer | | 2018 | | 370,000 | | | — | | | 2,257,243 | | | — | | | 699,485 | | | — | | | 11,000 | | | 3,337,728 | |
| | | | | | | | | | | | | | | | | |
Roger Maynard | | 2017 | | 360,000 |
| | — |
| | 726,100 |
| | — |
| | 535,950 |
| | — |
| | 10,800 |
| | 1,632,850 |
| Roger Maynard | | 2020 | | 387,600 | | | — | | | 926,257 | | | — | | | 584,113 | | | — | | | 11,400 | | | 1,909,370 | |
Executive Vice President - | | 2016 | | 360,000 |
| | — |
| | 674,200 |
| | — |
| | 488,703 |
| | — |
| | 10,600 |
| | 1,533,503 |
| Executive Vice President - | | 2019 | | 380,000 | | | — | | | 693,615 | | | — | | | 565,326 | | | — | | | 11,200 | | | 1,650,141 | |
Investments | | 2015 | | 350,000 |
| | — |
| | 988,740 |
| | — |
| | 517,125 |
| | — |
| | 10,400 |
| | 1,866,265 |
| Investments | | 2018 | | 370,000 | | | — | | | 1,234,430 | | | — | | | 699,485 | | | — | | | 11,000 | | | 2,314,915 | |
_________
| |
(1) | A substantial majority of bonus payments were based on certain performance criteria being met and as such are included under the Non-Equity Incentive Plan Compensation column of this table. |
| |
(2) | These amounts reflect the grant-date fair value of restricted stock awards, calculated in accordance with FASB ASC 718 based on the Company's closing stock price on the grant date. |
On January 22, 2015,(1)Effective February 9, 2021, Mr. David Eldersveld was appointed Executive Vice President, Chief Legal Officer and Corporate Secretary. Mr. Eldersveld was not an NEO for 2020, therefore, he is not included in this table.
(2)A substantial majority of the NEO's annual short-term incentive plan Cash Bonus payment is based on pre-established performance targets as communicated to the NEOs at the beginning of each year, and therefore, such amounts are classified as non-equity incentive plan compensation in this table.
(3)These amounts reflect the grant-date fair value of restricted stock awards, calculated in accordance with FASB ASC 718 based on the Company's closing stock price on the grant date. In accordance with FASB ASC 718, the performance-based portion of the 2018 Awards, 2019 Awards and 2020 Awards were deemed granted on the date the performance conditions were approved by the Compensation Committee approvedat the 2015 Restricted Stock Award (the "2015 Award") pursuanttarget grant date value as the probability of achievement of the performance target at that time was 100%. For the portion of the awards with a performance period of January 1, 2020 to the authority set forth in the 2014 Equity Incentive Plan. On February 2, 2015, the NEOs were granted 76,000December 31, 2020, Ms. Nader, Mr. Seavey, Mr. Waite and Mr. Maynard forfeited 484 shares, 394 shares, 394 shares and 217 shares of Restricted Common Stock, in accordance with the 2015 Award with a grant-date fair value per share of $54.93 as follows: Ms. Nader was granted 22,000 shares; Mr. Seavey was granted 18,000 shares; Mr. Waite was granted 18,000 shares and Mr. Maynard was granted 18,000 shares. Such shares vestedrespectively, that were scheduled to vest on December 31, 2015.
On January 21, 2016, the Compensation Committee approved the 2016 Restricted Stock Award (the "2016 Award") pursuant to the authority set forth29, 2021. The settlement on these awards is further described in the 2014 Equity Incentive Plan. On February 1, 2016, the NEOs were granted 68,000 sharesCD&A section of Restricted Common Stock in accordance with the 2016 Award with a grant-date fair value per share of $67.42 as follows: Ms. Nader was granted 22,000 shares; Mr. Seavey was granted 18,000 shares; Mr. Waite was granted 18,000 shares and Mr. Maynard was granted 10,000 shares. Such shares vested on December 31, 2016.
On January 23, 2017, the Compensation Committee approved the 2017 Restricted Stock Award (the "2017 Award") pursuant to the authority set forth in the 2014 Equity Incentive Plan. On February 1, 2017, the NEOs were granted 68,000 shares of Restricted Common Stock in accordance with the 2017 Award with a grant-date fair value per share of $72.61 as follows: Ms. Nader was granted 22,000 shares; Mr. Seavey was granted 18,000 shares; Mr. Waite was granted 18,000 shares; and Mr. Maynard was granted 10,000 shares. Such shares vested on December 31, 2017.
this Proxy Statement. All holders of Restricted Common Stock receive any dividends paid on such shares whether or not vested.
| |
(3) | There were no stock option awards issued to the NEOs during 2015, 2016 and 2017. |
| |
(4) | A substantial majority of the NEOs’ annual short-term incentive plan Cash Bonus payment is based on pre-established performance targets as communicated to the NEOs at the beginning of the year, and therefore, such amounts are classified as non-equity incentive plan compensation in this table. |
(4)There were no stock option awards issued to the NEOs during 2018, 2019 and 2020.
(5)A substantial majority of the NEOs’ annual short-term incentive plan Cash Bonus payment is based on pre-established performance targets as communicated to the NEOs at the beginning of the year, and therefore, such amounts are classified as non-equity incentive plan compensation in this table.
In February 2017,2020, February 2016,2019, and February 2015,March 2018, the Compensation Committee approved the 2017, 20162020, 2019 and 20152018 bonus potential and performance targets, respectively. In January 2018, 20172021, 2020 and 2016,2019, after assessment of the achievement of such performance targets, the Compensation Committee approved and the NEOs received their annual Cash Bonus for each of the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively. See the CD&A section of this Proxy Statement for further discussion of the 20172020 performance targets.
On March 9, 2018,February 8, 2021, the Compensation Committee approved the 20182021 Executive Bonus Plan. Information regarding the 20182021 Executive Bonus Plan is included in the CD&A section of this Proxy Statement and in a Current Report on Form 8-K filed with the SEC on March 12, 2018.
| |
(5) | There were no long-term non-equity incentive plan compensation awards granted to the NEOs in 2015, 2016, or 2017. |
| |
(6) | Includes employer-matching contributions pursuant to the Equity LifeStyle Properties, Inc. Retirement Savings Plan of $10,800, $10,600, and $10,400 for the years ended December 31, 2017, 2016 and 2015, respectively. |
GRANTS OF PLAN-BASED AWARDS(6)There were no long-term non-equity incentive plan compensation awards granted to the NEOs in 2018, 2019, or 2020.
(7)Includes employer-matching contributions pursuant to the Equity LifeStyle Properties, Inc. Retirement Savings Plan of $11,400, $11,200 and $11,000 for the years ended December 31, 2020, 2019 and 2018, respectively.
Grants of Plan-Based Awards
The following table sets forth certain information with respect to grants of plan-based awards to the Company’s NEOs for the year ended December 31, 2017.2020. All awards were approved on February 10, 2021.
| | Name | |
Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | All Other Stock Awards: Number of Shares of Stock or Units (#) (2) | | All Other Option Awards; Number of Securities Underlying Options (#) | |
Exercise or Base Price of Option Awards ($/sh) | |
Grant Date Fair Value of Stock and Option Awards ($) (3) | Name | |
Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under Equity Incentive Plan Awards | | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | |
Grant Date Fair Value of Stock and Option Awards ($) (4) |
|
Threshold ($) | |
Target ($) | |
Maximum ($) | | |
Threshold ($) | |
Target ($) | |
Maximum ($) | |
Threshold (#) | |
Target (#)(2) | |
Maximum (#) | |
Marguerite Nader | | 02/20/17 | (1) | | — |
| | 648,000 |
| | 848,000 |
| | 0 |
| | — |
| | — |
| | — |
| Marguerite Nader | | 02/10/20 | (1) | | — | | 1,285,843 | | 1,796,098 | | | — | | | | — | | — | | — | |
| | 02/01/17 | | — |
| | — |
| | — |
| | 22,000 |
| | — |
| | — |
| | 1,597,420 |
| | 02/11/20 | | — | | — | | | — | | | — | | | 16,126 | | | — | | | 12,379 | | | 2,093,977 | |
| |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Paul Seavey | | 02/20/17 | (1) | | — |
| | 437,400 |
| | 572,400 |
| | 0 |
| | — |
| | — |
| | — |
| Paul Seavey | | 02/10/20 | (1) | | — | | 644,656 | | | 900,472 | | | — | | — | | — | | — | |
| | 02/01/17 | | — |
| | — |
| | — |
| | 18,000 |
| | — |
| | — |
| | 1,306,980 |
| | 02/11/20 | | — | | — | | | — | | | — | | | 13,128 | | | — | | | 9,781 | | | 1,682,895 | |
| |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Patrick Waite | | 02/20/17 | (1) | | — |
| | 437,400 |
| | 572,400 |
| | 0 | | — |
| | — |
| | — |
| Patrick Waite | | 02/10/20 | (1) | | — | | 644,656 | | | 900,472 | | | — | | — | | — | | — | |
| | 02/01/17 | | — |
| | — |
| | — |
| | 18,000 |
| | — |
| | — |
| | 1,306,980 |
| | 02/11/20 | | — | | — | | | — | | | — | | | 13,128 | | | — | | | 9,781 | | | 1,682,895 | |
| | | | | | | | | | | | | | | |
Roger Maynard | | 02/20/17 | (1) | | — |
| | 437,400 |
| | 572,400 |
| | 0 | | — |
| | — |
| | — |
| Roger Maynard | | 02/10/20 | (1) | | — | | 644,656 | | | 900,472 | | | — | | — | | — | | — | |
| | 02/01/17 | | — |
| | — |
| | — |
| | 10,000 |
| | — |
| | — |
| | 726,100 |
| | 02/11/20 | | — | | — | | | — | | | — | | | 7,215 | | | — | | | 5,394 | | | 926,257 | |