PROPOSAL NO. 2
The Board recommends that the stockholders ratify the selection of Ernst & Young, LLP ("Ernst & Young") as the Company's Independent Accountants for the fiscal year ending December 31, 2018.2022. 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.
The affirmative vote of a majority of the votes cast by stockholders of record is necessary to ratify the selection of Ernst & Young.
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2018.22
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 eightnine meetings during 2017.2021.
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, 20172021 (the "2017"2021 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 20172021 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, 2018.2022.
Respectfully submitted,
Philip Calian, Chair
Derrick Burks
David Contis
Tao HuangScott Peppet
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COMPENSATION DISCUSSION AND ANALYSIS
Executive Officers' Biographical Information
For information with respect to Ms. Nader, please refer to the "Nominees' Biographical Information" section of this Proxy Statement. All of our Executive Officers are named executive officers ("NEOs").
Paul Seavey - Executive Vice President and Chief Financial Officer
Mr. Seavey, 53, has been Executive Vice President and Chief Financial Officer of the Company since February 2020. He was Executive Vice President, Chief Financial Officer and Treasurer from January 2014 to February 2020. Mr. Seavey was Senior Vice President, Chief Financial Officer and Treasurer from October 2012 to January 2014; 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 - Executive Vice President and Chief Operating Officer
Mr. Waite, 55, 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 - Executive Vice President - Investments
Mr. Maynard, 64, has been Executive Vice President - Investments of the Company since March 2016 and will continue in this role through his retirement on March 31, 2022. 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's Southeastern region from January 2000 to September 2001. Mr. Maynard was Regional Vice President for the Company's Southeastern region from June 1998 to December 1999, and Regional Vice President for the Company's Northeastern region from October 1997 to June 1998.
David Eldersveld - Executive Vice President, Chief Legal Officer and Secretary
Mr. Eldersveld, 48, 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
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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.
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 our NEOs.
The Compensation Committee took into account the stockholder advisory vote approving executive compensation at the last annual meeting of stockholders held in April 2021 and incorporated that as one of many factors it considered in connection with the discharge of its responsibilities. 90.4% of all the votes cast at last year's annual meeting of stockholders approved the compensation program described in the proxy statement for the 2021 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 2021 "Say-on-Pay" vote.
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The core principle of the Company's executive compensation program for 2021 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 | üThe Compensation Committee is comprised solely of independent Directors üDo engage an independent compensation consultant to advise on compensation matters at the request and direction of the Compensation Committee üDo an annual review of the Company's compensation strategy that includes a review of compensation-related risk management üDo have a strong pay for performance compensation philosophy with 61% of the NEOs pay tied solely to performance; therefore aligning the long-term interests of our NEOs with our stockholders üDo enhance executive retention with time-based, multi-year vesting schedules for equity incentive awards, which comprise a large percentage of total compensation üDo have performance-based cash bonus compensation üDo have meaningful share ownership guidelines for our executives and directors üDo have a Hedging Policy that prohibits our directors and officers 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 üDo 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 üDo have a Business Ethics and Conduct Policy, which all employees must follow |
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What We Don't Do | X No employment agreements X No compensation incentives that encourage excessive risk taking X No hedging of Company shares allowed X No excise tax gross-up in any change in control or other agreements X No excessive perks to our NEOs X 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 2021 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, capital allocation and strategic decisions for 2021, and the Company's response to the various state and local restrictions and continued efforts to ensure the health and safety of our employees and customers, were key priorities in 2021.
The following graphs show the Company's Normalized FFO per share of Common Stock, annual dividend per share and related compounded annual growth rates ("CAGR"), historical stock price and Normalized FFO. 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.
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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 through 2021. The Compensation Committee has the authority to engage Willis Towers
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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 at the request, and at the direction, of the Compensation Committee. 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 S&P Global database (formerly known as SNL Financial).
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. 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 beneficially owned as of February 18, 2022 (the "Record Date") by each of the NEOs as a multiple of their 2021 base salary. The NEOs have not been awarded stock options.
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Name | | Shares of Common Stock (1) | | Value of Shares Owned ($) (2) | | Base Salary ($) | | Stock Ownership Value/Base Salary (3) |
Marguerite Nader | | 260,330 | | 22,820,528 | | | 600,000 | | | 38x |
Paul Seavey | | 153,029 | | 13,414,522 | | | 395,300 | | | 34x |
Patrick Waite | | 215,129 | | 18,858,208 | | | 395,300 | | | 48x |
Roger Maynard (4) | | 269,220 | | 23,599,825 | | | 395,300 | | | 60x |
David Eldersveld | | 70,466 | | 6,177,050 | | | 395,300 | | | 16x |
All NEOs as a group | | 968,174 | | 84,870,133 | | | 2,181,200 | | | 39x |
(1) Shares of Common Stock beneficially owned as of the Record Date. See the "Security Ownership of Management and Directors" section of this Proxy Statement for more information.
(2) The value of the total shares beneficially owned as of the Record Date using the Company’s Common Stock closing stock price of $87.66 on December 31, 2021.
(3) The value of total shares beneficially owned as of the Record Date as compared to the NEO's 2021 Base Salary.
(4) In conjunction with his retirement on March 31, 2022, Mr. Maynard will forfeit 11,881 shares of unvested restricted Common Stock.
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
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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. 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 tables show the Company's peer group for 2021 and our 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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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 |
Regency Centers Corporation (REG) | Retail |
Simon Property Group (SPG) | Retail |
UDR, Inc. (UDR) | Residential |
Veris Residential, Inc. (formerly known as Mack-Cali Realty Corporation) (VRE) | Diversified |
Vornado Realty Trust (VNO) | Diversified |
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Total Stockholder Returns (1) |
| One-Year | Three-Year | Five-Year |
ELS | 41.00% | 91.90% | 171.00% |
ELS Annualized | 41.00% | 24.30% | 22.10% |
Peer Group Median | 58.90% | 15.60% | 9.90% |
Peer Group Average | 56.60% | 18.20% | 10.30% |
(1) Total Stockholder Return is calculated based on the stock price appreciation and dividends paid to show the total return to a stockholder over a period of time. Total Shareholder Return assumes dividends are reinvested in Common Stock on the day the dividend is paid.
Elements of Compensation
During the year ended December 31, 2021, there were three major components of executive compensation: Base Salary, performance-based Non-Equity Incentive Compensation ("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 S&P Global database 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 S&P Global database and the NAREIT Compensation Survey. The
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Compensation Committee believes the executive compensation information derived from the S&P Global 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 S&P Global 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 2021 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 2020 to 2021 for the NEOs in the aggregate reflects a 2.0% increase in base salaries and an increase in the performance-based Cash Bonus.
Base Salary
The Compensation Committee deliberately keeps Base Salaries at a relatively small percentage of total compensation. For 2021, the Compensation Committee concluded that Base Salaries of $600,000 for Ms. Nader and $395,300 for each of Mr. Seavey, Mr. Waite, Mr. Maynard and Mr. Eldersveld were appropriate in this regard. These Base Salaries reflect an increase of approximately 2.0% in 2021 from 2020.
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 2021 Cash Bonuses to the NEOs was in January 2022, after finalization of the Company's year-end earnings results.
The total 2021 maximum Cash Bonus potential for the NEOs set by the Compensation Committee was approximately $5.5 million and was comprised of a $5.5 million bonus potential ("2021 Bonus Potential"), a $146,122 manufactured home ("MH") revenue stretch goal and a $146,122 resort revenue stretch goal ("2021 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. The Cash Bonus paid to each NEO was based on the pre-established targets approved in February 2021. On a percentage basis, the bonus payments to the Company's employees were generally at or above that of the NEOs.
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The following table shows the 2021 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 $5.1 million, or 92.5%, as compared to the $5.5 million aggregate potential. The 2021 Stretch Goals required certain increases in the Company’s core MH revenues, which target was met, and certain increases in core resort revenues, which target was met. A total of $292,244 was paid to the NEOs with respect to the 2021 Stretch Goals.
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Name | | 2021 Bonus Potential (Amount x Base Salary) | |
Core MH Revenue Target (1) | | Core Resort Revenue & Dues Revenue Target (2) | | Site and Member Optimization 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 (7) | | 2.2 | | 14.0% | | 14.0% | | 14.0% | | 14.0% | | 14.0% | | 30.0% |
David Eldersveld | | 2.2 | | 14.0% | | 14.0% | | 14.0% | | 14.0% | | 14.0% | | 30.0% |
(1)This target required achieving a 4.5% increase in core MH base rent growth for the year ended December 31, 2021 as compared to the year ended December 31, 2020, which target was met. The total paid for this target was approximately $730,600.
(2)This target required that the Company’s annual and seasonal core resort revenue increase 2.1% and transient resort revenue and dues revenue increase 9.7% for the year ended December 31, 2021 as compared to December 31, 2020, which target was met. The total paid for this target was approximately $730,600.
(3)This target was comprised of three equal components related to: (i) the number of paid member sales units; (ii) RV dealer activations; and (iii) completion of expansion sites, which component targets were all met. The total paid to the NEOs for this target was approximately $730,600.
(4)This target was comprised of two equal components related to: (i) core net operating income, excluding property management expense, to increase 3.8% for the year ended December 31, 2021 as compared to the year ended December 31, 2020, which target was met; and (ii) core expense growth less than 3.4% for the year ended December 31, 2021 as compared to the year ended December 31, 2020, which target was not met. The total paid to the NEOs for this target was approximately $365,300.
(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, which portion of the target was met; (iii) reduction of rental expenses, which portion of the target was met at a threshold level; and (iv) management of chattel financing, which portion of the target was met. As a result, the NEOs were paid 93.7% of this target or approximately $684,900.
(6)At the beginning of 2021, 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 the discretionary portion of their 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 2021, each NEO met with Ms. Nader to discuss achievement of these strategic initiatives. 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. The strategic initiatives were also reviewed and discussed with the Strategic Planning Committee. As a result, Mr. Seavey, Mr. Waite, Mr. Maynard and Mr. Eldersveld each received 100% of the discretionary bonus potential for 2021.
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 2021.
The total paid to all NEOs for discretionary targets was approximately $1.6 million.
(7) Effective March 31, 2022, Mr. Maynard will retire from the Company.
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 awards have each been awarded at the closing price of the Company’s Common Stock on the NYSE on the date of the award (the "Award 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.
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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 through the end of the year prior to the vesting date (the "Explicit Service Period") and a performance-based vesting component, subject to the satisfaction of performance conditions and Explicit Service Period requirements.
Information regarding the annual awards of Restricted Stock for 2018, 2019, 2020 and 2021 (the "2018 Award", the "2019 Award", the "2020 Award" and the "2021 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. All Restricted Common Stock Awards were approved by the Compensation Committee prior to the award date. To ensure the Award Date Fair Value of the award of Restricted Common Stock for 2020 and 2021 was aligned with 2019, the number of shares of Restricted Common Stock awarded in 2020 and 2021 was determined by dividing the dollar value of the award by the closing price of the Company's Common Stock on the award date. For each of the Restricted Stock Awards, vesting was subject to the NEO being employed through the Explicit Service Period and vesting of the performance-based portion of the awards was further subject to the satisfaction of performance conditions as further described in the "Performance Conditions" section of this CD&A. The following tables provide information for each of the Restricted Stock Awards.
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2018 Award | | | |
Approval Date: January 29, 2018 | | | |
Award Date: February 1, 2018 | | |
Award Date Fair Value: $42.33 | | |
| Total Award | 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 | |
David Eldersveld | 13,000 | | 8,664 | | 4,336 | |
(a) 50% 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. |
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2019 Award | | | |
Approval Date: January 23, 2019 | | | |
Award Date: February 1, 2019 | | |
Award Date Fair Value: $52.84 | | |
| Total Award | 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 | |
David Eldersveld | 14,000 | | 6,998 | | 7,002 | |
(a) One-third vested on January 31, 2020, one-third vested on January 29, 2021 and one-third vested 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 vested on January 31, 2022, subject to the satisfaction of performance conditions as further discussed below. |
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2020 Award | | | |
Approval Date: February 10, 2020 | | | |
Award Date: February 11, 2020 | | |
Award Date Fair Value: $73.46 | | |
| Total Award | 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 | |
David Eldersveld | 11,945 | | 5,972 | | 5,973 | |
(a) One-third vested on January 29, 2021, one-third vested 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 vested on January 31, 2022, and one-third vests on January 27, 2023, subject to satisfaction of performance conditions as further discussed below. |
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2021 Award | | | |
Approval Date: February 8, 2021 | | | |
Award Date: February 9, 2021 | | |
Award Date Fair Value: $63.78 | | |
| Total Award | Time-Based Vesting(a) | Performance-Based Vesting(b) |
Marguerite Nader | 28,516 | | 14,258 | | 14,258 | |
Paul Seavey | 22,532 | | 11,266 | | 11,266 | |
Patrick Waite | 22,532 | | 11,266 | | 11,266 | |
Roger Maynard | 12,426 | | 6,213 | | 6,213 | |
David Eldersveld | 13,758 | | 6,879 | | 6,879 | |
(a) One-third vested on January 31, 2022, one-third vests on January 27, 2023 and one-third vests on January 26, 2024. (b) One-third vested on January 31, 2022, one-third vests on January 27, 2023 and one-third vests on January 26, 2024, subject to satisfaction of performance conditions as further discussed below. |
Performance Conditions
In accordance with FASB ASC 718, the performance-based portion of the Restricted Stock Awards are deemed granted on the date the performance conditions are approved by the Compensation Committee ("Grant Date") 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 ("Grant Date Fair Value") 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 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:
| | | | | | | | |
| # 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 | |
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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 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 $73.46 per share. We continued our strong performance in 2020 amidst the COVID-19 pandemic. 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 Performance Conditions: Effective February 9, 2021, the Compensation Committee established the following performance condition for the performance-based portion of the 2019 Awards, 2020 Awards and 2021 Awards with a performance period January 1, 2021 through December 31, 2021 as follows:
"Achieve Normalized FFO per Common Share (fully diluted) for the year ending
December 31, 2021 between $2.26 and $2.36."
As such, this portion of the 2019 Awards, 2020 Awards and 2021 Awards was deemed granted on February 9, 2021 with a Grant Date Fair Value of $63.78 per share. On January 13, 2022, the Compensation Committee determined that such vesting criteria had been met and all of this portion of the 2019 Awards, 2020 Awards and 2021 Awards vested on January 31, 2022 as follows:
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| # of Shares Vested - 2021 Performance Period |
| 2019 Award | 2020 Award | 2021 Award |
Marguerite Nader | 5,500 | | 4,126 | | 4,752 | |
Paul Seavey | 4,534 | | 3,261 | | 3,755 | |
Patrick Waite | 4,534 | | 3,261 | | 3,755 | |
Roger Maynard | 2,500 | | 1,798 | | 2,071 | |
David Eldersveld | 2,334 | | 1,991 | | 2,293 | |
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2022 and 2023 Performance Conditions: Effective February 8, 2022, the Compensation Committee established the following performance condition for the performance-based portion of the 2020 Awards and 2021 Awards with a performance period January 1, 2022 through December 31, 2022 as follows:
"Achieve Normalized FFO per Common Share (fully diluted) for the year ending
December 31, 2022 between $2.64 and $2.74."
The Compensation Committee will establish performance conditions at the beginning of 2023 for the performance period January 1, 2023 through December 31, 2023. If these 2022 and 2023 performance conditions are satisfied as determined by the Compensation Committee in its discretion, the relevant portion of the performance-based portion of the 2020 Awards and 2021 Awards will vest on January 27, 2023 and January 26, 2024, respectively.
CEO Compensation
Ms. Nader’s 2021 compensation consisted of a Base Salary of $600,000 and a performance-based Cash Bonus award of $1,700,415. During the year ended December 31, 2021, Ms. Nader acquired 31,768 shares of Restricted Common Stock upon vesting with a value of $1,953,732. 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. Internal Revenue Code section 162(m) limits the annual compensation expense deduction available to publicly traded companies to $1 million for certain "covered employees."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. Consequently, compensation paid to our NEOs may not be fully deductible.
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, 2021, non-vested restricted stock awards for the NEOs were as shown in the "Outstanding Equity Awards at Fiscal Year-End" table of 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 $11,600. 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 2021.
The Company has provided each of the NEOs with an indemnification agreement, however, the Company has paid no amounts under such agreements.
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The Company has a non-qualified Employee Stock Purchase Plan ("ESPP") in which certain employees and all the Directors may participate. Participants may acquire Common Stock through the ESPP at a 15% discount with up to $250,000 in contributions per year.
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.
2022 Executive Compensation
On February 7, 2022, the Compensation Committee approved the 2022 Base Salaries of $624,000 for Ms. Nader and $411,112 for each of Mr. Seavey, Mr. Waite, and Mr. Eldersveld effective April 1, 2022. On February 7, 2022, the Compensation Committee approved the Executive Bonus Plan for 2022 (the "2022 Plan"). Information regarding the 2022 Plan was filed on Form 8-K with the SEC on February 11, 2022. Under the 2022 Plan, the annual 2022 Cash Bonus potential is based on the achievement of certain performance targets. The total 2022 Cash Bonus potential under the 2022 Plan is as follows:
| | | | | | | | |
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 |
David Eldersveld | Executive Vice President, Chief Legal Officer and Corporate Secretary | 220% of annual salary |
Under the Plan, payment of 70% of the 2022 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 and dues revenue, site and member optimization, core net operating income and expense control, and working capital. The Compensation Committee will have discretion at the end of 2022 to determine an appropriate award based on an evaluation of each of the established goals. Payment of the remaining 30% of the 2022 Cash Bonus potential is at the discretion of the Compensation Committee based on its assessment of various strategic initiatives, 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, 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, core resort base rental income, and FFO per share, the total 2022 Cash Bonus potential may be increased by up to an additional $553,284, which would be shared amongst the NEOs. 2022 Cash Bonus payments will be made in cash and will be paid subsequent to the year ending December 31, 2022 after finalization of the Company’s results of operations and upon review and approval by the Compensation Committee.
On February 7, 2022, the Compensation Committee approved the 2022 Restricted Stock Award (the "2022 Award") in accordance with and pursuant to the authority set forth in the 2014 Equity Incentive Plan. On February 8, 2022, the NEOs were awarded 74,907 shares of Restricted Common Stock in accordance with the 2022 Award as shown in the table below. 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 8, 2022, or $76.00 per share.
| | | | | | | | | | | |
2022 Award | | | |
Approval Date: February 7, 2022 | | | |
Award Date: February 8, 2022 | | |
Award Date Fair Value: $76.00 | | |
| Total Award | Time-Based Vesting(a) | Performance-Based Vesting(b) |
Marguerite Nader | 23,931 | | 11,965 | | 11,966 | |
Paul Seavey | 18,909 | | 9,454 | | 9,455 | |
Patrick Waite | 18,909 | | 9,454 | | 9,455 | |
David Eldersveld | 13,158 | | 6,579 | | 6,579 | |
(a) One-third vests on January 27, 2023, one-third vests on January 26, 2024 and one-third vests on January 31, 2025. (b) One-third vests on January 27, 2023, one-third vests on January 26, 2024 and one-third vests on January 31, 2025, subject to satisfaction of performance conditions as further discussed below. |
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50% of the 2022 Stock Awards are time-based and will vest in equal annual installments on, January 27, 2023, January 26, 2024, and January 31, 2025, subject to satisfaction of continuous employment by the NEO during such explicit service period (the "Service Period Requirement"). The time-based portion of the 2022 Awards have a Grant Date Fair Value of $76.00 per share. The remaining one-half of the 2022 Awards provide for performance-based vesting and will vest in equal annual installments on January 27, 2023, January 26, 2024 and January 31, 2025, 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 2022, 2023 and 2024. Effective February 8, 2022, the Compensation Committee established the performance conditions for the 2022 performance period as follows: "Achieve Normalized FFO per Common Share (fully diluted) for the year ending December 31, 2022 between $2.64 and $2.74."
On February 10, 2022, the Company announced the retirement of Mr. Maynard effective March 31, 2022. Mr. Maynard's 2022 Base Salary will remain the same as 2021 through his retirement on March 31, 2022. On February 10, 2022, Mr. Maynard and the Company entered into, effective March 31, 2022, a twelve-month consulting agreement (the "Consulting Agreement"), which may be extended by the mutual agreement of the parties. Pursuant to the Consulting Agreement, Mr. Maynard will provide services at the request of our CEO, primarily related to acquisition and development related projects and initiatives. Under the terms of the Consulting Agreement, the Company will pay Mr. Maynard consulting fees of $83,333 per month and reimbursement of expenses for his services plus an annual bonus opportunity of $200,000. Information regarding Mr. Maynard's retirement and the Consulting Agreement was filed on Form 8-K with the SEC on February 11, 2022.
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, 2021.
Respectfully submitted,
David Contis, Chair Philip Calian Constance Freedman Sheli Rosenberg
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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 – Investments
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, the Compensation Committee did not make any substantive changes to the 2017 executive compensation program.
The core principle of the Company’s executive compensation program for 2017 continues to be pay for performance, and the framework of the executive compensation program includes the governance features discussed below:
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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 of 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 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. The following tables show the Company’s historical stock price, annual dividends, and Normalized Funds From Operations ("Normalized FFO"). 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 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, Willis Towers Watson in 2017 as its independent outside compensation consultant to provide an independent analysis and recommendation concerning 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.
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 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 Company and to provide for the retention of such executives.
Elements of Compensation. During the year ended December 31, 2017, there were three major components of executive compensation: Base Salary, 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 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 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 review of the median and average total compensation for each NEO position and allows each NEO to attain compensation in alignment with the average and median compensation of the peer group, and based 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 companies as shown in the following table. The Company's peer group for 2017 remained consistent with prior years, with 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 compared to the median total shareholder return for the peer group of 4%, 9%, and 12%, respectively, 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.The Compensation Committee deliberately keeps Base Salaries at a relatively small percentage of total compensation. For 2017, 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.
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 and executive officers, but subject to the discretion of the Compensation Committee. The Compensation Committee selected the performance targets, 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 set 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 shows 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% |
_____________
| |
(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. |
| |
(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. |
| |
(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. |
| |
(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. |
| |
(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. |
| |
(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.
|
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 a portion of the stock to provide the executive officer with the ability to receive the vested stock net of applicable tax effects.
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 2017 compensation consisted of a Base Salary of $400,000 and a performance-based Cash Bonus award of $794,000. During the year ended December 31, 2017, Ms. Nader acquired 22,000 shares of Restricted Common Stock upon vesting with a value of approximately $1,958,440. 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 Considerations. The Company accounts for its stock options and stock awards in accordance with FASB ASC 718.
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 benefits upon a change in control of the Company. The vesting of Restricted Common Stock grants is subject to acceleration upon a change of control of the Company or in the event of death, disability and involuntary termination not for cause. As of December 31, 2017, there were no unexercised stock options or non-vested restricted stock awards for any of the NEOs.
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 $10,800. Additionally, the Company may make a discretionary contribution annually for each participant in an amount, if any, as determined by the Company. 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 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.
2018 Changes to Executive Compensation. On March 9, 2018, the Compensation Committee approved the 2018 Executive Bonus Plan (the "Plan"). Information regarding the Plan was filed on Form 8-K with the SEC on March 12, 2018. Under the Plan, the annual 2018 Cash Bonus potential was established based on certain performance targets. The total 2018 Cash Bonus potential under the Plan for each eligible executive follows:
|
| | |
Name | Title | Bonus Potential |
Marguerite Nader | President and Chief Executive Officer | 250% of annual salary |
Paul Seavey | Executive Vice President, Chief Financial Officer and Treasurer | 190% of annual salary |
Patrick Waite | Executive Vice President and Chief Operating Officer | 190% of annual salary |
Roger Maynard | Executive Vice President - Investments | 190% of annual salary |
Under the Plan, payment of 70% of the 2018 Cash Bonus potential is contingent upon achieving certain operational targets, including goals related to core community base rental income, core resort base rental income, membership dues revenues, core net operating income, and working capital. The Compensation Committee will have discretion at the end of 2018 to determine an appropriate award based on an evaluation of each of the target areas. Payment of the remaining 30% of the 2018 Cash Bonus potential is based on an assessment of discretionary objectives for the executive officer team, as a whole. In addition, if the Company exceeds by specified amounts certain operational targets relating to core community base rental income and core resort base rental income, the total 2018 Cash Bonus potential may be increased by up to an additional $186,540, which would be shared pro-rata by the NEOs. 2018 Cash Bonus payments will be made in cash and will be paid subsequent to the year ending December 31, 2018 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, the Compensation Committee, in consultation with Willis Towers Watson, its independent, outside compensation consultant, approved the 2018 Restricted Stock Award Program (the “2018 Restricted Stock Program”) 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 the NEOs with a three-year vesting period (the "2018 Awards"), with one-third vesting on December 28, 2018 and the remaining two-thirds vesting on each of December 28, 2019 and December 28, 2020, respectively (the "Extended Vesting Portion"). One-half of the Extended Vesting Portion of the 2018 Awards provide solely for time-based vesting and will vest in equal installments on December 28, 2019 and December 28, 2020. The remaining one-half of the Extended Vesting Portion of the 2018 Awards provide for performance-based vesting and will vest, subject to the satisfaction of the performance conditions to be established by the Compensation Committee, in equal installments on December 28, 2019 and December 28, 2020.
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 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 for 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. The Transition Awards are not subject to performance goals. The Compensation Committee does not view these awards as a continuing feature of the 2018 Restricted Stock Award Program, and there is no intent to replicate these Transition Awards in future years.
On February 1, 2018, the NEOs were granted shares of Restricted Common Stock in accordance with the 2018 Restricted Stock Award Program with a grant date fair value of $84.65 per share as follows:
|
| | | |
Name | Title | 2018 Award | Transition Award |
Marguerite Nader | President and Chief Executive Officer | 19,500 Shares | 19,500 Shares |
Paul Seavey | Executive Vice President, Chief Financial Officer and Treasurer | 16,000 Shares | 16,000 Shares |
Patrick Waite | Executive Vice President and Chief Operating Officer | 16,000 Shares | 16,000 Shares |
Roger Maynard | Executive Vice President - Investments | 8,750 Shares | 8,750 Shares |
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.
Respectfully submitted,
Sheli Rosenberg, Chair
David Contis
William Young
SUMMARY COMPENSATION TABLE
The following table includes information concerning compensation paid to or earned for the year ended December 31, 20172021 by the Company's Chief Executive Officer, Chief Financial Officer, and those other persons who were, at December 31, 2017, executive officers2021, 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, 20172020, 2021 and 2018,2022, 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"Compensation" in the table. Total compensation amounts include the fair value of the stock awards and option awardsRestricted Stock Awards granted to the NEOs, with such grants being shown in the table in the year of grant.grant, which for the performance-based portion of the Awards is the year in which the performance conditions were approved by the Compensation Committee.
For the years ended December 31, 2017, 20162021, 2020 and 2015,2019, Base Salary (Salary) accounted for approximately 17%16%, 18%16% and 18%19%, respectively, of total compensation; Equity Compensation (Stock Awards) accounted for approximately 56%47%, 55%58% and 52%51%, respectively, of total compensation; and Cash Bonus (Non-Equity Incentive Plan Compensation - STIP)Compensation) accounted for approximately 27%37%, 26% and 29%30%, respectively, of total compensation.
| | | | | | | | | | | | | | | | | | | | |
Name and Principal Position(1) |
Year |
Salary |
Stock Awards(2) | Non-Equity Incentive Plan Compensation (3) | All Other Compensation(4) |
Total |
|
Marguerite Nader President and Chief Executive Officer | 2021 | $ | 600,000 | | $ | 1,826,474 | | $ | 1,700,415 | | $ | 11,600 | | $ | 4,138,489 | |
2020 | $ | 586,500 | | $ | 2,093,977 | | $ | 1,165,082 | | $ | 11,400 | | $ | 3,856,959 | |
2019 | $ | 575,000 | | $ | 1,530,528 | | $ | 1,125,562 | | $ | 11,200 | | $ | 3,242,290 | |
| | | | | | |
Paul Seavey Executive Vice President and Chief Financial Officer | 2021 | $ | 395,300 | | $ | 1,455,220 | | $ | 849,875 | | $ | 11,600 | | $ | 2,711,995 | |
2020 | $ | 387,600 | | $ | 1,682,895 | | $ | 584,113 | | $ | 11,400 | | $ | 2,666,008 | |
2019 | $ | 380,000 | | $ | 1,260,195 | | $ | 565,326 | | $ | 11,200 | | $ | 2,216,721 | |
| | | | | | |
Patrick Waite Executive Vice President and Chief Operating Officer | 2021 | $ | 395,300 | | $ | 1,455,220 | | $ | 849,875 | | $ | 11,600 | | $ | 2,711,995 | |
2020 | $ | 387,600 | | $ | 1,682,895 | | $ | 584,113 | | $ | 11,400 | | $ | 2,666,008 | |
2019 | $ | 380,000 | | $ | 1,260,195 | | $ | 565,326 | | $ | 11,200 | | $ | 2,216,721 | |
| | | | | | |
Roger Maynard (5) Executive Vice President - Investments | 2021 | $ | 395,300 | | $ | 802,512 | | $ | 849,875 | | $ | 11,600 | | $ | 2,059,287 | |
2020 | $ | 387,600 | | $ | 926,257 | | $ | 584,113 | | $ | 11,400 | | $ | 1,909,370 | |
2019 | $ | 380,000 | | $ | 693,615 | | $ | 565,326 | | $ | 11,200 | | $ | 1,650,141 | |
| | | | | | |
David Eldersveld Executive Vice President, Chief Legal Officer and Secretary | 2021 | $ | 395,300 | | $ | 860,826 | | $ | 849,875 | | $ | 11,600 | | $ | 2,117,601 | |
2020 | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
2019 | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
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) | |
Marguerite Nader | | 2017 | | 400,000 |
| | — |
| | 1,597,420 |
| | — |
| | 794,000 |
| | — |
| | 10,800 |
| | 2,802,220 |
|
President and | | 2016 | | 400,000 |
| | — |
| | 1,483,240 |
| | — |
| | 724,004 |
| | — |
| | 10,600 |
| | 2,617,844 |
|
Chief Executive Officer | | 2015 | | 385,000 |
| | — |
| | 1,208,460 |
| | — |
| | 758,450 |
| | — |
| | 10,400 |
| | 2,362,310 |
|
| | | | | | | | | | | | | | | | | | |
Paul Seavey | | 2017 | | 360,000 |
| | — |
| | 1,306,980 |
| | — |
| | 535,950 |
| | — |
| | 10,800 |
| | 2,213,730 |
|
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 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Patrick Waite | | 2017 | | 360,000 |
| | — |
| | 1,306,980 |
| | — |
| | 535,950 |
| | — |
| | 10,800 |
| | 2,213,730 |
|
Executive Vice President and | | 2016 | | 360,000 |
| | — |
| | 1,213,560 |
| | — |
| | 488,703 |
| | — |
| | 10,600 |
| | 2,072,863 |
|
Chief Operating Officer | | 2015 | | 350,000 |
| | — |
| | 988,740 |
| | — |
| | 517,125 |
| | — |
| | 10,400 |
| | 1,866,265 |
|
| | | | | | | | | | | | | | | | | | |
Roger Maynard | | 2017 | | 360,000 |
| | — |
| | 726,100 |
| | — |
| | 535,950 |
| | — |
| | 10,800 |
| | 1,632,850 |
|
Executive Vice President - | | 2016 | | 360,000 |
| | — |
| | 674,200 |
| | — |
| | 488,703 |
| | — |
| | 10,600 |
| | 1,533,503 |
|
Investments | | 2015 | | 350,000 |
| | — |
| | 988,740 |
| | — |
| | 517,125 |
| | — |
| | 10,400 |
| | 1,866,265 |
|
_________(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 or 2019, therefore, compensation amounts are not included for those years.
| |
(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,(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. In accordance with FASB ASC 718, the performance-based portion of the 2018 Awards, 2019 Awards, 2020 Awards and 2021 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 withrespectively, that were scheduled
38
to vest on January 29, 2021. The settlement on 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 vested 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 forthAwards 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)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.
| |
(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. |
In February 2017, February 2016,2021, 2020 and February 2015,2019, the Compensation Committee approved the 2017, 20162021, 2020 and 20152019 bonus potential and performance targets, respectively. In January 2018, 20172022, 2021 and 2016,2020, 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, 20162021, 2020 and 2015,2019, respectively. See the CD&A"Compensation Discussion & Analysis" section of this Proxy Statement for further discussion of the 20172021 performance targets.
On March 9, 2018,February 7, 2022, the Compensation Committee approved the 20182022 Executive Bonus Plan. Information regarding the 20182022 Executive Bonus Plan is included in the CD&A"Compensation Discussion & Analysis" section of this Proxy Statement and in a Current Report on Form 8-K filed with the SEC on February 11, 2022.
There were no long-term non-equity incentive plan compensation awards granted to the NEOs in 2019, 2020, or 2021.
(4)Includes employer-matching contributions pursuant to the Equity LifeStyle Properties, Inc. Retirement Savings Plan of $11,600, $11,400 and $11,200 for the years ended December 31, 2021, 2020 and 2019, respectively.
(5)On February 10, 2022, the Company announced the retirement of Mr. Maynard effective 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 $10,400 for the years ended December 31, 2017, 2016 and 2015, respectively. |
31, 2022 as further described in the "Compensation Discussion and Analysis" section of this Proxy Statement. GRANTS OF PLAN-BASED AWARDS
Grants of Plan-Based Awards
The following table sets forth certain information with respect to grants of plan-based awards to the Company’s NEOs for the year ended December 31, 2017.2021. All awards were approved on February 8, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | |
Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under Equity Incentive Plan Awards | | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | |
Grant Date Fair Value of Stock and Option Awards ($) (4) |
|
Threshold ($) | |
Target ($) | |
Maximum ($) | |
Threshold (#) | |
Target (#)(2) | |
Maximum (#) | |
Marguerite Nader | | 02/08/21 | (1) | | — | | 1,315,440 | | 1,837,440 | | | — | | — | | | — | | — | | — | |
| | 02/09/21 | | | — | | — | | | — | | | — | | | 14,378 | | | — | | | 14,258 | | | 1,826,474 | |
| | | | | | | | | | | | | | | | | | | |
Paul Seavey | | 02/08/21 | (1) | | — | | 657,463 | | | 918,361 | | | — | | — | | | — | | — | | — | |
| | 02/09/21 | | | — | | — | | | — | | | — | | | 11,550 | | | — | | | 11,266 | | | 1,455,220 | |
| | | | | | | | | | | | | | | | | | | |
Patrick Waite | | 02/08/21 | (1) | | — | | 657,463 | | | 918,361 | | | — | | — | | | — | | — | | — | |
| | 02/09/21 | | | — | | — | | | — | | | — | | | 11,550 | | | — | | | 11,266 | | | 1,455,220 | |
| | | | | | | | | | | | | | | | | | | |
Roger Maynard (5) | | 02/08/21 | (1) | | — | | 657,463 | | | 918,361 | | | — | | — | | | — | | — | | — | |
| | 02/09/21 | | | — | | — | | | — | | | — | | | 6,369 | | | — | | | 6,213 | | | 802,512 | |
| | | | | | | | | | | | | | | | | | | |
David Eldersveld | | 02/08/21 | (1) | | — | | | 657,463 | | | 918,361 | | | — | | | — | | | — | | | — | | | — | |
| | 02/09/21 | | | — | | | — | | | — | | | — | | | 6,618 | | | — | | | 6,879 | | | 860,826 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Name | |
Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | All Other Stock Awards: Number of Shares of Stock or Units (#) (2) | | All Other Option Awards; Number of Securities Underlying Options (#) | |
Exercise or Base Price of Option Awards ($/sh) | |
Grant Date Fair Value of Stock and Option Awards ($) (3) |
|
Threshold ($) | |
Target ($) | |
Maximum ($) | |
Marguerite Nader | | 02/20/17 | (1) | | — |
| | 648,000 |
| | 848,000 |
| | 0 |
| | — |
| | — |
| | — |
|
| | 02/01/17 | | | — |
| | — |
| | — |
| | 22,000 |
| | — |
| | — |
| | 1,597,420 |
|
| |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Paul Seavey | | 02/20/17 | (1) | | — |
| | 437,400 |
| | 572,400 |
| | 0 |
| | — |
| | — |
| | — |
|
| | 02/01/17 | | | — |
| | — |
| | — |
| | 18,000 |
| | — |
| | — |
| | 1,306,980 |
|
| |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Patrick Waite | | 02/20/17 | (1) | | — |
| | 437,400 |
| | 572,400 |
| | 0 | | — |
| | — |
| | — |
|
| | 02/01/17 | | | — |
| | — |
| | — |
| | 18,000 |
| | — |
| | — |
| | 1,306,980 |
|
| | | | | | | | | | | | | | | | | |
Roger Maynard | | 02/20/17 | (1) | | — |
| | 437,400 |
| | 572,400 |
| | 0 | | — |
| | — |
| | — |
|
| | 02/01/17 | | | — |
| | — |
| | — |
| | 10,000 |
| | — |
| | — |
| | 726,100 |
|
_________(1)Payment of the 2021 award was based on the following performance targets being achieved: 14.0% related to achieving a benchmark in core MH revenues; 14.0% related to achieving a benchmark in core resort revenues and membership dues revenues; 14.0% related to achieving a benchmark in site and member optimization; 14.0% related to achieving a benchmark in core net operating income;14.0% related to achieving a working capital benchmark and 30.0% was at the discretion of the Compensation Committee after evaluation of each NEO's performance, including an analysis of successes and strategic initiatives during the year. In addition, each NEO was awarded an additional amount upon achievement of the 2021 Stretch Goals. The 2021 maximum amounts represent the total potential bonus award. The 2021 target amounts reflect the non-discretionary portion of the total potential bonus award. Payment of the 2021 award was made in January 2022.
| |
(1) | Payment of the 2017 award was based on the following performance targets being achieved: 15.0% related to achieving a benchmark in core MH revenues; 15.0% related to achieving a benchmark in core resort revenues; 15.0% related to achieving a benchmark in membership dues revenues; 15.0% related to achieving a benchmark in core net operating income;15.0% related to achieving a working capital benchmark and 25.0% was at the discretion of the Compensation Committee after evaluation of each NEO's performance, including an analysis of successes and strategic initiatives during the year. In addition, each NEO was awarded an additional amount upon achievement of the 2017 Stretch Goals. The 2017 maximum amounts represent the total potential bonus award. The 2017 target amounts reflect the non-discretionary portion of the total potential bonus award. Payment of the 2017 award was made in February 2018. |
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(2) | These amounts reflect the number of shares of Restricted Common Stock granted to each NEO. |
| |
(3) | (2)These amounts reflect the number of shares of Restricted Common Stock granted to each NEO and includes the performance-based portion of the 2019 Awards, 2020 Awards and 2021 Awards with performance conditions that were approved on February 8, 2021. (3)These amounts reflect the number of shares of Restricted Common Stock granted to each NEO and includes the time-based portion of the 2021 Awards with a Grant Date of February 9, 2021. (4)This amount reflects 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. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
There were no unexercised stock options and non-vested restricted stock awards calculated in accordance with FASB ASC 718 based on the Company's closing stock price of $63.78 on February 9, 2021, the Grant Date Fair Value for the NEOstime-based portion of the 2021 Awards and the Grant Date Fair Value of the performance-based portion of the 2019 Awards, 2020 Awards and 2021 Awards with performance conditions that were approved on February 8, 2021.
(5)In conjunction with his retirement effective on March 31, 2022, Mr. Maynard will forfeit 4,142 shares of unvested Restricted Common Stock as of December 31, 2017.
listed under "All Other Stock Awards".
39OPTION EXERCISES AND STOCK VESTED
Outstanding Equity Awards at Fiscal Year-End
The following table includes certain information with respect to the value of all non-vested restricted stock awards previously awarded to the NEOs as of December 31, 2021. The NEOs have not been awarded stock options.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Stock Awards (1) |
Name | |
Number of Shares or Units of Stock That Have Not Vested (#) | |
Market Value of Shares or Units of Stock That Have Not Vested ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
Marguerite Nader | | 5,500 (2) | | $482,130 | | 5,500 (2) | | $482,130 |
| | 8,253 (3) | | $723,458 | | 8,253 (4) | | $723,458 |
| | 14,258 (5) | | $1,249,856 | | 14,258 (6) | | $1,249,856 |
| | | | | | | | |
Paul Seavey | | 4,533 (2) | | $397,363 | | 4,534 (2) | | $397,450 |
| | 6,521 (3) | | $571,631 | | 6,522 (4) | | $571,719 |
| | 11,266 (5) | | $987,578 | | 11,266 (6) | | $987,578 |
| | | | | | | | |
Patrick Waite | | 4,533 (2) | | $397,363 | | 4,534 (2) | | $397,450 |
| | 6,521 (3) | | $571,631 | | 6,522 (4) | | $571,719 |
| | 11,266 (5) | | $987,578 | | 11,266 (6) | | $987,578 |
| | | | | | | | |
Roger Maynard (7) | | 2,500 (2) | | $219,150 | | 2,500 (2) | | $219,150 |
| | 3,596 (3) | | $315,225 | | 3,597 (4) | | $315,313 |
| | 6,213 (5) | | $544,632 | | 6,213 (6) | | $544,632 |
| | | | | | | | |
David Eldersveld | | 2,333 (2) | | $204,511 | | 2,334 (2) | | $204,598 |
| | 3,982 (3) | | $349,062 | | 3,982 (4) | | $349,062 |
| | 6,879 (5) | | $603,013 | | 6,879 (6) | | $603,013 |
(1)The market value of Stock Awards that had not vested as of December 31, 2021 was based on a closing price of the Company’s Common Stock on December 31, 2021, or $87.66. Upon vesting of these stock awards, at the NEO's option, exercisesthe Company will buy back a portion of the stock to provide the NEO with the ability to receive the vested stock net of applicable tax effects.
(2)The time-based portion and performance-based portion of these 2019 Awards vested on January 31, 2022.
(3)The time-based portion of these 2020 Awards vested one-half on January 31, 2022 and will vest one-half on January 27, 2023, subject to the satisfaction of the Explicit Service Period requirement.
(4)The performance-based portion of these 2020 Awards vested one-half on January 31, 2022 and will vest one-half on January 27, 2023, subject to satisfaction of the Explicit Service Period requirement and performance criteria.
(5)The time-based portion of these 2021 Awards vested one-third on January 31, 2022, and will vest one-third on January 27, 2023 and one-third on January 26, 2024, subject to the satisfaction of the Explicit Service Period requirement.
(6)The performance-based portion of these 2021 Awards vested one-third on January 31, 2022, and will vest one-third on January 27, 2023 and one-third on January 26, 2024, subject to satisfaction of the Explicit Service Period requirement and the performance criteria.
(7)In conjunction with his retirement effective on March 31, 2022, Mr. Maynard will forfeit 11,881 shares of unvested Restricted Common Stock.
Option Exercises and Stock Vested
The following table includes certain information with respect to the stock vested for each of the NEOs for the year ended December 31, 2017.2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) (1) | | Value Realized on Vesting ($) |
Marguerite Nader | | — | | — | | 31,768 | | | 1,953,732 | |
Paul Seavey | | — | | — | | 25,858 | | | 1,590,267 |
Patrick Waite | | — | | — | | 25,858 | | 1,590,267 |
Roger Maynard | | — | | — | | 14,213 | | 874,099 |
David Eldersveld | | — | | — | | 12,787 | | 786,400 |
(1) Upon vesting of these stock awards, the Company purchased 14,076, 10,425, 10,423, 4,548 and 4,630 shares from Ms. Nader, Mr. Seavey, Mr. Waite, Mr. Maynard and Mr. Eldersveld, respectively, to pay their respective withholding taxes.
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| | | | | | | | | |
| | Option Awards | | Stock Awards |
Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) (1) | |
Value Realized on Vesting ($) |
Marguerite Nader | | — |
| | — | | 22,000 | | 1,958,440 |
Paul Seavey | | — |
| | — | | 18,000 | | 1,602,360 |
Patrick Waite | | — |
| | — | | 18,000 | | 1,602,360 |
Roger Maynard | | — |
| | — | | 10,000 | | 890,200 |
_____________
| |
(1) | Upon vesting of these stock awards, the Company purchased 10,318, 8,442, 8,442, and 4,195 shares from Ms. Nader, Mr. Seavey, Mr. Waite and Mr. Maynard, respectively, to pay their respective withholding taxes. |
POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL
The Compensation Committee has reviewed the Company's compensation policies and practices and believes it has taken reasonable and appropriate actions to mitigate the risk that the Company’s compensation policies and practices would lead to conduct that would have an unintended material adverse effect on the Company. The assessment included a review of the components of the executive officer’sNEOs compensation. For the Base Salary component, the Compensation Committee believes the following mitigates the incentive for risky behavior: (i) Base Salary is a relatively small portion of total compensation for the executive officers,NEOs, and (ii) the executive officersNEOs and employees have signed the Company's Employee Handbook and Business and Ethics Policy agreeing to maintain the highest standards of personal and professional integrity at all times and to comply with the Company’s policies and procedures. For the performance-based Cash Bonus, the Compensation Committee believes the following mitigates the incentive for risky behavior: (i) the Cash Bonus targets are tied to near-term operational goals that the Compensation Committee believes promote long-term growth of the Company and increased stockholder value and are not generally susceptible to accounting risk; and (ii) a portion of the Cash Bonus is payable at the discretion of the Compensation Committee. For the Equity Compensation component, the Compensation Committee believes the following mitigates the incentive for risky behavior: (i) the Board has previously established share ownership guidelines for the executive officersNEOs to align their
interests with those of the stockholders; (ii) the grants and terms of restricted stock are established by the Committee; and (iii) the Committee granted restricted stock rather than options to limit the risky behavior associated with trying to maximize stock price. In addition, there are no formulaic compensation arrangements that could create unintended compensation and the Compensation Committee has the ability to exercise discretion over all pay; the CEO meets regularly with the Compensation Committee and quarterly with the Compensation Committee, Executive Committee, Strategic Planning and Audit Committee chairpersons; the Company's Internal Audit department performs property and other corporate audits to ensure compliance with policies and procedures; the Company maintains a whistleblower hotline; and quarterly disclosure meetings are held with the executive officersExecutive Officers and senior management for the purpose of allowing full disclosure of information that may impact the financial statements and related disclosures.
PROPOSAL NO. 3
Section 14A of the Exchange Act requires the Company to allow stockholders an opportunity to cast a non-binding, advisory vote on executive compensation as disclosed in this Proxy Statement. The following proposal, commonly known as a "Say on Pay" proposal, gives stockholders the opportunity to approve, reject or abstain from voting with respect to the Company's fiscal 20172021 executive compensation programs and policies and the compensation paid to the named executive officers.
As discussed in the "Compensation Discussion and Analysis" section of this Proxy Statement, the primary objectives of our executive compensation program are to attract and retain qualified executive officers who are accountable for the performance of the Company and to promote an ownership mentality among our executive officers.Executive Officers. The compensation of our executive officersExecutive Officers reflects the success of our management team in attaining certain operational goals which leads to the success of the Company and serves the best interests of our stockholders.
This proposal allows our stockholders to express their opinions regarding the decisions of the Compensation Committee on the prior year's annual compensation to the named executive officers. Your non-binding, advisory vote will serve as an additional tool to guide the Board and the Compensation Committee in continuing to improve the alignment of the Company's executive compensation programs with the interests of the Company and its stockholders, and is consistent with our commitment to high standards of corporate governance.
Non-binding, advisory approval of this Say on Pay Proposal requires the affirmative vote of a majority of the votes cast by stockholders of record. Because the vote on this proposal is non-binding and advisory in nature, it will not affect any compensation already paid or awarded to any named executive officerNEO and will not be binding on or overrule any decisions by the Board; it will not create or imply any additional duty on the part of the Board, and it will not restrict or limit the ability of stockholders to make proposals for inclusion in proxy materials related to executive compensation. To the extent there is any significant vote against our named executive officer compensation as disclosed in this proxy statement,Proxy Statement, the Compensation Committee will evaluate whether any actions are necessary to address the concerns of stockholders. The vote on this resolution is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers, as described in this proxy statementProxy Statement in accordance with the compensation disclosure rules of the SEC.
_________
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(1) | Pursuant to a Schedule 13G filed with the SEC for calendar year 2017, The Vanguard Group, Inc. is the beneficial owner of 13,261,952 shares of Common Stock and has sole voting power over 142,062 shares of Common Stock and sole dispositive power over 13,111,992 shares of Common Stock. The Schedule 13G filed with the SEC for calendar year 2017 by Vanguard Specialized Funds - Vanguard REIT Index Fund states that it has sole voting power over 5,564,996 shares of Common Stock. We confirmed that the 5,564,996 shares of Common Stock held by Vanguard Specialized Funds - Vanguard REIT Index Fund are included in the 13,261,952 shares of Common Stock held by The Vanguard Group. |
| |
(2) | Pursuant to a Schedule 13G/A filed with the SEC for calendar year 2017, FMR LLC is the beneficial owner of 11,197,725 shares of Common Stock and has sole voting power over 3,516,844 shares of Common Stock and sole dispositive power over 11,197,725 shares of Common Stock. |
| |
(3) | Pursuant to a Schedule 13G/A filed with the SEC for calendar year 2017, BlackRock Inc. is the beneficial owner of and has sole dispositive power over 6,571,795 shares of Common Stock and has sole voting power over 6,252,548 shares of Common Stock. |
| |
(4) | Pursuant to a Schedule 13G filed with the SEC for calendar year 2017, Cohen & Steers, Inc. is the beneficial owner of and has sole dispositive power over 4,764,427 shares of Common Stock and has sole voting power over 2,319,405 shares of Common Stock. |
SECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORS
The following table sets forth, as of February 27, 2018,18, 2022, certain information with respect to the Common Stock that may be deemed to be beneficially owned by each directorDirector of the Company, by the NEOs as of December 31, 2017 and by all such directorsDirectors and executive officersExecutive Officers as a group. The address for each of the directorsDirectors and executive officersExecutive Officers is c/o Equity LifeStyle Properties, Inc., Two North Riverside Plaza, Suite 800, Chicago, Illinois 60606. Unless otherwise indicated, each person has sole investment and voting power, or shares such power with his or her spouse, with respect to the Common Stock set forth in the following table.
|
| | | | | | | | | | | |
Name of Beneficial Holder | | Shares of Common Stock (1) | | Common Stock Shares Upon Exercise of Options (2) | | Total Shares of Common Stock | | Percentage of Common Stock Class (3) |
Philip Calian | | 97,542 |
| | — |
| | 97,542 |
| | * |
David Contis (4) | | 24,019 |
| | 5,600 |
| | 29,619 |
| | * |
Constance Freedman | | 188 |
| | — |
| | 188 |
| | * |
Thomas Heneghan (5) | | 343,057 |
| | — |
| | 343,057 |
| | * |
Tao Huang | | 7,915 |
| | 14,480 |
| | 22,395 |
| | * |
Roger Maynard | | 166,489 |
| | — |
| | 166,489 |
| | * |
Marguerite Nader | | 116,550 |
| | — |
| | 116,550 |
| | * |
Sheli Rosenberg (6) | | 567,862 |
| | — |
| | 567,862 |
| | * |
Paul Seavey | | 72,060 |
| | — |
| | 72,060 |
| | * |
Patrick Waite | | 96,160 |
| | — |
| | 96,160 |
| | * |
Howard Walker | | 56,104 |
| | — |
| | 56,104 |
| | * |
William Young (7) | | 14,806 |
| | — |
| | 14,806 |
| | * |
Samuel Zell (8) | | 2,789,692 |
| | 200,000 |
| | 2,989,692 |
| | 3.4% |
Directors and Executive Officers as a group (13 persons) | | 4,352,444 |
| | 220,080 |
| | 4,572,524 |
| | 5.2% |
____________ | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name of Beneficial Holder | | Shares of Common Stock (1) | | Common Stock Shares Upon Exercise of Options (2) | | Total Shares of Common Stock | | Percentage of Common Stock Class (3) |
Andrew Berkenfield | | 529 | | | 7,415 | | | 7,944 | | | * |
Derrick Burks | | 1,637 | | | — | | | 1,637 | | | * |
Philip Calian | | 207,372 | | | — | | | 207,372 | | | * |
David Contis (4) | | 21,003 | | | — | | | 21,003 | | | * |
David Eldersveld | | 70,466 | | | — | | | 70,466 | | | * |
Constance Freedman | | 5,127 | | | 8,535 | | | 13,662 | | | * |
Thomas Heneghan (5) | | 396,802 | | | — | | | 396,802 | | | * |
Roger Maynard (6) | | 269,220 | | | — | | | 269,220 | | | * |
Marguerite Nader | | 260,330 | | | — | | | 260,330 | | | * |
Scott Peppet (7) | | 9,598 | | | — | | | 9,598 | | | * |
Sheli Rosenberg (8) | | 1,116,954 | | | — | | | 1,116,954 | | | * |
Paul Seavey | | 153,029 | | | — | | | 153,029 | | | * |
Patrick Waite | | 215,129 | | | — | | | 215,129 | | | * |
Samuel Zell (9) | | 6,328,636 | | | — | | | 6,328,636 | | | 3.5% |
Directors and Executive Officers as a group (14 persons) | | 9,055,832 | | | 15,950 | | | 9,071,782 | | | 5.0% |
* Less than 1%
(1) The Operating Partnership is the entity through which the Company conducts substantially all of its operations. Certain limited partners of the Operating Partnership own OP Units which are exchangeable for an equivalent number of shares of Common Stock. The shares of Common Stock beneficially owned includes OP Units that can be exchanged for an equivalent number of shares of Common Stock.
(2) The amounts shown in this column reflect shares of Common Stock subject tounderlying options, which are currently exercisable or exercisable within 60 days of the Record Date.
(3) In accordance with SEC regulations governing the determination of beneficial ownership of securities, the percentage of Common Stock beneficially owned by a person assumes that all OP Units held by the person are exchanged for Common Stock, that none of the OP Units held by other persons are so exchanged, that all options exercisable within 60 days of the Record Date to acquire Common Stock held by the person are exercised and that no options to acquire Common Stock held by other persons are exercised.
(4) 22,00317,431 shares of Common Stock are held by the Contis Family Trust and 5001,000 shares of Common Stock are held by Mr. Contis in custodial accounts for his grandchildren.
(5) Includes 130,236293,537 shares of Common Stock beneficially owned by Mr. Heneghan's spouse, as to which Mr. Heneghan disclaims beneficial ownership.
(6) Mr. Maynard will retire effective March 31, 2022.
(7) Includes 23,060190 shares of Common Stock beneficially owned by Mr. Peppet's daughter, as to which Mr. Peppet disclaims beneficial ownership.
(8) Includes 46,120 OP Units beneficially owned by Ms. Rosenberg, which are exchangeable into 23,06046,120 shares of Common Stock. Also includes approximately 189,128378,255 shares of Common Stock beneficially owned by Ms. Rosenberg's spouse, as to which Ms. Rosenberg disclaims beneficial ownership.
(7) On February 27, 2018, Mr. Young informed the Board that he will not stand for reelection at the Company's Annual Meeting.
(8)(9) Includes shares of Common Stock and OP Units and options to purchase share of Common Stock with respect to which Mr. Zell has voting and investment power which include the holdings held directly by Mr. Zell (sole power) and the holdings of Samuel Zell Revocable Trust and Samstock/SZRT, L.L.C. (shared power in both cases). Also includes 8,00056,000 shares of Common Stock held by the Helen Zell Revocable Trust (“HZRT”) of which Helen Zell, Mr. Zell's spouse, is the trustee. Mr. Zell disclaims beneficial ownership of such shares held by HZRT except to the extent of any pecuniary interest therein. Approximately 1.83.0 million of such shares of Common Stock which are beneficially owned directly or indirectly by Mr. Zell or by entities controlled directly or indirectly by Mr. Zell are pledged as security for certain loans. There was no change in the pledging arrangement in 2021 and the pledging arrangement has been in place for many years, has been closely monitored by our Board, is compliant with our Securities Pledging Policy and has fostered long-term investment by Mr. Zell, who has been Chairman since 1993 and a holder of our equity since our initial public offering in 1993.
In addition to the shares of Common Stock and OP Units and options set forth above, shares of Common Stock and OP Units are indirectly owned by irrevocable trusts established for the benefit of Mr. Zell and his family, the trustee of which is Chai Trust, a state-regulated corporate trust company. Mr. Zell is not an officer or director of Chai Trust and does not have voting or dispositive power with respect to such shares of Common Stock or OP Units. Mr. Zell disclaims beneficial ownership of such shares of Common Stock and OP Units, except
44
to the extent of any pecuniary interest therein. As reported on Amendment No. 2 to Statement on Schedule 13D filed with the Securities and Exchange Commission on October 23, 2015, Chai Trust and the shares of Common Stock and OP Units over which it has voting and investment power are a separate group for purposes of section 13(d)(3) of the Securities Exchange Act of 1934.
CERTAIN RELATIONSHIPSQUESTIONS AND RELATED TRANSACTIONSANSWERS ABOUT THE ANNUAL MEETING
Q: Why did I receive these materials?
A: Pursuant to the SEC notice and access rules, we have elected to provide access to our proxy materials over the Internet. Accordingly, on or about March 17, 2022, we will begin mailing to all stockholders of record at the close of business on the Record Date a Notice of Internet Availability of Proxy Materials (the "Notice"). All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or may request to receive a set of the proxy materials in printed form by mail or electronically by email at no charge. Instructions on how to access the proxy materials over the Internet and how to request printed copies are included in the Notice.
Q: How can I get electronic access to the proxy materials?
A: The Notice will provide you with instructions regarding how to:
•View our proxy materials for the Annual Meeting on the Internet; and
•Instruct us to send our future proxy materials to you electronically by email.
Choosing to receive your future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our Annual Meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.
Q: Who Is Entitled to Vote?
A: You are entitled to vote your shares of the Company's Common Stock on the Proposals if you held your shares of Common Stock at the close of business on the Record Date. As of the Record Date, a total of 186,014,442 shares of Common Stock were outstanding and entitled to vote. Each share of Common Stock entitles its holder to cast one vote for each matter to be voted upon.
Q: What Is Required to Hold the Annual Meeting?
A: The presence at the Annual Meeting, virtually or by proxy, of the holders of a majority of the shares of Common Stock outstanding and entitled to vote on the Record Date will constitute a quorum permitting business to be conducted at the Annual Meeting. If you have returned valid proxy instructions or you attend the Annual Meeting and vote virtually, your shares of Common Stock will be counted for purposes of determining whether there is a quorum, even if you abstain from voting on any or all matters introduced at the Annual Meeting.
Q: How Do I Vote?
A: Your vote is important. Stockholders can vote virtually at the Annual Meeting or by proxy. Stockholders can vote online authorizing a proxy over the Internet by following the instructions provided in the Notice, or if you requested printed copies of the proxy materials, you can also authorize a proxy by using a toll-free telephone number or completing a proxy card and mailing it in the postage-paid envelope provided. Please refer to your Notice or proxy card or the information forwarded by your bank, broker or other nominee to see which options are available to you. If you authorize a proxy over the Internet or by telephone, you do NOT need to return your proxy card. If you authorize a proxy, the individuals named on the proxy card as representatives will vote your shares of Common Stock in the manner you indicate. You may specify whether your shares of Common Stock should be voted for all, some or none of the nominees for Director and whether your shares of Common Stock should be voted for or against the other proposals. Stockholders who wish to vote virtually at the Annual Meeting will need to obtain a proxy from the broker, bank or other nominee that holds their shares of Common Stock of record.
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Q: Can I Change or Revoke My Proxy?
A: Yes, you may change your proxy at any time before the Annual Meeting by timely delivery of a properly executed, later-dated proxy (including Internet or phone proxy) or by voting virtually at the Annual Meeting. You may revoke your proxy by filing a written notice with our Corporate Secretary at our address at any time before the Annual Meeting. The powers of the proxy holders will be suspended if you attend the Annual Meeting virtually and request that they be so suspended. However, attendance (without further action) at the Annual Meeting will not by itself revoke a previously granted proxy.
Q: How Do I Attend the Virtual Annual Meeting?
A: Broadridge Financial Institutions ("Broadridge") will host the virtual Annual Meeting. In order to attend the virtual Annual Meeting, vote during the Annual Meeting and submit questions, please log into the meeting platform at: www.virtualshareholdermeeting.com/ELS2022 as further described below.
The virtual Annual Meeting will begin promptly at 9:00 a.m. Central Time on Tuesday, April 26, 2022, and online access will begin at 8:45 a.m. Central Time. We encourage you to access the virtual Annual Meeting prior to the start time. Broadridge will have technicians ready to assist you with any technical difficulties you may have accessing the virtual Annual Meeting.
Q: Vote is Needed to Approve Each Proposal?
A: Following are the votes needed to approve each Proposal at the Annual Meeting. For all Proposals a quorum must be present at the Annual Meeting.
Proposal 1: The affirmative vote of a plurality of all the votes cast by stockholders of record is necessary to elect the nominees for director.
Proposal 2: The affirmative vote of a majority of all the votes cast by stockholders of record is required to ratify the selection of Ernst & Young as our Independent Accountants for the year ending December 31, 2022.
Proposal 3: The affirmative vote of a majority of all the votes cast by stockholders of record is required to approve, on a non-binding, advisory basis, the executive compensation of our named executive officers as disclosed in this Proxy Statement.
Other Matters: The affirmative vote of a majority of all the votes cast by stockholders of record is required to approve any other matters properly presented at the Annual Meeting for stockholder approval.
We will treat abstentions as shares of Common Stock that are present and entitled to vote for purposes of determining the presence or absence of a quorum. Abstentions do not constitute a vote "for" or "against" any matter being voted on at the Annual Meeting and will not be counted as "votes cast." Therefore, abstentions will have no effect on any of the Proposals, assuming a quorum is present. Broker "non-votes," or proxies from brokers or nominees indicating that such broker or nominee has not received instructions from the beneficial owner or other entity entitled to vote such shares of Common Stock on a particular matter with respect to which such broker or nominee does not have discretionary voting power, will be treated in the same manner as abstentions for purposes of the Annual Meeting. If you are a beneficial owner whose shares of Common Stock are held of record by a broker, your broker has discretionary voting authority under NYSE rules to vote your shares of Common Stock on Proposal No. 2 even if the broker does not receive voting instructions from you. However, under NYSE rules, your broker does not have discretionary authority to vote on Proposals No. 1 and 3 without instructions from you, in which case a broker "non-vote" will occur and your shares of Common Stock will not be voted on these matters. None of the Proposals, if approved, entitle any of the stockholders to appraisal rights under Maryland law.
Q: How is My Vote Counted?
A: If you properly execute a proxy by mail, telephone or over the Internet, and if we receive it prior to voting at the Annual Meeting, the shares of Common Stock that the proxy represents will be voted in the manner specified in the proxy. If no specification is made, the shares of Common Stock will be voted "for" all nominees named in this Proxy Statement for election as director, "for" ratification of the selection of Ernst & Young as our Independent Accountants for the year ending December 31, 2022, and "for" approval on a non-binding, advisory basis of the executive compensation disclosed in this Proxy Statement. It is not anticipated that any matters other than those set forth in this Proxy Statement will be presented at the Annual Meeting. If other
46
matters are presented, proxies will be voted as recommended by the Board, or if there is no recommendation, in the discretion of the proxy holders. No valid stockholder proposals or nominations were received on a timely basis, so no such matters may be brought to a vote at the Annual Meeting.
Q: Who is Soliciting My Proxy?
A: This solicitation of proxies is made by and on behalf of the Board. We will pay the cost of solicitation of the proxies. We have retained MacKenzie Partners, Inc. to assist, at a de minimis cost, in the solicitation of proxies. In addition to the solicitation of proxies by mail, our Directors, officers and employees may solicit proxies personally or by telephone at a de minimis cost.
No person is authorized on our behalf to give any information or to make any representations with respect to the Proposals other than the information and representations contained in this Proxy Statement, and, if given or made, such information and/or representations must not be relied upon as having been authorized, and the delivery of this Proxy Statement shall not, under any circumstances, create any implication that there has been no change in our affairs since the date hereof.
ADDITIONAL INFORMATION
Certain Relationships and Related Transactions
The Audit Committee is responsible for reviewing and approving all material transactions with any related party. Related parties include any of our directorsDirectors or executive officersExecutive Officers and their immediate family members. Our policy regarding related party transactions is outlined in our Business Ethics and Conduct Policy, a copy of which can be found on the Company’s website. Our Business Ethics and Conduct Policy requires all directors,Directors, officers and employees who may have a potential or apparent conflict of interest to immediately notify the Company’s Executive Vice President, General CounselChief Legal Officer and Corporate Secretary. Further, to identify related party transactions, we submit and require our directorsDirectors and executive officersExecutive Officers to complete Director and Officer Questionnaires identifying any transactions with us in which the director, executive officer,Director, Executive Officer, or their family members have an interest.
Corporate Headquarters
We lease office space from Two North Riverside Plaza Joint Venture Limited Partnership, an entity affiliated with Mr. Zell, Chairman of our Board of Directors.Board. Payments made in accordance with the lease agreement to this entity amounted to approximately $1.4$1.7 million for each of the yearsyear ended December 31, 2017, 20162021, $1.6 million for the year ended December 31, 2020 and 2015.$1.7 million for the year ended December 31, 2019.
SECTIONDelinquent Section 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEReports
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company’s executive officersExecutive Officers and directors,Directors, and persons who own more than 10% of the Common Stock, to file reports of ownership and changes of ownership with the SEC and the NYSE. Executive officers, directorsDirectors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on the Company’s review of the copies of those forms received by the Company, or written representations from executive officersExecutive Officers and directorsDirectors that no Forms 5 were required to be filed for the fiscal year ended December 31, 2017,2021, all appropriate Section 16(a) forms were filed in a timely manner.
STOCKHOLDER PROPOSALS FOR THE 2019 ANNUAL MEETINGStockholder Proposals for the 2023 Annual Meeting
Stockholder proposals intended to be presented at the 20192023 annual meeting of stockholders must be received by our Corporate Secretary no later than November 22, 2018,17, 2022, in order to be considered for inclusion in the Company's proxy statementProxy Statement and on the proxy card that will be solicited by the Board in connection with the 20192023 annual meeting of stockholders.
In addition, if a stockholder desires to bring business before an annual meeting of stockholders, which is not the subject of a proposal for inclusion in the Company's proxy materials, the stockholder must follow the advance notice procedures outlined in the Company's Bylaws. The Company's current Bylaws provide that in order for a stockholder to nominate a candidate for election as a directorDirector at an annual meeting of stockholders or propose business for consideration at such annual meeting of stockholders, notice must generally be given to our Corporate Secretary no more than 90 days nor less than 60 days prior to the first anniversary of the preceding year's annual meeting of stockholders. The 20182022 Annual Meeting is scheduled for May 1, 2018.April 26, 2022. Therefore, if a stockholder desires to present a proposal for the 20192023 annual meeting of stockholders without seeking to include the proposal in
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the Company's proxy materials, the Company must receive notice of the proposal no earlier than January 31, 201926, 2023 and no later than March 2, 2019.February 25, 2023. Copies of the Bylaws may be obtained from our Corporate Secretary by written request.
2017 ANNUAL REPORT2021 Annual Report
Stockholders are concurrently being furnished with a copy of the Company's 20172021 Annual Report and Annual Report on Form 10-K. Additional copies of the 20172021 Annual Report and Annual Report on Form 10-K and of this Proxy Statement are available athttp:https://www.astproxyportal.com/ast/26115materials.proxyvote.com/29472R or by contacting Equity LifeStyle Properties, Inc, Attn: Investor Relations, at Two North Riverside Plaza, Suite 800, Chicago, Illinois 60606 (toll-free number: 1-800-247-5279 or email: investor_relations@equitylifestyle.com)investor_relations@equitylifestyle.com). Copies will be furnished promptly at no additional expense.
HOUSEHOLDING OF PROXY MATERIALSHouseholding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as "householding," potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are our stockholders will be "householding" our proxy materials. A single Notice of Annual Meeting of Stockholders ("Notice") will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the impacted stockholders. Once you have received notice from your broker that they will be "householding" communications to your address, "householding" will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in "householding" and would prefer to receive a Notice, please notify us, by directing your request to: Equity LifeStyle Properties, Inc., Two North Riverside Plaza, Suite 800, Chicago, Illinois 60606; Attn: David Eldersveld, Corporate Secretary, Telephone: 312-279-1400. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request "householding" of their communications should contact their broker as specified above.broker.
OTHER MATTERS
Other Matters
The Board knows of no other matters to be presented for stockholder action at the Annual Meeting. If any other matters are properly presented at the Annual Meeting for action, it is intended that the persons named in the accompanying proxy and acting thereunder will vote in accordance with their discretion on such matters.
By Order of the Board of Directors
David P. Eldersveld
Executive Vice President, General CounselChief Legal Officer and
Corporate Secretary
March 15, 20182022
Chicago, Illinois
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Appendix A
EQUITY LIFESTYLE PROPERTIES, INC.
Supplemental Information for the Compensation Discussion and Analysis in the
Proxy Statement for the 20182022 Annual Meeting of Stockholders
INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO MOST DIRECTLY COMPARABLE GAAP MEASURES
The Compensation"Proxy Statement Summary" and "Compensation Discussion and AnalysisAnalysis" of this Proxy Statement containscontain Normalized Funds from Operations ("Normalized FFO"), a non-GAAP financial measure. Funds from Operations ("FFO") is a non-GAAP financial measure. We define FFO as net income, computed in accordance with GAAP, excluding gains and actual or estimated losses from sales of properties, plus real estate related depreciation and amortization impairments, if any,related to real estate, impairment charges and after adjustments forto reflect our share of FFO of unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We compute FFO in accordance with our interpretation of standards established by the National Association of Real Estate Investment Trusts ("NAREIT"), which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. We receive up-front non-refundable upfront payments from the entry of right-to-usemembership upgrade contracts. In accordance with GAAP, the non-refundable upfront non-refundable payments and related commissions are deferred and amortized over the estimated customer life.membership upgrade contract term. Although the NAREIT definition of FFO does not address the treatment of non-refundable right-to-useupfront payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of FFO.
We define Normalized FFO as FFO excluding the following non-operating income and expense items: a) the financial impact of contingent consideration; b)items such as gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs; c) property acquisitioncosts and other transaction costs related to mergers and acquisitions; and d) other miscellaneous non-comparable items. Normalized FFO presented herein is not necessarily comparable to Normalized FFO presented by other real estate companies due to the fact that not all real estate companies use the same methodology for computing this amount.
We believe that FFO and Normalized FFO are helpful to investors as supplemental measures of the performance of an equity REIT. We believe that by excluding the effect of depreciation, amortization, impairments, if any, and actual or estimated gains or losses from sales of properties, depreciation and amortization related to real estate all ofand impairment charges, which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO can facilitate comparisons of operating performance between periods and among other equity REITs. We further believe that Normalized FFO provides useful information to investors, analysts and our management because it allows them to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences not related to our normal operations. For example, we believe that excluding the early extinguishment of debt property acquisition and other transaction costs related to mergers and acquisitionsmiscellaneous non-comparable items from Normalized FFO allows investors, analysts and our management to assess the sustainability of operating performance in future periods because these costs do not affect the future operations of the properties. In some cases, we provide information about identified non-cash components of FFO and Normalized FFO because it allows investors, analysts and our management to assess the impact of those items.
Income from Rental Operations, Net of Depreciation
We use income from rental operations, net of depreciation, as an alternative measure to evaluate the operating results of our home rental program. Income from rental operations, net of depreciation represents income from rental operations less depreciation expense on rental homes. We believe this measure is meaningful for investors as it provides a complete picture of the home rental program operating results including the impact of depreciation which affects our home rental program investment decisions.
Our definitions and calculations of these non-GAAPNon-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These non-GAAPNon-GAAP financial and operating measures do not represent cash generated from operating activities in accordance with GAAP, nor do they represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash flowflows from operating activities, determined in accordance with GAAP, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.
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The following table presents a calculation of FFO available for common stockholdersCommon Stock and OP Unitholders and Normalized FFO available for common stockholdersCommon Stock and OP Unitholders for the years ended December 31, 2017, 2016, 2015, 20132021, 2020, 2019, 2018 and 2012 (amounts in thousands):2017:
Net Income to FFO and Normalized FFO Reconciliation (in millions)
| | | | | | | | | | | | | | | | | |
| 2021 | 2020 | 2019 | 2018 | 2017 |
Net income available for common stockholders | $ | 262.5 | | $ | 228.3 | | $ | 279.1 | | $ | 212.6 | | $ | 190.0 | |
Income allocated to non-controlling interests - common OP units | 13.5 | | 13.1 | | 16.8 | | 13.8 | | 12.8 | |
Membership upgrade sales upfront payments, deferred, net | 25.1 | | 12.1 | | 10.5 | | 7.4 | | 4.1 | |
Membership sales commissions, deferred, net | (5.1) | | (1.7) | | (1.2) | | (0.8) | | (0.4) | |
Depreciation and amortization | 188.4 | | 155.1 | | 152.1 | | 137.2 | | 123.7 | |
Depreciation on unconsolidated joint ventures | 1.1 | | 0.7 | | 1.2 | | 1.8 | | 1.5 | |
Gain on unconsolidated joint ventures | — | | (1.2) | | — | | — | | — | |
Gain on sale of real estate, net | 0.1 | | — | | (52.5) | | — | | — | |
FFO available for common stockholders | 485.6 | | 406.4 | | 406.0 | | 372.0 | | 331.7 | |
Insurance proceeds due to catastrophic weather event and other, net | — | | — | | (6.2) | | (5.1) | | 0.8 | |
Early debt retirement | 2.8 | | 10.8 | | 2.0 | | 1.1 | | 2.8 | |
COVID-19 expenses | — | | 1.4 | | — | | — | | — | |
Transaction costs | 0.6 | | — | | — | | — | | 0.7 | |
Normalized FFO available for common stockholders | $ | 489.0 | | $ | 418.6 | | $ | 401.8 | | $ | 368.0 | | $ | 336.0 | |
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| | | | | | | | | | | | | | | | | | | |
Computation of Normalized Funds From Operations: | | 2017 | | 2016 | | 2015 | | 2014 | | 2013 |
Net income available for common shares | | $ | 189,904 |
| | $ | 164,037 |
| | $ | 130,145 |
| | $ | 118,731 |
| | 106,919 |
|
Income allocated to common OP Units | | 12,788 |
| | 13,869 |
| | 11,141 |
| | 10,463 |
| | 9,706 |
|
Right-to-use contract upfront payments, deferred, net | | 4,108 |
| | 3,079 |
| | 4,231 |
| | 5,501 |
| | 5,694 |
|
Right-to-use contract commissions, deferred, net | | (354 | ) | | (223 | ) | | (1,556 | ) | | (2,617 | ) | | (2,410 | ) |
Depreciation on real estate assets | | 111,014 |
| | 106,736 |
| | 102,934 |
| | 100,159 |
| | 101,694 |
|
Depreciation on real estate assets, discontinued operations | | — |
| | — |
| | — |
| | — |
| | 1,536 |
|
Depreciation on rental homes | | 10,441 |
| | 10,664 |
| | 10,675 |
| | 10,906 |
| | 6,535 |
|
Amortization of in-place leases | | 2,231 |
| | 3,373 |
| | 2,358 |
| | 3,999 |
| | 1,940 |
|
Depreciation on unconsolidated joint ventures | | 1,533 |
| | 1,292 |
| | 1,081 |
| | 903 |
| | 960 |
|
Gain on sale of property | | — |
| | — |
| | — |
| | (1,457 | ) | | (41,525 | ) |
FFO available for common stockholders | | 331,665 |
| | 302,827 |
| | 261,009 |
| | 246,588 |
| | 191,049 |
|
Change in fair value of contingent consideration asset | | — |
| | — |
| | — |
| | (65 | ) | | 1,442 |
|
Transaction costs | | 724 |
| | 1,217 |
| | 1,130 |
| | 1,647 |
| | 1,963 |
|
Early debt retirement | | 2,785 |
| | — |
| | 16,913 |
| | 5,087 |
| | 37,844 |
|
Preferred stock, original issue | | 757 |
| | — |
| | — |
| | — |
| | — |
|
Litigation settlement, net | | — |
| | 2,415 |
| | — |
| | — |
| | — |
|
Normalized FFO available for common stockholders | | $ | 335,931 |
|
| $ | 306,459 |
| | $ | 279,052 |
| | $ | 253,257 |
| | 232,298 |
|
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