UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
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Prologis, Inc.
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AHEAD OF WHAT’S NEXT™
Prologis Proxy Statement
Notice of annual meeting of stockholders
Prologis Proxy StatementPark Ontario, Ontario, California
Notice of Annual Meeting Thursday, April 29, 2021
of Stockholders
Wednesday, May 2, 2018
1:30 p.m., Pacific time
Pier 1, Bay 1
San Francisco, California 94111
The date of this proxy statement is March 19, 2021
Notice of 2021 Annual Meeting
of Stockholders
March 19, 2021
To our stockholders:
I invite you to attend the 2021 annual meeting of stockholders of Prologis, Inc. at 1:30 p.m. on April 29, 2021. Due to the COVID-19 outbreak and to support the health and well-being of our stockholders, directors and employees, our annual meeting will be held in a virtual format only. You will not be able to attend the annual meeting physically.
Items of business. The following items of business will be conducted at our 2021 annual meeting of stockholders:
Elect eleven directors to our Board to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. | ||
2. | Advisory vote to approve the company’s executive compensation for 2020. | |
3. | Ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year 2021. | |
4. | Consider any other matters that may properly come before the meeting and at any adjournments or postponements of the meeting. |
Record Date. If you were a holder of shares of our common stock at the close of business on March 8, 2021, you are entitled to receive this notice and to vote at the annual meeting and any adjournment(s) or postponement(s) of the annual meeting. | How to Vote. You can vote your shares by proxy through the Internet, by telephone or by mail using the instructions on the proxy card or you can vote during the virtual annual meeting. Any proxy may be revoked in the manner described in the accompanying proxy statement at any time prior to its exercise at the annual meeting. | Meeting Attendance. To be admitted to the annual meeting at www.virtualshareholdermeeting.com/ |
Proxy Materials. On or about March 19, 2021, we intend to distribute to our stockholders:
(i) | Either in printed form by mail or electronically by email, a Notice of Annual Meeting and Internet Availability of Proxy Materials containing instructions on: (a) how to electronically access our 2021 Proxy Statement and 2020 Annual Report to Stockholders, which includes our 2020 Annual Report on Form 10-K; (b) how to vote; and (c) how to request printed proxy materials (if desired). |
(ii) | If requested or required, printed proxy materials, which will include our 2021 Proxy Statement, our 2020 Annual Report on Form 10-K and a proxy card. |
On behalf of the Board of Directors, EDWARD S. NEKRITZ Chief Legal Officer, General Counsel and Secretary | Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 29, 2021. This proxy statement and accompanying form of proxy are first being made available to you on or about March 19, 2021. Proxy materials are available at www.proxyvote.com. |
Prologis Proxy Statement | March 19, 2021 |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on May 2, 2018. This proxy statement and accompanying form of proxy are first being made available to you on or about March 23, 2018. Proxy materials are available at www.proxyvote.com.
This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting of the Stockholders. Please read it carefully.
The following summary highlights information contained in this proxy statement. This summary does not contain all the information you should consider and you should read the entire proxy statement before voting. For more complete information regarding our 2020 performance, please review our Annual Report on Form 10-K for the year ended December 31, 2020. All company operational information in this proxy statement is for the year ended or as of December 31, 2020, unless otherwise noted. See Appendix A for definitions and discussion of non-GAAP measures and reconciliations to GAAP measures and for additional detail regarding definitions of terms as generally explained in the proxy statement. References in this proxy statement to “we,” “us,” “our,” the “company,” and “Prologis” refer to Prologis, Inc. and its subsidiaries, unless the context otherwise requires.
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Proxy Summary2020 Business Highlights
OUR BUSINESS MODEL DELIVERS RESULTSOur business model delivers long-term growth and outperformance.
In 2017,2020, we outperformedstood resilient through the pandemic, outperforming both operationally and in the equity markets for yet another successful year.
Sector-Leading Financial Performance | ||
234.7% seven-year TSR Over 1,100 bps outperformance | 17.8% net earnings and 12.7% Core FFO per share seven-year CAGR(3), 790 bps and 710 bps above the Large- cap REIT Group seven-year CAGR average,(4) respectively |
Prologis Datteln Distribution Center 1, Datteln, Germany
(1) | Total stockholder return (“TSR”) is calculated based on the stock price appreciation and dividends paid to show the total return to a stockholder over a period of time. TSR assumes dividends are reinvested in common stock on the day the dividend is paid. Measured in seven-year TSR. |
(2) | MSCI US REIT Index is the “MSCI REIT |
(3) | Seven-year compound annual growth rate (“CAGR”). Core FFO per share is anon-GAAP measure. Please see Appendix A for a discussion and reconciliation to the most directly comparable GAAP |
For further detail, please see “Compensation Discussion and Analysis.”
108% 5-year TSR(1) Over 640 bps outperformance over MSCI REIT and Cohen & Steers REIT Indices in 5-year TSR(2) 378% increase in Net Earnings per share over the last 5 years 70% increase in Core FFO per share(3) over the last 5 years
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The “Large-cap REIT Group” is our historical REIT compensation comparison group (American Tower Corporation, AvalonBay Communities, Inc., Boston Properties, Inc., Crown Castle International Corp., Digital Realty Trust, Inc., Equinix, Inc., Equity Residential, Public Storage, Inc., Simon Property Group, Inc., Ventas, Inc. and Welltower Inc.) The average rates of the Large-cap REIT Group are weighted by market capitalization. See footnotes to “Strong Growth Relative to Peers” for further detail on the calculation of the Large-cap REIT Group average. |
WE INCENTIVIZE OUTPERFORMANCE RESPONSIBLY
For further detail, please see “Compensation Discussion and Analysis.”
Prologis Proxy Statement | March 19, 2021 |
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Proxy Summary |
Our compensation program rewards for performance.
$1
| 100% performance-based and at-risk CEO compensation |
2017 Environmental Stewardship, Social Responsibility andGovernance (ESG) Highlights
WE TAKE ESG SERIOUSLY
Prologis Elizabeth Seaport, Elizabeth, New Jersey
Prologis Proxy Statement | March 19, 2021 | 2 |
Proxy Summary |
2020 Environmental Stewardship, Social Responsibility and Governance (ESG) Highlights
We have a long-standing commitment to ESG leadership.
Global 100 Corporations 12th year on Global 100 list by Corporate Knights | Continuous Board Five new directors in six years; appointed third female director in 2020 | |
18 Consecutive Years A leading REIT in corporate governance by Green Street | Top 10% in World Global sustainable companies recognized |
Nanjing Airport Logistics Center, Nanjing, China
For further detail, please see “Board of Directors and Corporate Governance”, “Environmental Stewardship, Social Responsibility and Governance” and “Compensation Discussion and Analysis.”
Continuous Board Refreshment Ms. Cristina Bita is our new director nominee (third new director nominee in three years) 10 Green Stars awarded by GRESB(1) (North America and Asia Sector Leader) (their highest designation for outstanding performance in ESG)
Prologis Proxy Statement | March 19, 2021 |
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Proxy Summary | ||
PROXY SUMMARY
Proposals Submitted to Vote at the 20182021 Annual Meeting
We are asking our stockholders of record on March |
Proposal | Board Recommendation | ||||
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Compensation for
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Abstentions and brokernon-votes are counted for purposes of determining whether a quorum is reached.
References in this proxy statement to “we,” “us,” “our,” the “company,” and “Prologis” refer to Prologis, Inc. and its subsidiaries, unless the context otherwise requires.
This summary highlights information contained in this proxy statement. This summary does not contain all the information you should consider and you should read the entire proxy statement before voting. For more complete information regarding our 2017 performance, please review our Annual Report on Form10-K for the year ended December 31, 2017. All company operational information in this proxy statement is for the year ended or as of December 31, 2017, unless otherwise noted. See Appendix A for definitions and discussion ofnon-GAAP measures and reconciliations to GAAP measures and for additional detail regarding definitions of terms as generally explained in the proxy statement.
Prologis Proxy Statement | March 19, 2021 |
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6 | Prologis Corporate Governance Tear Sheet | |
7 | Election of Directors (Proposal 1) | |
9 | Board Evaluations and Process for Selecting Directors | |
10 | Director Qualifications, Skills and Experience |
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Board of Directors and Corporate Governance |
Prologis Corporate Governance Tear Sheet
Director Independence
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(1) | Our governance guidelines provide that directors will not be nominated or appointed to the Board if they are, or would be, |
(2) | One director has self-identified as African American and two directors have self-identified as West Asian/Middle Eastern/Asian American. |
(3) | See “Additional Information” for further detail on proxy access. |
Prologis Proxy Statement | March 19, 2021 |
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Election of Directors (Proposal 1)
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The Board unanimously recommends that the stockholders vote FOR the
election of each nominee.
Prologis Proxy Statement | March 19, 2021
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Board |
HOW IT WORKS
(1) | The entire Board was rebuilt in 2011 at the time of the merger (the “Merger”) between AMB Property Corporation and ProLogis (the “Trust”) and the tenure of the rebuilt Board started at that time. However, we include Mr. Moghadam, Ms. Kennard, Mr. Webb and Mr. Skelton in the 12+ year category as they were directors of the legal acquirer prior to the Merger. |
(2) | Includes Philip Hawkins, who joined our Board in 2018 and stepped down from our Board in 2020 to assume an executive chairman position at a U.S. industrial real estate company. |
Prologis Proxy Statement | March 19, 2021 |
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Board Evaluations and Process for Selecting Directors
Rigorous board evaluation and refreshment process
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· | Our director candidate search process actively identifies and assesses a pool of potential candidates through a variety of sources, primarily through internal references. Although the committee may retain third parties to assist in identifying potential nominees, it prefers internal references by directors who understand the needs and dynamics of the Board with a particular focus on inclusion and diversity of ideas and background. |
¾ Feedback received in our 2018 Board evaluations noted the high functioning nature of the Board and the need for new directors with technology, innovation, finance and/or accounting backgrounds. Our nomination of Cristina Bita addresses these needs.
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Director Qualifications, Skills and Experience
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Regular Board composition and refreshment
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The Board is committed to regular refreshment to maintain an optimal balance of different perspectives, skills and |
The Board was completely refreshed and rebuilt at the time of the Merger in 2011. The Merger essentially created a new company with a new operating and corporate platform. At that time, all directors underwent intensive review to determine which directors would best fit the newly created combined company. |
Each director selected in this rebuilding process was onboarded as a new director to the newly established company. These directors were required to perform in a new governance environment, with new structures, processes, committees, charters and guidelines. |
We have continued to refresh the Board since the Merger. David O’Connor onboarded as a new director in 2015, Olivier Piani |
Prologis Proxy Statement | March 19, 2021 |
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Board of Directors and Corporate Governance |
· | As a result of our regular board refreshment, the Board comprises an appropriate mix of tenures: three directors with up to five years of tenure, four directors with tenure between six and eleven years and four with over twelve years of tenure. This mix provides an even balance of experience and institutional knowledge with fresh perspectives. |
Director Qualifications, Skills and Experience
Board composition and diversity
· | Our board diversity policy centers on our commitment to maintaining Board diversity in thought, background and experience—a mix of gender, ethnic background, geographic origin and professional experience that supports our business strategy and the current needs of the Board. As such, the Governance Committee focuses on identifying and nominating qualified and diverse director candidates with commensurate experience and background and each of our director nominees was chosen on this basis. For information about our director nominees and our business, strategy and goals, please see “Director Nominees” and “Compensation Discussion and Analysis” (“CD&A”). |
· | In making its nominations, the Governance Committee also assessed each director nominee by key characteristics, including courage to voice opinions, integrity, experience, accountability, good judgment, supportiveness in working with others and willingness to commit the time needed to satisfy the requirements of Board and committee membership. |
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Board of Directors and Corporate Governance |
BOARD QUALIFICATIONS
In addition to fundamental characteristics necessary for all directors, such as courage, wisdom and good judgment, below are qualifications of our Board identified as important in our Board evaluation process. These characteristics are critical to strong oversight.
We have deep experience in real estate on our Board covering all components of our business model. The Board believes a balance of perspectives from other industries is also critical to well-rounded oversight. Our Board’s wide range of experience across a spectrum of industries from banking to healthcare broadens perspectives and strengthens risk assessments by the Board. In addition to the qualifications listed below, Ms. Bita brings her experience in the technology industry to the Board providing valuable insight supporting our strategic initiatives driving innovation and data analytics.
PROLOGIS BOARD DIVERSITY
Prologis Proxy Statement | March 19, 2021 | 11 |
Board of Directors and Corporate Governance |
Board Qualifications
Director skills and experience support our business strategy.
· | We have deep experience on our Board covering all components of our business model. The Board believes a balance of perspectives from other industries is critical to well-rounded oversight and insight into the perspectives of our customers covering a wide range of industries. |
(1) | Over seven-year period 2014-2020. |
(2) | Our global platform outperformed the average of the “Large-cap REIT Group” in net earnings per share and Core FFO per share CAGR by 790 bps and 710 bps, respectively, over the last seven years. The average rates for the Large-cap REIT Group are weighted by market capitalization. See footnotes to “Strong Growth Relative to Peers” for further detail on the calculation of the Large-cap REIT Group average. Core FFO per share is a non-GAAP measure. Please see Appendix A for a discussion and reconciliation to the most directly comparable GAAP measure and a calculation of the CAGR of our Core FFO per share. |
(3) | “G&A” are our general and administrative expenses. |
(4) | Value created over our total expected investment through development and leasing activities based on current projections. Please see Appendix A for further detail regarding how we calculate “Value creation.” Development value creation is calculated across our owned and managed portfolio. |
Prologis Proxy Statement | March 19, 2021 | 12 |
Board of Directors and Corporate Governance |
· | Along with the fundamental characteristics necessary for all directors, such as courage, wisdom and good judgment, below are qualifications of our Board identified in our Board evaluation process as important to support our current business strategy. These characteristics, coupled with diversity of thought and background, are critical to strong oversight and proven long-term results. Also, in addition to these qualifications, director experience in innovation and technology, like Ms. Bita’s tenure at Google, supports our strategic initiatives to stay ahead of the evolution of the supply chain and our customers’ needs. As the former Chief Information Officer and head of technology of Wells Fargo, Ms. Modjtabai also brings her experience overseeing core technology functions including information/cybersecurity. |
· | Race, ethnic and gender demographics of the board are also included below. |
(1) | Includes development, operations, real estate investments and fund management. |
Prologis Proxy Statement | March 19, 2021 | 13 |
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Hamid R. Moghadam
Chairman of the Board since January 2000; Director since November 1997 |
·Board Committees: Executive
·Other public directorships: None
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Mr. Moghadam, 64, has been our Chief Executive Officer since the end of December 2012 and was ourCo-Chief Executive Officer from June 2011 to December 2012. He is theco-founder of AMB Property Corporation and was AMB’s Chief Executive Officer from November 1997 (from the time of AMB’s initial public offering) to June 2011 when AMB merged with the Trust.
Other relevant qualifications. Mr. Moghadam is on the board of the Stanford Management Company and formerly served as its chairman. He is a former trustee of Stanford University and previously served on the Executive Committee of the Board of Directors of the Urban Land Institute. Mr. Moghadam holds Bachelor’s and Master’s degrees in engineering from the Massachusetts Institute of Technology and a Master of Business Administration from the Graduate School of Business at Stanford University.
Irving F. Lyons III
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·Board Committees: Executive
·Other public directorships: Equinix, Inc. and Essex Property Trust, Inc. | |||||
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Mr. Lyons, 71, has been a principal with Lyons Asset Management, a private equity firm, since January 2005. In 2004, Mr. Lyons retired from the Trust where he served as chief investment officer from 1997 until his retirement. He joined the Trust in 1993 and served as president from 1999 to 2001 and vice chairman from 2001 to 2004. Mr. Lyons is a member of the boards of Equinix, Inc., a global data center operator, and Essex Property Trust, Inc., a real estate investment trust investing in apartment communities. Mr. Lyons previously served as chairman of the board of BRE Properties, Inc.
Other relevant qualifications. Mr. Lyons joined the Trust when King & Lyons, an industrial real estate management and development company, was acquired by the Trust in 1993. Mr. Lyons had been the managing general partner in that firm since its inception in 1979 and was one of its principals at the time of the acquisition. Mr. Lyons holds a Master in Business Administration from Stanford University and a Bachelor of Science in industrial engineering and operations research from the University of California at Berkeley.
Prologis Proxy Statement | March 19, 2021 |
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Cristina G. Bita
· Board Committees: Audit ·Other public directorships: None
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Ms. Bita, 42, is a Vice President of Finance at Google, and Business Finance Officer for Google’s Devices and Services product area, Google Marketing organization and Google Sustainability. She has served in a number of finance leadership roles since joining Google in 2006 across a range of business areas, including Global Partnerships and Business Development, Global Sales, and Consumer Products and Platforms. Prior to Google, Ms. Bita spent six years with Siemens/Osram, where she held various positions in Business Unit Controllership and Corporate FP&A.
Other relevant qualifications. Ms. Bita holds a Master of Science in Finance from the Boston College Wallace E. Carroll School of Management and a Bachelor of Science in Business Administration (Accounting) from Salem State University. Ms. Bita is also a Certified Management Accountant (CMA).
George L. Fotiades
·Director since June 2011 (prior to the Merger served as a trustee of the Trust from December 2001 to June 2011) |
·Board Committees: Compensation (Chair)
·Other public directorships: AptarGroup, Inc. and Cantel Medical Corp.* | |||||
Mr. Fotiades, 67, was appointed President and Chief Executive Officer* of Cantel Medical Corp., a provider of infection prevention and control products, in March 2019. Mr. Fotiades was an operating partner at Five Arrows Capital Partners (Rothschild Merchant Banking) from April 2017 until March 2019. From April 2007 to April 2017, Mr. Fotiades was a partner, healthcare investments at Diamond Castle Holdings, LLP, a private equity firm. Mr. Fotiades was chairman of Catalent Pharma Solutions, Inc., a provider of advanced technologies for pharmaceutical, biotechnology, and consumer health companies, from June 2007 to February 2010. Mr. Fotiades is Chairman of the board of AptarGroup, Inc., a global dispensing systems company and is also a director of Cantel Medical Corp. He previously served on the board of Alberto-Culver Company, a consumer products company specializing in hair and skin care products.
Other relevant qualifications. Mr. Fotiades was previously the president and chief operating officer of Cardinal Health, Inc. and also served as president and chief executive officer of Cardinal’s Pharmaceutical Technologies and Services segment. Mr. Fotiades also served as president of Warner-Lambert’s consumer healthcare business, as well as in other senior positions at Bristol-Myers Squibb, Wyeth, and Procter & Gamble. Mr. Fotiades holds a Master of Management from The Kellogg School of Management at Northwestern University and a Bachelor of Arts from Amherst College.
* Mr. Fotiades will no longer be CEO of Cantel Medical Corp. (or CEO in any other capacity) upon the closing of Steris Corporation’s acquisition of Cantel Medical Corp., expected to occur in the second quarter of 2021. Should the Steris acquisition terminate or not close, Mr. Fotiades will nevertheless retire as CEO of Cantel Medical Corp.
Mr. Fotiades, 64, has been an operating partner at Five Arrows Capital Partners (Rothschild Merchant Banking) since April 2017. From April 2007 to April 2017, Mr. Fotiades was a partner, healthcare investments at Diamond Castle Holdings, LLP. Mr. Fotiades was chairman of Catalent Pharma Solutions, Inc., a provider of advanced technologies for pharmaceutical, biotechnology, and consumer health companies, from June 2007 to February 2010. Mr. Fotiades is a member of the board of AptarGroup, Inc., a global dispensing systems company, and is vice chairman of the board of Cantel Medical Corp., a provider of infection prevention and control products. He previously served on the board of Alberto-Culver Company, a consumer products company specializing in hair and skin care products.
Other relevant qualifications. Mr. Fotiades was previously the president and chief operating officer of Cardinal Health, Inc. and also served as president and chief executive officer of Cardinal’s Pharmaceutical Technologies and Services segment. Mr. Fotiades also served as president of Warner- Lambert’s consumer healthcare business, as well as in other senior positions at Bristol-Myers Squibb, Wyeth, and Procter & Gamble. Mr. Fotiades holds a Master of Management from The Kellogg School of Management at Northwestern University and a Bachelor of Arts from Amherst College.
Prologis Proxy Statement | March 19, 2021 |
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Lydia H. Kennard
·Director since August 2004 |
·Board Committees: Governance
·Other public directorships:
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Ms. Kennard, 66, is the founder and chief executive officer of KDG Construction Consulting, a provider of project and construction management services, a principal of KDG Aviation, an aviation focused real estate operating and development company, and a principal with 1031 N. Brand Boulevard, Glendale, LLC, a single-purpose real estate entity. Ms. Kennard is a member of the boards of Freeport-McMoRan Copper & Gold Inc., a natural resource company, Healthpeak Properties, Inc., a healthcare real estate investment trust, and AECOM, an infrastructure consulting firm. Ms. Kennard was previously a member of the boards of URS Corporation, a provider of engineering, construction and technical services, and Intermec, Inc., an automated identification and data collection company.
Other relevant qualifications. Ms. Kennard served as Chief Executive Officer of Los Angeles World Airports, a system of airports comprising Los Angeles International, Ontario International Airport, Palmdale Regional, and Van Nuys General Aviation Airports from 1999 to 2003 and again from 2005 to 2007. From 1994 to 1999, she served as the system’s deputy executive for design and construction. Ms. Kennard holds a Juris Doctor degree from Harvard University, a Master’s degree in city planning from the Massachusetts Institute of Technology, and a Bachelor of Science in urban planning and management from Stanford University.
J. Michael Losh
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Avid Modjtabai
· Director since February 2020 · Other public directorships: Avnet, Inc. |
Ms. Modjtabai, 59, served as the Senior Executive Vice President and head of the Payments, Virtual Solutions and Innovation Group at Wells Fargo from 2016 to her retirement in March 2020. Prior to that, she served in various leadership roles at Wells Fargo, including Group head for Wells Fargo Consumer Lending from 2011 to 2016, Chief Information Officer and head of Technology and Operations Group from 2008 to 2011, Chief Information Officer and head of technology from 2007 to 2008, and Director of Human Resources from 2005 to 2007. Ms. Modjtabai is a member of the board of Avnet, Inc., a global technology solutions provider.
Other relevant qualifications. Ms. Modjtabai holds a Master in Business Administration in finance from Columbia University and a Bachelor of Science in industrial engineering from Stanford University.
Prologis Proxy Statement | March 19, 2021 |
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David P. O’Connor
·Director since January 2015 |
·Board Committees: Compensation
·Other public directorships: Regency Centers | |||||
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Mr. O’Connor, 56, is a private investor, managing partner of High Rise Capital Partners, LLC, a private real estate investment firm, and a non-executive co-chairman of HighBrook Investors LLC. He was the co-founder and senior managing partner of High Rise Capital Management LP, a real estate securities hedge fund manager that operated from 2001 to 2011. Mr. O’Connor is a member of the board of Regency Centers Corporation, a publicly traded real estate investment trust specializing in shopping centers. He previously served on the board of Songbird Estates plc, the former majority owner of Canary Wharf in London, UK and Paramount Group, Inc., a publicly traded real estate investment and management company specializing in office buildings. of HighBrook Investors LLC. He was theco-founder and senior managing partner of High Rise Capital Management LP, a real estate securities hedge fund manager that operated from 2001 to 2011. Mr. O’Connor is a member of the boards of Regency Centers, Inc., a publicly traded real estate investment trust specializing in shopping centers, and Paramount Group, Inc., a publicly traded real estate investment and management company specializing in office buildings. He previously served on the board of Songbird Estates plc, the former majority owner of Canary Wharf in London, UK.
Other relevant qualifications. Mr. O’Connor was previously a principal,co-portfolio manager and investment committee member of European Investors, Inc., a large dedicated real estate investment trust investor, from 1994 to 2000. Mr. O’Connor received a Master of Science in real estate from New York University and holds a Bachelor of Science degree from the Boston College Wallace E. Carroll School of Management.
Olivier Piani
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· Director since May 2017 · Board Committees: Audit · Other public directorships: None |
Mr. Piani, 67, is the chief executive officer and founder of OP Conseils, a consulting company in real estate and finance that Mr. Piani started in January 2016. Mr. Piani is also a senior consultant with Ardian, a major European private equity group. From September 2008 to December 2015, Mr. Piani was chief executive officer of Allianz Real Estate, the real estate and asset management investment platform for the Allianz Group.
Other relevant qualifications. From 1998 to 2008, Mr. Piani built the pan-European platform for GE Capital Real Estate spanning seven different countries. Prior to joining GE in 1998, Mr. Piani was chief executive officer of UIC-Sofal, a real estate bank. From 1982 to 1995, Mr. Piani held various leadership positions in the Paribas Group in Paris, New York and London. Mr. Piani is a graduate of Paris Ecole Superieure de Commerce de Paris and received a Master of Business Administration from Stanford University.
Prologis Proxy Statement | March 19, 2021 |
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Jeffrey L. Skelton
·Director since November 1997 |
·Board Committees: Governance (Chair), Executive (Chair)
·Other public directorships: None
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Mr. Skelton, 71, retired in 2009 as president and chief executive officer of Symphony Asset Management, a subsidiary of Nuveen Investments, Inc., an investment management firm. After his retirement in 2009 and until 2013, Mr. Skelton was aco-founder and managing partner of Resultant Capital Partners, an investment management firm.
Other relevant qualifications. Prior to founding Symphony Asset Management in 1994, Mr. Skelton was with Wells Fargo Nikko Investment Advisors from 1984 to 1993, where he served in a variety of capacities, including chief research officer, vice chairman,co-chief investment officer and chief executive officer of Wells Fargo Nikko Investment Advisors Limited in London. Previously, Mr. Skelton was also an assistant professor of finance at the University of California at Berkeley, Walter A. Haas School of Business. Mr. Skelton holds a Ph.D. in mathematical economics and finance and a Master of Business Administration from the University of Chicago.
Carl B. Webb
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· Director since August 2007 · Board Committees: Audit (Chair) · Other public directorships: Hilltop Holdings Inc. |
Mr. Webb, 71, is currently a co-managing member of Ford Financial Fund II, L.P. and Ford Financial Fund III, L.P., private equity firms focusing on equity investments in financial services, a position he has held since February 2012 and March 2019, respectively. Mr. Webb has served as chairman of the Mechanics Bank board since April 2015. From June 2008 until December 2012, Mr. Webb was a senior partner of Ford Management, L.P. Mr. Webb was also the chief executive officer and a board member of Pacific Capital Bancorp and chairman of Santa Barbara Bank and Trust from August 2010 until December 2012. Mr. Webb has also served as a consultant to Hunter’s Glen/Ford, Ltd., a private investment partnership, since November 2002. Additionally, Mr. Webb is a member of the board of Hilltop Holdings Inc., a publicly traded financial services holding company.
Other relevant qualifications. Mr. Webb previously served on the boards of Plum Creek Timber Company, M & F Worldwide Corp. and Triad Financial SM LLC, where he was co-chairman from July 2007 to October 2009 and served as interim president and chief executive officer from August 2005 to June 2007. Since 1983, Mr. Webb held executive positions at banking institutions, including Golden State Bancorp, Inc. and its subsidiary, California Federal Bank, FSB, First Madison Bank, FSB, First Gibraltar Bank, FSB and First National Bank at Lubbock. Mr. Webb holds a Bachelor of Business Administration from West Texas A&M University and a graduate banking degree from Southwestern Graduate School of Banking at Southern Methodist University.
Prologis Proxy Statement | March 19, 2021 |
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William D. Zollars
·Director since June 2011 (prior to the Merger served as a trustee of the Trust from December 2001 to May 2010) · Board Committees: Governance, Compensation · Other public directorships: Cerner Corporation |
Mr. Zollars, 73, retired from YRC Worldwide, Inc., a global transportation service provider, in July 2011 where he served as chairman, president, and chief executive officer from 1999 until his retirement. He was president of Yellow Transportation, Inc. from 1996 to 1999. Mr. Zollars is a member of the board of Cerner Corporation, a supplier of healthcare information technology solutions, healthcare devices and related services. Mr. Zollars also serves on the U.S. Postal Service Board of Governors. He is a former director of CIGNA Corporation, a global health service organization.
Other relevant qualifications. Mr. Zollars was previously a senior vice president of Ryder Integrated Logistics, a division of Ryder System, Inc. and he spent 24 years in various executive positions, including eight years in international locations, at Eastman Kodak. Mr. Zollars holds a Bachelor of Arts in economics from the University of Minnesota.
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Board of Directors and Corporate Governance |
Mr. Zollars, 70, retired from YRC Worldwide, Inc., a global transportation service provider, in July 2011 where he served as chairman, president, and chief executive officer from 1999 until his retirement. He was president of Yellow Transportation, Inc. from 1996 to 1999. Mr. Zollars is a member of the boards of Cerner Corporation, a supplier of healthcare information technology solutions, healthcare devices, and related services, and CIGNA Corporation, a global health service organization.
Other relevant qualifications. Mr. Zollars was previously a senior vice president of Ryder Integrated Logistics, a division of Ryder System, Inc. and he spent 24 years in various executive positions, including eight years in international locations, at Eastman Kodak. Mr. Zollars holds a Bachelor of Arts in economics from the University of Minnesota.
We require that a majority of the Board be independent in accordance with NYSE rules. To determine whether a director is independent, the Board must affirmatively determine that there is no direct or indirect material relationship between the company and the director.
90%91% of the Board is independent.
The Board has determined that all our directors |
The Board reached this determination after considering all relevant facts and circumstances, reviewing director questionnaires and considering transactions and relationships, if any, between us, our affiliates, our executive officers and their affiliates, and each of the directors, and prospective director, members of each of their immediate families and their affiliates.
Audit, CompensationGovernance and GovernanceTalent and Compensation Committees are 100% independent. The Board has also determined that all members of the Audit, Compensation and Governance Committees of the Board are independent in accordance with NYSE and Securities and Exchange Commission (“SEC”) rules.
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The Board has also determined that all members of the Audit, Governance and Talent and Compensation Committees of the Board are independent in accordance with NYSE and Securities and Exchange Commission (“SEC”) rules. |
Our governance guidelines do not specify a leadership structure for the Board, allowing the Board the flexibility to choose the best option for the company as circumstances warrant. The Board believes that strong independent leadership ensures effective oversight over the company. Such independent oversight is maintained through:
our lead independent director; |
our independent directors; |
the Audit, Governance and Talent and Compensation Committees, which are all comprised entirely of independent directors; |
annual review of the Board leadership structure and effectiveness of oversight through the Board evaluation process; and |
strong adherence to our governance guidelines. |
All of our independent directors have the ability to provide input for meeting agendas and are encouraged to raise topics for discussion by the Board. In addition, the Board and each Board committee has complete and open access to any member of management.
Each committee has the authority to retain independent legal, financial and other advisors as they deem appropriate without consulting or obtaining the approval of any member of management. The Board also holds regularly scheduled executive sessions of only independent directors in order to promote free and open discussion among the independent directors.
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Chairman and CEO assessment
Our chairman and CEO and our lead independent director act together in a system of checks and balances, providing both strong oversight and operational insight.
Our CEO, Mr. Moghadam, serves as chairman of the Board. The lead independent director role is focused on ensuring independent oversight of the company. Mr. Moghadam’s roles as both CEO and chairman enable him to act as a bridge between management and the Board, ensuring that the Board understands our business when making its decisions.
Mr. Moghadam has the breadth of experience to execute our unique business plan and to provide special insightinsights to the Board.
Very few have experience running a public company with extensive global operations and substantial strategic capital and development businesses. Mr. Moghadamco-founded the company and has served on the Board since the company’s initial public offering in November 1997. As one of our founders, Mr. Moghadam has extensive knowledge and expertise in the real estate and REIT industries, as well as history and knowledge of our company.
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Considering all of these factors, the Board believes that a structure that combines the roles of CEO and chairman, along with an independent lead director, independent chairs for each of the Board committees and independentnon-employee directors, provides the best leadership for the company at this time and places the company in a competitive position to provide long-term value to our stockholders.
Lead independent director
If the offices of chairman and CEO are held by the same person, the independent members of the Board will annually elect an independent director to serve in a lead capacity. The lead independent director is generally expected to serve for more than one year. Mr. Lyons has been selected as the lead independent director by our Governance Committee and the independent members of our Board and has served in that capacity for nearly seventen years.
The lead independent director coordinates the activities of the other independent directors and performs such other duties and responsibilities as determined by the Board may determine.Board.
The specific responsibilities of the lead independent director are currently as follows:
Executive Sessions/ Committee Meetings |
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Liaison with Chairman and CEO |
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Board Processes and Information |
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Communications with Stockholders |
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Pursuant to the Maryland General Corporation Law and our bylaws, our business, property and affairs are managed under the direction of the Board. Members of the Board are kept informed of our business through our executive management team.
The four standing committees of the Board are: Audit, Governance, Talent and Compensation (the “Compensation Committee”) and Executive Committee (the “Executive Committee”). The Board has determined that each member of the Audit, Governance and Talent and Compensation Committees is an independent director in accordance with NYSE and SEC rules.
The current membership information for our Board committees is presented below.
Each committee has a charter which generally states the purpose of the committee and outlines the committee’s structure and responsibilities. The committees, other than the Executive Committee, must review the adequacy of their charter on an annual basis.
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PROLOGIS BOARD COMMITTEES
Members: Carl Webb (Chair), Cristina Bita, Avid Modjtabai and Olivier Piani Number of Meetings in 2020: 9 |
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Talent and Compensation Committee
Members: George Fotiades (Chair), David O’Connor and William Zollars
Number of Meetings in 2020: 6
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Board Governance and Nomination Committee
Members: Jeffrey Skelton (Chair), Lydia Kennard and William Zollars
Number of Meetings in 2020: 3
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Executive Committee
Members: Jeffrey Skelton (Chair), Irving Lyons III and Hamid Moghadam
Number of Meetings in 2020: 0
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Board’s role in risk oversight
Risk awareness is embedded throughout our operations, underpinned by an integrated framework for identifying, assessing and managing risk.
The Board has the primary responsibility for overseeing risk management of the company. Oversight for certain specific risks falls under the responsibilities of our Board committees.
The Audit Committee focuses on financial and cybersecurity risks relating to the company. |
The Compensation Committee focuses on risks relating to human capital management, talent retention and remuneration of our officers and employees. |
The Governance Committee focuses on reputational, |
These committees regularly advise the full Board of their risk oversight activities.
Critical components of our risk oversight framework include regular communication among the Board, our management executive committee and our risk management infrastructure to identify, assess and manage risk.
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Identifying, Managing and Assessing Risks
Our risk oversight framework includes:
| Board engagement with executive and risk management teams including multi-dimensional risk reviews, risk assessment mapping andone-on-one interviews between each director and our risk management team |
| Executive management committee meetings focused on strategic risks |
| A structured approach to capital deployment vetted through weekly investment committee meetings, |
including assessments of ESG, resilience, and natural disaster/weather/climate risks
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Management of one of the strongest balance sheets in the REIT industry achieved by lowering our financial risk and foreign currency exposure |
| Rigorous internal and third-party audits assessing the company’s controls and procedures |
| Centralized team dedicated to managing risk globally and staying closely engaged with Prologis’ teams at |
Cybersecurity
Our Chief Technology Officer and our Vice President of IT Governance oversee our information security program. They report to the audit committee/board at least annually and also conduct annual information security compliance training. The Prologis Information Security Policy is governed by the NIST Cybersecurity Framework (CSF) and includes mandatory annual training for all employees. Prologis’ cybersecurity posture is reviewed and benchmarked against its peers through regular participation in a third-party security benchmarking survey. Our IT infrastructure is externally audited as part of our Sarbanes Oxley audit process and our controls include information security standards. Also, we maintain standalone cybersecurity insurance. To our knowledge, we have not experienced a material breach in information security.
CEO and management succession planning
The Board is responsible for ensuring that we have a high-performing management team in place. The Board, with the assistance of the Compensation Committee, regularly conducts a detailed review of management development and succession planning activities to ensure that top management positions, including the CEO position, can be filled without undue interruption.
Our succession planning process is two-tiered to ensure orderly succession. One tier contemplates succession planning in the case of an emergency during which one or more members of our current management are unable to perform their duties. The second tier involves long-term planning to identify and develop talent with potential to step in as our future management team. As part of our longer term succession planning, we made changes in 2019 and 2020 to our organizational architecture to prepare the company for the next chapter in its evolution. Executive roles were reorganized to drive our platform initiatives focusing on customer centricity and extracting value beyond our real estate while allowing for growth opportunities for the next generation of potential leaders.
Communications with directors
We appreciate your input. Our lead independent director (or any of our other directors) are accessible to our stockholders for engagement as appropriate. You can communicate with any of the directors, individually or as a group, by writing to them in care of Edward S. Nekritz, Secretary, Prologis, Inc., Pier 1, Bay 1, San Francisco, California 94111. Such communications will be reviewed and forwarded to the appropriate director. Each communication intended for the Board and received by the secretary that is related to the operation of the company and is not otherwise commercial in nature will be forwarded to the specified party following its clearance through normal security procedures. The directors will be advised of any communications that were excluded through normal security procedures as appropriate and they will be made available to any director who wishes to review them.
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Director attendance
The Board held four meetings in 2017,2020, including telephonic meetings, and all of the directors attended 75% or more of the aggregate number of Board and applicable committee meetings on which he or she served during 20172020 (held during the periods they served). Each director standing for election in 20182021 is expected to attend the annual meeting of stockholders, either in personvirtually or telephonically, absent cause. All of our directors attended the annual meeting last year, in personvirtually or telephonically.
Director compensation
Please see “Director Compensation” and the table titled “Directors“Director Compensation for Fiscal Year 2017.2020.”
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Stock ownership guidelines and prohibition on hedging/pledging
Our directors must comply with our stock ownership guidelines which require the director to maintain an ownership level in our common stock equal to five times the annual cash retainer (a total of $550,000$600,000 as of December 31, 2017)2020). Shares included as owned by directors for purposes of the guidelines include common stock owned, vested or unvested equity awards (restricted stock, restricted stock units, shares and share units deferred under the terms of the Director Deferred Fee Plan or the applicablenon-qualified deferred compensation plan, deferred share units and dividend equivalent units) and operating partnership or other partnership units exchangeable or redeemable for common stock. Until such time as the ownership thresholds are met, we will require directors to retain and hold 50% of any net shares of our common stock issued to our directors under our equity compensation plans.
Additionally, our insider trading policy prohibits our directors and employees from hedging the economic risk of ownership of our common stock and from pledging shares of our common stock.
All of our directors and executive officers are currently in compliance with the stock ownership guidelines and the prohibition on hedging and pledging our common stock.
Independent compensation consultant
The Compensation Committee directly engagesengaged an outside compensation consulting firm, Frederic W. Cook & Co., Inc. (“FW Cook”) to assist the committee in assessing our compensation programs for our Board, our CEO and other members of executive management. FW Cook reportsreported directly to the Compensation Committee. FW Cook receivesreceived no compensation from the company other than for its work in advising the Compensation Committee and maintainsmaintained no other economic relationships with the company. FW Cook interactsinteracted directly with members of our management only on matters under the Compensation Committee’s oversight.
FW Cook conducted a comprehensive competitive review of the compensation program for our executive officers and ournon-employee directors in 2017,April 2020, which was used by the Compensation Committee to assist it in making compensation recommendations to the Board. Our CEO makes separate recommendations to the Compensation Committee concerning the form and amount of the compensation of our executive officers (excluding his own compensation). FW Cook has also assisted the Compensation Committee in evaluating the design of certain outperformance compensation plans first implemented in 2012.
Annually, theThe Compensation Committee considersconsidered the independence of FW Cook in light of the rules regarding compensation committee advisor independence mandated under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). The Compensation Committee reviewed factors, facts and circumstances regarding compensation consultant independence, including a letter from FW Cook addressing FW Cook’s and their consulting team’s
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independent status with respect to the following factors: (i) other services provided to us by FW Cook; (ii) fees we pay to FW Cook as a
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Board of Directors and Corporate Governance |
percentage of their total revenues; (iii) FW Cook’s policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship between FW Cook or members of their consulting team that serves the Compensation Committee and a member of the Compensation Committee; (v) any shares of our stock owned by FW Cook or members of their consulting team that serves the Compensation Committee; and (vi) any business or personal relationships between our executive officers and FW Cook or members of their consulting team that serves the Compensation Committee. After discussing these factors, facts and circumstances, the Compensation Committee affirmed the independent status of FW Cook and concluded that there are no conflicts of interest with respect to FW Cook.
At the end of 2020, the Compensation Committee engaged another compensation consulting firm, Pay Governance, switching our compensation consulting firms as a good compensation governance practice. Pay Governance reports directly to the Compensation Committee. Pay Governance receives no compensation from the company other than for its work in advising the Compensation Committee and maintains no other economic relationships with the company. Pay Governance interacts directly with members of our management only on matters under the Compensation Committee’s oversight.
The Compensation Committee considered the independence of Pay Governance in light of the rules regarding compensation committee advisor independence mandated under the Dodd-Frank Act. The Compensation Committee reviewed factors, facts and circumstances regarding compensation consultant independence, including a letter from Pay Governance addressing Pay Governance and their consulting team’s independent status with respect to the following factors: (i) other services provided to us by Pay Governance; (ii) fees we pay to Pay Governance as a percentage of their total revenues; (iii) Pay Governance’s policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship between Pay Governance or members of their consulting team that serves the Compensation Committee and a member of the Compensation Committee; (v) any shares of our stock owned by Pay Governance or members of their consulting team that serves the Compensation Committee; and (vi) any business or personal relationships between our executive officers and Pay Governance or members of their consulting team that serves the Compensation Committee. After discussing these factors, facts and circumstances, the Compensation Committee affirmed the independent status of Pay Governance and concluded that there are no conflicts of interest with respect to Pay Governance.
Compensation Committee interlocks and insider participation
No member of the Compensation Committee:Committee (i) was, during the year ended December 31, 2017,2020, or had previously been, an officer or employee of the company or (ii) had any material interest in a transaction with the company or a business relationship with, or any indebtedness to, the company. No interlocking relationships existed during the year ended December 31, 2017,2020, between any member of the Board or the Compensation Committee and an executive officer of the company.
Code of Ethics and Business Conduct and Governance Guidelines
The Board has adopted a code of ethics and business conduct that applies to all employees and directors. The Board has formalized policies, procedures and standards of corporate governance that are reflected in our Governance Guidelines.
Our Code of Ethics and Business Conduct outlines in great detail the key principles of ethical conduct expected of our employees, officers and directors, including matters related to conflicts of interest, use of company resources, fair dealing, and financial reporting and disclosure. The code establishes formal procedures for reporting illegal or unethical behavior to the company’s internal ethics committee. These procedures permit employees to report any concerns, including concerns about the company’s accounting, internal accounting controls or auditing matters, on a confidential or anonymous basis if desired. Employees may contact the ethics committee bye-mail, email, in writing, byweb-based report or by calling a toll-free telephone number. Any significant concerns are reported to the Audit Committee in accordance with the code.
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Simultaneous Board service
Our governance guidelines require that, if a director serves on three or more public company boards simultaneously, including our Board, a determination is
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made by our Board as to whether such simultaneous service impairs the ability of such member to effectively serve the company. Messrs. Fotiades Losh,and Lyons O’Connor and ZollarsMs. Kennard currently serve on at least three public company boards, including our Board. In each case, our Board has determined that such simultaneous board service does not impair the Board member’s ability to be an effective member of our Board. None
Mr. Fotiades is the chief executive officer and a director of our directors currently serve on more than four public company boards (including our Board).Cantel Medical Corp. He has advised us that he will no longer be CEO of Cantel Medical Corp. (or CEO in any other capacity) upon the closing of Steris Corporation’s acquisition of Cantel Medical Corp., expected to occur in the second quarter of 2021. Should the Steris acquisition terminate or not close, Mr. Fotiades will nevertheless retire as CEO of Cantel Medical Corp.
Certain relationships and related party transactions
We do not have any related party transactions to report under relevant SEC rules and regulations. According to our Articles of Incorporation, the Board may authorize any agreement or other transaction with any party even though one or more of our directors or officers may be a party to such an agreement or is an officer, director, stockholder, member or partner of the other party if: (i) the existence of the relationship is disclosed or known to the Board, and the contract or transaction is authorized, approved or ratified by the affirmative vote of not less than a majority of the disinterested directors, even if they constitute less than a quorum of the Board; (ii) the existence is disclosed to the stockholders entitled to vote, and the contract or transaction is authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote (excluding shares owned by any interested director or officer or the organization in which such person is a director or has a material financial interest); or (iii) the contract or transaction is fair and reasonable to the company.
We recognize that transactions between us and related parties can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations other than the company’s best interests and the best interests of our stockholders. Related parties may include our directors, executives, significant stockholders and immediate family members and affiliates of such persons. Accordingly, several provisions of our code of ethics and business conduct are intended to help us avoid the conflicts and other issues that may arise in transactions between us and related parties, prescribing that:
| employees will not engage in conduct or activity that may raise questions as to the company’s honesty, impartiality or reputation or otherwise cause embarrassment to the company; |
| employees shall not hold financial interests that conflict with, or leave the appearance of conflicting with, the performance of their assigned duties; |
| employees shall act impartially and not give undue preferential treatment to any private organization or individual; and |
| employees should avoid actual conflicts or the appearance of conflicts of interest. |
These provisions of our code of ethics and business conduct may be amended, modified or waived by the Board or the Governance Committee, subject to the disclosure requirements and other provisions of the rules and regulations of the SEC and the NYSE.
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No waivers of our code of ethics and business conduct were granted in 2017.2020.
Although we do not have detailed written procedures concerning the waiver of the application of our code of ethics and business conduct or the review and approval of transactions with directors or their affiliates, our directors would consider all relevant facts and circumstances in considering any such waiver or review and approval.
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Executive Officers |
Biographies of our executive officers as of December 31, 2017,March 2021, other than Mr. Moghadam, are presented below. Information for Mr. Moghadam is included above under “Board of Directors and Corporate Governance.” All of our executive officers are treated as named executive officers (each an “NEO”). for purposes of this proxy statement.
Thomas S. Olinger: Chief Financial Officer
Mr. Olinger, 51,54, has been our chief financial officer since May 2012 and was our chief integration officer from June 2011 to May 2012. Mr. Olinger was the chief financial officer of AMB from March 2007 to June 2011. Prior to joining AMB in February 2007, Mr. Olinger was the vice president and corporate controller at Oracle Corporation, an enterprise software company and provider of computer hardware products and services. Prior to his employment with Oracle, Mr. Olinger was an accountant and partner at Arthur Andersen LLP, where he served as the lead partner on our account from 1999 to 2002. Since January 2011, Mr. Olinger has served as a director of American Assets Trust, a real estate investment trust investing in office, retail office, and residential properties. Mr. Olinger holds a Bachelor of Science degree in finance from the Kelley School of Business at Indiana University.
Eugene F. Reilly: CEO, The AmericasChief Investment Officer
Mr. Reilly, 57,59, has been our chief investment officer since March 2019. Mr. Reilly was our CEO, the Americas, since the Merger infrom June 2011 until March 2019, and he served as president, the Americas, as well as a number of other executive positions, at AMB from October 2003 until the Merger in June 2011. Mr. Reilly serves on the technical committee of FIBRA Prologis, a publicly traded Mexican REIT that is sponsored and managed by the company. Prior to joining AMB in October 2003, Mr. Reilly was chief investment officer of Cabot Properties, Inc., a private equity industrial real estate firm of which he was also a founding partner. From August 2009 until December 2015, Mr. Reilly served as a director of Strategic Hotels and Resorts, an owner and asset manager ofhigh-end hotels and resorts. Mr. Reilly holds an A.B. degree in economics from Harvard College.
Edward S. Nekritz: Chief Legal Officer, General Counsel and Secretary
Mr. Nekritz, 52,55, has been our Chief Legal Officer,chief legal officer, general counsel and secretary since the Merger in June 2011. Mr. Nekritz was general counsel of the Trust from December 1998 to June 2011 and secretary of the Trust from March 1999 to June 2011. Mr. Nekritz serves on the technical committee of FIBRA Prologis. Prior to joining the Trust in September 1995, Mr. Nekritz was an attorney with Mayer, Brown & Platt (now Mayer Brown LLP). Mr. Nekritz holds a Juris Doctor degree from the University of Chicago Law School and an A.B. degree in government from Harvard College.
Gary E. Anderson: CEO, Europe and AsiaChief Operating Officer
Mr. Anderson, 52,55, has been our chief operating officer since March 2019. Mr. Anderson was our CEO, Europe and Asia, since the Merger infrom June 2011.2011 until March 2019. Mr. Anderson held various positions with the Trust from August 1994 to June 2011, including head of the Trust’s global fund business from March 2009 to June 2011 and president of the Trust’s European operations from November
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2006 to March 2009. Prior to joining the Trust, Mr. Anderson held various positions with Security Capital Group Incorporated, a diversified real estate investment company. Mr. Anderson holds a Master of Business Administration in finance and real estate from the Anderson Graduate School of Management at the University of California at Los Angeles and a Bachelor of Arts in marketing from Washington State University.
Michael S. Curless: Chief InvestmentCustomer Officer
Mr. Curless, 54,57, has been our chief customer officer since March 2019. Mr. Curless was our chief investment officer since the merger infrom June 2011.2011 until March 2019. Mr. Curless was chief investment officer of the Trust from September 2010 to June 2011, and he was with the Trust in various capacities from August 1995 through February 2000. Mr. Curless was president and a principal at Lauth, a privately-heldprivately held national construction and development firm, from March 2000 until rejoining the Trust in September 2010. Prior thereto, he was a marketing director with the Trammell Crow Company. Mr. Curless holds a Master of Business Administration in finance and marketing and a Bachelor of Science in finance from the Kelley School of Business at Indiana University.
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Environmental Stewardship, Social Responsibility and Governance |
Environmental Stewardship, Social
Responsibility and Governance
ESG UNLOCKS VALUE FOR PROLOGIS
ESG is essential to our value-creation strategy, delivering quantifiable benefits today and for the long term
For nearly four decades, our commitment to environmental stewardship, social responsibility and good governance (ESG) has made us a leader in our industry and beyond. ESG is woven into our fabric and informs decision-making from the boardroom to all corners of our global operations. Our ESG focus:
· | Drives innovation. We future proof our business and build resilience by operating on the cutting edge. We have committed to build 100% sustainably certified new development and are exploring innovative circular and sustainable building design and technologies such as borehole thermal energy storage and dynamic energy monitoring systems. |
· | Expands our value proposition beyond real estate. For example, 56% of our top 25 customers have turned to our LED programs as a simple solution for enhancing their employees’ work environment while reducing costs and environmental impact. |
· | Deepens our relationships. The goodwill we build with our stakeholders is a competitive advantage. Through our Community Workforce Initiative (CWI) we have formed partnerships with communities and local governments in nine of our key markets to address our customers’ growing needs for qualified labor. In 2020, we developed a digital training curriculum, leveraging virtual reality and mobile technology. Nearly 4,000 individuals registered in just the first two months after launch. |
· | Attracts and retains top talent. We received an employee engagement score of 82% on our 2020 Employee Engagement Survey, which captured input from 92% of employees across the globe. This result is ten points above the U.S. average.(2) |
· | Reduces our capital costs. In 2020, we raised more than $2.5 billion in green bonds globally at a weighted average rate of 1.53% to fund our green projects at some of the tightest credit spreads in the market, demonstrating our financial resilience through the economic uncertainty of the COVID-19 pandemic. |
Prologis Park Venlo, Venlo, Netherlands
(1) | All data contained in this section is as of 12/31/2020 unless otherwise stated. |
(2) | Based on comparative data from the Qualtrics global company index of employer data. |
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Leading the Way to a Sustainable Future
1st | 1st | 1st | ||||||
among sector peers (Americas & Asia) in Global Real Estate Sustainability Benchmark (GRESB). | WELL-certified logistics building by the International WELL Building Institute. | logistics real estate company to set a carbon reduction target approved by the Science Based Targets initiative (SBTi). | ||||||
Top 10% | 12th year | 3rd | ||||||
of global sustainable companies recognized by the 2020 DJSI World Index. | on Corporate Knights’ Global 100 Most Sustainable Corporations in the World list. | most onsite installed solar capacity among U.S. corporations; 1st among real estate companies for commercial solar capacity.(1) |
Prologis Park DatteIn, DatteIn, Germany
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Prologis’ ESG Goals Raise the Bar
We have made significant progress toward our ESG commitments and are on track to accomplish more, continuing to push the boundaries of ESG leadership globally.
SDG | Goal | Target year | 2020 Progress | |||||
Environmental Stewardship | ||||||||
Reduce total Scope 3 GHG emissions(1) by 15% (2016 baseline) | 2025 | 13%reduction 2016-2019(2) | ||||||
Install 200 MW of solar capacity on our buildings | 2020 | Achieved in 2019 | ||||||
Install 400 MW of solar capacity on our buildings | 2025 | 252 MW through the end of 2020(3) | ||||||
100% of new development and redevelopment (by number of projects) will achieve sustainable building certification | Recurring annually | New goal established We will begin reporting with 2021 performance | ||||||
Install LED lighting across 100% of our entire portfolio (by area) | 2025 | 42% through the end of 2020(4) | ||||||
Social Responsibility | ||||||||
Train 25,000 participants through our Community Workforce Initiative (CWI) | 2025 | 5,672 trained through the end of 2020 | ||||||
75,000 hours supporting our local communities around the globe | 2025 | 22,417hours 2019-2020 | ||||||
Governance | ||||||||
Ensure 100% of employees complete ethics training | Recurring annually | 100% in 2020 |
(1) | Scope 3 emissions account for 99.9% of Prologis’s total Scope 1, 2 and 3 carbon footprint. |
(2) | 2020 data not yet available; to be published with our forthcoming 2020 Sustainability Report. The 13% reduction in Scope 3 GHG emissions is equivalent to removing 1,095,000 typical passenger vehicles from the road for a year. |
(3) | Equivalent to the amount of energy needed to power 42,250 homes for a year. |
(4) | Equivalent to the area of 4,291 soccer fields. |
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Environmental Stewardship, Social Responsibility and Governance |
Delivering Sustainable Solutions to Our Customers
Prologis’ ability to help customers meet their sustainability goals is a competitive advantage for our business
Our customers understand the value of sustainability. For example, eight of our top ten customers have set their own carbon and/or energy reduction commitments. By leveraging our resources, expertise and scale, we help customers meet their objectives and stay ahead of changing ESG expectations.
Our turnkey Prologis Essentials SolarSmart and LED solutions accelerate energy savings and environmental footprint reductions for our customers. With our strong value proposition, we proactively reach out to customers to discuss how Prologis can work side by side with them to enhance their sustainability performance.
PROLOGIS ESSENTIALS: SOLARSMART What it does: Uses rooftop solar generating capacity to help our customers access the financial, operational and sustainability benefits of solar without upfront capital costs or long-term financial commitments. Customers pay only for the energy they use. | PROLOGIS ESSENTIALS: LED SOLUTIONS What it does: Helps customers upgrade to efficient LED lighting without upfront capital costs, paying only pennies per square foot in a monthly fee structure. Customers retain 100% of the energy/maintenance savings and often benefit from gains in safety, productivity and employee satisfaction. 90% of our top ten customers participate in this program. |
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Environmental Stewardship, Social Responsibility and Governance |
Building for Tomorrow, Today
Prologis’ scale and long-standing strategy to stay ahead of what’s next puts us in an ideal position to offer our customers state-of-the-art sustainable technologies such as EV infrastructure, building automation and smart meters.
Future-proofed by design, our buildings incorporate innovative technologies that promote high-efficiency operations, optimize the human experience and reduce occupational costs. We build to achieve independent, green building certification, showcasing sustainable building innovation that spans the globe:
· | Borehole thermal energy storage – France: accesses stored underground heat energy for HVAC. |
· | PARKlife amenities – Hungary: enhances the user experience within our parks through nature trails, sports fields and other outdoor recreational spaces. |
· | Unified LED/motion sensor solution – Japan: drives a 43% electricity reduction from conventional LEDs and captures data on the use of space from motion sensor activations. |
· | Digital pumproom monitoring – United States: identifies leaks and equipment malfunction remotely. |
· | Circular building design – the Netherlands: plans for building disassembly; incorporates recycled/recyclable materials. |
Prologis Park Waalwijk, Waalwijk, Netherlands
Prologis Proxy Statement | March 19, 2021 | 35 |
Environmental Stewardship, Social Responsibility and Governance |
Committed to our Stakeholders During Unprecedented Times
We work hard to cultivate lasting relationships with our stakeholders. In turn, we build the foundation of trust that brings us together even in the most difficult times. As COVID-19 began to batter communities across the globe, we were ready. We mobilized our teams quickly to help our customers, communities and employees, working day and night to establish a fast-tracked structure for how to best deploy our resources to support those in need.
Logistics space donated through our Space for Good program in Dallas, Texas
Customers | Communities | |||
·COVID-19 RELIEF CENTER:24/7 support for our customers. ·PERSONAL PROTECTIVE EQUIPMENT: sourcing hard-to-obtain safety gear. ·PPP(1) TOOLKIT: made available within days of legislation to help customers understand the resources available to them. | ·$5 MILLION global relief fund launched by the Prologis Foundation in 2020 to help charities around the world mitigate the impacts of the pandemic. ·$9.3 MILLION of in-kind logistics space donated to municipalities, hospitals and relief organizations on the frontlines of the COVID-19 response. | |||
Employees | Investors | |||
·SUPPORT BENEFITS:ensure that employees have ample access to resources such as telehealth, free testing for COVID-19, quarantine pay and childcare. ·0% INTEREST LOANS:offered to non-management employees whose household incomes were impacted by the pandemic. | ·RAPID ANALYTICS AND INSIGHTS about our response plans and the impacts of the pandemic on logistics real estate in six special reports over four months. ·THOUGHT LEADERSHIP through such research as our collaboration with MIT on the sustainability impacts of e-commerce vs. retail. ·34% OUTPERFORMANCE over MSCI REIT Indexduring the pandemic.(2) |
(1) | Paycheck Protection Program, a U.S. federal loan program helping businesses during the COVID-19 pandemic. |
(2) | Since March 11, 2020, the official start of the pandemic per the World Health Organization. |
Prologis Proxy Statement | March 19, 2021 | 36 |
Environmental Stewardship, Social Responsibility and Governance |
Solutions for Our Customers’ Labor Challenges
Community Workforce Initiative (CWI)
The Pain Point: | Prologis’ Response: | Value Created: | ||
· Lack of qualified talent to meet accelerating supply chain demands. · Lack of knowledge about the rewards of logistics careers, and limited resources for logistics-focused job training. | · Create modernized logistics training to build career pathways and upskill talent for the rapidly evolving logistics industry. · Feature cutting-edge digital training technologies, all online and mobile-friendly. · Embed CWI into communities through partnerships with government-sponsored jobs programs and local organizations focused on labor. | · Differentiated our value proposition by building a pipeline of diverse, qualified and engaged talent for our customers. In the first two months after launch of the digital platform, about 4,000 people enrolled. · Built goodwill with communities and local municipalities by unlocking economic opportunity—nine market partnerships established to date, with plans to expand globally. |
“GEODIS’ success is driven by our teammates, and Prologis CWI’s ‘learn anywhere, anytime’ online program provides us with the flexibility to train and develop talent from the ground up.” Shannon Leffler |
Technology and Building Design
Our scale enables us to help our customers address their human capital challenges from many angles.
· Our Prologis Ventures team invests in logistics solutions such as WorkStep software that connects logistics employers with talent and Kinetic wearable technology that monitors movements to keep employees safe. In Japan we invest in Taimee, an app that allows customers to hire temporary logistics workers with the efficiency of a digital interface. · Our sustainable building design fosters healthy and attractive environments for our customers’ workforce. We were the first logistics real estate company to develop a WELL-certified facility, marrying our standard sustainable design features with wellness elements such as walking trails, athletic facilities and spaces for employee respite. |
Prologis Proxy Statement | March 19, 2021 | 37 |
Environmental Stewardship, Social Responsibility and Governance |
Culture and Talent: The Backbone of Our Success
Fostering talent and a strong corporate culture is one of our top three business imperatives. It drives results on our other two strategic priorities: customer centricity and change through innovation and operational excellence. To illustrate:
· We recently implemented Customer Experience Teams (CETs), which comprise five unique customer-facing roles working as an integrated team to serve our customers. This shift has created a more inclusive, collaborative and innovative culture for our colleagues globally through training and skills development. · Our Net Promoter Score (NPS) increased by five points in 2020 – evidence of the success of CET and the work of our customer teams even during the unique challenges of the pandemic. |
Prologis employees in Denver, CO
Prologis Proxy Statement | March 19, 2021 | 38 |
Environmental Stewardship, Social Responsibility and Governance |
Prologis Pillars of Inclusion & Diversity
Inclusion & Diversity (I&D) is the foundation of our human capital program, focused on advancing inclusive behaviors and countering unconscious bias. We are implementing core HR system enhancements to clarify the criteria for our hiring and promotion decisions and require alignment with our staffing agencies. We train our global leaders via I&D-focused leadership development curriculum and cloud-based mentoring.
We provide opportunities in the logistics industry for minority and underserved populations through our Community Workforce Initiative (discussed above), as well as through partnerships with the Urban Land Institute and NAIOP. We fund scholarships for underrepresented students at partner schools and created the HiPE (High Potential Employee) rotational leadership program to give diverse candidates with STEM degrees exposure to our business. And in 2020, Prologis donated more than $1 million to charities fighting racial injustice.
While we are proud of the progress we have made, like achieving a roughly equal gender split across all employees, we know there is so much more to do. We remain committed to driving long-term, meaningful change both within Prologis and across the industry.
Infrastructure ·RECRUITING: restructure interview process ·PROMOTIONS: establish consistent framework ·TALENT: mentor/sponsorship development program | Engagement ·AFFINITY: aligning around employee resource groups ·GRASSROOTS: support to local ambassadors ·MEASUREMENT: inclusion as a KPI (engagement) | Community ·PARTNERSHIPS: expand network globally ·INVEST: social justice and other causes ·ALIGNMENT: with vendors committed to diversity |
Prologis Proxy Statement | March 19, 2021 | 39 |
Environmental Stewardship, Social Responsibility and Governance
Environmental Stewardship, Social Responsibility and Governance |
Good Governance Protects Our Business
Risk governance and oversight | Resilience | |
Strong, integrated risk oversight at every level of our company protects business value and delivers results for our stakeholders. · Our corporate Risk Management division works with regional counterparts to continuously review global and local risks. This work includes assessing environmental and climate-related risks associated with flooding, sea level rise and extreme weather events, as well as risks from seismic activity. · Prologis’ Investment Committee, comprised of our CEO, CFO and other executive team members, assesses the risks associated with capital decisions. · Rigorous internal and third-party audits help assure adherence to the company’s controls and procedures. · Prologis’ Customer Advisory Board and our Customer Sustainability Advisory Council provide third-party insights into existing and emerging risks. · Global Health & Safety Committee establishes policies and practices to enhance protections for our employees and contractors. | Strong governance and oversight practices, such as those highlighted below, enable us to anticipate and adapt to market, regulatory and environmental changes. Financial resilience: · Our efficient cost structure positions us for growth. We have one of the strongest balance sheets in the industry with $4.8 billion in liquidity. · Prologis’ comprehensive global insurance infrastructure and expedited damage assessment and repair services assure quick responses to risk events. Reputational resilience: · Protections against bribery and corruption include mandatory annual training on our Code of Ethics and Business Conduct for all employees and global FCPA training. · Our cybersecurity team maintains continuous vigilance against threats and attacks. Operational resilience: · Our Disaster Preparedness and Recovery Plan and Global Business Continuity and Emergency Response Plan ensure employee safety, operational continuity and continuous support for our customers. · Responsible investment practices advance green design principles and mitigate environmental, climate and other ESG risks. |
Drone rooftop inspection at International Park of Commerce, Tracy, California
Prologis Proxy Statement | March 19, 2021 |
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| Environmental Stewardship, Social Responsibility and Governance |
Prologis’ Approach to Environmental Stewardship, Social Responsibility and Governance (ESG)
Our Investment in the FutureESG Governance
· | ESG oversight is integrated into our management processes and infused into the full breadth of our operations, informing decision-making across functions and at every level of the company. |
· | Global functional leaders are responsible for integrating ESG principles into the work of their teams and executing on priority initiatives. For example: |
– | Global development builds to green design standards and innovates to stay ahead of the evolving supply chain. |
– | Prologis Ventures invests in companies on the cutting edge delivering ESG innovations. |
– | Prologis Essentials provides ESG solutions for our customers including SolarSmart, LED lighting and automation technology. |
– | Investor & Client Relations proactively communicates the Prologis ESG value proposition to investors. |
· | Our regional ESG Committees are responsible for implementing Prologis’ ESG agenda at the local level. They ensure our ESG efforts best meet customers’ needs and are tailored to regional circumstances. |
· | Prologis employees breathe life into our ESG activities. From innovation to execution, they make ESG happen. |
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| Environmental Stewardship, Social Responsibility and Governance |
Recognition for Our environmental goalsESG Leadership
In a world where choice matters – where customers have a choice of landlord, employees have a choice of employer, and objectives are linkedcommunities with scarce infill real estate have a choice of developers – our strategic business goals and objectives
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ESG leadership makes Prologis the natural choice.
PROLOGIS ENVIRONMENTAL STEWARDSHIP2020 awards and recognition
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Prologis Ports Jersey City
Spotlighting the interconnection of Prologis development acumen with ESG
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Building customer, investor and community relationships and investing in our talent serves a critical business purpose
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Employee health and wellness
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Strong governance and oversight ensures the resilience of our business, creating a culture of uncompromising integrity
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PROLOGIS ESG TEAR SHEET
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Compensation Discussion and& Analysis
Prologis Proxy Statement | March 19, 2021 | 43 |
Compensation Discussion and Analysis |
Compensation Discussion and Analysis Summary
Unique future- A competitive differentiator in all operating environments | Resilient business
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Delivered strong stockholder returns through the pandemic | Performance-based Pays only when justified by performance |
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Prologis Proxy Statement | March 19, 2021 | 44 |
Compensation Discussion and Analysis | ||
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary2020 Prologis Highlights
In 2017, we outperformed both operationally and in the equity markets, while managing our business responsibly
Over the past seven years from 2014 to 2020. |
Core FFO per share is anon-GAAP measure. Please see Appendix A for a discussion and |
(3) | TSR is total shareholder return. TSR is calculated based on the stock price appreciation and dividends paid to show the total return to a stockholder over a period of time. TSR assumes dividends are reinvested in common stock on the day the dividend is paid. |
(4) | Change in ratings by Moody’s and S&P, respectively, in 2016 and maintained to date. Maintenance of credit ratings can impact our bonus determinations as discussed later, as well as our business, refinancing and other capital markets activities, our ability to manage debt maturities, our future growth and our development and acquisition activity. A |
(5) | Increase in AUM and decrease in leverage over the |
(6) | By Corporate Knights. |
(7) | By CDP (formerly Carbon Disclosure Project), a global climate change assessor. |
(8) | Includes 1.6 million square feet of logistics space donated to charitable organizations during 2020 (valued at $9.3 million). |
All company operational information in CD&A is for the year ended or as of December 31, 2017,2020, unless otherwise noted. See Appendix A for definitions and discussion ofnon-GAAP measurements and reconciliations to the most directly comparable GAAP measures and for additional detail regarding definitions of terms as generally explained in CD&A. The Compensation Committee reviews management’s performance against key company performance measures, such as Core FFO per share, discussed below. See “2017“2020 Compensation Decisions: Annual Base Salary and Bonus Opportunity” for more information about our key performance measures and targets.
Prologis Proxy Statement | March 19, 2021 | 45 |
Compensation Discussion and Analysis |
2020 Compensation and Stockholder Outreach Highlights
Our compensation program pays when stockholders win.
· Target compensation is aimed around the median of our comparison group, with additional earning opportunities requiring significant outperformance. · Outperformance opportunities are paid only after stockholders are rewarded substantially. · Our performance dictates compensation levels. 100% of our CEO compensation is contingent on operational and financial performance, with most components determined formulaically. |
STOCKHOLDER OUTREACH
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Engaged more than | 85% | of our stockholders | (1)
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(1) | Calculated by outstanding shares of common stock of institutional stockholders. Engagement includes outreach regarding performance, governance, executive compensation, ESG and other matters. |
Prologis Proxy Statement | March 19, 2021 | 46 |
Compensation Discussion and Analysis |
· | Our Board and management are committed to engaging with and listening to our stockholders through regular and proactive outreach. We solicit input from our stockholders regarding our performance, governance, executive compensation, human capital management, environmental, social, and other matters. Our two-way dialogue with our investors deepens our Board’s understanding of stockholder areas of focus and provides investors with insight into our Board’s decision-making and processes. |
· | We continually assess our programs based on stockholder feedback. Our priority is to ensure that our compensation programs are performance based. Investors appreciate that our compensation is supported by strong performance and our responsiveness to their feedback over the years has resulted in improvements such as longer vesting terms and an absolute cap on our outperformance plan. |
Themes heard in outreach: 1.Our stockholders appreciate our outperformance and the value we have created for them long term as well as through the challenges of the current operating environment. 2. Our stockholders agree that our compensation reflects our performance and our compensation program is working as designed to pay for performance. 3. Stockholders are focused on board composition and diversity. 4. Stockholders value our longstanding commitment to ESG, which is embedded into our business strategy and creates value for our company. Our investors are assessing ESG in their investment criteria, seeking standardized ESG metrics. They are also increasingly focused on how compensation incentivizes ESG. | Our response: 1. We continued to pay a $1 base salary to our CEO, so that his compensation remains 100% at risk and based on performance. Also, we did not increase 2020 base salaries for our other NEOs, keeping 2020 fixed compensation under 10% of total compensation. In fact, we have not increased our NEO base salaries in the last five years. 2. We did not change our 2020 bonus targets set prior to the pandemic. These targets were ambitious by pre-pandemic standards, requiring 14% growth in Core FFO per share over 2019 performance. 3. We enhanced our board diversity disclosure to include additional information on board ethnicity, race and gender. We also amended our Governance Guidelines to include a director/CEO recruitment diversity policy. 4. We continue to demonstrate industry-leading ESG practices. In response to investor feedback, we enhanced disclosure, including a mapping to Taskforce on Climate-Related Financial Disclosures (TCFD) and the Principles for Responsible Investment (PRI), as well as SASB information, in our ESG report and microsite. Also, we continue to include ESG-related goals in our bonus metrics incentivizing our LED and solar programs and our inclusion and diversity initiatives. |
Prologis Proxy Statement | March 19, 2021 | 47 |
Compensation Discussion and Analysis |
2020 NEO compensation highlights
· | Fixed compensation/salary is the smallest portion of total pay and is below typical peer levels for fixed pay/salary. |
· | Increased the weighting of operational bonus metrics |
· | Restructured our peer group methodology and composition to better reflect our 2020 portfolio growth and our unmatched breadth of size and scope in the REIT industry. (Such peer group changes did not result in an increase in target compensation or change in compensation program structure.) |
· | Reduced NEO bonus awards to pay at target to reallocate funds to employees who went above and beyond to serve our customers during the pandemic. (NEO bonuses were reduced to at-target levels despite our above-target performance against bonus goals established pre-pandemic.) |
NO ADJUSTMENTS MADE TO COMPENSATION DUE TO PANDEMIC · No changes to compensation program structure · No adjustments to payouts (except to reduce NEO bonuses) · No changes to pre-pandemic 2020 bonus targets · No adjustments to long-term performance awards · No one-time awards · No truncating of performance periods · No changes of performance-based compensation to time-based compensation |
Prologis Proxy Statement | March 19, 2021 | 48 |
Compensation Discussion and Analysis |
Prologis business model is designed for growth and resilience.
· | Our business model centers on our customers, who need well-located, high-quality logistics space in the world’s busiest consumption markets. The importance of logistics and a resilient supply chain are more apparent than ever in the ongoing COVID-19-impacted environment. Our forward-thinking strategy is ahead of the curve, expanding our products and services to meet the related needs of our customers. |
· | The interplay of the leasing operations, development and strategic capital components of our business model allows us to grow our portfolio across the globe, while managing risk responsibly. Such growth enables us to provide our customers what they need. |
· | This model positioned us to meet the demands of the supply chain revolution accelerated by the pandemic. Despite a difficult operating environment, we delivered 21.3% growth in rent change on rollover year-over-year in our owned and managed portfolio and historical highs in annual leasing volume (171 MSF of space) and development value creation ($942 million) at year-end 2020. |
· | We also earned a record-breaking $477 million in asset management fees and promote incentives in 2020 through the management of our strategic capital ventures for our private investors. |
· | Strategic capital further differentiates our model, making us the only public logistics REIT that can self-fund capital deployment and development without the need to access the public equity markets. We develop properties to contribute to our ventures and use the contribution proceeds we receive to reinvest in new development in line with market and customer demand. Owning assets through these ventures allows us to reduce our debt exposure as well as our currency risk, as the ventures operate primarily in their natural currencies. |
(1) | See Appendix A for definition of value creation. |
Prologis Proxy Statement | March 19, 2021 | 49 |
Compensation Discussion and Analysis |
Our business model is a differentiator.
· | Our model gives us the ability to be the preferred provider to our customers, delivering an unmatched package of prime real estate and scale-enabled services and solutions. The combination of our global reach, significant development platform and size and scope of our strategic capital business puts us in a unique category, setting us apart from other REITs. |
· | This model has allowed us to navigate the operational challenges of the pandemic, generating earnings through our significant development and strategic capital businesses and decreasing our interest expense by refinancing at lower rates that our credit commands—all capabilities unique to Prologis in the REIT space. |
(1) | Based on the Large-cap REIT Group, our historical REIT compensation comparison group. |
(2) | Calculated based on square feet of our owned and managed portfolio. |
(3) | Calculated based on strategic capital revenue earned from our consolidated and unconsolidated co-investment ventures compared to earned management fees of the Large-cap REIT Group. |
Prologis Proxy Statement | March 19, 2021 | 50 |
Compensation Discussion and Analysis |
Unlocking advantages of scale for our customers
· | Our footprint provides benefits beyond the capabilities of a typical real estate company. Our investments in technology, data and innovation have paid off as our customers seek solutions to meet demand intensified by the pandemic. |
OPPORTUNITIES | LEADING-EDGE ESG SOLUTIONS | ADDRESSING CUSTOMER LABOR PAIN POINTS | ||
Prologis Essentials Our customers benefit from our scale-driven purchasing power by taking advantage of our services and products such as forklifts, racking and sanitation services, all at lower costs. | Prologis Energy Solutions As one of the world’s largest LED buyers, we can procure LED cost-effectively for our customers to help mitigate increasing energy costs driven by the electrification of transportation and delivery. | Community Workforce Initiative We help build skilled workforces for our customers through community partnerships and our digital training curriculum, which is available anywhere, anytime via mobile technology. | ||
AHEAD OF TRENDS AND DISRUPTORS | ON TOP OF EVOLVING | DIGITIZING OUR CUSTOMER AND INVESTOR EXPERIENCE | ||
Prologis Data and Research Our thought leadership in logistics is one of many advantages of our scale-enabled information systems. Our data opportunity lies in our 984 million square feet across 19 countries and an estimated $2.2 trillion of goods that flow through our buildings annually.(1) | Prologis Labs and Ventures The pandemic has accelerated our customers’ exploration of robotic and smart building technologies, a focal point of our Prologis Labs and Prologis Ventures groups. | Investments in Technology Our digital resource center, which features online leasing and virtual property tour capabilities, met the COVID-19-driven technology needs of our customers and investors head-on. |
(1) | By Prologis Research and Oxford Economics as of June 30, 2020. |
Prologis Proxy Statement | March 19, 2021 |
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| Compensation Discussion and Analysis |
Our business delivers strong and durable long-term performance.
We have surpassed our peers in operational performance and dividend growth. The seven-year compound annual growth rates(1) of our net earnings per share and Core FFO(2) per share were 790 bps and 710 bps higher than the Large-cap REIT Group average.(3) Our dividend compound annual growth rate over the past seven years was 330 bps higher than the Large-cap REIT Group average.(1)(3) |
· | Since 2014, our annual net earnings per share have grown by 62%, our Core FFO(2) per share has |
(1) | Compound annual growth rates were calculated for the 2014-2020 period. |
(2) | Core FFO per share is anon-GAAP measure. Please see Appendix A for a discussion and reconciliations to the most directly comparable GAAP measure. See Appendix A for a calculation of the compound annual growth rate of our Core FFO per share. |
(3) | Based on weighted average market capitalization over the seven-year period for the Large-cap REIT Group. |
(4) | Calculated using our common stock prices and dividends, as applicable, at December 31, 2014 and December 31, 2020. |
(5) | 2020 net earnings was impacted by non-cash real estate depreciation related to the portfolio acquisitions of LPT and IPT. |
(6) | Growth of our year-end common stock price. |
Prologis Proxy Statement | March 19, 2021 | 52 |
Compensation Discussion and Analysis |
STRONG GROWTH RELATIVE TO PEERS(1)
Total Shareholder Return (7-Year) | ||||
800 bps greater TSR than | 140 bps greater TSR than | |||
Stock Price CAGR (7-Year) | Dividend CAGR(2) (7-Year) | |||
Earnings Per Share CAGR(3) (7-Year) | Core FFO Per Share CAGR(4) (7-Year) | |||
(1) | Based on the weighted average market capitalization over the seven-year period for the Large-cap REIT Group and other logistics REITs (Duke Realty Corporation, EastGroup Properties, Inc., First Industrial Realty Trust and Stag Industrial, Inc. (collectively, the “Other Logistics REITs”)). |
(2) | Excludes companies that did not report dividends for the full seven-year period. |
(3) | Excludes companies that had negative earnings per share in the initial period. |
(4) | Core FFO per share is a non-GAAP measure. Please see Appendix A for a discussion and reconciliation to the most directly comparable GAAP measure. See Appendix A for a calculation of the CAGR of our Core FFO per share. Excludes companies that did not report FFO at all or for the full seven-year period and uses FFO adjusted for comparability to Core FFO measures for companies that do not report Core FFO. |
Prologis Proxy Statement | March 19, 2021 | 53 |
Compensation Discussion and Analysis |
STRONG RISK OVERSIGHT PROTECTS LONG-TERM STOCKHOLDER VALUE
Loan-to-Market Value(1)
(1) | Loan-to-Market Value is a non-GAAP measure. A decrease in loan-to-market value ratios demonstrates decreased leverage risk. A loan-to-market value ratio is generally the ratio of our ownership share of debt to our ownership share of our gross market capitalization. Please see Appendix A for a discussion and calculation of Loan-to-Market Value. |
Our business model and top-rated balance sheet position us for strength in all operating environments
· | With Moody’s and S&P credit ratings(1) at A3/A-, respectively, we are one of the top credit-rated REITs with $4.8 billion in liquidity at year-end 2020. As a result, our bonds often trade at record low REIT credit spreads, market validation of our industry-leading balance sheet. |
· | Our business model and financial health well positioned us for resilience through the challenges of the pandemic. During 2020, we closed $17 billion of merger transactions, successfully integrating two multi-billion portfolios into our business surpassing synergy expectations. In 2020, we were able to access the financial markets globally at significantly low costs of capital, issuing $10.4 billion of debt at a weighted average interest rate of 1.8% and a weighted average term of approximately twelve years. This financing activity included $2.5 billion in green bonds issued at a weighted average rate of 1.5% and a weighted average term of approximately eleven years, a testament to the strength of our ESG program. We raised $3.6 billion in our strategic capital vehicles in 2020, increasing the number of investors in our private vehicles by 15%. |
· | As most of our customers are in “essential” industries, demand intensified in 2020 and far outweighed the challenges faced by the minority of our customers hardest hit by the pandemic. Our operations proved their resilience with a 99% rent collection rate at year-end 2020. |
RESILIENT PERFORMANCE DURING COVID-19 | ||
$25.0 B in investment activity(2) | 2020 rent collection 99% at year-end(3) | |
$3.6 B in strategic capital raised in 2020 | $10.4 B debt issued in 2020 at 1.8% weighted average rate and 12-year weighted average term(4) |
Prologis Proxy Statement | March 19, 2021 | 54 |
Compensation Discussion and Analysis |
(1) | A securities rating is not a recommendation to buy, sell or hold securities and is subject to withdrawal at any time by the rating organization. |
(2) | Owned and managed investment activity in 2020 includes mergers and acquisitions, development starts, building acquisitions, building and land dispositions, contributions, and our share of value creation from development stabilizations. |
(3) | As of year ended December 31, 2020 for our owned and managed portfolio. |
(4) | Owned and managed. |
Discussion of Compensation Comparison Group
No REITs provide a true comparison to Prologis.
· | Historically, we have used a comparison group comprised generally of the largest internally managed U.S. publicly traded REITs. While these REITs formerly were among the closest in comparison to us, our growth in our global operations, development and strategic capital platforms, as well as our Prologis Essentials business, further moves us into a category beyond the REIT industry. Some companies may individually demonstrate depth in one or two of these categories, but not across all. |
Large-cap REIT Group | Size(1) | Developer(2) | Global(3) | Strategic Capital(4) | ||||
PROLOGIS | ✔ | ✔ | ✔ | ✔ | ||||
American Tower Corporation | ✔ | ✔ | ✔ | |||||
AvalonBay Communities, Inc. | ✔ | |||||||
Boston Properties, Inc. | ✔ | |||||||
Crown Castle | ||||||||
Digital Realty | ✔ | ✔ | ||||||
Equinix, Inc. | ✔ | ✔ | ||||||
Equity Residential | ||||||||
Public Storage | ||||||||
Simon Property Group, Inc. | ✔ | ✔ | ||||||
Ventas | ✔ | |||||||
Welltower | ✔ |
(1) | Size threshold is at least $100 billion of AUM based on enterprise value. (Prologis’ AUM is $148 billion.) |
(2) | Total development portfolio is at least 3% of assets or development stabilizations are greater than $500 million. |
(3) | Operations in at least 10 countries. Prologis operates in 19 countries. |
(4) | Based on management of a business including open-ended funds and publicly-traded vehicles. Most comparison companies have joint ventures with one other partner. However, these joint ventures are structured and managed differently from our perpetual life funds (which can raise capital on a continual basis) and publicly traded vehicles with multiple investors that obtain liquidity by redemption or sale of their equity in the vehicles. |
Assets under management (AUM) reflects the full scope of our operations, 147% larger than other large-cap REITs.(1)
· | Our NEOs are assessed on the performance of all real estate held in our portfolio (in both consolidated and unconsolidated entities). |
· | Our AUM(2) captures an additional $62.9 billion in assets we manage in our unconsolidated strategic capital ventures that are not included in our consolidated balance sheet. 48% of our portfolio’s net operating income(3) is generated by these unconsolidated assets. |
Prologis Proxy Statement | March 19, 2021 | 55 |
Compensation Discussion and Analysis |
· | Due to the additional income generated by management fees and promotes paid to us by our strategic capital ventures, our return on assets held in our strategic capital business is greater than the return on assets held on our balance sheet by approximately 402 bps. |
· | The graphic below illustrates that our AUM is substantially greater than that of the Large-cap REIT Group as well as Other Logistics REITs. |
PROLOGIS AUM VS. AUM OF LARGE-CAP REIT GROUP AND OTHER LOGISTICS REITS(2)
(1) | Based on the average of the Large-cap REIT Group. |
(2) | AUMs of Large-cap REIT Group companies and Other Logistics REITs are derived from publicly available data as of December 31, 2020. Prologis AUM includes estimated investment capacity. |
(3) | As of December 31, 2020, for our owned and managed portfolio. Net operating income is a non-GAAP measure. Please see Appendix A for a discussion and reconciliation to the most directly comparable GAAP measure. |
Our substantial asset growth in 2020 and the evolution of our business prompt need to reassess peer group.
· | We completed two multi-billion-dollar merger transactions in early 2020, increasing our AUM by 25% and shrinking our industry group by acquiring two public logistics REITs. These transactions increased our size substantially. This growth, coupled with our Essentials business and our customer-focused solutions centering around innovation, data and technology, further differentiate us from our REIT peer group. This prompted our Compensation Committee to reassess and change our peer group methodology to focus on general industry peers that better reflect our size, scope and breadth. This methodology also gives the committee a more comprehensive understanding of the competitive landscape from which we would draw executive talent (versus the universe of smaller REITs). |
· | With guidance from FW Cook, our Compensation Committee consultant for 2020, the committee selected a group of 50 category-leading S&P 500 companies of significant scope and complexity from general industry groups. Prologis is around the median of this group based on total capitalization (comprising market capitalization, total debt and preferred equity). |
Prologis Proxy Statement | March 19, 2021 | 56 |
Compensation Discussion and Analysis |
Target core compensation did not increase as a result of peer group methodology changes.
· | The Compensation Committee concluded that no changes should be made to target core compensation for 2020 based on the competitive analysis using the new peer group. (Target core compensation comprises base salary, target annual bonus, and target annual LTI equity awards.) |
(1) | As of April 2020. |
Prologis Proxy Statement | March 19, 2021 | 57 |
Compensation Discussion and Analysis |
Target compensation is geared to the median of the peer group. Outperformance compensation is paid if significant above-market value is realized by stockholders.
· | The committee’s competitive analysis confirmed that target core compensation opportunities were positioned appropriately around the median of the peer set. |
· | Our program structure allows for above-median opportunities only if outperformance return hurdles are met and significant value is created for our stockholders. |
PROGRAM COMPONENTS REFLECT A BALANCE OF TSR AND OPERATIONAL PERFORMANCE METRICS
Target Core Compensation | Additional Incentive Opportunities | |||||
Base Salary | Bonus Opportunity | LTI Equity Awards | Outperformance Plan Awards | |||
$1 CEO base salary Other NEOs: less than 10% of compensation | 100% based on operational performance | 100% based on TSR performance per | Prologis outperformance plan (POP) Prologis promote plan (PPP) 100% based on operational outperformance per formula | |||
(1) | The Compensation Committee may reduce awards based on assessments of individual performance. See “How It Works: Annual LTI Equity Awards” for further detail. |
Prologis Proxy Statement | March 19, 2021 | 58 |
Compensation Discussion and Analysis |
Discussion and Analysis of CEO Compensation
COMPANY PERFORMANCE DURING CEO TENURE IN THE LAST SEVEN YEARS | ||||||
234.7% TSR(1) | 1,103 bps Outperformance over MSCI REIT | 963 bps Outperformance over Cohen | ||||
Long-term 11.0% dividend CAGR | Superior financial 17.8% net earnings and 12.7% Core FFO(3) per share CAGR | Best-in-class A3/A- credit ratings(4) |
Prologis Park Pineham, Northampton, UK
(1) | TSR is total shareholder return. TSR is calculated based on the stock price appreciation and dividends paid to show the total return to a stockholder over a period of time. TSR assumes dividends are reinvested in common stock on the day the dividend is paid. |
(2) | Outperformance over the seven-year annualized TSR of the MSCI REIT Index and the Cohen & Steers Realty Majors Portfolio Index (the “Cohen & Steers REIT Index”). |
(3) | Seven-year CAGR of net earnings per share and Core FFO per share, respectively. Core FFO per share is a non-GAAP measure. Please see Appendix A for a discussion and reconciliation to the most directly comparable GAAP measure and for a calculation of the CAGR of Core FFO per share. |
(4) | By Moody’s and S&P, |
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A Unique Business Model Thinking Ahead
Prologis Proxy Statement | March 19, 2021 |
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| Compensation Discussion and Analysis |
Our Operations Demonstrate Continued StrengthCEO performance record supports compensation payouts.
In our outreach efforts, our investors told us they are highly impressed with Mr. Moghadam’s performance and appreciate the results he continually delivers to our stockholders. As a result of Mr. Moghadam’s leadership in the last seven years, we:
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Our Development Business Creates Significant Value
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Our Steady Strategic Capital Business Adds Recurring Fee Streams to Our Bottom Line
Raised $21.6 billion of |
Streamlined our strategic capital business while growing fees by 148.1% (not including promotes). |
Achieved A3/A- credit ratings(4) from Moody’s and S&P, respectively, and maintained one of the best balance sheets in our |
Our outperformance weathering the COVID-19 pandemic further evidences the value Mr. Moghadam continues to deliver to the recurring management fee streams, boost our earnings and cash flows benefitting our stockholders. Our 1-year TSR was 14.6%, outperforming the MSCI REIT Index by 2,220 bps and the Cohen & Steers REIT Index by 1,962 bps at year-end 2020.(1)(5) Demonstrating the continued strength of our leasing operations, we delivered 21.3% growth in rent change on rollover in our owned and managed portfolio year-over-year in 2020.
(1) | TSR is total shareholder return. TSR is calculated based on the stock price appreciation and dividends paid to show the total return to a stockholder over a period of time. TSR assumes dividends are reinvested in common stock on the day the dividend is paid. |
Outperformance over the |
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Smart Management of Risk Protects Long-term Stockholder Value
(3) |
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Our Business Model Delivers Long-term Growth on Both a Relative and Absolute Basis
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respectively. Core FFO per share is anon-GAAP measure. Please see Appendix A for a discussion and reconciliation to the most directly comparable GAAP |
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In response to investor feedback, we implemented the following changes in 2017:
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Discussion and Analysis of CEO Compensation
CEO compensation is a small fraction of significant value created for stockholders
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(4) | A securities rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal at any time by the rating organization. |
(5) | Outperformance over 1-year TSR of MSCI and |
Prologis Proxy Statement | March 19, 2021 |
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COMPANY PERFORMANCE DURING CEO TENURE IN THE LAST FIVE YEARS
During Mr. Moghadam’s tenure as CEO in the last five years, the company has created tremendous value for our stockholders under his leadership.
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2020 CEO Core Compensation for 2017 Performance Year
Mr. Moghadam’s core compensation for 2020 was less than his core compensation for 2019. |
· | The Compensation Committee |
· | To demonstrate his commitment to the company, Mr. Moghadam elected to take 100% of his bonus in equity. Essentially, 100% of Mr. Moghadam’s total compensation is paid in equity. |
SUMMARY OF CEO CORE COMPENSATION FOR 20172020 PERFORMANCE YEAR
Annual Base Salary
| Annual Bonus
| Annual LTI Equity Award
| Aggregate Core
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No salary increase in 2017 | For 2017 performance paid in 2018 Minimum-Target-Maximum 0%-150%-300% of salary
| For 2017 performance year granted in 2018 | ||||
$1,000,000 | Paid at 137.5% of target ($2,062,500)
| Paid at $12,375,000
| $15,437,500 |
Annual Base Salary | Annual Bonus | Annual LTI Equity Award | Aggregate Core Compensation for 2020 Performance Year(1) | |||
Salary decreased to $1 in 2019 | For 2020 performance paid in 2021
Minimum: 0% Target: $1,500,000 Maximum: $3,000,000 | For 2018-2020 performance granted in 2021 (including performance-based equity compensation paid in lieu of salary) (2) | ||||
$1 | Paid at 100% of target ($1,500,000) | Paid at 150% of target $12,375,000 Plus $999,999 paid in lieu of salary | $14,875,000 |
(1) | Aggregate core compensation amounts are calculated differently than the total compensation amounts reflected in the Summary Compensation Table. Aggregate core compensation amounts include annual base salary, annual bonus, equity awards paid in lieu of base salary and annual long-term incentive (“LTI”) equity awards for the |
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(2) | ||||
Equity awards valued up to $999,999 contingent on achieving target annual bonus goals, and subject to 4-year vesting. This equity amount paid in lieu of salary is capped at $999,999. If performance goals are not achieved, Mr. Moghadam will earn less than $999,999. |
Strong correlation between CEO core compensation and relative three-year TSR and operational performancedirectly correlates with company performance.
The following graphic illustrates the |
Although we had strong operational performance in 2015, our three-year TSR at the end of 2015 underperformed the TSR indices of our equity formula. |
Since 2015, we have outperformed both operationally and in relative TSR performance, |
Prologis Proxy Statement | March 19, 2021 | 61 |
Compensation Discussion and Analysis |
CORRELATION OF CEO CORE COMPENSATION WITH TSR AND OPERATIONAL PERFORMANCE
(1) | Core FFO per share is anon-GAAP measure. Please see Appendix A for a discussion and reconciliation to the most directly comparable GAAP measure. |
(2) | Represents the difference between PLD’s 3-year annualized TSR and the 3-year annualized weighted TSR index of logistics and large cap REITs of our equity award formula used to determine our annual LTI awards (for the 2015 through 2020 performance years). |
(3) |
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For the 2014 performance year, the benchmarks of logistics and large cap REITs that were used in our equity award decisions were not aggregated into one weighted benchmark. We instituted our equity award formula starting with the 2015 performance year. |
(4) | Annual LTI equity awards are capped at 500 bps above the index, so performance above 500 bps does not result in greater annual LTI equity awards. |
CEO POP award is a small fraction of the $11.8$24.2 billion in value created in exceeding thefor stockholders when POP hurdlecompensation was awarded.
About 100 participants receive an annual opportunity to earn awards under POP but only if high-reach three-year relative TSR hurdles are met. A POP compensation pool only funds if and to the extent that our three-year, compound annualized TSR exceeds the three-year MSCI REIT Index annual return by 100 basis points. |
The POP hurdle is high-reach and formulaic. Due to the difficulty of the performance hurdle, we did not earn awards for the first two performance periods (2012-2014 and 2013-2015) under the plan. |
By surpassing the POP hurdle, we create value for our stockholders above the performance of the MSCI REIT Index. In creating |
Prologis Proxy Statement | March 19, 2021 |
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Compensation Discussion and Analysis |
CEO POP AWARDS(1) ARE A SMALL FRACTION OF TOTAL VALUE CREATED FOR STOCKHOLDERS IN EXCEEDING POP HURDLES(2)
CEO POP awards were 0.08% of value generated for stockholders by
exceeding POP hurdle
(1) | CEO POP award for the |
(2) | POP hurdle applicable to the 2018-2020 performance period. We calculate our outperformance by comparing the aggregate dollar value of our actual TSR versus the aggregate value of our TSR had it tracked the TSR of the MSCI REIT Index over the same period of time. The aggregate dollar value of our TSR is generally the sum of (i) the increase in value of existing and newly issued shares, plus (ii) cumulative dividends including reinvestment. Please see POP for further detail regarding the outperformance calculation. The dollar value of Prologis’ aggregate TSR over |
(3) | The $20.4 million in POP awards include the $3.4 million and $2.0 million holdback awards earned upon meeting index performance at December 31, 2020 for the 2017-2019 and 2016-2018 performance periods, respectively. |
Prologis Proxy Statement | March 19, 2021 |
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| Compensation Discussion and Analysis |
CEO PPP awards are a small fraction of the $1.2
$2.6 billion in value created in achievingfor stockholders when PPP hurdlescompensation was paid.
PPP incentivizes outperformance of our |
PPP completes the incentive structure needed to support our business model. Our strategic capital investors are a key source of capital fundamental to the growth of our platform. These venture investors require alignment between our compensation and the performance of our ventures. PPP provides such alignment. |
· | Our core compensation is determined using a peer group based on total capitalization (which does not fully account for the total AUM of our strategic capital ventures). PPP addresses this gap, covering the stewardship of our strategic capital business. |
· | PPP awards are earned if Prologis achieves |
We exceeded the high-reach promote hurdles of three of our ventures, resulting in payments of PPP awards in 2020. |
· | Our stockholders and venture investors benefit when we exceed the strenuous promote hurdles. |
Due to surpassing the hurdles and earning the promotes, |
Prologis Proxy Statement | March 19, 2021 |
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| Compensation Discussion and Analysis |
CEO PPP AWARDSARE A SMALL FRACTION OF TOTAL VALUE CREATED FOR STOCKHOLDERS WHEN WE ACHIEVED PPP HURDLES (1) CEO PPP awards were 0.6% of the total value created for stockholders when we achieved the promote hurdles
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(1) | The “total value created |
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2017Say-on-Pay Vote and Stockholder Outreach
94% vote in favor of oursay-on-pay proposal
Lead director and Compensation Committee chair met with 70% of our stockholders
Common themes from 2017 outreach roadshowspatially proportionate.
Prologis Proxy Statement | March 19, 2021 |
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| Compensation Discussion and Analysis |
HOW IT WORKS
Prologis Proxy Statement | March 19, 2021 |
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| Compensation Discussion and Analysis |
Discussion of Compensation Comparison Group
No REITs represent a true comparison to Prologis
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Other industrial REITs are too small in size to be used in our comparison group
AUM is most the appropriate measure to gauge size and scope
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Compensation Elements: Target Core Compensation is Geared to Median of Comparison Group
Outperformance plans make up for the size and scope discrepancy but only kick in with exceptional performance
HOW COMPENSATION PROGRAM COMPONENTS FIT TOGETHER
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20172020 Compensation Decisions: Annual Base Salary and Bonus Opportunity
CEO base salary continues at $1; No increases were made to annualNEO base salaries for 2017 performance yearsalaries.
Responding to the |
Annual 2017 bonus is based on operational performance against our strategic priorities
The rest of our CEO’s previous base salary ($999,999) was shifted to at-risk pay – equity compensation contingent on performance and subject to 4-year vesting. Our Compensation Committee |
Requested by our CEO to further demonstrate his commitment to our company, this change offers no additional upside to him. The amounts he can earn are capped at $999,999. If performance |
The Compensation Committee |
Prologis Proxy Statement | March 19, 2021 |
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Compensation Discussion and Analysis |
HOW IT WORKS
| 68 |
Compensation Discussion and Analysis |
Our bonus structure supports our strategic priorities. No changes made to pre-pandemic 2020 bonus metrics.
How we select our bonus metrics and set our targets
Our bonus metrics are set annually to reflect the company’s business strategy and to tie to our |
Our bonus metrics are rigorous and difficult to achieve
We set targets to incentivize progress along our current strategic priorities, which may change from year to year as goals are achieved and strategy evolves. For example, we eliminated our strategic capital metric for 2020 (and increased the weighting of our operational metric accordingly) as we already completed our strategic capital investment goals in the previous year. We added a development net operating income submetric to increase the focus of our team on the leasing of development assets. Our |
· | Our 2020 bonuses were largely determined by our performance on |
OUR TARGETS ARE RIGOROUS
14% higher
2020 target Core FFO per share(1) compared to 2019 performance
6% higher
2020 target SSNOI growth(1) compared to 2019 performance
(1) | Core FFO per share and SSNOI are non-GAAP measures. Please see Appendix A for a discussion and reconciliation to the most directly comparable GAAP measure and a calculation of the compound annual growth rate of our Core FFO per share. |
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Prologis Proxy Statement | March 19, 2021 | 69 |
Compensation Discussion and Analysis |
· | Our |
We set our bonus metrics to support our strategy ensuring strong operational performance over the long-term. For example, our performance has resulted in a 11.0% dividend CAGR and 17.8% and 12.7% CAGR in our net earnings per share and Core FFO per share, respectively, over the past seven years.(1) |
The Compensation Committee’s approach to our 2020 bonus allocation
· | Most metrics are assessed quantitatively based on actual performance against metric levels set in a range to provide payout between 50% to 200% of target. The committee determines how well we executed on our strategic priorities, evaluating our results in the context of our overarching business plan. |
· | 2020 was a year of solid execution overall by our team in the face of the challenges of the pandemic. As requested by our CEO, the Compensation Committee reviewed our goals and agreed that no changes should be made to our targets set prior to the pandemic, although these targets were ambitious by pre-pandemic standards. Assessing performance against these unchanged targets, the committee determined that our corporate score was 121% of target. |
Corporate score and NEO bonus assessments
At-target bonuses awarded despite above-target achievement to reallocate funds to reward customer-focused non-NEOs
· | Similar to prior years, the Compensation Committee weighted portfolio operational metrics significantly higher than any other bonus metric category |
KEY ANNUAL BONUS METRICS
2017
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Portfolio operations
| 50% of
| Target performance 100% of Target Bonus
| 200% of
| Actual 2017
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Core FFO per share(1)(2) | $2.58 | $2.63 | $2.68 | $2.81 | ||||
Average Occupancy | 95% | 96% | 97% | 96.3% | ||||
SSNOI Growth(1)(2) | 2.9% | 3.4% | 3.9% | 3.7% | ||||
Rent Change on Rollovers(1)(3) | 12.5% | 14.5% | 16.5% | 15.4% |
· | The strong performance of our NEOs earned an overall above-target corporate score of 121% based on metrics set prior to the pandemic. Even though this above-target corporate score would have justified above-target NEO bonuses based on our bonus methodology, at the request of our CEO, the Compensation Committee awarded at-target bonuses to all of our NEOs. This decision was made in order to reallocate bonus funds to reward our non-senior level employees who went above and beyond to serve our customers during the pandemic. |
PORTFOLIO OPERATIONS | WEIGHTED AT 50% | BELOW TARGET OVERALL |
Portfolio Operations | Threshold performance 50% of Target Bonus | Target Performance 100% of Target Bonus | Stretch Performance 200% of Target Bonus | Actual 2020 Performance | ||||||||||||
Core FFO per share (excluding | $ | 3.52 | $ | 3.56 | $ | 3.60 | $ | 3.58 | ||||||||
SSNOI Growth(1)(2) | 3.1% | 3.6% | 4.1% | 2.4% | ||||||||||||
Rent Change on Rollover(2)(3) | 21.1% | 23.0% | 25.0% | 21.3% |
(1) | Core FFO per share and SSNOI arenon-GAAP measures. See Appendix A for definitions and discussions ofnon-GAAP measurements and reconciliations to the most directly comparable GAAP measures. Target Core FFO per share is calculated net of promotes. Actual Core FFO calculated |
Prologis Proxy Statement | March 19, 2021 |
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| Compensation Discussion and Analysis |
CORPORATE SCORE AND NEO BONUS ASSESSMENTS
(2) | SSNOI Growth and Rent Change on Rollover are based on our owned and managed portfolio. | ||
(3) |
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DEPLOYMENT AND DEVELOPMENT STABILIZATIONS | WEIGHTED AT 25% |
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· | Committee assessment: The profitability of our development program continues to be excellent and, overall, above target. We stabilized $3.0 billion of new projects, on target, with a margin of 35% that significantly exceeded our stretch goal. While development net operating income was below target, contributions also exceeded our stretch goals. |
· | Individual NEO contributions: Mr. Curless led our build-to-suit program with 27 development starts with $1.1 billion in total estimated investment, and strong global customer retention. Mr. Curless also leveraged the global customer team to drive 472 development and leasing transactions. In addition, Mr. Reilly oversaw the stabilization of developments on target with margins that exceeded our stretch goals. |
· | Calculation of score: Based on these results, the Compensation Committee scored our deployment and development stabilizations metric at 128% of target. |
| WEIGHTED AT 25% | ABOVE TARGET OVERALL |
· | Committee assessment: Our platform initiatives comprise company priorities to push innovation, get ahead of the evolution of logistics and leverage our scale to capture value beyond real estate. We have streamlined platform initiatives into the Prologis 3Cs (focusing on customer centricity, change through innovation and operational excellence and culture and talent). These priorities (formerly called our Five Drivers) focus on customer experience, procurement, ancillary revenues and services like our Solarsmart, LED and other Essentials programs, data analytics, continuous improvement and inclusion and diversity. |
· | In 2020, we continued to make progress on our platform initiatives. We advanced our position as a provider of innovative logistics solutions through our Prologis Venture investments and had success in procurement, negotiating cost reductions in our contracts significantly over our stretch goals. Our global net promoter scores improved, demonstrating an increase in customer satisfaction. New process enhancements led to a substantial increase in customer outreach, exceeding our stretch targets for customer data quality. While our revenues from our Essentials program were hampered by the pandemic and were below threshold goals, year-over-year growth was over 100%, and the team focused on building customer centricity and the digitization of the platform for greater efficiency. |
· | We saw significant improvement across seven business workstreams and efficiency gains resulting in an 18% increase in customer outreach. Meeting our project completion rate target, we continued to enhance our digital infrastructure across 12 workstreams. |
· | Per engagement survey results, teammate engagement remained strong above both financial and general industry benchmarks. Although diverse real estate hires decreased in number, our regrettable turnover improved significantly year-over-year. Also, important as a key measure of the efficiency of our platform, G&A/AUM also improved and was above target. |
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Compensation Discussion and Analysis |
· | Individual NEO contributions: Leveraging our scale and managing overhead, Mr. Olinger and Mr. Reilly delivered above target G&A/AUM. Mr. Anderson delivered more than $135 million in procurement savings above our stretch goals, and implemented a global platform and processes, exceeding our stretch goals for customer data quality. In addition, Mr. Anderson led “kaizen” programs driving efficiency gains and increasing customer facing activities. He also met completion targets for digital transformation. |
Driving customer centricity, Mr. Curless and Mr. Anderson led customer-focused efforts that increased our global NPS score by five basis points despite pandemic challenges. Mr. Reilly led efforts to position and develop upcoming talent, including advancement of diverse senior leadership, and expansion of rotational investment committee membership to a wider and more inclusive group. |
Mr. Nekritz advanced our ESG platform, resulting in top ESG rankings, and greatly expanded ESG customer and investor engagement. He also led the significant expansion of our Community Workforce Initiative resulting in more than 5,500 individuals trained in 2020 alone and developed a digital logistics training curriculum. Mr. Nekritz headed an internal COVID-19 task force and rolled out our Paycheck Protection Program toolkit for our customers, our global relief fund strategy and our charitable program supporting racial equity. He and Mr. Olinger drove continuous improvement in digital transformation processes throughout their respective organizations. |
· | Calculation of score: All such factors considered, the Compensation Committee determined that the performance of this metric was above target (165.5% of target). |
Balance Sheet Considerations
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· | Our credit metrics and balance sheet |
· | As a testament to the strength of our leadership and execution, our annualized three-year TSR outperformed the Cohen & Steers REIT index by 1,340 basis points. Forward-thinking in positioning us for growth, Mr. Moghadam and |
Prologis Proxy Statement | March 19, 2021 | 72 |
Compensation Discussion and Analysis |
· | Determination of our corporate score: Calculating our corporate score based on the weightings of the above-target scores for our deployment and development stabilizations metric and our 3Cs/G&A/AUM metric and the below-target score for portfolio operations, the Compensation Committee determined that our overall corporate score was above target (121% of target). |
(1) |
A securities rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal at any time by the rating organization. |
(2) | Core FFO per share and SSNOI are non-GAAP measures. See Appendix A for definitions and discussion of non-GAAP measurements and reconciliations to the most directly comparable GAAP measures. |
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20172020 ANNUAL BONUS DECISIONS REDUCED NEO BONUSES TO RE-ALLOCATE PAY TO NON-NEOS
2020 Bonus* | ||||||||||||||||||||||||||||
2017 Target
| 2017 Bonus*
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NEO
| % Target**
| Amount
| 2020 Target Bonus Value | Earned Bonus Prior to Reduction | Percentage Reduction | Amount Paid (100% of Target) After Reduction** | ||||||||||||||||||||||
Hamid Moghadam | $ | 1,500,000 | 137.5% | $ | 2,062,500 | $1,500,000 | $1,752,000 | -14% | $1,500,000 | |||||||||||||||||||
Thomas Olinger | $ | 750,000 | 132.5% | $ | 993,750 | $ 750,000 | $ 844,500 | -11% | $ 750,000 | |||||||||||||||||||
Eugene Reilly | $ | 750,000 | 139.5% | $ | 1,046,250 | $ 750,000 | $ 844,500 | -11% | $ 750,000 | |||||||||||||||||||
Edward Nekritz | $ | 750,000 | 138.5% | $ | 1,038,750 | $ 750,000 | $ 844,500 | -11% | $ 750,000 | |||||||||||||||||||
Gary Anderson | $ | 750,000 | 139.5% | $ | 1,046,250 | $ 750,000 | $ 844,500 | -11% | $ 750,000 | |||||||||||||||||||
Michael Curless | $ | 750,000 | 134.5% | $ | 1,008,750 | $ 750,000 | $ 844,500 | -11% | $ 750,000 |
* | Target bonus levels are based on salary for the |
** | Our corporate score equals |
Bonus exchange aligns NEOperformance would have justified above-target scores and stockholder interests
pandemic.
Prologis Proxy Statement | March 19, 2021 |
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| Compensation Discussion and Analysis |
20172020 Compensation Decisions: Annual LTI Equity Awards
Annual LTI equity awards are formulaic, 100% based on performance and not guaranteedguaranteed.
ANNUAL LTI EQUITY AWARD FORMULAHOW IT WORKS
Equity amounts above 50% of target are based onour 3-year TSR vs. the weighted 3-year TSR index:
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PLD 3-Year TSR Basis
| Total Annual LTI
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>500 bps and above | 150% | |
+400 bps | 140% | |
+300 bps | 130% | |
+200 bps | 120% | |
+100 bps | 110% | |
0 | 100% | |
-100 bps | 90% | |
-200 bps | 80% | |
-300 bps | 70% | |
-400 bps | 60% | |
<=-500 bps | Qualitative component up to 50% |
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| Compensation Discussion and Analysis |
Annual LTI equity award benchmarks are a balance of industriallogistics andlarge-cap REITs large cap REITs.
We use two |
The weightings between the domestic and global |
Very few |
LTI EQUITY AWARD INDICES
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2017 annual LTI equity awards reflect TSR outperformance against industrial REIT and Cohen & Steers REIT indices
The weighted |
(2) | In August 2018, we acquired DCT. In our performance calculations, we used DCT’s annualized TSR measured from January 1, 2018 until April 27, 2018, the trading day prior to the date of the public announcement of the DCT acquisition. |
Prologis Proxy Statement | March 19, 2021 |
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Analysis |
LTI EQUITY AWARDS FOR THE 20172020 PERFORMANCE YEAR (GRANTED IN 2018)2021)(1)
2017 Target Award Value
| 2017 Actual Award Value (Granted in 2018)
| 2020 Actual Award Value | ||||||||||||||||
NEO
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% Target
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$
| 2020 Target Award Value | % Target | $ | |||||||||||||
Hamid Moghadam
| $8,250,000
| 150%
| $12,375,000
| $ | 8,250,000 |
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| 150% |
| $ | 12,375,000 |
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Thomas Olinger
| $2,100,000
| 150%
| $ 3,150,000
| $ | 2,100,000 |
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| 150% |
| $ | 3,150,000 |
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Eugene Reilly
| $2,600,000
| 150%
| $ 3,900,000
| $ | 2,600,000 |
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| 150% |
| $ | 3,900,000 |
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Edward Nekritz
| $2,100,000
| 150%
| $ 3,150,000
| $ | 2,100,000 |
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| 150% |
| $ | 3,150,000 |
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Gary Anderson
| $2,100,000
| 150%
| $ 3,150,000
| $ | 2,300,000 |
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| 150% |
| $ | 3,450,000 |
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Michael Curless
| $1,900,000
| 150%
| $ 2,850,000
| $ | 1,600,000 |
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| 150% |
| $ | 2,400,000 |
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(1) | The Compensation Committee considers LTI equity awards granted in |
Annual LTI equity awards for the 20162019 performance year (granted in 2017)2020)
Although the Summary Compensation Table presentation requires disclosure of LTI equity awards granted in |
As such, LTI equity awards granted in |
2017-2019 company performance resulted in |
For the |
Prologis Proxy Statement | March 19, 2021 |
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| Compensation Discussion and Analysis |
20172020 Compensation Decisions: Outperformance Plans
As discussed earlier, our |
More than half of the outperformance |
POP now includes an absolute maximum cap and7-year cliff vesting on earned awards
In 2020, the Compensation Committee allocated 15% of POP and PPP compensation pools to Mr. Moghadam, 6% of POP and PPP pools to Mr. Reilly, Mr. Anderson and Mr. Nekritz and 4% of the |
Prologis Proxy Statement | March 19, 2021 | 77 |
Compensation Discussion and Analysis |
HOW IT WORKS
Prologis Proxy Statement | March 19, 2021 | 78 |
Compensation Discussion and Analysis |
POP awards cannot be paid at a time when our absolute TSR is negative. |
If a pool funds because our relative TSR exceeds the POP performance hurdle, but our absolute |
This construct allows for recognition of the more strenuous performance often required to outperform peers in a down cycle battling macro factors weighing on the industry as a whole. The Compensation Committee concluded that this structure struck an appropriate balance, not allowing payment when absolute TSR is negative and only allowing payment if and when the company battles back to reach positive TSR. |
(1) | The POP |
CEO POP awards paid in January 2021 include awards earned for the 2018-2020 performance period and the earned portion of the holdback amounts from the 2016-2018 and 2017-2019 performance periods. |
· | For performance periods starting prior to 2018, the POP compensation pool for each performance cycle |
In response to stockholder feedback, we reduced the potential size of the pool by applying an absolute maximum cap of $100 million |
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Under the new construct, only 20% of POP awards |
Although the new vesting construct |
Prologis Proxy Statement | March 19, 2021 | 79 |
Compensation Discussion and Analysis |
HOW IT WORKS
· | Strategic capital is a high return business that accelerates our growth responsibly and mitigates risk. Our eight private and two publicly traded strategic capital ventures represent over $74.7 billion in AUM, including $6.1 billion in investment capacity that we can use to grow our business. These ventures allow us to build scale globally, mitigating currency risk by raising capital in local currencies where we operate. Strategic capital generates additional income from management fees and promotes, giving us a higher return on the assets held in these ventures than those held on our balance sheet. |
Prologis Proxy Statement | March 19, 2021 | 80 |
Compensation Discussion and Analysis |
· | PPP incentivizes outperformance of our strategic capital business, key to our financial rigor and continued growth. When Prologis achieves PPP outperformance promote hurdles, our venture partners reward that outperformance by paying Prologis incentive fees (promotes). This results in significant additional earnings for Prologis, benefitting our stockholders. |
Achievement of |
Achieving formulaic PPP hurdles creates value for our stockholders
When we achieve the difficult promote hurdle and Prologis earns the promote, the promote proceeds are used to fund a PPP compensation pool. This pool is 40% of the promote (after excluding our ownership share in the applicable venture). |
· | The aggregate amount of PPP awards paid to a participant in a calendar year is capped at the participant’s total amount of core compensation paid in the two most recently completed years (excluding awards under our two outperformance plans). |
· | PPP performance hurdles are the formulaic promote hurdles established by our strategic capital ventures to incentivize superior performance. Promotes are earned by Prologis when returns in certain of our ventures exceedpre-negotiated preferred return hurdles. These promotes arethird-party validated measures of operational success. |
For a number of our ventures, meeting a promote hurdle requires an internal rate of return in excess of a 7% to 9% annualized |
The performance period for promotes with respect to our |
Note that disclosure of information regarding our strategic capital ventures, including promote |
See “2020 CEO PPP Award Details: Deeper Dive” for further information. |
(1) | For definition of total value created for stockholders when achieving PPP hurdles, please see footnotes to “CEO PPP Awards are a Small Fraction of Total Value Created for Stockholders When |
(2) | PPP awards paid in 2020. |
Prologis Proxy Statement | March 19, 2021 |
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| Compensation Discussion and Analysis |
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Other Compensation Elements and Considerations
LTIP Units
LTIP Units are profits interests in Prologis, L.P., our operating partnership. Certain executives, including NEOs, may elect to receive LTIP Units in lieu of RSUs. Our NEOs elected to receive all of their equity awards granted in |
LTIP Units were structured to be generally economically equivalent to |
CEO waiverNEO waivers of retirement eligibility benefits
For any equity awards granted starting in 2017, Mr. Moghadam voluntarily waived any vesting benefits related to meeting retirement-eligibility thresholds under our incentive plan. Vesting under such awards will continue after he terminates employment as long as he continues in a substantial role with the company or its affiliates. Our other NEOs executed a similar waiver applicable to equity awards granted after September 2018. |
To demonstrate their commitment to our company, our NEOs executed these waivers voluntarily without receiving any benefit in exchange. |
· | Had |
· | In 2020, the Compensation Committee amended the NEO waivers to allow for continued vesting of certain awards if an NEO performs approved services for the company or community work after termination (to the extent such provisions did not already apply to such awards.) The amendment did not change the NEOs’ waivers of their retirement-eligibility benefits. |
Senior-level benefits
In addition to benefits provided to all other U.S. employees, such as our 401(k) plan, health care and welfare coverage, paidtime-off, life and accident insurance and short and long-term disability programs, we offer our NEOs the following senior-level benefits: |
– | Deferred compensation plans |
– | Retiree medical benefits—upon retirement and having served as a member of the management executive committee (our CEO and certain direct reports) for five consecutive years, executives may continue health coverage under our plans at their own expense |
– | Financial planning services |
– | Company-paid parking |
– | Personal use of leased corporate aircraft interest by our CEO if reimbursed by the CEO |
Prologis Proxy Statement | March 19, 2021 |
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| Compensation Discussion and Analysis |
Change-in-control benefits
Our NEOs’ benefits include fair and reasonable severance in connection with a change in control to serve the best interests of stockholders during a threatened or actual change in control by: |
– | Providing for continuity of our management team’s services |
– | Increasing objectivity of our management team in analyzing a proposed change in control and advising the Board if such proposal is in the best interests of stockholders |
Such benefits apply on a double-trigger basis (change in control has occurred and NEO’s employment status is impacted) and consist of: |
– | Cash severance payments that are a multiple of salary and/or cash bonus opportunity levels |
– | Accelerated vesting of unvested equity awards, available throughchange-in-control agreements or long-term equity incentive plans |
Other considerations
COMPENSATION GOVERNANCE POLICIES
24,836 units with a value of |
13,725 units with a value of |
12,199 units with a value of |
2,793 units with a value of |
6,563 units with a value of |
· | 2,054 units with a value of $196,280, issued on July 6, 2018, vested on July 6, 2020; |
· | 328 units with a value of $35,519, issued on October 12, 2017, vested on October 12, 2020; |
· | 316 units with a value of $31,783, issued on December 17, 2018, vested on December 17, 2020; |
· | 7,138 units with a value of $700,024, issued on December 19, 2019, vested on December 19, 2020; |
· | 1,733 units with a value of $159,800, issued on December 9, 2016, vested on January 15, 2020; |
· | 9,761 units with a value of $900,062, issued on December 11, 2017, vested on January 15, 2020. |
(5) | Represents the vesting of LTIP Units as presented below: |
9,952 units with a value of |
19,553 units with a value of |
21,665 units with a value of |
11,086 units with a value of |
9,812 units with a value of |
2,793 units with a value of |
6,563 units with a value of |
· | 2,054 units with a value of $196,280, issued on July 6, 2018, vested on July 6, 2020; |
· | 328 units with a value of $35,519, issued on October 12, 2017, vested on October 12, 2020; |
· | 316 units with a value of $31,783, issued on December 17, 2018, vested on December 17, 2020; |
· | 7,138 units with a value of $700,024, issued on December 19, 2019, vested on December 19, 2020; |
· | 1,733 units with a value of $159,800, issued on December 9, 2016, vested on January 15, 2020; |
· | 9,761 units with a value of $900,062, issued on December 11, 2017, vested on January 15, 2020. |
(6) | Represents the vesting of LTIP Units as presented below: |
9,952 units with a value of |
19,553 units with a value of |
21,727 units with a value of |
11,086 units with a value of |
9,812 units with a value of |
2,793 units with a value of |
6,563 units with a value of |
· | 2,054 units with a value of $196,280, issued on July 6, 2018, vested on July 6, 2020; |
· | 328 units with a value of $35,519, issued on October 12, 2017, vested on October 12, 2020; |
· | 316 units with a value of $31,783, issued on December 17, 2018, vested on December 17, 2020; |
· | 7,138 units with a value of $700,024, issued on December 19, 2019, vested on December 19, 2020; |
· | 1,733 units with a value of $159,800, issued on December 9, 2016, vested on January 15, 2020; |
· | 9,761 units with a value of $900,062, issued on December 11, 2017, vested on January 15, 2020. |
(7) | Represents the vesting of LTIP Units as presented below: |
9,952 units with a value of |
16,805 units with a value of |
20,174 units with a value of |
10,030 units with a value of |
7,955 units with a value of |
2,793 units with a value of |
6,563 units with a value of |
· | 2,054 units with a value of $196,280, issued on July 6, 2018, vested on July 6, 2020; |
· | 328 units with a value of $35,519, issued on October 12, 2017, vested on October 12, 2020; |
· | 316 units with a value of $31,783, issued on December |
· | 7,138 units with a value of $700,024, issued on December 19, 2019, vested on December 19, 2020; |
· | 1,733 units with a value of $159,800, issued on December 9, 2016, vested on January 15, 2020; |
· | 9,761 units with a value of $900,062, issued on December |
Prologis Proxy Statement | March 19, 2021 |
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| Nonqualified Deferred Compensation |
Nonqualified Deferred Compensation in Fiscal Year 2017*2020*
Name (a) | Plans | Executive Contributions in Last FY ($) (b) | Aggregate Earnings In Last FY ($) (d) | Aggregate Withdrawals/ Distributions ($) (e) | Aggregate Balance at Last FYE ($) (f) | Plans | Executive Contributions in Last FY ($) (b) | Aggregate Earnings In Last FY ($) (d) | Aggregate Withdrawals/ Distributions ($) (e) | Aggregate Balance at Last FYE ($) (f) | ||||||||||||||||||||||||||
Hamid Moghadam | AMB NQ Plans & 2012 NQDC Plan(1) | $ | 3,691,324 | $ | 13,599,633 | (2) | $ | — | $ | 69,171,398 | AMB NQ Plans & 2012 NQDC Plan | — | $ | 14,421,484 | (1) | — | $ | 112,438,414 | ||||||||||||||||||
Notional Account NQDC Plan(3) | $ | — | $ | 11,298,907 | $ | — | $ | 33,399,540 | Notional Account NQDC Plan(2) | — | $ | 10,475,636 | — | $ | 67,280,296 | |||||||||||||||||||||
Thomas Olinger | AMB NQ Plans & 2012 NQDC Plan(1) | $ | — | $ | 394,125 | (2) | $ | — | $ | 2,026,053 | AMB NQ Plans & 2012 NQDC Plan | — | $ | 375,845 | (1) | — | $ | 3,246,000 | ||||||||||||||||||
Eugene Reilly | $ | — | $ | — | $ | — | $ | — | — | — | — | |||||||||||||||||||||||||
Edward Nekritz | $ | — | $ | — | $ | — | $ | — | — | — | — | — | ||||||||||||||||||||||||
Gary Anderson | $ | — | $ | — | $ | — | $ | — | — | — | — | — | ||||||||||||||||||||||||
Michael Curless | $ | — | $ | — | $ | — | $ | — | — | — | — | — |
* | Column (c) has been omitted from this table because it is not applicable. |
(1) |
Represents earnings that are computed based on the specific investment options that are elected by the NEO, as described in the narrative discussion that follows these footnotes. Primarily these earnings consist of the dividends paid on the shares of our common stock deferred by the NEO and the change in the market value of those shares. These amounts are not included in the NEO’s total compensation presented in the Summary Compensation Table for Fiscal Year |
(2) | Participants in our nonqualified deferred compensation plans prior to the Merger received alump-sum payment, triggered by the Merger, equal to the value of their account balance in June 2011. After the Merger, we established a new nonqualified deferred compensation plan that is discussed in further detail below. Under this Notional Account NQDC Plan, an initial account credit value was established for the |
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Narrative Discussion to Nonqualified Deferred Compensation in Fiscal Year 20172020 Table
2012 NQDC Plan
Effective 2012, we established a nonqualified deferred compensation plan (the “2012 NQDC Plan”). The 2012 NQDC Plan allows certain eligible employees andnon-employee directors of the company and our participating subsidiaries to elect to defer up to 100% of their eligible compensation, such as annual salary, bonus, equity awards and directors’ fees, that were earned and vested on or after January 1, 2012. The deferred compensation under the 2012 NQDC Plan is our unsecured obligation and amounts deferred are held in a rabbi trust. Participants select from various investment options available under the plan to earn investment credits on their elective deferrals. There are no guaranteed returns for any of the investment options or for any participants in the plans. The amount of earnings that a participant receives depends on the participant’s investment elections related to cash balances in the account and, with respect to shares of our common stock that have been deferred, the dividends earned on that stock and the change in market value of the stock during the
Prologis Proxy Statement | March 19, 2021 | 104 |
Nonqualified Deferred Compensation |
period. The 2012 NQDC Plan offers a variety of investment choices with respect to cash contributions. Our common stock is not an investment option available with respect to deferrals of cash compensation. The NEOs did not elect to defer any of their 2017 cash2020 compensation (salary, bonus or bonus)equity awards) under the 2012 NQDC Plan.
If a participant elects to defer the receipt of an equity award, the underlying common stock is held in the rabbi trust, which cannot be reinvested in any other investment option. Cash dividends earned on these shares of our common stock after deferral are credited with earnings and losses based on specific investment options, other than our common stock, that are selected by the participant. Distributions under these plans are made in a lump sum payment upon termination of employment, or service as anon-employee director, or in the event of a change in control or death of a participant. With respect to equity awards deferred bynon-employee directors, participants may elect to receive distributions prior to termination of service.
We have reserved the right under the 2012 NQDC Plan to make discretionary matching contributions to participant accounts from time to time. No such discretionary contributions have been made. The participants’ elective deferrals and matching contributions, if any, are fully vested at all times. We pay all of the administrative costs associated with the 2012 NQDC Plan. Generally, the compensation that is deferred istax-deferred until it is distributed to the participant. However, amounts deferred are subject to FICA and Medicare employee and employer taxes in accordance with statutory requirements.
In December 2014, the 2012 NQDC Plan was amended, primarily to allow for LTIP Units to be issued in lieu of other deferred compensation upon a distribution event.
AMB NQ Plans
Prior to the Merger, we maintained two nonqualified deferred compensation plans: (i) the Amended and Restated AMB 2005 Nonqualified Deferred Compensation Plan (the “2005 NQ Plan”) and (ii) the Amended and Restated Nonqualified Deferred Compensation Plan (the “2002 NQ Plan”), (together, the “AMB NQ Plans”). The AMB NQ Plans allowed our directors and certain eligible employees to defer certain compensation, including the receipt of restricted stock awards and, in the case of the 2002 NQ Plan, gains from exercise of stock options, received under our equity compensation plans. The AMB NQ Plans provided that upon a change in control, such as the Merger in June 2011, participants would receive alump-sum payment equal to the vested account balance. Such distributions were made in 2011.
Compensation subject to deferral elections made under the AMB NQ Plans prior to the Merger with respect to compensation earned in 2011 and beyond was not subject to the distributions under the AMB NQ Plans triggered by the Merger. Mr. Moghadam has deferred certain gains resulting from the exercise of stock options under the 2002 NQ
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Plan. In addition, Mr. Moghadam and Mr. Olinger have deferred shares of our common stock received upon vesting of certain equity awards under the 2005 NQ Plan.
The deferred compensation under the AMB NQ Plans is our unsecured obligation and amounts deferred are held in a rabbi trust. Participants select from various investment options available under the plans to receive investment credit on their elective deferrals. There are no guaranteed returns for any of the investment options or for any participants in the plans. The amount of earnings that a participant receives depends on the participant’s investment elections related to cash balances in the account and, with respect to deferred shares of our common stock, the dividends earned on the stock and the change in market value of the stock during the period. Cash dividends earned on shares of our common stock after deferral are credited earnings and losses based on specific investment options, other than our common stock, selected by the participant. Distributions under these plans are made in either a lump sum payment or installments. Participants can elect a specific distribution date in accordance with Section 409A of the Internal Revenue Code or, if no election is made, the amounts will be distributed upon termination of the participant’s employment with us. Distributions are also made in the event of change in control or a participant’s death or disability.
In December 2014, the 2005 NQ Plan was amended, primarily to allow for LTIP Units to be issued in lieu of other deferred compensation upon a distribution event under the plan.
Prologis Proxy Statement | March 19, 2021 | 105 |
Nonqualified Deferred Compensation |
Notional Account NQDC Plan
The Notional Account NQDC Plan was adopted in conjunction with the Merger with the purpose of providing the opportunity for certain participants of the AMB NQ Plans to continue to receive tax deferred earnings with respect to taxes on distributions triggered by the Merger.
Each participant in the AMB NQ Plans who continued to be employed by us after the Merger or continued as anon-employee director after the Merger received an initial account credit in a notional earnings account under the Notional Account NQDC Plan. Mr. Moghadam and Mr. Olinger participate in the Notional Account NQDC Plan. The initial account credit value for a participant was equal to the deemed amount of the tax liability on the distributions they received in 2011 that were triggered by the Merger. The initial account credit value is either invested in our common stock or hypothetically invested in measurement funds selected by the participant, which do not include our common stock. Measurement funds are used for measurement purposes only and plan participants do not have rights in or to the underlying hypothetical investments.
A notional earnings account is credited with hypothetical earnings or charged with hypothetical losses associated with the underlying hypothetical investments in measurement funds. Upon a distribution event under the plan, the participant is entitled to the excess, if any, of the value in the notional earnings account (representing the value of the initial account credit plus cumulative earnings or losses associated with the underlying hypothetical investments, if any) over the initial account credit value.
Mr. Moghadam’s initial account credit value was in the amount of $25,798,616. A rabbi trust was created to hold shares of our common stock and cash in the amount of Mr. Moghadam’s initial account credit balance. We issued 803,945 shares of our common stock to the rabbi trust representing Mr. Moghadam’s initial account credit value. The number of shares was determined based on the price of our common stock at the time, $32.09 per share. Mr. Moghadam is entitled to direct the voting of these shares and, as such, they are reflected as beneficially owned by him in the stock ownership table presented below. Mr. Moghadam is not entitled to receive these shares upon distribution of his notional earnings account under the plan. Upon a distribution event under the plan, Mr. Moghadam is entitled to the excess, if any, of the value in the notional earnings account (representing the value of the initial account credit plus cumulative earnings or losses associated with the underlying common stock, if any) over the initial account credit value.
Mr. Olinger’s initial account credit value was hypothetically invested in measurement funds selected by him. The initial account credit value for Mr. Olinger was $122,697.
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In December 2014, the Notional Account NQDC Plan was amended, primarily to allow for LTIP Units to be issued in lieu of other deferred compensation upon a distribution event under the plan.
In September 2020, the Compensation Committee approved a form of amendment to the Notional Account NQDC Plan, which allows for the conversion of a notional stock account under the plan into an account structure intended to operate more similarly to accounts under our 2012 NQDC Plan. The value of a current notional stock account will be determined using the stock price on the day of conversion. The account value upon conversion can be invested all or in part in investment options available under the plan, including our common stock or cash. This amendment has not been effected yet.
Prologis Proxy Statement | March 19, 2021 | 106 |
Nonqualified Deferred Compensation |
Investment funds and returns for 20172020
The participants in our nonqualified deferred compensation plans can elect measurement funds whichthat are the same investment funds that are available to participants in our 401(k) Plan, with the exception of investments in our company stock. Our company stock is not an available investment option under the nonqualified deferred compensation plans. These investment funds are shown below with the returns earned by these investmentsinvestment funds in 2017:2020:
Vanguard Treasury M/M Fund | 0.80% | Metropolitan West High Yield Bond I | 6.37% | |||||||
PIMCO Real Return/Institutional | 3.92% | Vanguard Interm. Term Bond Index Inst. | 3.88% | |||||||
Vanguard Short-Term Bond Index Admiral | 1.18% | Vanguard Balanced Index Fund (Instl) | 13.86% | |||||||
Vanguard Target Retirement Income | 8.47% | Vanguard Target Retirement 2015 | 11.50% | |||||||
Vanguard Target Retirement 2020 | 14.08% | Vanguard Target Retirement 2025 | 15.94% | |||||||
Vanguard Target Retirement 2030 | 17.52% | Vanguard Target Retirement 2035 | 19.12% | |||||||
Vanguard Target Retirement 2040 | 20.71% | Vanguard Target Retirement 2045 | 21.42% | |||||||
Vanguard Target Retirement 2050 | 21.39% | Vanguard Target Retirement 2055 | 21.38% | |||||||
Vanguard Target Retirement 2060 | 21.36% | American Beacon Small Cap Value I | 8.67% | |||||||
American Funds Growth Fund of Am.R6 | 26.53% | American Funds Wash. Mutual Inv R6 | 20.54% | |||||||
Vanguard Growth Index Fund (Inst) | 27.81% | Vanguard Institutional Index I | 21.79% | |||||||
VanguardMid-Cap Index Fund Instl. | 19.29% | Vanguard Small Cap Growth Index (Inst) | 21.94% | |||||||
Artisan International Institutional | 31.24% | Vanguard Total Intl Stock Index Admiral | 27.55% | |||||||
Invesco Global Real Estate R5 | 13.12% |
Vanguard Treasury M/M Fund | 0.47% | American Funds Growth Fund of AM R6 | 38.28% | |||||||
American Funds Washington Mutual R6 | 8.08% | Fidelity 500 Index Fund | 18.40% | |||||||
Vanguard Growth Index Fund Inst. | 40.20% | Fidelity Mid Cap Index Fund | 17.11% | |||||||
American Beacon Small Cap Value | 4.03% | Vanguard Target Retirement 2015 | 10.32% | |||||||
Vanguard Target Retirement 2020 | 12.04% | Vanguard Target Retirement 2025 | 13.30% | |||||||
Vanguard Target Retirement 2030 | 14.10% | Vanguard Target Retirement 2035 | 14.79% | |||||||
Vanguard Target Retirement 2040 | 15.47% | Vanguard Target Retirement 2045 | 16.30% | |||||||
Vanguard Target Retirement 2050 | 16.39% | Vanguard Target Retirement 2055 | 16.32% | |||||||
Vanguard Target Retirement 2060 | 16.32% | Vanguard Target Retirement 2065 | 16.17% | |||||||
Vanguard Small Cap Growth Index | 35.31% | Artisan International Inst. | 7.82% | |||||||
Fidelity Total International Index Fund | 11.07% | Invesco Global Real Estate Fund R5 | -12.14% | |||||||
Vanguard Balanced Index Fund Inst. | 16.41% | Vanguard Target Retirement Inc | 10.02% | |||||||
Fidelity ST Bond Index Fund | 4.68% | Fidelity US Bond Index Fund | 7.80% | |||||||
Metropolitan High Yield Bond | 11.77% | PIMCO Real Return Inst. | 12.09% | |||||||
Vanguard ST Bond Index Admiral | 4.54% |
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Prologis Proxy Statement | March 19, 2021 |
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Potential Payments Upon Termination or Change in Control We have change in control and noncompetition agreements (the “CIC Agreements”) with our NEOs. The CIC Agreements are subject to automaticone-year extensions. Some form of In the event of a change in control, the CIC Agreements provide for severance benefits on a “double-trigger” basis with severance benefits payable only upon termination of employment (which is, generally, termination without cause or termination by employee for good reason as such term is defined in the CIC Agreements), within two years following the change in control. Under the CIC Agreements, in consideration for the rights to receive such severance payments, the NEO is subject to confidentiality obligations during employment and after termination,non-competition obligations during the term of employment andnon-solicitation obligations for two years after the date of termination. A change of control, as defined in the CIC Agreements, generally occurs upon: (i) the consummation of a transaction, approved by our stockholders, to merge or consolidate the company with another entity, sell or otherwise dispose of all or substantially all of its assets or adopt a plan of Potential payments due to the NEOs under the scenarios listed above are presented in the table below based on the assumption that a termination occurred as of December 31, Prologis Proxy Statement | March 19, 2021 Potential Payments uponPotential Payments Upon Termination or Change in Control severance benefits (cash payments and/or acceleration of vesting of unvested equity awards) are provided to our NEOs for:NEOs: (i) in the CIC Agreements; (ii) under the equity award agreements; or (iii) under the terms of POP. These benefits are available under the following scenarios: (1) death; (2) disability; (3) retirement (as defined and under certain circumstances); and (4) termination without cause or termination by employee for good reason within two years of a change in control (as defined).liquidation,liquidation; provided, however, that a change in control shall not occur if a transaction results in 50% or more of the beneficial ownership of the voting power of the company or other relevant entity being held by the same persons (although not necessarily in the same proportion) who held the voting power of the company immediately prior to the transaction (except that upon the completion of the transaction, employees or employee benefit plans of the company may be a new holder of such beneficial ownership); (ii) the beneficial ownership of securities representing 50% or more of the combined voting power of the company is acquired, other than from the company, by any person (with certain exceptions); or (iii) at any time during any period of two consecutive years, board members at the beginning of such period cease to constitute at least a majority of the Board (unless the election or the nomination for election of each new director was approved by a vote of at leasttwo-thirds of the directors still in office at the time of such election or nomination who were directors at the beginning of such period).2017.2020. The acceleration of vesting of unvested equity awards benefit is estimated using the closing stock price of our common stock on December 31, 20172020 of $64.51$99.66 per share. Under our company policy, each of our employees would be paid for their earned and unused vacation benefits upon termination under any termination scenario, so the value of this benefit is not included in the amounts below. Because the termination scenarios are as of December 31, 2017,2020, the NEOs would have completed the performance year such that they would receive their annual bonus and their annual long-term equity incentive award for the 20172020 performance year. Therefore, these payments are not considered to be severance benefits and such amounts are not included in the amounts presented. 106108
| Potential Payments Upon Termination or Change in Control |
Name of Executive/Type of Benefit
| Death
| Disability
| After Change in Control: Termination without Cause or Voluntary Termination for Good Reason(1)
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Hamid Moghadam | ||||||||||||
Cash severance (salary and bonus)(2) | $ | 1,500,000 | $ | — | $ | 5,000,000 | ||||||
Health and welfare benefits(3) | $ | — | $ | — | $ | 86,320 | ||||||
280G adjustment(4) | $ | — | $ | — | $ | — | ||||||
Equity awards (vesting accelerated)(5)(6) | $ | 73,035,775 | $ | 73,035,775 | $ | 73,035,775 | ||||||
Total Estimated Value | $ | 74,535,775 | $ | 73,035,775 | $ | 78,122,095 | ||||||
Thomas Olinger | ||||||||||||
Cash severance (salary and bonus)(2) | $ | 350,000 | $ | — | $ | 2,700,000 | ||||||
Health and welfare benefits(3) | $ | — | $ | — | $ | 86,320 | ||||||
280G adjustment(4) | $ | — | $ | — | $ | — | ||||||
Equity awards (vesting accelerated)(5)(6) | $ | 25,848,075 | $ | 25,848,075 | $ | 25,848,075 | ||||||
Total Estimated Value | $ | 26,198,075 | $ | 25,848,075 | $ | 28,634,395 | ||||||
Eugene Reilly | ||||||||||||
Cash severance (salary and bonus)(2) | $ | 350,000 | $ | — | $ | 2,700,000 | ||||||
Health and welfare benefits(3) | $ | — | $ | — | $ | 86,320 | ||||||
280G adjustment(4) | $ | — | $ | — | $ | — | ||||||
Equity awards (vesting accelerated)(5)(6) | $ | 27,159,628 | $ | 27,159,628 | $ | 27,159,628 | ||||||
Total Estimated Value | $ | 27,509,628 | $ | 27,159,628 | $ | 29,945,948 | ||||||
Edward Nekritz | ||||||||||||
Cash severance (salary and bonus)(2) | $ | 350,000 | $ | — | $ | 2,700,000 | ||||||
Health and welfare benefits(3) | $ | — | $ | — | $ | 86,320 | ||||||
280G adjustment(4) | $ | — | $ | — | $ | — | ||||||
Equity awards (vesting accelerated)(5)(6) | $ | 25,968,193 | $ | 25,968,193 | $ | 25,968,193 | ||||||
Total Estimated Value | $ | 26,318,193 | $ | 25,968,193 | $ | 28,754,513 | ||||||
Gary Anderson | ||||||||||||
Cash severance (salary and bonus)(2) | $ | 350,000 | $ | — | $ | 2,700,000 | ||||||
Health and welfare benefits(3) | $ | — | $ | — | $ | 86,320 | ||||||
280G adjustment(4) | $ | — | $ | — | $ | — | ||||||
Equity awards (vesting accelerated)(5)(6) | $ | 25,884,265 | $ | 25,884,265 | $ | 25,884,265 | ||||||
Total Estimated Value | $ | 26,234,265 | $ | 25,884,265 | $ | 28,670,585 | ||||||
Michael Curless | ||||||||||||
Cash severance (salary and bonus)(2) | $ | 350,000 | $ | — | $ | 2,700,000 | ||||||
Health and welfare benefits(3) | $ | — | $ | — | $ | 94,347 | ||||||
280G adjustment(4) | $ | — | $ | — | $ | — | ||||||
Equity awards (vesting accelerated)(5)(6) | $ | 24,786,499 | $ | 24,786,499 | $ | 24,786,499 | ||||||
Total Estimated Value | $ | 25,136,499 | $ | 24,786,499 | $ | 27,580,846 |
Name of Executive/Type of Benefit | Death | Disability | After Change in Control: Termination without Cause or Voluntary Termination for Good Reason(1) | |||||||||
Hamid Moghadam |
|
|
|
|
|
|
|
|
| |||
Cash severance (salary and bonus)(2) | $ | 1,500,000 | — | $ | 5,000,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 70,989 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6)(7) | $ | 136,180,350 | $ | 136,180,350 | $ | 136,180,350 | ||||||
Total Estimated Value | $ | 137,680,350 | $ | 136,180,350 | $ | 141,251,339 | ||||||
Thomas Olinger |
|
|
|
|
|
|
|
|
| |||
Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 105,189 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 43,354,209 | $ | 43,354,209 | $ | 43,354,209 | ||||||
Total Estimated Value | $ | 43,704,209 | $ | 43,354,209 | $ | 46,159,398 | ||||||
Eugene Reilly |
|
|
|
|
|
|
|
|
| |||
Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 90,200 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 46,667,048 | $ | 46,667,048 | $ | 46,667,048 | ||||||
Total Estimated Value | $ | 47,017,048 | $ | 46,667,048 | $ | 49,457,248 | ||||||
Edward Nekritz |
|
|
|
|
|
|
|
|
| |||
Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 105,189 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 44,356,630 | $ | 44,356,630 | $ | 44,356,630 | ||||||
Total Estimated Value | $ | 44,706,630 | $ | 44,356,630 | $ | 47,161,819 | ||||||
Gary Anderson |
|
|
|
|
|
|
|
|
| |||
Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 105,189 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 44,359,719 | $ | 44,359,719 | $ | 44,359,719 | ||||||
Total Estimated Value | $ | 44,709,719 | $ | 44,359,719 | $ | 47,164,908 | ||||||
Michael Curless |
|
|
|
|
|
|
|
|
| |||
Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | |||||||
Health and welfare benefits(3) | — | — | $ | 113,376 | ||||||||
280G adjustment(4) | — | — | — | |||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 42,797,010 | $ | 42,797,010 | $ | 42,797,010 | ||||||
Total Estimated Value | $ | 43,147,010 | $ | 42,797,010 | $ | 45,610,386 |
| ||||
|
(1) | Cause is generally defined in the CIC Agreements as: (i) the willful and continued failure by the executive to substantially perform specified duties; (ii) the engaging in conduct that is demonstrably injurious to the company (monetarily or otherwise); or (iii) the engaging in egregious misconduct involving serious moral turpitude. Termination by employee for good reason, as generally defined in the CIC Agreements, can occur should we: (i) change the executive’s duties such that they are inconsistent with the position held prior to the change in control and |
Prologis Proxy Statement | March 19, 2021 | 109 |
Potential Payments Upon Termination or Change in Control |
results in a material diminution in the executive’s authority, duties, or responsibilities; (ii) material reduction in the executive’s annual base compensation after the change in control; (iii) relocate the executive’s place of employment more than 50 miles from the current location or require the executive to be based anywhere other than where the executive was based prior to the change in control without the executive’s written consent resulting in a material change to geographic location; or (iv) not comply with the provisions of the agreements or arrangements pertaining to the officer’s compensation and benefits. |
(2) | Under the death and disability scenarios contained in the CIC Agreements, the NEO would receive a cash severance payment equal to his annual base salary plus the annual bonus amount that he received or was entitled to receive for the most recent annual period (target level for |
(3) | In the change in control scenario contained in the CIC Agreements, the NEO would receive a cash payment equal to the cost of continuation of health insurance coverage in place at the date of termination for 24 months. Additionally, the CIC Agreements provide for the payment of an amount equal to two times the company’s matching contribution under the 401(k) Plan ($ |
(4) | The CIC Agreements provide for the reduction of any payments to which the NEO is entitled after a change in control should such payments constitute a “parachute payment” (as defined in Section 280G of the Internal Revenue Code). Such payments shall be either (a) reduced (but not below zero) so that the aggregate present value of the payment shall be $1.00 less than three times the officer’s “base amount” (also as defined in Section 280G of the Internal Revenue Code) so that no portion of the payment will be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code or (b) paid in full, whichever produces the better netafter-tax result for the NEO (taking into account any applicable excise tax under Section 4999 and any applicable income taxes). Under the scenarios for |
(5) | The estimates for each scenario reflect the value that would be realized as of December 31, |
Under the death and disability scenarios, awards under POP would not be paid until the end of the performance period and the actual awards paid would be based on performance for the entire performance period. Under these scenarios, the value of the participation points allocated to each NEO under POP (and the POP LTIP Units exchanged for such participation points)
Under the death and disability scenarios, awards under POP would not be paid until the end of the applicable performance period and the actual awards paid would be based on performance for the entire performance period. Under these scenarios, the value of the POP Allocation to each NEO (and the POP LTIP Units exchanged for such POP Allocations) for the 2016-2018 performance period,
For
Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees was This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. Pay ratios within our industry will also differ and may not be comparable depending on the size, scope, global breadth and structure of the company. To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of the “median employee,” the methodology and the material assumptions, adjustments, and estimates that we used were as follows:
Advisory Vote to Approve the Company’s Executive Compensation for The Dodd-Frank Act allows our stockholders to vote to approve, on an advisory(non-binding) basis, the compensation of our NEOs as disclosed in this proxy statement in accordance with SEC rules. The compensation of our NEOs is discussed above under “Executive Compensation.” Our executive compensation programs are designed to attract, motivate and retain our NEOs, who are critical to our success. Under these programs, our NEOs are rewarded for the achievement of specific annual, long-term and strategic goals and the realization of increased stockholder value. Please read the CD&A for additional details about our executive compensation programs, including information about the compensation of our NEOs for This proposal, commonly known as a“say-on-pay” proposal, gives our stockholders the opportunity to express their views on our NEOs’ compensation that is described in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this proxy statement. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the annual meeting: “RESOLVED, that the company’s stockholders approve, on an advisory basis, the company’s You may vote for, vote against or abstain from voting to approve the above resolution on the company’s executive compensation for As an advisory vote, this proposal is not binding on the company. However, the Compensation Committee values the opinions of our stockholders and
The Board unanimously recommends that
Non-employee directors are compensated with a mix of cash and equity-based compensation, with a higher percentage of the overall mix in equity-based compensation. An employee who also serves as a member of the Board, such as Mr. Moghadam, does not receive additional compensation for service on the Board. In FW Cook’s review found that (i) ournon-employee director compensation is
Compensation applicable to service on the Board by ournon-employee directors for
The equity component of the compensation paid to our directors is awarded under the terms of the
Nonqualified Deferred Compensation Plans for Directors 2012 NQDC Plan and AMB NQ Plans Ms. Bita and Messrs. Fotiades, Losh and Webb elected to defer receipt of their annual retainers and other fees earned, as applicable, in In 2012, Mr. Fotiades deferred his annual cash retainer into a cash account under the 2012 NQDC Plan. As of December 31, See discussion of our deferred compensation plans in the narrative that follows the Nonqualified Deferred Compensation in Fiscal Year Under the Notional Account NQDC Plan, Mr. Losh and Ms. Kennard received an initial account credit value in a notional earnings account equal to the amount of the deemed tax liability on the distributions they received in 2011 triggered by the Merger. The initial account credit value is hypothetically invested in measurement funds selected by the participant, which do not include our company stock. Measurement funds are used for measurement purposes only and plan participants do not have rights in or to the underlying hypothetical investments. Notional earnings accounts are credited with hypothetical earnings or charged with hypothetical losses associated with the underlying hypothetical investments. Upon their retirement from the Board, Mr. Losh and Ms. Kennard are entitled to the excess, if any, of the value in their notional earnings account (representing the value of the initial account credit plus cumulative earnings or losses associated with the underlying hypothetical investments, if any) over their initial account credit value. The initial account credit values for Mr. Losh and Ms. Kennard were $469,558 and $98,047, respectively. As of December 31, See discussion of our deferred compensation plans in the narrative that follows the Nonqualified Deferred Compensation in Fiscal Year
ProLogis Deferred Fee Plan for Trustees This plan, which was assumed by us in the Merger, allowed members of the Trust’s board to receive their fees currently or elect to defer the receipt of their fees until after their board service ended. Deferrals were in the form of cash or Trust common shares. For those choosing shares, fees earned were credited to hypothetical fee deferral accounts based on the closing price of the common shares as of the date of the deferral. Under the Merger agreement, the Trust common shares in the deferral account were converted to our common stock using the Merger exchange ratio. Each share in the hypothetical account represents one share of our common stock and earns dividends under the same terms as dividends paid on our common stock. Upon retirement from the Board, the participant will be issued the shares of
common stock included in their hypothetical fee deferral account pursuant to specific deferral elections, which generally delay payment until the next fiscal year after service on the Board ends. No additional deferrals could be made under this plan after December 31, 2011. Mr. Fotiades participated in this plan at the time of the Merger. As of December 31,
Director Compensation for Fiscal Year
|
The number of shares of our common stock beneficially owned, as of the datedates indicated in the footnotes below, by each person known to us to be the beneficial owner of more than five percent, or more, in the aggregate, of our outstanding common stock as of the datedates indicated in the footnotes below is as follows:
Name and Address(1)
| Number of Shares Beneficially Owned
| % of Outstanding Shares of Common Stock
| Number of Shares Beneficially Owned | % of Outstanding Shares of Common Stock | ||||||||
The Vanguard Group, Inc.(2) 100 Vanguard Blvd. Malvern, PA 19355 | 77,974,862 | 14.72% | 93,088,245 | 12.60% | ||||||||
BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10022 | 53,388,532 | 10.00% | 76,214,355 | 10.3% | ||||||||
State Street Corporation(4) State Street Financial Center One Lincoln Street Boston, MA 02111 | 29,912,490 | 5.60% | 41,816,183 | 5.66% | ||||||||
|
(1) | Entities included have filed a Schedule 13G representing that the shares of common stock they are reporting were acquired and are held in the ordinary course of business, were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of Prologis and were not acquired and are not held in connection with or as a participant in any transaction having such purpose or effect. |
(2) | Information regarding beneficial ownership of our common stock by The Vanguard Group, Inc. (“Vanguard”) |
(3) | Information regarding beneficial ownership of our common stock by entities related to BlackRock, Inc. is included herein based on a Schedule 13G/A filed with the SEC on January |
(4) | Information regarding |
Prologis Proxy Statement | March 19, 2021 |
| |||
Security Ownership | ||
SECURITY OWNERSHIP
The following table shows the number of shares of our common stock beneficially owned, as of March 6, 2018,8, 2021, by: (i) our CEO; (ii) our chief financial officer; (iii) our other NEOs currently employed by us;NEOs; (iv) each of our directors; and (v) our directors and all of our executive officers as a group.
Shares Beneficially Owned
| ||||||||||||||||||||||||||||||||||||||||
Shares Beneficially Owned | ||||||||||||||||||||||||||||||||||||||||
Name(1)
| Number of Shares of Common Stock as of March 6, 2018(2)
| Number of Shares of Common Stock That May Be Acquired by May 5,
| Total Beneficial Ownership
| % of Outstanding Shares of Common Stock(8)
| % of Outstanding Shares of Common Stock and Units(9)
| Number of of Common Stock as of March 8, 2021(2) | Number of Shares of Common Stock That May Be Acquired by May 7, 2021(3)(4)(5)(6)(7) | Total Ownership** | % of Outstanding Shares of Common Stock(8) | % of Outstanding Shares of Common Stock and Units(9) | ||||||||||||||||||||||||||||||
NEOs: | ||||||||||||||||||||||||||||||||||||||||
Hamid Moghadam(10) | 3,677,223 | 894,738 | 4,571,961 | 0.96% | 0.94% | 3,257,223 | 855,508 | 4,112,731 | 0.56 | % | 0.54 | % | ||||||||||||||||||||||||||||
Thomas Olinger(11) | 37,192 | 363,548 | 400,740 | * | * | 46,010 | 447,287 | 493,297 | * | * | ||||||||||||||||||||||||||||||
Eugene Reilly(12) | 63,176 | 422,988 | 486,164 | * | * | 2,811 | 333,546 | 336,357 | * | * | ||||||||||||||||||||||||||||||
Edward Nekritz | 148,071 | 395,212 | 543,283 | * | * | 1,799 | 611,923 | 613,722 | * | * | ||||||||||||||||||||||||||||||
Gary Anderson | 1,738 | 272,723 | 274,461 | * | * | 1,881 | 193,373 | 195,254 | * | * | ||||||||||||||||||||||||||||||
Michael Curless(13) | 29,033 | 292,628 | 321,661 | * | * | |||||||||||||||||||||||||||||||||||
Michael Curless | — | 390,203 | 390,203 | * | * | |||||||||||||||||||||||||||||||||||
Directors: | ||||||||||||||||||||||||||||||||||||||||
Cristina Bita | — | 3,158 | 3,158 | |||||||||||||||||||||||||||||||||||||
George Fotiades | 24,049 | — | 24,049 | * | * | 22,710 | — | 22,710 | * | * | ||||||||||||||||||||||||||||||
Lydia Kennard | 28,288 | 25,147 | 53,435 | * | * | 39,597 | 3,158 | 42,755 | * | * | ||||||||||||||||||||||||||||||
J. Michael Losh(14) | 25,339 | 10,380 | 35,719 | * | * | |||||||||||||||||||||||||||||||||||
Irving Lyons III(15) | 126,487 | — | 126,487 | * | * | |||||||||||||||||||||||||||||||||||
Irving Lyons III(13) | 91,816 | — | 91,816 | * | * | |||||||||||||||||||||||||||||||||||
Avid Modjtabai | — | — | — | |||||||||||||||||||||||||||||||||||||
David O’Connor | 15,000 | 4,005 | 19,005 | * | * | 4,035 | — | 4,035 | * | * | ||||||||||||||||||||||||||||||
Olivier Piani | — | — | — | 2,334 | 3,158 | 5,492 | ||||||||||||||||||||||||||||||||||
Jeffrey Skelton | 40,055 | 28,765 | 68,820 | * | * | 51,364 | 3,158 | 54,522 | * | * | ||||||||||||||||||||||||||||||
Carl Webb | 67,220 | 4,005 | 71,225 | * | * | 78,529 | 3,158 | 81,687 | * | * | ||||||||||||||||||||||||||||||
William Zollars | 20,225 | 4,005 | 24,230 | * | * | 17,115 | 3,158 | 20,273 | * | * | ||||||||||||||||||||||||||||||
All directors and executive officers as a group (15 total) | 4,303,096 | 2,718,144 | 7,021,240 | 1.32% | 1.28% | |||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
All directors and executive officers as a group (17 total) | 3,617,224 | 2,850,788 | 6,468,012 | 0.87 | % | 0.85 | % |
* | Represents less than 0.1% of the outstanding shares of common stock and limited partnership units, as applicable. |
** | This column does not include LTIP Units held by NEOs that will not meet the waiting period and other applicable conditions for conversion and redemption by May 7, 2021. Our NEOs have elected to take most, if not all, their equity awards in the form of LTIP Units since 2014. This column also does not include deferred stock units held by our directors that are deferred per their terms or by election until after May 7, 2021. |
(1) | The principal address of each person is: c/o Prologis, Inc., Pier 1, Bay 1, San Francisco, California 94111. |
(2) | This column includes shares of our common stock beneficially owned as of the date indicated. Includes vested shares of our common stock owned through our 401(k) Plan and our nonqualified deferred compensation plans, as applicable. Unless indicated otherwise, all interests are owned directly and the indicated person has sole voting and dispositive power. For discussion of our nonqualified deferred compensation plans, see the narrative discussion that follows the Nonqualified Deferred Compensation in Fiscal Year |
(3) | This column includes shares of our common stock that may be acquired within 60 days of March |
Prologis Proxy Statement | March 19, 2021 |
| |||
| Security Ownership |
(4) | This column does not include shares of phantom stock held in hypothetical fee deferral accounts under the terms of our nonqualified deferred compensation plans, all of which arenon-voting. Phantom share balances as of March |
| 1,305 shares | |
· Mr. Fotiades: | 13,275 shares | |
| ||
| 17,911 shares |
Generally, the director has deferred receipt of the underlying common stock until his service on the Board ends. See “Director Compensation—Director Compensation for Fiscal Year 2017.”
Generally, the director has deferred receipt of the underlying common stock until his service on the Board ends. See “Director Compensation—Director Compensation for Fiscal Year 2020.” |
(5) | This column does not include shares of phantom stock held in a hypothetical fee deferral |
| 25,145 shares | |
| ||
|
Mr. Lyons’ phantom stock is currently being distributed ratably over a five-year period that began in January 2015 and will end in January 2019. Mr. Zollars’ phantom stock is currently being distributed ratably over a10-year period that began in January 2011 and will end in January 2020. Mr. Fotiades’ phantom stock will be distributed to him in January of the year following his termination from the Board. See “Director Compensation—Director Compensation for Fiscal Year 2017.”
Mr. Fotiades’ phantom stock will be distributed to him in January of the year following his termination from the Board. See “Director Compensation—Director Compensation for Fiscal Year 2020.” |
(6) | This column does not include vested DSUs and associated accrued DEUs, all of which arenon-voting, which were earned by directors who were formerly members of the Trust’s board. Balances as of March |
| 20,154 shares | |
| 9,288 shares |
Generally, these awards are payable to the director when his or her service on the Board ends. See “Director Compensation—Director Compensation for Fiscal Year 2017.”
Generally, these awards are payable to the director when his or her service on the Board ends. See “Director Compensation—Director Compensation for Fiscal Year 2020.” |
(7) | This column does not include vested or unvested DSUs and associated accrued DEUs, all of which arenon-voting, receipt of which has been deferred to a date later than May |
| 4,702 shares | |
· Mr. Fotiades: | 32,424 shares | |
| ||
| 4,702 shares | |
| ||
| 19,713 shares | |
| 2,145 shares | |
· Mr. O’Connor: | 15,370 shares | |
| 4,702 shares | |
| 4,702 shares | |
| 4,702 shares | |
| 4,702 shares |
(8) | The percentage of shares of common stock beneficially owned by a person assumes that all the limited partnership units held by the person that can be exchanged as of May |
(9) | The percentage of shares of common stock and units beneficially owned by a person assumes that all of the limited partnership units held by the person that can be exchanged as of May |
| ||||
|
May |
Prologis Proxy Statement | March 19, 2021 | 122 |
Security Ownership |
(10) | Includes 131,775 shares that are indirectly held through a trust of which Mr. Moghadam is the trustee, 982,414 shares are held through a rabbi trust pursuant to the AMB NQ Plans and the 2012 NQDC Plan, for which the trustee holds all voting power, 803,945 shares are indirectly held through the Notional Account NQDC Plan for which Mr. Moghadam has voting power. In addition, Mr. Moghadam shares voting and dispositive power with his spouse with respect to |
(11) | Includes |
(12) | Includes |
(13) | Includes |
Prologis Proxy Statement | March 19, 2021 |
| |||
Equity Compensation Plans | ||
EQUITY COMPENSATION PLANS
We currently grant equity awards only under the 20122020 LTIP. However, we do have awards outstanding that were granted under the 2012 LTIP, AMB Plans and the Trust Plans. All future equity awards will be granted from the 2012 LTIP. The available shares of common stock reserved for issuance under the 2012 LTIP, AMB Plans and the Trust Plans as of May 3, 2012,April 29, 2020, the date our stockholders approved the 20122020 LTIP, were added to the share reserve of the 20122020 LTIP. All outstanding awards under the AMB Plans and the Trust Plans will remain outstanding until they vest, expire, or are forfeited by the participant. The 20122020 LTIP does not expire but no further awards can be granted under the plan after the tenth anniversary date of the plan approval (May 3, 2022).approval. Information about our equity compensation plans as of December 31, 20172020 is as follows:
Plan Category (a) | # of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (b) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (c) | # of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (b)) (d) | # of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (b) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (c) | # of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (b)) (d) | |||||||||||||||||||||
Equity compensation plans approved by security holders(1)(2) | 8,843,610 | $ | 24.68 | 8,316,285 | 4,060,266 | $33.05 | 23,532,099 | ||||||||||||||||||||
Equity compensation plans not approved by security holders
| — | — | — | — | — | — |
(1) | The amount in column (b) includes |
(2) | The weighted average exercise price in column (c) relates to |
Prologis Proxy Statement | March 19, 2021 |
| |||
Audit Matters |
126 | Audit Committee Report | |
127 | Independent Public Accountant | |
128 |
Prologis Proxy Statement | March 19, 2021 |
| |||
| Audit Matters |
The purpose of the Audit Committee is to be an informed, vigilant and effective overseer of our financial accounting and reporting processes consistent with risk mitigation appropriate in the circumstances. The committee is directly responsible for the appointment, compensation and oversight of our independent registered public accounting firm.accountant. The committee is comprised of the threefour directors named below. Each member of the committee is independent as defined by SEC and NYSE rules. In addition, the Board has determined that each member of the Audit Committee is an audit committee financial expert and is financially literate in accordance with applicable NYSE and SEC rules. Management is responsible for the company’s internal controls and the financial reporting process. The company’s independent registered public accounting firmaccountant is responsible for performing an independent audit of the company’s consolidated financial statements and the effectiveness of the company’s internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), and issuing reports thereon. The Audit Committee is responsible for overseeing the conduct of these activities. The committee’s function is more fully described in its charter which has been approved by the Board. The charter can be viewed, together with any future changes, on our website at http://ir.prologis.com/governance.cfm.governance. Information contained on our website is not incorporated by reference into this proxy statement or any other report we file with the SEC.
We have reviewed and discussed the company’s audited financial statements for the fiscal year ended December 31, 20172020 and unaudited financial statements for the quarterly periods ended March 31, June 30 and September 30, 20172020 with management and KPMG LLP, the company’s independent registered public accounting firm.accountant. We also reviewed and discussed management’s assessment of the effectiveness of the company’s internal controls over financial reporting. The committee has discussed with KPMG LLP the matters that are required to be discussed by Auditing Standard No. 1301, Communication With Audit Committees, issued by the PCAOB.applicable requirements of the PCAOB and the SEC. KPMG LLP has provided to the company the written disclosures and the letter required by applicable PCAOB requirements regarding their communications with the Audit Committee concerning independence, and the Audit Committee has discussed with KPMG LLP its independence. The committee also concluded that KPMG LLP’s performance ofnon-audit services to us and our affiliates, aspre-approved by the committee and described in the next section, does not impair KPMG LLP’s independence.
Based on the considerations referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report onForm 10-K for 2017.2020. The foregoing report is provided by the following independent directors, who constitute the committee.
Audit Committee:
J. Michael LoshCarl B. Webb (Chair)
Cristina G. Bita
Avid Modjtabai
Olivier Piani
Carl B. Webb
Prologis Proxy Statement | March 19, 2021 |
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| Audit Matters |
Independent Registered Public Accounting FirmAccountant
The Audit Committee engaged KPMG LLP as our independent registered public accounting firmaccountant for the fiscal years ended December 31, 20172020 and 2016.2019. KPMG LLP was also retained to provide certain audit-related and tax services in 20172020 and 2016.2019.
In the course of the provision of services on our behalf, we recognize the importance of our independent registered public accounting firm’saccountant’s ability to maintain objectivity and independence in its audit of our financial statements and the importance of minimizing any relationships that could appear to impair that objectivity. To that end, the Audit Committee has adopted policies and procedures governing thepre-approval of audit andnon-audit work performed by our independent registered public accounting firm.accountant. The independent registered public accounting firmaccountant is authorized to perform specifiedpre-approved services up to certain annual amounts and up to specified amounts for specific services. Such limits vary by the type of service provided. Individual engagements anticipated to exceedpre-established thresholds must be separately approved. All of the fees reflected below for 20172020 and 20162019 were either specificallypre-approved by the Audit Committee orpre-approved pursuant to the Audit Committee’s Audit andNon-Audit ServicesPre-Approval Policy. These policies and procedures also detail certain services which the independent registered public accounting firmaccountant is prohibited from providing to us.
The following table represents fees for professional audit services rendered for the audit of our consolidated financial statements for the years ended December 31, 20172020 and 20162019 and fees billed for other services rendered in each year.
Types of Fees | 2017 | 2016 | 2020 | 2019 | ||||||||||||
Audit fees(1) | $ | 4,365,612 | $ | 4,378,265 | $ | 5,278,250 |
| $ | 4,473,055 |
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Audit-related fees(2) | 7,500 | — | $ | 95,671 |
| $ | 46,500 |
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Tax fees(3) | 383,669 | 324,883 | $ | 451,077 |
| $ | 357,393 |
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All other fees(4) | — | — |
| — |
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| — |
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Totals | $ | 4,756,781 | $ | 4,703,148 | $ | 5,824,998 |
| $ | 4,876,948 |
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(1) | Audit fees consists of fees for professional services for the audit of our consolidated financial statements included in our Annual Report on Form10-K and the review of our consolidated financial statements included in our Quarterly Reports on Form10-Q, including all services required to comply with the standards of the PCAOB, and fees associated with performing the integrated audit of internal controls over financial reporting (Sarbanes-Oxley Section 404 work). Additionally, amounts include fees for services associated with comfort letters, statutory audits, consents, technical accounting consultations and reviews of documents filed with the SEC. |
(2) | Audit-related fees consist of fees for assurance and related services associated with the issuance of |
(3) | Tax fees are primarily fees for tax compliance, tax return preparation, tax planning andpre-approved tax consultations. |
(4) | No other fees were billed for |
Prologis Proxy Statement | March 19, 2021 |
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| Audit Matters |
Ratification of the Appointment of the Independent
Registered Public Accounting FirmAccountant (Proposal 3)
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firmaccountants retained to audit our financial statements. The Audit Committee has appointed KPMG LLP as our independent registered public accounting firmaccountant for the year 2018.2021. KPMG LLP has been our external auditors since 2002. The Audit Committee is responsible for the audit fee negotiations associated with the company’s retention of KPMG LLP. In order to ensure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered public accounting firm.accountant. In conjunction with the mandated rotation of KPMG LLP’s lead engagement partner, the Audit Committee and its chairperson are directly involved in the selection of KPMG LLP’s new lead engagement partner. The Audit Committee and the Board believe that the continued retention of KPMG LLP to serve as our independent registered public accounting firmaccountant is in the best interest of the company and our stockholders.
We are asking our stockholders to ratify the selection of KPMG LLP as our independent registered public accounting firmaccountant for the year 2018.2021. In the event our stockholders do not approve the appointment, the appointment will be reconsidered by the Audit Committee.
KPMG LLP representatives are expected to attend the 20182021 annual meeting. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate stockholder questions.
You may vote for, vote against, or abstain from voting on ratifying the appointment of KPMG LLP as our independent registered public accounting firmaccountant for the year 2018.2021. Assuming a quorum is present, to be approved by the stockholders, the proposal must receive the affirmative vote of a majority of the shares of common stock having voting power present in person or by proxy at the annual meeting. Abstentions and brokernon-votes are considered voting power present in person or by proxy and thus will have the same effect as votes cast “Against” the proposal.
The Board unanimously recommends that the stockholders vote FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year 2018.
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| Additional Information |
Notice of 2018 Annual Meeting of Stockholders
March 22, 2018
To our Stockholders:
I invite you to attend the 2018 annual meeting of stockholders of Prologis, Inc. at 1:30 p.m. on May 2, 2018 at Pier 1, Bay 1, San Francisco, California 94111.
Items of business. The following items of business will be conducted at our 2018 annual meeting of stockholders:
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Submitting Stockholder Proposals | ||||
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Prologis Proxy Statement | March 19, 2021 |
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| Additional Information |
Proxy Materials. On or about March 23, 2018, we intend to distribute to our stockholders:
On behalf of the Board of Directors,
EDWARD S. NEKRITZ
Chief Legal Officer, General Counsel and Secretary
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on May 2, 2018. This proxy statement and accompanying form of proxy are first being made available to you on or about March 23, 2018. Proxy materials are available at www.proxyvote.com.
Proxy Materials and Voting Information
Proxy materials
We are required under SEC regulations to provide you with a proxy statement when we ask you to sign a proxy designating individuals to vote on your behalf. A proxy is a legal designation of another person to vote the stock you own, which person is also referred to as your “proxy.” This designation may be done in a written document that is called a “proxy” or “proxy card.”
The proxy materials consist of our 20182021 Proxy Statement and our 20172020 Annual Report to Stockholders, which includes our 20172020 Annual Report on Form10-K.
Your vote is very important. For this reason, our Board is requesting that you permit your common stock to be represented and voted at the annual meeting by the proxies named on the proxy card.
Notice of Internet Availability
We have implemented the Notice and Access Rule enacted by the SEC for distribution of materials for our annual meeting. Accordingly, we are sending a Notice of Internet Availability to many of our stockholders of record and our beneficial owners. All stockholders will be able to access the proxy materials. We believe that the electronic availability of materials is an appropriate proxy communication solution that will allow us to provide our stockholders with the materials they need, while lowering the cost of delivery and reducing the environmental impact of our annual meetings. Stockholders may request to receive printed copies of the proxy materials.
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Distribution of proxy materials
On or about March 23, 2018,19, 2021, the Notice of Annual Meeting and Internet Availability of Proxy Materials (“Notice of Internet Availability”) will be distributed to many of our stockholders, either in printed form by mail or electronically by email, in lieu of mailing the printed proxy materials. The Notice of Internet Availability instructs stockholders as to how they may: (i) access and review all of the proxy materials through the Internet; (ii) submit their proxy; and (iii) receive printed proxy materials. Also on or about March 23, 2018,19, 2021, printed proxy materials, including our 20182021 Proxy Statement and our Annual Report on Form10-K for 2017,2020, will be mailed to all other stockholders, as requested or required. On the mailing date, all stockholders and beneficial owners will have the ability to access all of the proxy materials on the Internet at www.proxyvote.com or on our website at http://ir.prologis.com/annuals.cfm. Information contained on our website is not incorporated by reference into this proxy statement or any other report we file with the SEC.
Stockholders may request to receive proxy materials electronically bye-mail email on an ongoing basis by visiting our website and selecting the link “Consent for Electronic Delivery” at http://ir.prologis.com/annual-reports.. You can also sign up for electronic delivery of proxy materials by following the instructions on the proxy card and Notice of Internet Availability with respect to how to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. If you register to receive future proxy materials electronically bye-mail, email, you will receive ane-mail email next year with instructions on how to access those proxy materials and how to vote. If you change youre-mail email address, you will need to update your registration. Your election on how to receive proxy materials will remain in effect until you terminate it.
Stockholders will receive printed copies of the proxy materials if they have elected this form of delivery or they are participants in our 401(k) Plan. Printed copies of the proxy materials will be provided upon request at no charge by submitting a written notice to Investor Relations, Prologis, Inc., Pier 1, Bay 1, San Francisco, California 94111.
Prologis Proxy Statement | March 19, 2021 | 130 |
Additional Information |
Voting in person at the annual meeting in virtual format
If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered the stockholder of record with respect to those shares and a Notice of Internet Availability or printed proxy materials and a proxy card are being sent directly to you. As the stockholder of record, you have the right to attend and to vote in personvirtually at the annual meeting. If you chooseTo be admitted to vote in person at the virtual annual meeting you can bringmust enter the control number found on your proxy card mailed toor voting instruction form or notice you if you received printed proxy materials, or you can vote using a ballot that will be provided to you at the annual meeting.previously received. Even if you plan to attend the virtual annual meeting, we recommend that you authorize your proxy to vote your shares in advance so that your vote will be counted should you later decide not to attend the annual meeting.
Most of our stockholders hold their shares in street name through a broker, bank, trustee or other nominee rather than directly in their own name. In this case, you are considered the beneficial owner of shares held in street name, and a Notice of Internet Availability or printed proxy materials are being forwarded to you together with a voting instruction card.card by your broker, bank, trustee or nominee. As the beneficial owner, you are also invited to attend the virtual annual meeting. However, because a beneficial owner is not the stockholder of record, you may not vote these shares in personvirtually at the annual meeting unless you obtain a “legal proxy” from the broker, bank, trustee or nominee that holds your shares, which will give you the right to vote the shares at the annual meeting. You will need to contact your broker, bank, trustee or nominee to obtain a legal proxy. You will need to bring that legal proxy toFollow the annual meeting in order to vote in person.instructions provided on the voting instruction form provided by your broker.
Voting without attending the annual meeting
Whether you hold shares directly as a stockholder of record or beneficially in street name, you may direct your vote without attending the annual meeting. You may vote by granting a proxy or, for shares held in street name, by submitting voting instructions to your broker, bank, trustee or nominee. In most cases, you will be able to do this by telephone, through the Internet or by mail. If you are a stockholder of record, please refer to the summary instructions on the proxy card included with your proxy materials or the instructions on how to vote contained in the Notice of
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Internet Availability. If you hold your shares in street name, the voting instructions will be communicated to you by your broker, bank, trustee or nominee. The Notice of Internet Availability also provides instructions on how you can request a printed copy of the proxy materials and proxy card, if you desire.
By Telephone or through the Internet—If you have telephone or Internet access, you may submit your proxy by following the instructions included with your proxy materials or, if you requested a printed copy of the proxy materials, on the proxy card. If you provide specific voting instructions, your shares will be voted as you have instructed.
By Mail—If you requested a printed copy of the proxy materials, you may submit your proxy by mail by signing the proxy card or, for shares held in street name, by following the voting instruction card included by your broker, bank, trustee or nominee and mailing it in the postage-paid envelope that is included. If you provide specific voting instructions, your shares will be voted as you have instructed.
The telephone and Internet proxy voting facilities for stockholders of record will close at 11:59 p.m., Eastern time, on May 1, 2018,April 28, 2021, unless the meeting is postponed or adjourned, in which case such voting facilities may remain open or be reopened until the day before the postponed or adjourned meeting.
The availability of telephone and Internet voting for beneficial owners will depend on the voting processes of your broker, bank, trustee or nominee. Therefore, we recommend that you follow the voting instructions in the materials you receive from your broker, bank, trustee or nominee.
Prologis Proxy Statement | March 19, 2021 | 131 |
Additional Information |
If you vote by telephone or through the Internet, you do not have to return a proxy card or voting instruction card.
The telephone and Internet proxy voting procedures are designed to authenticate stockholders by use of a control number and to allow stockholders to confirm that their instructions have been properly recorded. The method by which you vote will in no way limit your right to vote at the annual meeting if you later decide to attend the annual meeting in person.virtually.
Changing your vote
You may revoke your proxy at any time and change your vote at any time before the final vote at the annual meeting. If you are a stockholder of record, you may do this by signing and submitting a written notice to Edward S. Nekritz, Secretary, Prologis, Inc., Pier 1, Bay 1, San Francisco, California 94111, by submitting a new proxy card with a later date, by voting again by telephone or through the Internet (your latest telephone or Internet proxy is counted), or by attending the annual meeting in personvirtually and voting by ballot at the annual meeting. If you hold your shares beneficially in street name, you will need to contact your broker, bank, trustee or nominee to determine the process for revoking a voting instruction. Merely attending the annual meeting will not revoke a proxy unless you specifically request your proxy to be revoked.
All shares that have been properly voted (for which proxies have not been revoked) will be voted at the annual meeting.
Specific voting instructions not given
If you hold your shares directly in your name, and you sign and return a proxy card without giving specific voting instructions, the shares of common stock represented by that proxy will be voted as recommended by the Board. If you hold your shares in street name through a broker, bank, trustee or nominee and you do not provide specific voting instructions, your broker, bank, trustee or nominee will have discretion to vote such shares but only with respect to routine matters (Proposal 3).
If no voting instructions are received from you, and you hold your shares in street name, your broker, bank, trustee or nominee will not turn in a proxy card for your shares on thenon-routine matters proposed at our annual meeting.Non-routine matters are the election of directors (Proposal 1) and the advisory vote to approve the company’s executive compensation for 20172020 (Proposal 2).
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If you hold shares in your 401(k) Plan account and do not provide the trustee of the 401(k) Plan with specific voting instructions, the trustee will vote all uninstructed shares held in our 401(k) Plan in the same proportion as how instructed shares held in the 401(k) Plan are voted.
Vote required for proposals
Vote Required for Proposal 1 (Election of Directors): You may vote for, vote against or abstain from voting for any of the director nominees. Assuming a quorum is present, to elect a particular director nominee, the number of votes cast “For” a director nominee must exceed the number of such votes cast “Against” the director nominee. Abstentions and broker non-votes, if any, will have no effect on the outcome of the election. A more detailed description of these majority voting procedures is provided below under “Majority Voting.”
Vote Required for Proposal 2 (Advisory Vote to Approve the Company’s Executive Compensation for 2020): You may vote for, vote against or abstain from voting for the resolution on the company’s executive compensation for 2020. Assuming a quorum is present, to be approved by the stockholders, the proposal must receive the affirmative vote of a majority of the shares of common stock present in person or by proxy at the annual meeting. Abstentions and broker non-votes, if any, are considered shares present in person or by proxy and thus will have the same effect as votes cast “Against” the proposal.
Prologis Proxy Statement | March 19, 2021 | 132 |
Additional Information |
Vote Required for Proposal 3 (Ratification of the Appointment of Independent Public Accountant): You may vote for, vote against or abstain from voting on ratifying the appointment of KPMG LLP as our independent public accountant for the year 2021. Assuming a quorum is present, to be approved by the stockholders, the proposal must receive the affirmative vote of a majority of the shares of common stock present in person or by proxy at the annual meeting. Abstentions and broker non-votes, if any, are considered shares present in person or by proxy and thus will have the same effect as votes cast “Against” the proposal.
Proxy solicitation
We pay the cost of soliciting proxies. Proxies may be solicited on our behalf by our directors, officers or employees, in person or by telephone, facsimile or other electronic means. These people will not be specially compensated for their solicitation of proxies.
In accordance with the rules and regulations of the SEC and NYSE, we will also reimburse brokerage firms and other custodians, nominees and fiduciaries for their expenses incurred in sending proxies and proxy materials to the beneficial owners of shares of our common stock.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THE DELIVERY OF THIS PROXY STATEMENT SHALL, UNDER NO CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF PROLOGIS, INC. SINCE THE DATE OF THIS PROXY STATEMENT.
Admission to the annual meeting in virtual format
Stockholders must bring proof of current ownership of our common stock toTo be admitted to the annual meeting at www.virtualshareholdermeeting.com/pld2021, you must enter the control number found on your proxy card or voting instruction form or notice you previously received. You may vote during the Annual Meeting by following the instructions available on the meeting website during the meeting. Technical support contact information will be available on the meeting website prior to the meeting start time.
Asking questions at the annual meeting in virtual format
Stockholders can ask and to attendsubmit questions by typing them into the 2018“Submit Question” field on the virtual meeting site. Questions may be asked throughout the annual meeting.meeting using the above process (or before or after the meeting by contacting our investor relations department). Questions that are not answered at the meeting will be addressed after the meeting by phone, email, meeting, disclosure on our corporate website, or otherwise as appropriate.
Board’s voting recommendations
The Board recommends a vote:
“for” the election of each of the eleven nominees to the Board named in the proxy statement (Proposal 1); |
“for” the approval, on an advisory basis, of the company’s executive compensation for |
“for” the ratification of the appointment of KPMG LLP as our independent |
Prologis Proxy Statement | March 19, 2021 | 133 |
Additional Information |
Who can vote
Each issued and outstanding share of common stock is entitled to one vote on each matter properly brought before the annual meeting. Holders of record of Prologis common stock at the close of business on the record date, March 6, 2018,8, 2021, are entitled to notice of and to vote at the annual meeting. As of March 6, 2018,8, 2021, there were 533,068,686739,744,792 shares of our common stock outstanding.
Quorum requirement
There is no right to cumulative voting. A quorum is met if a majority of the shares of common stock outstanding as of the record date are represented, in person or by proxy, at the virtual annual meeting. Your shares are counted as present at the virtual meeting if you are present and entitled to vote in person at the meeting, if you have properly submitted a proxy card, or if you authorize your proxy to vote your shares by telephone or through the Internet.
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If you are present at the virtual annual meeting in person or by proxy, but you abstain from voting on any or all proposals, your shares are still counted as present and entitled to vote for purposes of determining a quorum.
Brokernon-votes are also counted as present and entitled to vote for purposes of determining a quorum. A brokernon-vote occurs when a nominee holding shares of our common stock for a beneficial owner is present at the virtual meeting, in person or by proxy, and entitled to vote, but does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions on how to vote with respect to that item from the beneficial owner.
Majority voting
Our bylaws provide that the vote required for election of directors is a “majority vote of the votes cast” in uncontested elections of directors. Accordingly, directors are required to be elected by the majority of votes cast by the shares present in person or represented by proxy with respect to such director in uncontested elections. A majority of the votes cast means that the number of shares voted “For” a director nominee by the holders of shares of common stock entitled to vote on the election of directors and represented in person or by proxy at the annual meeting must exceed the number of such shares voted “Against” the director nominee. Abstentions and brokernon-votes, if any, will have no effect on the outcome of the proposal.
In a contested election (where a determination is made that the number of director nominees is expected to exceed the number of directors to be elected at a meeting), the vote standard will be a plurality of the votes cast with respect to such director. In the event of a contested election where the plurality vote standard applies, stockholders shall be permitted to vote only “for” a director nominee or to designate their vote be “withheld” from such nominee.
If a nominee who is serving as a director is not elected by a majority vote at the annual meeting, then, under Maryland law, such director would continue to serve as a “holdover director.” Under our bylaws, any director who fails to be elected by a majority vote shall tender his or her resignation to the Board, subject to acceptance by the Board. The Governance Committee will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board will then act on the Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of election results. If the resignation is not accepted, the director will continue to serve until the next annual meeting and until the director’s successor is duly elected and qualified. The director who tenders his or her resignation will not participate in the Board’s decision.Non-incumbent directors who are not elected at the annual meeting would not become directors and would not serve on the Board as a “holdover director.”
Prologis Proxy Statement | March 19, 2021 | 134 |
Additional Information |
Proxy access
In 2016, we adopted proxy access with a “3/3/20/20” market standard. The amendment and restatement of our bylaws provides that, subject to certain requirements, a stockholder, or a group of up to 20 stockholders, owning three percent or more of our outstanding common stock continuously for at least three years, can require us to include in our annual meeting proxy materials director nominations for up to 20% of the number of directors, or two directors, whichever is greater. Proxy access rights are subject to additional eligibility, procedural and disclosure requirements set forth in our bylaws.
Stockholder recommended nominees for director
The Governance Committee will evaluate nominees for director recommended by stockholders against the same criteria that it uses to evaluate other director nominees, as described under ‘Board“Board of Directors and Corporate Governance—Director Qualifications, Skills and Experience.’” The committee will consider nominees to the Board
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recommended by stockholders with respect to elections to be held at an annual meeting if notice of the nomination is timely delivered in writing to our secretary prior to the meeting. See “Submitting Stockholder Proposals” for notice requirements prescribed by our Bylaws.
Additional matters present at the annual meeting
We do not anticipate any other business to be brought before the 20182021 annual meeting of stockholders. In addition to the scheduled items, however, the meeting may consider properly presented stockholder proposals and matters relating to the conduct of the meeting. As to any other business, the proxies, in their discretion, are authorized to vote on other matters that may properly come before the meeting and any adjournments or postponements of the meeting.
Prologis Proxy Statement | March 19, 2021 | 135 |
Additional Information |
Submitting Stockholder Proposals
There are no stockholder proposals for consideration at the 20182021 annual meeting. You may submit proposals, including director nominations, for consideration at our next annual meeting expected to be held in 20182022 as follows:
Deadline for submitting stockholder proposals for inclusion in our 20192022 proxy statement.Rule14a-8 of the Securities Exchange Act of 1934 (the “Exchange Act”) provides that certain stockholder proposals must be included in the proxy statement for our annual meeting. For a stockholder proposal to be considered for inclusion in the 20182022 proxy statement for our 20192022 annual meeting, it must be received at our principal executive offices (Pier 1, Bay 1, San Francisco, California 94111) no later than November 22, 2018.19, 2021. The proposal must comply with the SEC regulations under Rule14a-8 of the Exchange Act regarding the inclusion of stockholder proposals in our proxy materials. Proposals and nominations should be addressed to Edward S. Nekritz, Secretary, Prologis, Inc., Pier 1, Bay 1, San Francisco, California 94111.
If, however, the date of the 20192022 annual meeting is advanced or delayed by more than 30 days from May 2, 2019,April 29, 2022, we must receive notice a reasonable time before we begin to print and distribute our proxy materials.
Deadline for submitting stockholder proposals or director nominations not to be included in our 20182022 Proxy Statement. If you intend to present a proposal or nomination for director at our 20192022 annual meeting, but you do not intend to have it included in our 20182022 proxy statement, the notice of proposal or nomination must be delivered to, or mailed and received by, us at our principal executive offices (Pier 1, Bay 1, San Francisco, California 94111) betweennot earlier than December 30, 2021 and not later than January 2, 2019 and February 1, 2019.29, 2022.
If, however, the date of the 20192022 annual meeting is advanced or delayed by more than 30 days from May 2, 2019,April 29, 2022, we must receive the notice of proposal or nomination not more than 120 days prior to the date of the 20192022 annual meeting and not less than 90 days prior to the date of the 20192022 annual meeting.
If less than 100 days’ notice or prior public disclosure of the date of the 20192022 annual meeting (which was advanced or delayed by more than 30 days from May 2, 2019)April 29, 2022) is given or made to stockholders, the deadline to receive the notice of proposal or nomination is the close of business on the 10th day following the day on which notice of the 20192022 annual meeting date was mailed or publicly disclosed. Proposals and nominations should be addressed to Edward S. Nekritz, Secretary, Prologis, Inc., Pier 1, Bay 1, San Francisco, California 94111.
Deadline for submitting proxy access director nominations to be included in our 20192022 proxy statement. If you intend to present a nomination for director at our 20192022 annual meeting pursuant to the proxy access provisions in our bylaws, the notice of proxy access nomination must be delivered to, or mailed and received by, us at our principal executive offices (Pier 1, Bay 1, San Francisco, California 94111) betweennot earlier than December 30, 2021 and not later than January 2, 2019 and February 1, 2019.29, 2022.
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If, however, the date of the 20192022 annual meeting is advanced or delayed by more than 30 days from May 2, 2019,April 29, 2022, we must receive the notice of nomination not more than 120 days prior to the date of the 20192022 annual meeting and not less than 90 days prior to the date of the 20192022 annual meeting.
If less than 100 days’ notice or prior public disclosure of the date of the 20192022 annual meeting (which was advanced or delayed by more than 30 days from May 2, 2019)April 29, 2022) is given or made to stockholders, the deadline to receive the notice of nomination is the close of business on the 10th day following the day on which notice of the 20192022 annual meeting date was given or publicly disclosed. Proposals and nominations should be addressed to Edward S. Nekritz, Secretary, Prologis, Inc., Pier 1, Bay 1, San Francisco, California 94111.
Stockholder notice.As set forth in our bylaws, for stockholder proposals other than director nominations, such stockholder’s notice must contain, among other things, with respect to each proposed matter:
a brief description of the business and the reasons for conducting such business at the annual meeting; |
the name of the stockholder and any “stockholder associated person” (as defined in our bylaws); |
the record address or current address, if different, of the stockholder and any stockholder associated person; |
Prologis Proxy Statement | March 19, 2021 | 136 |
Additional Information |
the class, series and number of shares the stockholder and any stockholder associated person beneficially holds (including the number of shares held beneficially but not of record and the name of any nominee holder of such shares); |
any material interest the stockholder or any stockholder associated person has in such business; |
whether and the extent to which hedging or other transaction(s) have been entered into by the stockholder or on the stockholder’s behalf, or by a stockholder associated person or on that person’s behalf (including any agreement, arrangement, or understanding made with the effect or intent to mitigate loss, manage risk of stock price changes, or to increase the voting power of such stockholder or stockholder associated person) and a general description of such activity; and |
to the extent known by the stockholder giving notice, the name and address of any other stockholder supporting a proposal of other business. |
Please review our bylaws for more information regarding requirements to submit a stockholder proposal outside ofRule 14a-8.
As set forth in our bylaws, for director nominations, a stockholder’s notice must contain, among other things, with respect to each proposed nominee:
the name, age, business address and residence address of the proposed nominee; |
the principal occupation or employment of the proposed nominee; |
the class, series, and number of shares beneficially held by the proposed nominee, the date such shares were acquired, and the investment intent of such acquisition; |
any other information relating to the proposed nominee that is required to be disclosed under Regulation 14A of the Exchange Act; |
the proposed nominee’s written consent to serve as a director if elected and, with respect to proxy access nominations, to be named in our proxy materials; |
a statement whether such person, if elected orre-elected, or as a condition thereto, will tender an irrevocable resignation effective upon failure to receive the required vote forre-election at the next meeting at which such person would facere-election and upon acceptance of such resignation by the Board; and |
with respect to the stockholder giving the notice: (i) the name of the stockholder, the record address (or current address, if different) of the stockholder, and the class, series and number of shares the stockholder beneficially |
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holds (including the number of shares held beneficially but not of record and the name of any nominee holder of such shares); (ii) whether and the extent to which hedging or other transaction(s) have been entered into by the stockholder or on the stockholder’s behalf (including any agreement, arrangement, or understanding made with the effect or intent to mitigate loss, manage risk of stock price changes, or to increase the voting power of such stockholder) and a general description of such activity; and (iii) to the extent known by the stockholder giving notice, the name and address of any other stockholder giving notice, the name and address of any other stockholder supporting the nominee for election orre-election as a director, as well as similar information regarding any stockholder associated person. |
We may require a proposed nominee to furnish other information to determine the eligibility of such proposed nominee to serve as one of our directors. Please review our bylaws for more information regarding proxy access eligibility, procedural and disclosure requirements and other relevant requirements to nominate directors.
Prologis Proxy Statement | March 19, 2021 |
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| Additional Information |
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Exchange Act, as amended, requires our directors, certain officers and certain beneficial owners of our common stock to file reports of holdings and transactions in our common stock with the SEC and the NYSE. Except as provided below, basedBased on our records and other information available to us, we believe that, in 2017,2020, all of the above persons and entities met all applicable SEC filing requirements. In 2017,requirements except that one report with two transactions for each of Mr. Anderson, Mr. Curless, Mr. Moghadam, Mr. Nekritz, Mr. Olinger, Mr. Reilly and Ms. Kennard inadvertently failed to file a reportPalazzolo was not filed on a timely basis and except that one transaction for Mr. Piani was not reported on a timely basis, in each case due to an administrative error.
Prologis Proxy Statement | March 19, 2021 | 138 |
Additional Information |
Annual Report to Stockholders and Corporate Governance Documents
We will provide copies of our annual report to requesting stockholders, free of charge, by contacting Investor Relations, Prologis, Inc., Pier 1, Bay 1, San Francisco, California 94111, telephone(415) 394-9000. Our Code of Ethics and Business Conduct, Governance Guidelines and our Audit, Compensation and Governance Committee charters can be viewed on our website at http://ir.prologis.com/governance.cfm.governance. In addition, copies of our Code of Ethics and Business Conduct, Governance Guidelines, our Audit, Compensation and Governance Committee charters and our bylaws can be obtained by any stockholder, free of charge, upon written request to Edward S. Nekritz, Secretary, Prologis, Inc., Pier 1, Bay 1, San Francisco, California 94111.
March 22, 201819, 2021
San Francisco, California
Prologis Proxy Statement | March 19, 2021 |
| |||
| and Non-GAAP Financial Measures |
Definitions and Reconciliations of GAAP and Non-GAAP Financial Measures
Please refer to our annual and quarterly financial statements filed with the Securities and Exchange Commission onForms 10-K and10-Q and other public reports for further information about us and our business.
Annualized FFO Growth Rateis averageyear-on-year growth rate of Core FFO per share, over a period of time, reflecting the rate on an annual basis.
Annualized TSR is calculated based on the stock price appreciation and dividends paid to show a total return to a stockholder over a period of time. This calculation assumes dividends are reinvested into the stock on the day the dividend is paid. We annualize TSR by converting the total return of the stock at the end of a prescribed time period to an annualized basis.
Asset Management Feesrepresents the third-party share of asset management and transactional fees from both consolidated and unconsolidatedco-investment ventures.
Assets Under Management (“AUM”) represents the estimated fair value of the real estate we own or manage through both our consolidated and unconsolidated entities. We calculatedcalculate AUM beby adding Investment Capacity and the third-party investors’ share of the estimated fair value of the assets in the co-investment ventures to our share of total market capitalizationscapitalization (calculated as market equity plus our share of total debt). For purposes of calculating G&A as a percentage of AUM, or G&A/AUM, we use the estimated book value of our owned and managed real estate assets to determine AUM. To calculate the estimated book value, we add the gross book value of operating properties, land, and other real estate assets and the total expected investment of our development portfolio. The calculations of G&A as a percentage of AUM for December 31, 2017, 2016, 2015, 2014, and 2013 are provided in our earnings supplemental information for the fourth quarter of each respective year (furnished on Forms 8-K on January 23, 2018, January 24, 2017, January 26, 2016, January 27, 2015, and January 30, 2014, respectively).
Calculation of Per Share Amounts (in thousands, except per share amounts):
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Net earnings | ||||||||||||||||||||
Net earnings | $ | 1,641,931 | $ | 1,203,218 | $ | 862,788 | $ | 622,235 | $ | 315,422 | ||||||||||
Noncontrolling interest attributable to exchangeable limited partnership units | 46,280 | 37,079 | 13,120 | 3,636 | 1,305 | |||||||||||||||
Gains, net of expenses, associated with exchangeable debt assumed exchanged | — | — | (1,614 | ) | — | — | ||||||||||||||
Adjusted net earnings—Diluted | $ | 1,688,211 | $ | 1,240,297 | $ | 874,294 | $ | 625,871 | $ | 316,727 | ||||||||||
Weighted average common shares outstanding—Basic | 530,400 | 526,103 | 521,241 | 499,583 | 486,076 | |||||||||||||||
Incremental weighted average effect on exchange of limited partnership units | 15,945 | 16,833 | 8,569 | 3,501 | 2,060 | |||||||||||||||
Incremental weighted average effect of equity awards | 5,955 | 3,730 | 1,961 | 3,307 | 3,410 | |||||||||||||||
Incremental weighted average effect on exchangeable debt assumed exchanged(a) | — | — | 2,173 | — | — | |||||||||||||||
Weighted average common shares outstanding—Diluted | 552,300 | 546,666 | 533,944 | 506,391 | 491,546 | |||||||||||||||
Net earnings per share—Basic | $ | 3.10 | $ | 2.29 | $ | 1.66 | $ | 1.25 | $ | 0.65 | ||||||||||
Net earnings per share—Diluted | $ | 3.06 | $ | 2.27 | $ | 1.64 | $ | 1.24 | $ | 0.64 |
2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||
Net earnings | ||||||||||||||||||||||||||||
Net earnings | $ | 1,473,122 |
| $ | 1,566,950 |
| $ | 1,643,426 |
| $ | 1,641,931 |
| $ | 1,203,218 |
| $ | 862,788 |
| $ | 622,235 |
| |||||||
Noncontrolling interest attributable to exchangeable limited partnership units |
| 41,938 |
|
| 46,986 |
|
| 49,743 |
|
| 46,280 |
|
| 37,079 |
|
| 13,120 |
|
| 3,636 |
| |||||||
Gains, net of expenses, associated with exchangeable debt assumed exchanged |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (1,614 | ) |
| — |
| |||||||
Adjusted net earnings—Diluted | $ | 1,515,060 |
| $ | 1,613,936 |
| $ | 1,693,169 |
| $ | 1,688,211 |
| $ | 1,240,297 |
| $ | 874,294 |
| $ | 625,871 |
| |||||||
Weighted average common shares outstanding—Basic |
| 728,323 |
|
| 630,580 |
|
| 567,367 |
|
| 530,400 |
|
| 526,103 |
|
| 521,241 |
|
| 499,583 |
| |||||||
Incremental weighted average effect on exchange of limited partnership units |
| 20,877 |
|
| 19,154 |
|
| 17,768 |
|
| 15,945 |
|
| 16,833 |
|
| 8,569 |
|
| 3,501 |
| |||||||
Incremental weighted average effect of equity awards |
| 5,214 |
|
| 5,169 |
|
| 5,104 |
|
| 5,955 |
|
| 3,730 |
|
| 1,961 |
|
| 3,307 |
| |||||||
Incremental weighted average effect on exchangeable debt assumed exchanged(1) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2,173 |
|
| — |
| |||||||
Weighted average common shares outstanding—Diluted |
| 754,414 |
|
| 654,903 |
|
| 590,239 |
|
| 552,300 |
|
| 546,666 |
|
| 533,944 |
|
| 506,391 |
| |||||||
Net earnings per share—Basic | $ | 2.02 |
| $ | 2.48 |
| $ | 2.90 |
| $ | 3.10 |
| $ | 2.29 |
| $ | 1.66 |
| $ | 1.25 |
| |||||||
Net earnings per share—Diluted | $ | 2.01 |
| $ | 2.46 |
| $ | 2.87 |
| $ | 3.06 |
| $ | 2.27 |
| $ | 1.64 |
| $ | 1.24 |
|
Prologis Proxy Statement | March 19, 2021 |
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| and Non-GAAP Financial Measures |
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Core FFO | ||||||||||||||||||||
Core FFO | $ | 1,551,153 | $ | 1,400,498 | $ | 1,181,290 | $ | 953,147 | $ | 813,224 | ||||||||||
Noncontrolling interest attributable to exchangeable limited partnership units | 2,903 | 4,273 | 213 | 209 | 2,828 | |||||||||||||||
Interest expense on exchangeable debt assumed exchanged | — | — | 3,506 | 16,984 | 16,940 | |||||||||||||||
Core FFO—Diluted | $ | 1,554,056 | $ | 1,404,771 | $ | 1,185,009 | $ | 970,340 | $ | 832,992 | ||||||||||
Weighted average common shares outstanding—Basic | 530,400 | 526,103 | 521,241 | 499,583 | 486,076 | |||||||||||||||
Incremental weighted average effect on exchange of limited partnership units | 15,945 | 16,833 | 6,897 | 1,964 | 3,411 | |||||||||||||||
Incremental weighted average effect of equity awards | 5,955 | 3,730 | 1,961 | 3,307 | 3,410 | |||||||||||||||
Incremental weighted average effect on exchangeable debt assumed exchanged(a) | — | — | 2,173 | 11,879 | 11,879 | |||||||||||||||
Weighted average common shares outstanding—Diluted | 552,300 | 546,666 | 532,272 | 516,733 | 504,776 | |||||||||||||||
Core FFO per share—Diluted | $ | 2.81 | $ | 2.57 | $ | 2.23 | $ | 1.88 | $ | 1.65 |
2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||
Core FFO | ||||||||||||||||||||||||||||
Core FFO | $ | 2,864,148 |
| $ | 2,164,017 |
| $ | 1,788,149 |
| $ | 1,551,153 |
| $ | 1,400,498 |
| $ | 1,181,290 |
| $ | 953,147 |
| |||||||
Noncontrolling interest attributable to exchangeable limited partnership units |
| 598 |
|
| 646 |
|
| 1,531 |
|
| 2,903 |
|
| 4,273 |
|
| 213 |
|
| 209 |
| |||||||
Interest expense on exchangeable debt assumed exchanged |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 3,506 |
|
| 16,984 |
| |||||||
Core FFO—Diluted | $ | 2,864,746 |
| $ | 2,164,663 |
| $ | 1,789,680 |
| $ | 1,554,056 |
| $ | 1,404,771 |
| $ | 1,185,009 |
| $ | 970,340 |
| |||||||
Weighted average common shares outstanding—Basic |
| 728,323 |
|
| 630,580 |
|
| 567,367 |
|
| 530,400 |
|
| 526,103 |
|
| 521,241 |
|
| 499,583 |
| |||||||
Incremental weighted average effect on exchange of limited partnership units |
| 20,877 |
|
| 19,154 |
|
| 17,768 |
|
| 15,945 |
|
| 16,833 |
|
| 6,897 |
|
| 1,964 |
| |||||||
Incremental weighted average effect of equity awards |
| 5,214 |
|
| 5,169 |
|
| 5,104 |
|
| 5,955 |
|
| 3,730 |
|
| 1,961 |
|
| 3,307 |
| |||||||
Incremental weighted average effect on exchangeable debt assumed exchanged (1) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2,173 |
|
| 11,879 |
| |||||||
Weighted average common shares outstanding—Diluted |
| 754,414 |
|
| 654,903 |
|
| 590,239 |
|
| 552,300 |
|
| 546,666 |
|
| 532,272 |
|
| 516,733 |
| |||||||
Core FFO per share—Diluted | $ | 3.80 |
| $ | 3.31 |
| $ | 3.03 |
| $ | 2.81 |
| $ | 2.57 |
| $ | 2.23 |
| $ | 1.88 |
|
(1) | In March 2015, the exchangeable debt was settled primarily through the issuance of common stock. The adjustment in 2015 assumes the exchange occurred on January 1, 2015. |
See definition of Core FFO below in “Funds from Operations attributable to common stockholders and unitholders”.
Compound Annual Growth Rate,also referred to as CAGR, is used to determine the annual growth rate over a specified period of time longer than one year. The compound annual growth is calculated by dividing the ending value by the beginning value and multiplying the result to the power of one divided by the number of years in the calculation and then subtracting one from the result. We determined the three-yearseven-year compound annual growth rate of our Core FFO per share at December 31, 2017,2020, to be 14%12.7% by dividing the 20172020 diluted Core FFO per share of $2.81$3.80 by 20142013 diluted Core FFO per share of $1.88,$1.65, then multiplying the result to theone-third one-seventh power and then subtracting one from the result.
The Dow Jones Sustainability Indices (“DJSI”) are global sustainability indices offered cooperatively by RobecoSAM and S&P Dow Jones Indices, tracking the stock performance of companies in terms of economic, environmental and social criteria.
Estimated Value Creationrepresents the value that we expect to create through our development and leasing activities. We calculate Estimated Value Creation by estimating the Stabilized NOI that the property will generate and applying a stabilized capitalization rate applicable to that property. Estimated Value Creation is calculated as the amount by which the value exceeds our total expected investmentTEI and does not include any fees or promotes we may earn. Estimated Value Creation for our Value-Added Propertiesvalue-added properties that are sold includes the realized economic gain.
Estimated Weighted Average Margin is calculated on developed properties as the Value Creation less estimated closing costs and taxes, if any, on properties expected to be sold or contributed, divided by the TEI.
Funds from Operations attributable to common stockholders and unitholders (“FFO”). FFO is anon-GAAP financial measure that is commonly used in the real estate industry. The most directly comparable GAAP measure to FFO is net earnings.
The National Association of Real Estate Investment Trusts (“NAREIT” or “Nareit”) defines FFO as earnings computed under GAAP to exclude historical cost depreciation and gains and losses from the sales, along with impairment charges, of previously depreciated properties. We also exclude the gains on revaluation of equity investments upon acquisition of a controlling interest and the gain recognized from a partial sale of our investment, as these are similar to gains from the
Prologis Proxy Statement | March 19, 2021 |
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Appendix A: Definitions and Reconciliations of GAAP and Non-GAAP Financial Measures | ||
APPENDIX A: DEFINITIONS AND RECONCILIATIONS OF GAAP AND NON-GAAP FINANCIAL MEASURES
sales of previously depreciated properties. We exclude similar adjustments from our unconsolidated entities and the third parties’ share of our consolidatedco-investment ventures.
Our FFO Measures. Our FFO measures begin with NAREIT’s definition and we make certain adjustments to reflect our business and the way that management plans and executes our business strategy. While not infrequent or unusual, the additional items we adjust for in calculatingFFO, as modified by Prologis,andCore FFO, both as defined below, are subject to significant fluctuations from period to period. Although these items may have a material impact on our operations and are reflected in our financial statements, the removal of the effects of these items allows us to better understand the core operating performance of our properties over the long term. These items have both positive and negative short-term effects on our results of operations in inconsistent and unpredictable directions that are not relevant to our long-term outlook.
We calculate our FFO measures, as defined below, based on our proportionate ownership share of both our unconsolidated and consolidated ventures. We reflect our share of our FFO measures for unconsolidated ventures by applying our average ownership percentage for the period to the applicable reconciling items on an entity by entityentity-by-entity basis. We reflect our share for consolidated ventures in which we do not own 100% of the equity by adjusting our FFO measures to remove the noncontrolling interests share of the applicable reconciling items based on our average ownership percentage for the applicable periods.
These FFO measures are used by management as supplemental financial measures of operating performance and we believe that it is important that stockholders, potential investors and financial analysts understand the measures management uses. We do not use our FFO measures as, nor should they be considered to be, alternatives to net earnings computed under GAAP, as indicators of our operating performance, as alternatives to cash from operating activities computed under GAAP or as indicators of our ability to fund our cash needs.
We analyze our operating performance primarilyprincipally by the rental revenues of our real estate and the revenues from our strategic capital business, net of operating, administrative and financing expenses. This income stream is not directly impacted by fluctuations in the market value of our investments in real estate or debt securities.
FFO, as modified by Prologis attributable, to common stockholders and unitholders (“FFO, as modified by Prologis”).
To arrive at FFO, as modified by Prologis, we adjust the NAREIT definedNAREIT-defined FFO measure to exclude the impact of foreign currency relatedcurrency-related items and deferred tax, specifically:
deferred income tax benefits and deferred income tax expenses recognized by our subsidiaries; |
current income tax expense related to acquired tax liabilities that were recorded as deferred tax liabilities in an acquisition, to the extent the expense is offset with a deferred income tax benefit in earnings that is excluded from our defined FFO measure; |
foreign currency exchange gains and losses resulting from (a) debt transactions between us and our foreign |
(d) mark-to-market adjustments associated with other derivative financial instruments. |
We use FFO, as modified by Prologis, so that management, analysts and investors are able to evaluate our performance against other REITs that do not have similar operations or operations in jurisdictions outside the U.S.
Prologis Proxy Statement | March 19, 2021 |
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Appendix A: Definitions and Reconciliations of GAAP and Non-GAAP Financial Measures | ||
APPENDIX A: DEFINITIONS AND RECONCILIATIONS OF GAAP AND NON-GAAP FINANCIAL MEASURES
Core FFO attributable to common stockholders and unitholders (“Core FFO”). In addition to FFO, as modified by Prologis,we also useCore FFO.To arrive atCore FFO,we adjustFFO, as modified by Prologis, to exclude the following recurring and nonrecurring items that we recognized directly inFFO, as modified by Prologis:Prologis:
gains or losses from the disposition of land and development properties that were developed with the intent to contribute or sell; |
income tax expense related to the sale of investments in real |
impairment charges recognized related to our investments in real estate generally as a result of our change in intent to contribute or sell these properties; |
gains or losses from the early extinguishment of debt and redemption and repurchase of preferred stock; and |
expenses related to natural disasters. |
We use Core FFO, including by segment and region, to: (i) assess our operating performance as compared to other real estate companies; (ii) evaluate our performance and the performance of our properties in comparison with expected results and results of previous periods; (iii) evaluate the performance of our management; (iv) budget and forecast future results to assist in the allocation of resources; (v) provide guidance to the financial markets to understand our expected operating performance; and (vi) evaluate how a specific potential investment will impact our future results.
Limitations on the use of our FFO measures. While we believe our modified FFO measures are important supplemental measures, neither NAREIT’s nor our measures of FFO should be used alone because they exclude significant economic components of net earnings computed under GAAP and are, therefore, limited as an analytical tool. Accordingly, these are only a few of the many measures we use when analyzing our business. Some of the limitations are:
The current income tax expenses |
Depreciation and amortization of real estate assets are economic costs that are excluded from FFO. FFO is limited, as it does not reflect the cash requirements that may be necessary for future replacements of the real estate assets. Furthermore, the amortization of capital expenditures and leasing costs necessary to maintain the operating performance of logistics facilities are not reflected in FFO. |
Gains or losses fromnon-development property |
The deferred income tax benefits and expenses that are excluded from our modified FFO measures result from the creation of a deferred income tax asset or liability that may have to be settled at some future point. Our modified FFO measures do not currently reflect any income or expense that may result from such settlement. |
The foreign currency exchange gains and losses that are excluded from our modified FFO measures are generally recognized based on movements in foreign currency exchange rates through a specific point in time. The ultimate settlement of our foreign currency-denominated net assets is indefinite as to timing and amount. Our FFO measures are limited in that they do not reflect the current period changes in these net assets that result from periodic foreign currency exchange rate movements. |
The gains and losses on extinguishment of debt or preferred stock that we exclude from our Core FFO may provide a benefit or cost to us as we may be settling our |
The natural disaster expenses that we exclude from Core FFO are costs that we have incurred. |
Prologis Proxy Statement | March 19, 2021 |
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Appendix A: Definitions and Reconciliations of GAAP and Non-GAAP Financial Measures | ||
APPENDIX A: DEFINITIONS AND RECONCILIATIONS OF GAAP AND NON-GAAP FINANCIAL MEASURES
We compensate for these limitations by using our FFO measures only in conjunction with net earnings computed under GAAP when making our decisions. This information should be read with our complete Consolidated Financial Statements prepared under GAAP. To assist investors in compensating for these limitations, we reconcile our modified FFO measures to our net earnings computed under GAAP as follows (in millions).
2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||||||||||||||||||||||||||
FFO | ||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of net earnings to FFO measures: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net earnings attributable to common stockholders | $ | 1,641.9 | $ | 1,203.2 | $ | 862.8 | $ | 622.2 | $ | 315.4 | $ | 1,473.1 | $ | 1,567.0 | $ | 1,643.4 | $ | 1,641.9 | $ | 1,203.2 | $ | 862.8 | $ | 622.2 | ||||||||||||||||||||||||
Add (deduct) NAREIT defined adjustments: | ||||||||||||||||||||||||||||||||||||||||||||||||
Real estate related depreciation and amortization | 847.5 | 899.8 | 854.5 | 617.8 | 624.6 | 1,523.4 | 1,102.1 | 912.8 | 847.5 | 899.8 | 854.5 | 617.8 | ||||||||||||||||||||||||||||||||||||
Gains on dispositions of real estate properties, net (excluding development properties and land) | (855.4 | ) | (423.0 | ) | (500.8 | ) | (553.2 | ) | (271.3 | ) | (252.2 | ) | (390.2 | ) | (371.2 | ) | (855.4 | ) | (423.0 | ) | (500.8 | ) | (553.2 | ) | ||||||||||||||||||||||||
Reconciling items related to noncontrolling interests | (39.0 | ) | (104.8 | ) | (78.1 | ) | 47.9 | (9.0 | ) | (57.4 | ) | (8.2 | ) | 23.1 | (39.0 | ) | (104.8 | ) | (78.1 | ) | 47.9 | |||||||||||||||||||||||||||
Our share of reconciling items included in earnings from unconsolidated entities | 147.5 | 162.1 | 185.6 | 186.5 | 159.8 | 267.9 | 246.0 | 141.8 | 147.5 | 162.1 | 185.6 | 186.5 | ||||||||||||||||||||||||||||||||||||
Subtotal—NAREIT defined FFO | 1,742.5 | 1,737.3 | 1,324.0 | 921.2 | 819.5 | 2,954.8 | 2,516.7 | 2,349.9 | 1,742.5 | 1,737.3 | 1,324.0 | 921.2 | ||||||||||||||||||||||||||||||||||||
Add (deduct) our modified adjustments: | ||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized foreign currency and derivative losses (gains), net | 69.4 | (7.5 | ) | 1.0 | 19.0 | 32.8 | 160.4 | 69.0 | (120.4 | ) | 69.4 | (7.5 | ) | 1.0 | 19.0 | |||||||||||||||||||||||||||||||||
Deferred income tax benefit | (5.0 | ) | (5.5 | ) | (5.1 | ) | (87.2 | ) | (20.0 | ) | 0.7 | 12.2 | 1.4 | (5.0 | ) | (5.5 | ) | (5.1 | ) | (87.2 | ) | |||||||||||||||||||||||||||
Current income tax expense on dispositions related to acquired tax assets | 2.3 | — | 3.5 | 30.5 | 20.7 | 5.6 | 0.0 | 1.2 | 2.3 | 0.0 | 3.5 | 30.5 | ||||||||||||||||||||||||||||||||||||
Reconciling items related to noncontrolling interests | (0 | ) | 0.7 | (1.3 | ) | — | — | (1.4 | ) | 0.4 | (0.2 | ) | (0.0 | ) | 0.7 | (1.3 | ) | — | ||||||||||||||||||||||||||||||
Our share of reconciling items included in earnings from unconsolidated entities | (14.7 | ) | (22.9 | ) | (13.6 | ) | 4.0 | 2.2 | (0.2 | ) | (7.5 | ) | (0.3 | ) | (14.7 | ) | (22.9 | ) | (13.6 | ) | 4.0 | |||||||||||||||||||||||||||
FFO, as modified by Prologis | 1,794.5 | 1,702.1 | 1,308.5 | 887.5 | 855.2 | 3,119.9 | 2,590.8 | 2,231.6 | 1,794.5 | 1,702.1 | 1,308.5 | 887.5 | ||||||||||||||||||||||||||||||||||||
Adjustments to arrive at Core FFO: | ||||||||||||||||||||||||||||||||||||||||||||||||
Gains on dispositions of development properties and land, net | (327.5 | ) | (334.4 | ) | (258.1 | ) | (172.4 | ) | (427.6 | ) | (464.9 | ) | (467.6 | ) | (469.8 | ) | (327.5 | ) | (334.4 | ) | (258.1 | ) | (172.4 | ) | ||||||||||||||||||||||||
Current income tax expense (benefit) on dispositions | 19.1 | 24.2 | (0.2 | ) | 15.4 | 87.8 | 41.0 | 15.1 | 17.1 | 19.1 | 24.2 | (0.2 | ) | 15.4 | ||||||||||||||||||||||||||||||||||
Acquisition expenses | — | 4.6 | 47.0 | 4.2 | 3.0 | — | — | — | — | 4.6 | 47.0 | 4.2 | ||||||||||||||||||||||||||||||||||||
Losses (gains) on early extinguishment of debt and preferred stock repurchase, net | 72.3 | (2.5 | ) | 86.3 | 171.8 | 286.1 | 198.6 | 16.1 | 2.6 | 72.3 | (2.5 | ) | 86.3 | 171.8 | ||||||||||||||||||||||||||||||||||
Reconciling items related to noncontrolling interests | (0.4 | ) | 4.3 | (11.1 | ) | — | — | (2.5 | ) | 0.2 | 6.2 | (0.4 | ) | 4 | (11 | ) | — | |||||||||||||||||||||||||||||||
Our share of reconciling items included in earnings from unconsolidated entities | (6.8 | ) | 2.2 | 8.9 | 46.6 | 8.7 | (27.9 | ) | 9.4 | 0.4 | (6.8 | ) | 2.2 | 8.9 | 46.6 | |||||||||||||||||||||||||||||||||
Core FFO | $ | 1,551.2 | $ | 1,400.5 | $ | 1,181.3 | $ | 953.1 | $ | 813.2 | $ | 2,864.2 | $ | 2,164.0 | $ | 1,788.1 | $ | 1,551.2 | $ | 1,400.5 | $ | 1,181.3 | $ | 953.1 |
General and Administrative Expenses (“G&A”). Generally our property management personnel perform the property-level management of the properties in our owned and managed portfolio, which include properties we consolidate and those we manage that are owned by the unconsolidated co-investment ventures. We allocate the costs of our property management function to the properties we consolidate (included in rental expenses) and the properties owned by the unconsolidated co-investment ventures (included in strategic capital expenses) by using the square feet owned by the respective portfolios. Strategic capital expenses also include the direct expenses associated with the asset management of the unconsolidated co-investment ventures provided by our employees who are assigned to our strategic capital segment and promote expenses. We do not allocate indirect costs to strategic capital expenses.
Prologis Proxy Statement | March 19, 2021 | A-5 |
Appendix A: Definitions and Reconciliations of GAAP and Non-GAAP Financial Measures |
Global Customer Retention. The square footage of all leases commenced during the period that are rented by existing tenants divided by the square footage of all expiring and in-place leases during the reporting period. The square footage of tenants that default or buy-out prior to expiration of their lease and short-term leases of less than one year, are not included in the calculation.
GRESB (“Global Real Estate Sustainability Benchmark”) assesses the sustainability performance of real estate and infrastructure portfolios and assets worldwide.
Investment Capacity is our estimate of the gross real estate whichthat could be acquired by ourco-investment ventures through the use of existing equity commitments from us and our partners assuming the ventures maximum leverage limits of the ventures are used.
LED lighting. LEDstands for “light-emitting diode.” LED lighting is a type of energy efficient lighting.
Liquidity is equal to the sum of the current availability of our consolidated credit facilities ($3.14.2 billion) plus our consolidated cash and cash equivalents ($0.50.6 billion).
LED lighting. LEDstands for “light-emitting diode.” LED lighting is a type of energy efficient lighting.
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Loan-to-Market Value,or debt as a percentage of gross market capitalization, is anon-GAAP measure used by us to analyze the leverage risk in our debt risk portfolio. We make adjustments to reflect our economic ownership in each entity in which we invest, whether consolidated or unconsolidated. The following table presents the calculation ofLoan-to-Market Value for the years ended December 31 (in thousands).
2017 | 2016 | 2015 | 2014 | 2013 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||
Debt as a % of gross real estate assets: | ||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated debt (at par) | $ | 9,469,106 | $ | 10,632,534 | $ | 11,620,995 | $ | 9,293,367 | $ | 8,970,567 | $ | 16,920,021 | $ | 11,994,717 | $ | 11,161,326 | $ | 9,469,106 | $ | 10,632,534 | $ | 11,620,995 | $ | 9,293,367 | ||||||||||||||||||||||||
Noncontrolling interests share of consolidated debt (at par) | (70,422 | ) | (634,945 | ) | (674,048 | ) | (383,455 | ) | (175,211 | ) | (5,708 | ) | (6,752 | ) | (13,119 | ) | (70,422 | ) | (634,945 | ) | (674,048 | ) | (383,455 | ) | ||||||||||||||||||||||||
Prologis share of unconsolidated debt (at par) | 2,040,271 | 1,557,561 | 1,768,900 | 1,853,320 | 2,101,573 | 2,712,239 | 2,187,043 | 2,048,777 | 2,040,271 | 1,557,561 | 1,768,900 | 1,853,320 | ||||||||||||||||||||||||||||||||||||
Total Prologis share of debt (at par) | 11,438,955 | 11,555,150 | 12,715,847 | 10,763,232 | 10,896,929 | 19,626,552 | 14,175,008 | 13,196,984 | 11,438,955 | 11,555,150 | 12,715,847 | 10,763,232 | ||||||||||||||||||||||||||||||||||||
Prologis share of outstanding foreign currency derivatives | 4,965 | (22,349 | ) | (34,769 | ) | (102,080 | ) | 20,828 | 16,426 | 17,506 | (1,519 | ) | 4,965 | (22,349 | ) | (34,769 | ) | (102,080 | ) | |||||||||||||||||||||||||||||
Consolidated cash and cash equivalents | (447,046 | ) | (807,316 | ) | (264,080 | ) | (350,692 | ) | (491,129 | ) | (598,086 | ) | (1,088,855 | ) | (343,856 | ) | (447,046 | ) | (807,316 | ) | (264,080 | ) | (350,692 | ) | ||||||||||||||||||||||||
Noncontrolling interests share of consolidated cash and cash equivalents | 55,827 | 52,519 | 51,204 | 45,236 | 7,904 | 10,619 | 103,982 | 71,078 | 55,827 | 52,519 | 51,204 | 45,236 | ||||||||||||||||||||||||||||||||||||
Prologis share of unconsolidated cash and cash equivalents | (132,276 | ) | (138,773 | ) | (163,595 | ) | (111,629 | ) | (145,186 | ) | (167,605 | ) | (202,342 | ) | (203,997 | ) | (132,276 | ) | (138,773 | ) | (163,595 | ) | (111,629 | ) | ||||||||||||||||||||||||
Total Prologis share of debt, net of adjustments | $ | 10,920,425 | $ | 10,639,231 | $ | 12,304,607 | $ | 10,244,067 | $ | 10,289,346 | $ | 18,887,906 | $ | 13,005,299 | $ | 12,718,690 | $ | 10,920,425 | $ | 10,639,231 | $ | 12,304,607 | $ | 10,244,067 | ||||||||||||||||||||||||
Total outstanding common stock and limited partnership units | 546,355 | 542,660 | 540,067 | 511,265 | 502,517 | 759,530 | 649,792 | 648,488 | 546,355 | 542,660 | 540,067 | 511,265 | ||||||||||||||||||||||||||||||||||||
Share price at year end | 64.51 | 52.79 | 42.92 | 43.03 | 36.95 | 99.66 | 89.14 | 58.72 | 64.51 | 52.79 | 42.92 | 43.03 | ||||||||||||||||||||||||||||||||||||
Total equity capitalization | 35,245,361 | 28,647,021 | 23,179,676 | 21,999,733 | 18,568,003 | 75,694,760 | 57,922,459 | 38,079,215 | 35,245,361 | 28,647,021 | 23,179,676 | 21,999,733 | ||||||||||||||||||||||||||||||||||||
Total Prologis share of debt, net of adjustments | 10,920,425 | 10,639,231 | 12,304,607 | 10,244,067 | 10,289,346 | 18,887,906 | 13,005,299 | 12,718,690 | 10,920,425 | 10,639,231 | 12,304,607 | 10,244,067 | ||||||||||||||||||||||||||||||||||||
Gross market capitalization | $ | 46,165,786 | $ | 39,286,252 | $ | 35,484,283 | $ | 32,243,800 | $ | 28,857,349 | $ | 94,582,666 | $ | 70,927,758 | $ | 50,797,905 | $ | 46,165,786 | $ | 39,286,252 | $ | 35,484,283 | $ | 32,243,800 | ||||||||||||||||||||||||
Debt as a % of gross real estate assets | 23.7 | % | 27.1 | % | 34.7 | % | 31.8 | % | 35.7 | % | ||||||||||||||||||||||||||||||||||||||
Debt as a % of gross market capitalization | 20.0 | % | 18.3 | % | 25.0 | % | 23.7 | % | 27.1 | % | 34.7 | % | 31.8 | % |
Nareit (or NAREIT) is the representative voice for real estate investment trusts and publicly traded real estate companies with an interest in U.S. real estate and capital markets.
Prologis Proxy Statement | March 19, 2021 | A-6 |
Appendix A: Definitions and Reconciliations of GAAP and Non-GAAP Financial Measures |
Net Operating Income (“NOI”) is anon-GAAP financial measure used to evaluate our operating performance and represents rental revenue less rental expenses.
Net Promoteincludes actual promotespromote revenue earned from third-party investors during the period, net of related cash and stock compensation expenses.
REIT is defined as areal estate investment trust.
Same Store. Our same store metrics are non-GAAP financial measures, which are commonly used in the real estate industry and expected from the financial community, on both a net effective and cash basis. We evaluate the operating performance of the operating properties we own and manage using a “same store” analysis because the population of properties in this analysis is consistent from period to period, which eliminatesallows us and investors to analyze our ongoing business operations. We determine our same store metrics on property NOI, which is calculated as rental revenue less rental expense for the effects of changesapplicable properties in the composition of the portfolio. We have defined the same store portfolio,population for both consolidated and unconsolidated properties based on our ownership interest, as further defined below.
We define our same store population for the three months ended December 31, 2017,2020 as thosethe properties in our Owned and Managed operating portfolio, including the property NOI for both consolidated properties and properties owned and managed properties that were in operationby the unconsolidated co-investment ventures at January 1, 20162019 and have been in operationowned throughout the same three-month periodsperiod in both 20162019 and 2017 (including development properties that have been completed and available for lease). We have removed all properties that were disposed of to a third party or were classified as held for sale to a third party from the population for both periods.2020. We believe the factors that affect rental revenues, rental expenses anddrivers of property NOI infor the same storeconsolidated portfolio are generally the same as for the total operating portfolio.properties owned by the ventures in which we invest and therefore we evaluate the same store metrics of the Owned and Managed portfolio based on Prologis’ ownership in the properties (“Prologis Share”). The same store population excludes properties held for sale to third parties, along with development properties that were not stabilized at the beginning of the period (January 1, 2019) and properties acquired or disposed of to third parties during the period. To derive an appropriate measure ofperiod-to-period operating performance, we remove the effects of foreign currency exchange rate movements by using the recent period endreported period-end exchange rate to translate from local currency into the U.S. dollar, for both periods.
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Same store is a commonly used measure inWe evaluate the real estate industry. Our same store measures arenon-GAAP financial measures that are calculated beginning with rental revenues, rental recoveries and rental expenses from the financial statements prepared in accordance with GAAP. It is also common in the real estate industry and expected from the analyst and investor community that these numbers be further adjusted to remove certainnon-cash items included in the financial statements prepared in accordance with GAAP to reflect a cash same store number. In order to clearly label these metrics, we call one Same Store NOI and one Same Store NOI—Cash. Asresults of our same store measures arenon-GAAP financial measures, they have certain limitations as analytical tools and may vary among real estate companies. As a result, we provide a reconciliation from our financial statements prepared in accordance with GAAP to same store property NOI with explanations of how these metrics are calculated.
We calculate our same store resultsportfolio on a quarterly basis. The following table summarizes same store NOI and the change from the prior period for the four quarters of 20172020 and on a cumulative annual basis and the square feet of the portfolio used in the calculation (dollars and square feet in millions):
Three Months Ended | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended | March 31,(1) | June 30,(1) | September 30,(1) | December 31, | Full Year | |||||||||||||||||||||||||||||||||||
March 31,(1) | June 30,(1) | September 30,(1) | December 31, | Full Year | ||||||||||||||||||||||||||||||||||||
2017 NOI—same store portfolio | $ | 730.3 | $ | 735.3 | $ | 751.6 | $ | 743.5 | $ | 2,960.7 | ||||||||||||||||||||||||||||||
2016 NOI—same store portfolio | $ | 697.9 | $ | 707.3 | $ | 730.3 | $ | 720.5 | $ | 2,856.0 | ||||||||||||||||||||||||||||||
2020 NOI—same store portfolio | $ | 968.3 |
| $ | 964.4 |
| $ | 980.6 |
| $ | 1,003.0 |
| $ | 1,003.02 |
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2019 NOI—same store portfolio | $ | 944.4 |
| $ | 942.7 |
| $ | 964.2 |
| $ | 971.5 |
| $ | 971.48 |
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Percentage change | 4.6 | % | 3.9 | % | 2.9 | % | 3.2 | % | 3.7 | % |
| 2.5% |
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| 2.3% |
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| 1.7% |
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| 3.2% |
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| 3.2% |
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Square feet of portfolio | 586.3 | 577.8 | 572.2 | 560.0 |
| 674.3 |
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| 672.6 |
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| 671.7 |
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| 669.7 |
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(1) | A reconciliation of our same store results for these fiscal quarters to the Consolidated Statements of Income is provided in our previously filed quarterly reports on Form10-Q for the respective quarter. |
Prologis Proxy Statement | March 19, 2021 | A-7 |
Appendix A: Definitions and Reconciliations of GAAP and Non-GAAP Financial Measures |
The following is a reconciliation of our consolidated rental revenues, rental recoveries, rental expenses and property NOI for the full year, as included in the Consolidated Statements of Income and within Note 2019 to the Consolidated Financial Statements, in our annual reports on Form10-K for year ended December 31, 2017,2020, to the respective amounts in our same store portfolio analysis for the three months ended December 31 (dollars in millions):
Three Months Ended | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended | March 31, | June 30, | September 30, | December 31, | Full Year | |||||||||||||||||||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | Full Year | ||||||||||||||||||||||||||||||||||||
2017 | ||||||||||||||||||||||||||||||||||||||||
Property NOI | ||||||||||||||||||||||||||||||||||||||||
2020 | ||||||||||||||||||||||||||||||||||||||||
Rental revenues | $ | 439.9 | $ | 448.0 | $ | 416.4 | $ | 433.5 | $ | 1,737.8 | $ | 878.8 | $ | 944.4 | $ | 980.1 | $ | 987.8 | $ | 3,791.1 | ||||||||||||||||||||
Rental recoveries | 127.0 | 128.4 | 114.8 | 117.1 | $ | 487.3 | ||||||||||||||||||||||||||||||||||
Rental expenses | (152.7 | ) | (147.8 | ) | (128.7 | ) | (140.3 | ) | $ | (569.5 | ) | (227.6 | ) | (232.1 | ) | (245.5 | ) | (246.8 | ) | $ | (952.1 | ) | ||||||||||||||||||
Property NOI | $ | 414.2 | $ | 428.6 | $ | 402.5 | $ | 410.3 | $ | 1,655.6 | $ | 651.2 | $ | 712.3 | $ | 734.7 | $ | 741.0 | $ | 2,839.1 | ||||||||||||||||||||
2016 | ||||||||||||||||||||||||||||||||||||||||
2019 | ||||||||||||||||||||||||||||||||||||||||
Rental revenues | $ | 437.1 | $ | 426.2 | $ | 435.8 | $ | 435.7 | $ | 1,734.8 | $ | 696.8 | $ | 700.7 | $ | 710.5 | $ | 723.8 | $ | 2,831.8 | ||||||||||||||||||||
Rental recoveries | 117.0 | 120.0 | 124.4 | 124.2 | 485.6 | |||||||||||||||||||||||||||||||||||
Rental expenses | (146.6 | ) | (140.7 | ) | (140.5 | ) | (141.1 | ) | (568.9 | ) | (188.1 | ) | (181.1 | ) | (180.9 | ) | (184.2 | ) | $ | (734.3 | ) | |||||||||||||||||||
Property NOI | $ | 407.5 | $ | 405.5 | $ | 419.7 | $ | 418.8 | $ | 1,651.5 | $ | 508.7 | $ | 519.6 | $ | 529.6 | $ | 539.6 | $ | 2,097.5 | ||||||||||||||||||||
Three Months Ended December 31, | ||||||||||||
dollars in thousands | 2020 | 2019 | Percentage Change | |||||||||
Reconciliation of Consolidated Property NOI to Same Store Property NOI measures: | ||||||||||||
Rental revenues | $ | 987,810 | $ | 723,857 | ||||||||
Rental expenses | (246,846 | ) | (184,196 | ) | ||||||||
Consolidated Property NOI | $ | 740,964 | $ | 539,661 | ||||||||
Adjustments to derive same store results: | ||||||||||||
Property NOI from consolidated properties not included in same | (252,566 | ) | (60,646 | ) | ||||||||
Property NOI from unconsolidated co-investment ventures included | 514,622 | 492,464 | ||||||||||
Third parties’ share of Property NOI from properties included in | (414,532 | ) | (402,988 | ) | ||||||||
Prologis Share of Same Store Property NOI – Net Effective(2) | $ | 588,488 | $ | 568,491 | 3.5 | % | ||||||
Consolidated properties straight-line rent and fair value lease | (10,739 | ) | (8,819 | ) | ||||||||
Unconsolidated co-investment ventures straight-line rent and fair | (11,318 | ) | (6,989 | ) | ||||||||
Third parties’ share of straight-line rent and fair value lease | 8,809 | 5,842 | ||||||||||
Prologis Share of Same Store Property NOI – Cash(2)(3) | $ | 575,240 | $ | 558,525 | 3.0 | % |
(1) | We exclude properties held for sale to third parties, along with development properties that were not stabilized at the beginning of the period and properties acquired or disposed of to third parties during the period. We also exclude net termination and renegotiation fees to allow us to evaluate the growth or decline in each property’s rental revenues without regard to one-time items that are not indicative of the property’s recurring operating performance. Net termination and renegotiation fees represent the gross fee negotiated to allow a customer to terminate or renegotiate their lease, offset by the write-off of the asset recorded due to the adjustment to straight-line rents over the lease term. Same Store Property NOI is adjusted to include an allocation of property management expenses for our consolidated properties based on the property management services provided to each property (generally, based on a percentage of revenues). On consolidation, these amounts are eliminated and the actual costs of providing property management services are recognized as part of our consolidated rental expense. |
Prologis Proxy Statement | March 19, 2021 |
A-8 | |||
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Three Months Ended December 31, | ||||||||||||
2017 | 2016 | Percentage Change | ||||||||||
Rental Revenues(1)(2) | ||||||||||||
Consolidated: | ||||||||||||
Rental revenues as included in the Consolidated Statements of Income | $ | 433.6 | $ | 435.7 | ||||||||
Rental recoveries as included in the Consolidated Statements of Income | 117.1 | 124.2 | ||||||||||
Consolidated adjustments to derive same store results: | ||||||||||||
Rental revenues and recoveries of properties not in the same store portfolio—properties developed, acquired and sold to third parties during the period and land subject to ground leases | (74.4 | ) | (66.1 | ) | ||||||||
Effect of changes in foreign currency exchange rates and other | (7.7 | ) | 0.6 | |||||||||
Unconsolidatedco-investment ventures—rental revenues | 525.2 | 463.9 | ||||||||||
Same store portfolio—rental revenues(2) | $ | 993.8 | $ | 958.3 | 3.7 | % | ||||||
Rental Expenses(1)(3) | ||||||||||||
Consolidated: | ||||||||||||
Rental expenses as included in the Consolidated Statements of Income | $ | 140.3 | $ | 141.0 | ||||||||
Consolidated adjustments to derive same store results: | ||||||||||||
Rental expenses of properties not in the same store portfolio—properties developed, acquired and sold to third parties during the period and land subject to ground leases | (31.8 | ) | (22.7 | ) | ||||||||
Effect of changes in foreign currency exchange rates and other | 17.9 | 13.6 | ||||||||||
Unconsolidatedco-investment ventures—rental expenses | 123.9 | 105.0 | ||||||||||
Same store portfolio—rental expenses(3) | $ | 250.3 | $ | 236.9 | 5.3 | % | ||||||
NOI(1) | ||||||||||||
Consolidated: | ||||||||||||
Property NOI as included in the Consolidated Statements of Income | $ | 410.4 | $ | 418.9 | ||||||||
Consolidated adjustments to derive same store results: | ||||||||||||
Property NOI of properties not in the same store portfolio—properties developed, acquired and sold to third parties during the period and land subject to ground leases | (42.6 | ) | (43.4 | ) | ||||||||
Effect of changes in foreign currency exchange rates and other | (25.6 | ) | (13.0 | ) | ||||||||
Unconsolidatedco-investment ventures—property NOI | 401.3 | 358.9 | ||||||||||
Same store portfolio—NOI | $ | 743.5 | $ | 721.4 | 3.2 | % | ||||||
(2) | We include |
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We further remove certain noncash items (straight-line rent and |
Scope 1 GHG are greenhouse gas emissions from sources owned or controlled by Prologis and
Scope 2GHG are indirect greenhouse gas emissions associated with consumption of purchased electricity and gas.
Stabilization is defined as the earlier of when a property that was developed has been completed for one year or is 90% occupied. Upon Stabilization, a property is moved into our Operating Portfolio.operating portfolio.
Stabilized NOIis equal to the estimated twelve months of potential gross rental revenue (base rent, including above or below market rents plus operating expense reimbursements) multiplied by 95% to adjust income to a stabilized vacancy factor of 5%, minus estimated operating expenses.
Total Expected Investment (“TEI”)represents total estimated cost of development or expansion, including land, development and leasing costs. TEI is based on current projections and is subject to change.
Total Stockholder Return (“TSR”)is calculated based on the stock price appreciation and dividends paid to show a total return to a stockholder over a period of time. This calculation assumes dividends are reinvested into the stock on the day the dividend is paid.
Weighted Average Annualized Growth RateValue Creation isrepresents the growth rate of an investment assumingestimated value that we expect to create through our development and leasing activities. We calculate Value Creation by estimating the Stabilized NOI that the investment has been compounding overproperty will generate and applying a period of time. The growthstabilized capitalization rate is weighted by using the daily market capitalization of the applicable company averaged over a specified period of time.
Weighted Average Annualized TSR weights the annualized TSR of a company by using the daily market capitalization of the company averaged over the same period of time as the TSR. If applicable, the average daily market capitalization is then converted to USD using the applicable currency’s average daily exchange rate over the same period of time.
Weighted Average Stabilized Capitalization (“Cap”) Ratethat property. Value Creation is calculated as Stabilized NOI dividedthe amount by which the value exceeds our TEI and does not include any fees or promotes we may earn. Value Creation for our value-added properties that are sold includes the realized economic gain.
WELL Building Standard is a design standard for buildings that promotes health and wellness. The WELL Building Standard was developed and is overseen by the Acquisition Cost.International WELL Building Institute™ (IWBI™).
Prologis Proxy Statement | March 19, 2021 | A-9 |
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | ||||||||||||||||||||||||||||||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
YOUR VOTE IS IMPORTANT! VOTE BY INTERNET—www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern time the day before the meeting date. Have your Proxy Voting Instruction Form in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting PROLOGIS, INC. instruction form. PIER 1, BAY 1 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS SAN FRANCISCO, CA 94111 If you would like to reduce the costs incurred by Prologis, Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, Proxy Voting Instruction Forms, and annual reports electronically bye-mail or through the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BYPHONE—1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern time the day before the meeting date. Have your Proxy Voting Instruction Form in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign, and date your Proxy Voting Instruction Form and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Do your not proxy return by your telephone Proxy Voting or Internet. Instruction Form if you are authorizing TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E40964-P03044-Z71836 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY VOTING INSTRUCTION FORM IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY PROLOGIS, INC. The Board of Directors recommends you vote FOR all the listed nominees: 1. Election of Directors For Against Abstain Nominees: 1a. Hamid R. Moghadam ! ! ! 1b. Cristina G. Bita ! ! ! The Board of Directors recommends you vote FOR the For Against Abstain following proposal: 1c. George L. Fotiades ! ! ! 2. Advisory Vote to Approve the Company’s Executive ! ! ! Compensation for 2017 1d. Lydia H. Kennard ! ! ! The Board of Directors recommends you vote FOR the following proposal: 1e. J. Michael Losh ! ! ! 3. Ratification of the Appointment of KPMG LLP as the ! ! ! Company’s Independent Registered Public Accounting Firm for the year 2018 1f. Irving F. Lyons III ! ! ! 1g. David P. O’Connor ! ! ! 1h. Olivier Piani ! ! ! 1i. Jeffrey L. Skelton ! ! ! 1j. Carl B. Webb ! ! ! 1k. William D. Zollars ! ! ! Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. E40965-P03044-Z71836 PROLOGIS, INC. Annual Meeting of Stockholders May 2, 2018 1:30 P.M. Pacific Time This proxy is solicited by the Board of Directors The undersigned hereby appoints each of Hamid R. Moghadam, Thomas S. Olinger, and Edward S. Nekritz as proxies for the undersigned with full power of substitution in each of them, to represent the undersigned at the Annual Meeting of Stockholders to be held on May 2, 2018, and at any and all adjournments or postponements thereof with all powers possessed by the undersigned if personally present at the meeting, and to cast at such meeting all votes that the undersigned is entitled to cast at such meeting in accordance with the instructions indicated on the reverse side of this form. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS INDICATED AND THE SHARES ARE HELD DIRECTLY IN YOUR NAME, IT WILL BE VOTED (1) FOR EACH OF THE NOMINEES FOR DIRECTOR LISTED IN THE PROXY STATEMENT, (2) FOR THE APPROVAL, BY ADVISORY VOTE, OF THE COMPANY’S EXECUTIVE COMPENSATION FOR 2017, (3) FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR 2018, AND (4) IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. IF THESE SHARES ARE HELD IN YOUR 401(K) PLAN ACCOUNT AND YOU DO NOT PROVIDE SPECIFIC VOTING INSTRUCTIONS, THE TRUSTEE WILL VOTE ALL UNINSTRUCTED SHARES HELD IN THE COMPANY’S 401(K) PLAN IN THE SAME PROPORTION AS HOW INSTRUCTED SHARES HELD IN THE 401(K) PLAN ARE VOTED. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING, THE PROXY STATEMENT, AND THIS PROXY. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. Continued and to be signed on reverse side
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D39943-P50591-Z79239 | ||||
PROLOGIS, INC. Annual Meeting of Stockholders April 29, 2021 1:30 P.M. Pacific Time This proxy is solicited by the Board of Directors The undersigned hereby appoints each of Hamid R. Moghadam, Thomas S. Olinger, and Edward S. Nekritz as proxies for the undersigned with full power of substitution in each of them, to represent the undersigned at the Annual Meeting of Stockholders to be held on April 29, 2021, and at any and all adjournments or postponements thereof with all powers possessed by the undersigned if personally present at the meeting, and to cast at such meeting all votes that the undersigned is entitled to cast at such meeting in accordance with the instructions indicated on the reverse side of this form. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS INDICATED AND THE SHARES ARE HELD DIRECTLY IN YOUR NAME, IT WILL BE VOTED (1) FOR EACH OF THE NOMINEES FOR DIRECTOR LISTED IN THE PROXY STATEMENT, (2) FOR THE APPROVAL, BY ADVISORY VOTE, OF THE COMPANY’S EXECUTIVE COMPENSATION FOR 2020, (3) FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR 2021, AND (4) IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. IF THESE SHARES ARE HELD IN YOUR 401(K) PLAN ACCOUNT AND YOU DO NOT PROVIDE SPECIFIC VOTING INSTRUCTIONS, THE TRUSTEE WILL VOTE ALL UNINSTRUCTED SHARES HELD IN THE COMPANY’S 401(K) PLAN IN THE SAME PROPORTION AS HOW INSTRUCTED SHARES HELD IN THE 401(K) PLAN ARE VOTED. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING, THE PROXY STATEMENT, AND THIS PROXY. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. | ||||
Continued and to be signed on reverse side |