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.)
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐ Check the appropriate box: |
| ☐ | Preliminary Proxy Statement | |||
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||
| ☒ | Definitive Proxy Statement | |||
| ☐ | Definitive Additional Materials | |||
| ☐ | Soliciting Material Pursuant to Rule 14a-12 | |||
| Prologis, Inc. | ||||
(Name of Registrant as Specified In Its Charter)
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| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
| Payment of Filing Fee (Check | ||||
| ☒ | No fee required. | |||
| ☐ | Fee paid previously with preliminary materials. | |||
| ☐ | ||||
AHEAD OF WHAT’S NEXT™
Prologis Proxy Statement
Notice of annual meeting of stockholders
Prologis Park Ontario, Ontario, California
Thursday, April 29, 2021
1:30 p.m., Pacific time
The date of this proxy statement is March 19, 2021
Notice of 20212022 Annual Meeting
of Stockholders
March 19, 202125, 2022
To our stockholders:
I invite you to attend the 20212022 annual meeting of stockholders of Prologis, Inc. at 1:30 p.m. on April 29, 2021.May 4, 2022. Due to the COVID-19 outbreak pandemic 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 20212022 annual meeting of stockholders:
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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 | |
3. |
Ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year | |
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 | 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, 2021,25, 2022, 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 |
| (ii) | If requested or required, printed proxy materials, which will include our |
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
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| Other Compensation Elements and Considerations | ||
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 20202021 performance, please review our Annual Report on Form 10-K for the year ended December 31, 2020.2021. All company operational information in this proxy statement is for the year ended or as of December 31, 2020,2021, 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.
2020 Business Highlights2021 BUSINESS HIGHLIGHTS
Our business model delivers long-term growthBusiness Model Delivers Long-Term Growth and outperformance.Outperformance
In 2020,2021, we stoodcontinued to stand resilient through the pandemic, outperforming both operationally and in the equity markets for yet another successful year.
| Exceptional TSR Outperformance(1) | Sector-Leading Financial Performance | |
Over |
12.3%
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 Index.” Measured in seven-year TSR. |
| (3) | Seven-year compound annual growth rate (“CAGR”). 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 our Core FFO per share. |
| (4) | The |
For further detail, please see “Compensation Discussion and Analysis.”
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2020 Compensation Highlights2021 COMPENSATION HIGHLIGHTS
OurCompensation Program Improvements
In response to stockholder feedback, we adopted various improvements to our compensation program, rewards for performance.including:
| Annual Bonus Program | Long-Term Incentive (LTI) Equity Program | |
with full disclosure of all quantitative |
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Prologis Elizabeth Seaport, Elizabeth, New Jersey
| (1) | To be implemented beginning with the 2022-2024 performance period to avoid implementation during an ongoing performance period. |
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2020 Environmental Stewardship, Social Responsibility and Governance2021 ENVIRONMENTAL STEWARDSHIP, SOCIAL RESPONSIBILITY AND GOVERNANCE (ESG) HighlightsHIGHLIGHTS
We haveHave a long-standing commitmentLong-Standing Commitment to ESG leadership.Leadership
Global 100
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19 Consecutive Years
A leading REIT in corporate governance
| 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”Governance Priorities” and “Compensation Discussion and Analysis.”
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Proposals Submitted to Vote at the 20212022 Annual Meeting
| · | We are asking our stockholders of record on March |
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Corporate Governance
| 6 | Prologis Corporate Governance Tear Sheet | |
| 7 | Election of Directors (Proposal 1) | |
| Board Evaluations and Process for Selecting Directors | ||
| 10 | Director Qualifications, Skills and Experience | |
| Director Independence | ||
| Board Leadership Structure | ||
| Board Committees | ||
| Other Governance Matters | ||
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Prologis Corporate Governance Tear Sheet
| · 91% of our Board is independent: All directors, other than our chairman, are independent.
· No related-party transactions.
· No hedging or pledging of our securities.
· All directors attended 75% or more of Board and Board committee meetings.
· All directors are in compliance with our stock ownership guidelines (5x annual cash retainer). | |||
| DIRECTOR COMPOSITION AND EVALUATION PROCESS · Annual Board evaluation process involving Board, Board committee and individual director assessments: Administered by the chair of our Board Governance and Nomination Committee (the “Governance Committee”) and our lead independent director, with a third-party evaluation every other year.
· Age/tenure policy: 75 years maximum age limit and 15 year maximum tenure limit.(1)
· Our mix of director tenure, skills and background provides a balance of experience and institutional knowledge with fresh perspectives.
· Three directors are female, and three are ethnically diverse.(2) | |||
| · Lead independent director role with significant authority and responsibilities.
· Chairman and CEO policy gives Board flexibility to determine best candidate for the positions. | |||
| · All directors elected annually since IPO. Irrevocably opted out of Maryland staggered board provisions in 2014. · Adopted proxy access with 3/3/20/20 market standard
· No stockholder rights plan.
· Majority vote is the standard in uncontested director elections (adopted in 2007).
· Stockholders can amend bylaws with majority vote (adopted in 1997). | |||
ESG GOVERNANCE · Board oversight over ESG efforts through Board Governance and Nomination Committee. · ESG group reporting directly to C-suite (CLO). · Investment in ESG talent to support success of ESG as integrated part of business (such as Chief Energy and Sustainability Officer, VP of Global ESG, and regional and functional leaders focused on such aspects as ESG data/information technology, EV charging, and Inclusion and Diversity). · Accountability structure and ESG bonus metrics to ensure success of ESG. | RISK GOVERNANCE · Financial risk oversight: Evidenced by A3/A- credit ratings.(4) · Operational risk oversight: Annual enterprise level risk analyses with board; climate risk assessment platform; rigorous investment committee processes; local team property-level management. · Reputational risk oversight: Extensive employee learning and development platform requiring ethics, cybersecurity, Inclusion and Diversity and other training. | |||
| (1) | Our governance guidelines provide that directors will not be nominated or appointed to the Board if they are, or would be, 75 years or older or with 15 or more years of board tenure at the time of the election or appointment. Our board tenure policy applies to any director newly appointed or elected after the tenure policy was implemented (April 29, 2021). |
| (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. |
| (4) | Ratings by Moody’s/S&P. A securities rating is not a recommendation to buy, sell or hold securities and is subject to withdrawal at any time by the rating agency. |
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PROPOSAL 1
Election of Directors (Proposal 1)
· The Board is currently comprised of eleven directors, all of whom are standing to be elected to the Board at the
· The Board has affirmatively determined that all of our director nominees, other than Hamid Moghadam, are independent directors in accordance with New York Stock Exchange (“NYSE”) rules, our governance guidelines and our bylaws.
· Our bylaws provide for a majority voting standard for the election of directors. See “Additional Information—Majority Voting” for further detail.
· We do not know of any reason why any nominee would be unable or unwilling to serve as a director, if elected. However, if a nominee becomes unable to serve or will not serve, proxies may be voted for the election of such other person nominated by the Board as a substitute or the Board may reduce the number of directors. Each of the director nominees has consented to be named in this proxy statement and to serve as a director if elected.
· Information about each director nominee’s share ownership is presented below under “Security Ownership.”
· The shares represented by the proxies received will be voted for the election of each of the eleven nominees named below, unless you indicate in the proxy that your vote should be cast against any or all of the director nominees or that you abstain from voting. Each nominee elected as a director will continue in office until his or her successor has been duly elected and qualified, or until the earliest of his or her resignation, retirement or death.
· The eleven nominees for election to the Board at the |
The Board unanimously recommends that the stockholders vote FOR the
election of each nominee.
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HOW IT WORKS
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Board Evaluations and Process forFor Selecting Directors
Rigorous boardBoard evaluation and refreshment process
| · | Our annual Board evaluation process involves assessments at the Board, Board committee and individual director levels. Through this process, the Board determines who should be nominated to stand for election based on current company and Board needs. |
| · | In this process, directors |
| · | Director interview questions are prepared based on current areas of focus as well as feedback from our stockholder outreach efforts. |
| · | Annual one-on-one director interviews are conducted by our lead independent director and chair of the Governance Committee and, every other year, by an independent third party. |
| · | The results of the director interviews are aggregated by our lead independent director, Governance Committee chair, and if applicable, the independent third party, and reported to the Governance Committee and then to our full Board. Our Board will follow up on items identified in the evaluation process. |
| · | Our Governance Committee discusses Board succession and reviews potential candidates. This process is based on the results of annual board evaluations and takes place throughout the course of the year. |
| · | 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. |
| · | In 2021, we implemented a director/CEO recruitment diversity policy that requires the Governance Committee to consider (and any staffing agencies to recruit) ethnic and gender diverse candidates in formal director searches and recruitment for external CEO candidates. |
| · | Our governance guidelines also ensure regular board refreshment, providing that directors will not be nominated or appointed to the Board if they are, or would be, 75 years or older or with 15 or more years of board tenure at the time of the election or appointment. |
2022 Board evaluation feedback
Key feedback from our Board evaluation process:
| · | Noted the high-functioning nature of the Board and strong leadership of our lead independent director and committee heads. |
| · | Focused on director and executive succession planning. |
| · | Recognized the strength of our CEO and management. |
| · | Determined that there were no concerns about Board independence or longer tenured directors. |
| · | Recognized the benefits of our Essentials business and appreciated our risk management of the company. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 8 |
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Regular Board refreshment
| · | The Board is committed to regular refreshment to maintain an optimal balance of different perspectives, skills and backgrounds. We have onboarded five new directors in the past |
| · | 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 in 2017, Cristina Bita and Philip Hawkins in 2018, and Avid Modjtabai in 2020. (In 2020, Mr. Hawkins took a position as executive chairman of a U.S. industrial real estate portfolio company and, as a result, decided to step down from our Board). |
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| · | 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. |
BOARD COMPOSITION AND DIVERSITY
Distribution of Tenure(1)
5 | new directors in last seven years(2) | |
| (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 25, 2022 | 9 |
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
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 |
| · | 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. |
PROLOGIS BOARD DIVERSITY
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PROLOGIS BOARD DIVERSITY
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Board Qualifications
Director skills and experience support our business strategy.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. |
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| · | 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. |
| · | In addition, |
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| (1) | Includes development, operations, real estate investments and fund management. |
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Hamid R. Moghadam
  | Hamid R. Moghadam · Chairman of the Board since January 2000; Director since November 1997
· Board Committees: Executive
· Other public directorships: None |
Mr. Moghadam, 64,65, has been our Chief Executive Officer since the end of December 2012 and was our Co-Chief Executive Officer from June 2011 to December 2012. He is the co-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
  | Irving F. Lyons III · Lead independent director since June 2011 (prior to the Merger served as a trustee of the Trust from September 2009 to June 2011 and from March 1996 to May 2006)
· Board Committees: Executive
· Other public directorships: Equinix, Inc. and Essex Property Trust, Inc. |
Mr. Lyons, 71,72, 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.
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Cristina G. Bita
  | Cristina G. Bita · Director since May 2018
· Board Committees: Audit
· Other public directorships: None |
Ms. Bita, 42,43, is a Vice President of Finance at Google and serves as the Business Finance Officer for Google’s Devices and Services product area, Googleand Global Marketing organization and Google Sustainability. Sheorganizations. Ms. Bita leads global finance activities for consumer hardware, consumer paid services as well as for the company’s marketing investments globally. Bita is a widely recognized leader who has served in a number ofheld several finance leadership roles since joiningover the course of her 15+ year career at Google in 2006 across a range of business areas, including Global Partnershipsthat also included Sales and Business Development, Global Sales, and Consumer Products, Platforms and Platforms.Ecosystems, G&A, Technical Infrastructure and Enterprise. She has also served as the Chair of the Google Sustainability Board. Prior to Google, Ms. Bita spent six years with Siemens/Osram, where she held various positions at Siemens/Osram in the Business Unit Controllership and Corporate FP&A.&A groups.
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
  | 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. |
Mr. Fotiades, 67, was appointed68, served as President and Chief Executive Officer*Officer of Cantel Medical Corp., a provider of infection prevention and control products, from 2019 until his retirement in March 2019.2021. 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.company. He previously served on the boardboards of Cantel Medical Corp. and Alberto-Culver Company, a consumer products company specializing in hair and skin careskincare 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.
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Lydia H. Kennard
  | Lydia H. Kennard · Director since August 2004
· Board Committees: Governance
· Other public directorships: Freeport-McMoRan Copper & Gold Inc., Healthpeak Properties, Inc. (formerly known as HCP Inc.) and AECOM |
Ms. Kennard, 66,67, 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, the owner of KDG Holdings, Inc., parent of Quality Engineering Solutions, Inc., a pavement management analytics and construction inspection company, and a principal with 1031 N. Brand Boulevard, Glendale, LLC, aand 690 N. 2nd Street, Reno, LLC, both single-purpose real estate entity.entities. 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.
Avid Modjtabai
  | Avid Modjtabai · Director since February 2020
· Other public directorships: Avnet, Inc. |
Ms. Modjtabai, 59,60, 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.
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David P. O’Connor
  | David P. O’Connor · Director since January 2015
· Board Committees: Compensation
· Other public directorships: Regency Centers Corporation |
Mr. O’Connor, 56,57, 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 boardboards 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.
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
  | Olivier Piani · Director since May 2017
· Board Committees: Audit
· Other public directorships: None |
Mr. Piani, 67,68, 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.
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Jeffrey L. Skelton
  | Jeffrey L. Skelton · Director since November 1997
· Board Committees: Governance (Chair), Executive (Chair)
· Other public directorships: None |
Mr. Skelton, 71,72, 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 a co-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
  | Carl B. Webb · Director since August 2007
· Board Committees: Audit (Chair)
· Other public directorships: Hilltop Holdings Inc. |
Mr. Webb, 71,72, 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.
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William D. Zollars
  | 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, 73,74, 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 memberthe chairman 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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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.
91% of the Board is independent.
| · | The Board has determined that all our directors other than our chairman, Mr. Moghadam, are independent. |
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, members of each of their immediate families and their affiliates.
Audit, Governance and Talent and Compensation Committees are 100% independent.
| · | 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:
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| · | 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 insights to the Board.
Very few have experience running a public company with extensive global operations and substantial strategic capitalStrategic Capital and development businesses. Mr. Moghadam co-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.
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 independent non-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 or if the chairman is otherwise not independent, 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 ten years.Board.
The lead independent director coordinates the activities of the other independent directors and performs other duties and responsibilities as determined by the Board.
The specific responsibilities of the lead independent director are currently as follows:
Executive Sessions/ Committee Meetings | · Presides at all meetings of the Board at which the chairman is not present, including executive sessions of the independent directors (generally held at every regular Board meeting)
· Attends meetings of the various Board committees regularly
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Meetings of Independent Directors | · Has the authority to call meetings of the independent directors and set the
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Board Evaluations | · Oversees, with the chair of the Governance Committee and, when applicable, an independent
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Liaison with Chairman and CEO | · Serves as liaison between the independent directors and the chairman
· Meets regularly between Board meetings with the chairman and CEO
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Board Processes and Information | · Ensures the quality, quantity, appropriateness and timeliness of information provided to the Board and provides input to create meeting agendas
· Ensures that feedback is properly communicated to the Board and chairman
· Ensures the institution of proper Board processes, including the number, frequency and scheduling of Board meetings and sufficient time for discussion of all agenda items
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Communications with Stockholders | · Responds to stockholder inquiries and communicates with stockholders when appropriate
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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 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 their charter on an annual basis.
PROLOGIS BOARD COMMITTEES
Audit Committee
Members: Carl Webb (Chair), Cristina Bita, Avid Modjtabai and Olivier Piani
Number of Meetings in 2020:2021: 9
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Talent and Compensation Committee
Members: George Fotiades (Chair), David O’Connor and William Zollars
Number of Meetings in 2020:2021: 65
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Board Governance and Nomination Committee
Members: Jeffrey Skelton (Chair), Lydia Kennard and William Zollars
Number of Meetings in 2020:2021: 3
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Executive Committee
Members: Jeffrey Skelton (Chair), Irving Lyons III and Hamid Moghadam
Number of Meetings in 2020:2021: 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 |
| · | The Compensation Committee focuses on risks relating to human capital management, talent retention and remuneration of our officers and |
| · | The Governance Committee focuses on reputational, corporate governance and ESG |
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, Managingmanaging and Assessing Risksassessing risks
Our risk oversight framework includes:
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Climate risk
We assess natural hazard and climate risk across our portfolio. Our risk management team works to ensure we have sufficient insurance coverage and protection for our buildings. We also partner with a global reinsurance company to evaluate future climate scenarios and determine which actions we should take. This evaluation is based on underwriting data, a significant improvement over the traditional catastrophe modeling and flood zone data used by many other organizations. Based on this evaluation, we take a range of actions which can include improving the physical resilience of our buildings, reviewing and improving disaster response plans, and other measures. Because of our long-term planning, resilience measures and diverse portfolio footprint, we believe our climate change risk is well-managed.
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
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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. As an example, Mr. Olinger was instrumental in positioning his successor, Mr. Timothy Arndt, with key global leadership responsibilities to prepare Mr. Arndt for the role of CFO after Mr. Olinger’s retirement. Mr. Arndt will assume the position of CFO on April 1, 2022.
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. 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 2020,2021, 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 20202021 (held during the periods they served). Each director standing for election in 20212022 is expected to attend the annual meeting of stockholders, either virtually or telephonically, absent cause. All of our directors attended the annual meeting last year, virtually or telephonically.
Director compensation
Please see “Director Compensation” and the table titled “Director Compensation for Fiscal Year 2020.2021.”
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 $600,000 as of December 31, 2020)2021). Shares included as owned by directors for purposes of the guidelines include common stock owned, vested or unvested equity
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awards (restricted stock, restricted stock units, shares and share units deferred under the terms of the Director Deferred Fee Plan or the applicable non-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 engaged an outside compensation consulting firm, Frederic W. Cook & Co., Inc. (“FW Cook”)Pay Governance, to assist the committee in assessing our compensation programs for our Board, our CEO and other members of executive management. FW Cook reported directly to the Compensation Committee. FW Cook received no compensation from the company other than for its work in advising the Compensation Committee and maintained no other economic relationships with the company. FW Cook interacted 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 our non-employee directors in 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.
The Compensation Committee considered 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 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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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.
Pay Governance conducted a comprehensive competitive review of the compensation program for our non-employee directors in April 2021 and executive officers in December 2021, 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).
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 (i) was, during the year ended December 31, 2020,2021, 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, 2020,2021, 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.
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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 by email, in writing, by web-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 director overboarding policy in our governance guidelines requirerequires that, if a director serves on three or more public company boards simultaneously, including our Board, a determination is made by our Board as to whether such simultaneous service impairs the ability of such member to effectively serve the company. Messrs. Fotiades andMr. Lyons and Ms. 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.
Mr. Fotiades is the chief executive officer and a director of 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:
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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.
No waivers of our code of ethics and business conduct were granted in 2020.2021.
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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Biographies of our executive officers as of March 2021,2022, 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 officersMessrs. Moghadam, Olinger, Reilly, Anderson and Nekritz are treated as named executive officers (each an “NEO”) for purposes of this proxy statement.
Thomas S. Olinger: Chief Financial Officer
Mr. Olinger, 54,55, 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 and residential properties. Mr. Olinger holds a Bachelor of Science in finance from the Kelley School of Business at Indiana University.
Mr. Olinger will retire as our Chief Financial Officer on April 1, 2022 and will remain with the company until the end of 2022 as part of the transition plan. Mr. Arndt will become our Chief Financial Officer on April 1, 2022.
Eugene F. Reilly: Chief Investment Officer
Mr. Reilly, 59,60, has been our chief investment officer since March 2019. Mr. Reilly was our CEO, the Americas, from 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 of high-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, 55, has been our 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: Chief Operating Officer
Mr. Anderson, 55,56, has been our chief operating officer since March 2019. Mr. Anderson was our CEO, Europe and Asia, from June 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 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.
Edward S. Nekritz: Chief Legal Officer, General Counsel and Secretary
Mr. Nekritz, 56, has been our 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.
Michael S. Curless: Chief Customer Officer
Mr. Curless, 57,58, has been our chief customer officer since March 2019. Mr. Curless was our chief investment officer from June 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 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
ESG UNLOCKS VALUE FOR PROLOGISEnvironmental, Social and
ESG is essential to our value-creation strategy, delivering quantifiable benefits today and for the long termGovernance Priorities
For nearly four decades,Approach to ESG Priorities
At Prologis, our commitment to environmental, stewardship, social responsibility and good governance (ESG) has made us a leaderpriorities are important factors in our industry and beyond. ESG is woven into our fabric and informs decision-making from the boardroom to all cornersimplementation of our global operations. Our ESG focus:business strategy. We support innovation and inclusion; reduce our environmental impact, including our emissions; and strengthen our relationships with customers, employees and communities.
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This integrated approach impacts every aspect of our company. Every day, Prologis’ approximately 2,000 employees work to: Define the Future of Logistics; Anticipate Stakeholder Needs; and Manage Risks and Opportunities.
Prologis Park Venlo, Venlo, Netherlands
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Leading the Way to a Sustainable Future
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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.
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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.
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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:
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Prologis Park Waalwijk, Waalwijk, Netherlands
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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
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Solutions for Our Customers’ Labor Challenges
Community Workforce Initiative (CWI)
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Our scale enables us to help our customers address their human capital challenges from many angles.
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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:
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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.
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Good Governance Protects Our Business
Strong, integrated risk oversight at every level of our company protects business value and delivers results for our stakeholders. This is the foundation of good governance. | ||
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We Define the Future of Logistics
With an innovative culture and an intense focus on our customers, we set the benchmark for logistics real estate. Examples include:
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· Between year-end 2017 and year-end 2021, Prologis’
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DEVELOPING FUTURE LOGISTICS TALENT
Our Community Workforce Initiative is an example of how we are advancing our industry and committing ourselves as partners to the communities we serve. The vision for the program is to develop an abundance of diverse, qualified and engaged talent while revitalizing career pathways and creating economic opportunity.
It includes an online workforce development platform that helps our customers by enabling members of the transportation, distribution and logistics workforce to build the skills they need to advance.
Since it was launched in 2018, more than 13,000 people across 15 markets have participated in CWI.
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| ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRIORITIES |
We Anticipate Stakeholder Needs How do we meet the needs of our employees, our customers and the communities we serve? We manage human capital and foster a workplace culture of respect and inclusion. We address our customers' challenges, including those brought on by global supply chain issues. We find new ways to connect with and serve the communities where we do business. Examples of our recent efforts include: Our employee engagement survey indicated that 88% of Prologis employees are engaged, as indicated by their positive response to the five questions comprising our engagement driver index, including "I am proud to work for this company." For the first time, we published a summary of our EEO-1 data on the Prologis website to provide transparency on our successes and challenges in inclusion and diversity. Our "net promoter" score of 66 far exceeds the B2B average of 40, indicating our customers are very likely to recommend Prologis to a colleague. Every build-to-suit development completed in 2021 incorporated sustainable elements, from rooftop solar and LED lighting to electric vehicle charging stations and zero-emissions status. This responds to customer and community needs, investor priorities and regulatory requirements for more efficient lower-emission buildings. With our PARKlife" program, we create a range of services and amenities to support our customers, their employees and the community at large. These include green spaces and fitness trails, art installations, green transportation programs, maintenance and security.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 30 |
| ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRIORITIES |
We Manage Risks and Opportunities
Strong, integrated risk management protects business value and delivers results for our stakeholders. This includes assessing environmental and climate-related risks as well as risks from seismic activity. A global health & safety committee establishes policies and practices to enhance protections for our employees and contractors. Our Customer Advisory Board provides third-party validation with insights into existing and emerging risks and opportunities in our industry.
We continuously anticipate market, regulatory and environmental changes to protect the financial, reputational and operational resilience of our company. Examples include:
| · | We have one of the strongest balance sheets in the industry, with
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Drone rooftop inspection at International Park of Commerce, Tracy, California
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ESG Governance
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Recognition for Our ESG Leadership
In a world where choice matters – where customers have a choice of landlord, employees have a choice of employer, and communities with scarce infill real estate have a choice of developers – our ESG leadership makes Prologis the natural choice.A Sustainable Flagship: Park Moissy 2 DC1
2020 awardsZero-carbon, community-oriented design
Park Moissy 2 DC1 in Paris, France is a flagship example of sustainable logistics. It shows that when we test the boundaries of what is possible, we can significantly reduce energy use, protect and recognitioneven enhance local biodiversity, and create a facility with attributes that benefit the surrounding neighborhood and broader community.
We work to incorporate community input and emissions reductions into building design wherever feasible. And we have committed that every new development or redevelopment across the Prologis portfolio will achieve a sustainable building certification. In 2021, we added nearly 25 MSF of sustainable certified space to our portfolio. Key sustainable attributes can be categorized as follows:
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Our ESG Goals and Progress
| Goal | Target year | 2021 Progress/Performance | ||
Environmental Performance | ||||
Reduce scope 3 GHG emissionsby 15% | 2025 | Reduced emissions by 37% as of year-end 2020 | ||
Install 400 MW of solar capacity | 2025 | Installed 285MW as of year-end 2021 | ||
Achieve sustainable building certifications for 100% of new development and redevelopment projects | Annual | Includes projects approved in June 2021 or later. These projects will achieve certification once built and stabilized. | ||
Install LED lighting across 100% of our | 2025 | Installed LED lighting across 57% of portfolio | ||
Social Performance | ||||
Train 25,000 participants through our | 2025 | Trained 13,039 participants | ||
Achieve 75,000 hours of volunteer time to | 2025 | Achieved ~33,000hours through the end of 2021 | ||
Governance Performance | ||||
Ensure 100% of employees complete ethics training | Annual | Trained 100%in 2021 | ||
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 33 |
| ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRIORITIES |
2021 Awards and Honors
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 34 |
| ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRIORITIES |
ESG Governance
Our leaders drive ESG performance
ESG oversight is integrated into our management processes across the full breadth of our operations. Our leaders are responsible for integrating ESG principles into the work of their teams. In the last year, Prologis has invested in expanding ESG talent and infrastructure by adding new officer-level positions responsible for ESG implementation including a chief energy and sustainability officer, focusing on customer solutions and sustainability as a service; a vice president of global ESG, focusing on global ESG strategy; and several regional and functional ESG leaders who will focus on aspects such as Inclusion & Diversity, electric vehicle charging, government and community affairs and ESG-related data systems and processes.
We have also incorporated ESG metrics including solar, LED lighting (since 2018) and Inclusion and Diversity (since 2017) into our compensation plan and have added additional ESG metrics to our 2022 bonus scorecard, including sustainable development, CWI and corporate governance metrics.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 35 |
| ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRIORITIES |
Further Information on our ESG Performance and Approach
At Prologis, our ESG priorities influence our long-term success: Defining the Future of Logistics; Anticipating Stakeholder Needs; and Managing Risks and Opportunities.
We welcome your feedback and ideas on how to improve the value of this disclosure: sustainability@prologis.com.
ESG report and Executive Summary Our next ESG report and Executive Summary, to be published later in 2022, will provide more detail on our priorities, opportunities and achievements in ESG. Corporate website In addition, our corporate website provides ESG related information, updates and data. This website is also where we publish our responses to ESG frameworks such as GRI, SASB, TCFD, CDP, PRI mapping and more.
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PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 36 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Compensation Discussion & Analysis
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Compensation Discussion and Analysis Summary
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All company operational information in CD&Athis Compensation Discussion and Analysis is for the year ended or as of December 31, 2020,2021, unless otherwise noted. See Appendix A for definitions and discussion of non-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.this Compensation Discussion and Analysis. The Compensation Committee reviews management’s performance against key company performance measures, such as Core FFO per share, discussed below. See “2020
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 37 |
| COMPENSATION DISCUSSION AND ANALYSIS |
COMPENSATION SUMMARY
Our Compensation Decisions: Annual Base Salary and Bonus Opportunity” for more information about our key performance measures and targets.Program Pays When Stockholders Win
| · | Paying for performance is our central compensation tenet. |
| – | 100% of our CEO’s compensation is at-risk and contingent on performance. |
| – | In line with our established practice of conducting extensive stockholder outreach and responding to feedback with concrete action, we made our long-term incentive program even more rigorous by requiring above-index performance to earn LTI awards at target. We also adopted a variety of improvements to other program features. |
| · | Outperformance compensation is paid only when stockholders receive significant above-market returns as measured by objective, formulaic hurdles. |
| – | Outperformance compensation extends deep into our organization beyond NEOs, helping us attract and retain key talent in an increasingly competitive market. Our evolving business requires expertise from industries beyond real estate such as finance, private equity and technology. |
| · | Our NEO compensation reflects the performance of our entire global business that generates value for our stockholders. This includes our Strategic Capital business, which accounts for nearly half of our real estate portfolio. Strategic Capital comprises two public and seven private ventures, which our NEOs manage in addition to the rest of our business. |
| WHAT SETS PROLOGIS APART? | ||||||||
Unique strategy proven to drive superior returns Powerful platform that delivers durable, sector-leading growth. |
| Strategic Capital ventures Prologis is the only public logistics REIT with a significant in-house |
| Global customer-centric operations Unparalleled scale enables Essentials solutions and innovations that benefit customers and reward our stockholders. | ||||
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2020Letter from the Talent and Compensation and Stockholder Outreach HighlightsCommittee
To Our Stockholders:
Prologis achieved tremendous success in 2021. We surpassed 1 billion square feet in our portfolio and achieved an occupancy rate of 97.7% globally, both all-time company records. Our 2021 TSR of 72.3% outpaced the S&P 500 index by 43.7%. We continued to receive third-party recognition for our ESG efforts, including being named one of the Global 100 Most Sustainable Corporations in the World for the thirteenth time. Our Community Workforce Initiative reached more than 13,000 trainees in total, building a pipeline of skilled logistics workers for our customers while revitalizing career pathways in the communities where we operate. Institutional Investor, a financial research institution, recognized Prologis as one of its most honored companies for the fourth year in a row and named our co-founder and CEO, Hamid R. Moghadam, who has led the company for over 35 years, its #1 REIT CEO for the second consecutive year.
For many years, we have proactively sought stockholder input regarding our executive compensation, governance, and other matters and made improvements in direct response to such feedback. Prologis is a unique, multi-faceted business. The program improvements we have implemented are designed to incentivize performance in support of the pivotal components of our global business, drive value creation for stockholders, and mitigate the risk of talent departure.
In light of our strong 2021 performance, we were disappointed in the low level of support for our Say-on-Pay proposal at our last annual meeting. The Committee takes the result of our Say-on-Pay vote extremely seriously and viewed the result of last year’s vote as a direction to redouble our commitment to stockholder engagement and paying for performance.
Following last year’s Say-on-Pay vote, we engaged with 78% of our top 100 stockholders. George Fotiades, Chair of our Committee, and Bud Lyons, the Board’s lead independent director, participated in a number of meetings to listen to feedback directly from stockholders. We also engaged with proxy advisory firms to understand their views on how to improve our compensation program.
During these discussions, we were pleased to hear that stockholders appreciate Prologis’ consistent financial outperformance and believe that the pay-for-performance design and implementation of our compensation program pays whensupports this outperformance. As in past years, our conversations with stockholders win.gave us direction on how we can further improve our compensation program. In response to feedback we heard from stockholders, we adopted a more rigorous payout scale in our long-term incentive program, added more transparency in our annual bonus program, increased the weighting of quantitative metrics (including more prominent ESG-related goals) in the annual bonus program, and completely eliminated certain NEO perquisites. The Committee and full Board are confident that these changes are directly responsive to the feedback we heard from stockholders in engagement conversations.
The continued evolution of our business requires talent recruitment from competitive industries beyond real estate. This led us to refine our compensation comparison peer group in 2021. We reduced the overall number of peers and selected peers of appropriate size that more accurately reflect the other key business and talent markets in which we now compete, namely finance and tech. Although we reconstituted our peer group, we did not increase pay levels in 2021 based on the new peer group. Consistent with our pay-for-performance philosophy, we continue to position core compensation within the competitive band of median pay of the refined group while requiring significant long-term stockholder value creation to earn outperformance compensation.
We deeply value our relationship with our stockholders and look forward to future opportunities for continued dialogue and improvement. Thank you for your candid and insightful feedback during our outreach efforts and for the opportunity to demonstrate our commitment to responsibly serve your best interests.
| David P. O’Connor | William D. Zollars | ||
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STOCKHOLDER OUTREACH
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| Engaged more than | 85% | of our stockholders | (1)
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PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 39 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Stockholder Outreach + Compensation Program Improvements
Say-on-Pay responsiveness
| · | We review our compensation program at every Talent and Compensation Committee (“Compensation Committee” or “the Committee”) meeting throughout the year. Voting results and feedback from our stockholders are crucial to our continual assessment of our compensation programs, decisions, and policies. |
| · | We received an average Say-on-Pay vote of over 80% support in the three years prior to our 2021 annual meeting. However, at our 2021 annual meeting, 52.17%(1) of stockholders voted in favor of our 2020 executive compensation. We take the results of our Say-on-Pay vote very seriously. As a direct response to that vote, we amplified our historically robust, proactive stockholder outreach efforts. In total, we connected with 78% of our top 100 stockholders.(2) The Chair of our Compensation Committee and the Board’s lead independent director participated directly in a number of meetings with stockholders. |
| · | Based on the initial stockholder feedback we received, we developed a list of potential compensation program improvements. We then conducted a second extensive outreach campaign to present our potential changes and gauge stockholder reactions. The feedback we heard from stockholders and our responsive compensation program improvements are detailed on the following pages. |
| · | Additionally, stockholder feedback influenced the development of our revised peer group, as discussed on pages 52-53. |
| (1) | Calculated using a denominator adding the total number of votes cast for our Say-on-Pay proposal and votes cast against it. Calculated using a denominator that includes abstentions and broker non-votes, the percentage is 48.27%. |
| (2) | Calculated by outstanding shares of common stock of |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 40 |
| COMPENSATION DISCUSSION AND ANALYSIS |
2021 STOCKHOLDER FEEDBACK | OUR RESPONSE | |||
Appreciated Our Outreach and Responsiveness:In light of our Say-on-Pay voting result, our stockholders appreciated our continued outreach and responsiveness to their feedback. While stockholders support the strong pay-for-performance orientation of our program, they requested additional rigor and transparency. |  | Assessed Program to Enhance Rigor and Transparency: The Compensation Committee carefully considered our 2021 Say-on-Pay result and conducted a comprehensive review of our program to identify potential areas of improvement. The Committee modified our LTI awards, annual bonus program, and disclosure, as discussed below. The Committee also eliminated NEO financial planning and parking perquisites. | ||
Scrutinized Payout Levels for LTI Awards: Stockholders appreciated that our LTI program aligns pay directly with TSR. However, some requested greater rigor, such as requiring above-index performance to receive target LTI award value. | | Higher Performance Standards for LTI Awards: The Committee modified LTI equity awards such that there is no payout if our annualized TSR is less than 500 bps below the index. This eliminated discretion to pay awards in the event of such performance. The Committee also modified the payout scale such that at-target payouts require annualized TSR performance of 100 bps above the benchmark index, as opposed to the previous standard of at-target payout for performance at the index. | ||
Preferred Less Discretion and More Quantitative Metrics in our Annual Bonus Program: Stockholders requested a heavier weighting for quantitative measures used to determine payouts in our annual bonus program. | | Reduced Discretion in Annual Bonus Program: The Compensation Committee shifted the weighting of bonus metrics so that the quantitative corporate score is weighted 80% and individual performance is weighted only 20% for all NEOs. This weighting previously applied only to our CEO. | ||
Requested More Visibility into Our Compensation Decisions: Stockholders requested more visibility into our compensation determinations, such as calculations for our annual bonus awards. They also requested simplified disclosure to better understand our program (such as for PPP) and a discussion of the Committee’s compensation goals and rationale for the program’s structure. | | Enhanced Disclosure on Our Program and Discussion of Pay Determinations: We expanded disclosures on various elements of our program, such as the quantitative targets used for bonus awards. We also developed enhanced explanations of our program (focusing on PPP per feedback) and our underlying rationale for our program’s structure in this Compensation Discussion & Analysis. | ||
Favored Greater Prominence of Quantitative ESG Targets in Our Incentive Programs: Stockholders noted their appreciation for our longstanding commitment to ESG. They requested that our bonus metrics reflect that dedication by including measurable ESG goals with a heavier weighting and more disclosure on the rationale for the ESG metrics we select. | | Added Emphasis on Quantitative ESG Metrics and Rationale for Their Selection: We added rigorous, quantifiable ESG goals to our bonus program and increased the weighting of these ESG goals in our bonus determination process. We also provided disclosure on why we selected these particular ESG metrics and how we measure progress. | ||
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 41 |
| COMPENSATION DISCUSSION AND ANALYSIS |
2021 STOCKHOLDER FEEDBACK | OUR RESPONSE | |||
Acknowledged No True Peers as Our Business Evolves: Stockholders recognize that our global business continues to expand beyond that of a typical real estate company, as seen in our Strategic Capital business and increasing emphasis on tech-enabled customer solutions. They understand the associated difficulty of selecting peers for our compensation comparison group that are appropriate in size and scope. | | Refined Peer Group to Better Reflect Complexity of Business and Comparative Size of Revenues: Our Compensation Committee refined our peer group to better reflect the growth and increasing complexity of our global business, as well as our need to tap employee talent markets beyond real estate to successfully operate our business. The Committee also ensured that all peers in the refined group were appropriate in size from a revenue standpoint. | ||
Detail on compensation program improvements
As discussed above, in response to our 2021 Say-on-Pay vote and related stockholder feedback, our Compensation Committee approved the following improvements to our executive compensation program:
1. | Annual Bonus Program |
| · | Increased the quantitative corporate score weighting to 80% for all NEOs: |
| – | This weighting, which places more emphasis on the quantitative corporate score, now applies to all NEOs (it already applied to our CEO). The other NEOs were previously subject to a 60% corporate score / 40% individual performance weighting. |
| – | This weighting applied to bonus payments made in 2022 for performance achieved in 2021. |
| · | Disclosed all quantitative corporate score bonus metrics: |
| – | We enhanced the discussion of our annual bonus program to include comprehensive disclosure of all quantitative targets used to determine our corporate score (which can be found on pages 60-62). |
| · | Increased weighting of quantitative, measurable ESG metrics in our annual Bonus Scorecard: |
| – | ESG metrics will account for 10%of our overall corporate score for bonus payments made in 2023 for performance achieved in 2022. |
| – | See the following page for additional detail on the quantitative ESG bonus metrics we adopted and our rationale for selecting these metrics. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 42 |
| COMPENSATION DISCUSSION AND ANALYSIS |
1. | Annual Bonus Program, continued |
QUANTITATIVE ESG BONUS METRICS IN OUR 2022 BONUS SCORECARD (10% WEIGHTING OVERALL)
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 43 |
| COMPENSATION DISCUSSION AND ANALYSIS |
2. | Long-Term Incentive (LTI) Program |
| · | No payout will occur if performance is less than 500 bps below index TSR: This eliminates any discretion to make payouts in the annual LTI award program below this threshold. |
| · | Increased the rigor of the LTI payout scale: Target payout (100% of award) is achieved only when we outperform the index by at least 100 bps. See table below for enhanced payout scale. |
| · | We also expanded the payout scale to cap the maximum payout at 200% of target payout for 500+ bps outperformance, consistent with market standards for upside payout opportunities. |
| · | See page 64 for a discussion of the benchmark index we use to calculate LTI equity awards. |
3. | Perquisites |
| · | Previously, the company paid for financial planning services and parking for all NEOs. We eliminated both of these benefits beginning in 2021, further reducing already minimal NEO perquisites. |
| (1) | To be implemented beginning with the 2022-2024 performance period to avoid implementation during an ongoing performance period. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 44 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Long track record of stockholder engagement and responsiveness
| · | Since our founding, our Board and management have demonstrated their commitment to maintaining a robust stockholder engagement program and incorporating stockholder feedback into decisions about our compensation program and governance practices. |
| · | In response to stockholder feedback in recent years, we continuously enhanced our program. The timeline below lists some notable compensation and governance enhancements we have adopted based on feedback from our stockholders. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 45 |
| COMPENSATION DISCUSSION AND ANALYSIS |
| · | Our core business: We own, manage, lease and develop high-quality logistics facilities in 19 countries across four continents. Our portfolio is focused on the world’s most vibrant centers of commerce and our extensive platform allows us to respond to our customers’ evolving logistics requirements. |
| · | Unique business model: Our model gives us the ability to be the preferred logistics provider to our customers, delivering an unmatched package of prime logistics real estate and complementary scale-enabled solutions, including the following: |
| – | Customer-focused development: Our business model begins with our customers, who require well-located logistics space in the world’s busiest consumption markets. We build logistics facilities globally where our customers need to be, as 68% of our top 25 customers lease space from us across multiple continents. |
| – | Strategic Capital: Strategic Capital is an important differentiator. This arm of our business provides a level of additional investment capacity unique to the public logistics REIT space and generates substantial fee income. |
| – | Solutions, services and products: We offer an array of solutions, products, and services to our customers through Prologis |
| – | ESG: Our leadership in sustainable building design and energy solutions, including solar installations, LED lighting and electric vehicle charging, helps our customers progress toward their sustainability objectives while reducing operating costs. Workforce training solutions through our Community Workforce Initiative and our steadfast commitment to good governance further solidify us as a partner of choice. |
| (1) | 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. |
| (2) | Calculated based on square feet of our owned and managed operating portfolio. |
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Consistent track record of above-market performance
| · | Top-of-sector performance: We exceeded the Large-cap REIT Group average in operational performance and stockholder returns over the last seven years. The seven-year compound annual growth rates (CAGR)(1) of our net earnings per share and Core FFO(2) per share were 30.2% and 7.0% higher than the Large-cap REIT Group average.(3)Our |
| · | Our forward-thinking strategy delivers results:We |
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2020 NEO compensation highlights
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Prologis business model is designed for growth and resilience.
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Responsible growth: The interplay of the leasing operations, development and |
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Our business model is a differentiator.
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Unlocking advantages of scale for our customers
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Our business delivers strong and durable long-term performance.
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| (1) | Compound annual growth rates were calculated for the |
| (2) | Core FFO per share is a non-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. See definition of “Large-cap REIT Group” on following page. |
| (4) | Calculated using our common stock prices and |
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STRONGDELIVERING DURABLE, SECTOR-LEADING GROWTH RELATIVE TO PEERS(1)
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Stock Price CAGR (7-Year) | Dividend CAGR(2) (7-Year) | |||
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| (1) | Based on the weighted average market capitalization over the seven-year period for the Large-cap REIT Group and |
| (2) | Excludes companies that did not report dividends for the full seven-year period. |
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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. |
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STRONG RISK OVERSIGHT PROTECTS LONG-TERM STOCKHOLDER VALUE
Loan-to-Market Value(1)
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Discussion of Compensation Comparison Group
No REITs provide a true comparison to Prologis.
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Assets under management (AUM) reflects the full scope of our operations, 147% larger than other large-cap REITs.(1)
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Strategic Capital is a powerful differentiator
| · | In-house private equity: Think of Strategic Capital generally as our in-house private equity business. In addition to owning assets directly, we partner with institutional investors in our Strategic Capital business to jointly own other properties through co-investment ventures, including seven private ventures and two public vehicles. We perform all of our Strategic Capital fundraising directly, as opposed to relying on third-party service providers to raise capital. Prologis manages the properties owned by the ventures, using our industry expertise to deliver substantial returns to our investment partners. See page 73 for an illustration of this structure. |
| · | Highly profitable complementary business: Prologis receives fees for our management of the properties held by the ventures and “promote incentives” when we meet certain pre-negotiated IRR or other financial hurdles. Prologis was paid $456 million in asset management fees and promote incentives in 2021. Due to |
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PROLOGIS AUM VS. AUM OF LARGE-CAP REIT GROUP AND OTHER LOGISTICS REITS(2)
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Our substantial asset growth in 2020 and the evolution of our business prompt need to reassess peer group.
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Target core compensation did not increase as a result of peer group methodology changes.
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Target compensation is geared to the median of the peer group. Outperformance compensation is paid if significant above-market value is realized by stockholders.
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PROGRAM COMPONENTS REFLECT A BALANCE OF TSR AND OPERATIONAL PERFORMANCE METRICS
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Discussion and Analysis of CEO Compensation
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Prologis Park Pineham, Northampton, UK
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CEO 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 outperformance weathering the COVID-19 pandemic further evidences the value Mr. Moghadam continues to deliver to 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.STRATEGIC CAPITAL IN NUMBERS
Large Portion of Our Total AUM $95.4B of assets ($66.2B third-party owned) are held in our 9 ventures across 17 countries, comprising 2,487 buildings and 556 million square feet of space. | Major Income Stream Over the past seven years, Prologis earned $1.3B in management fees and $842M in promote revenue. | Fuels Our Outperformance Our Strategic Capital income has more than doubled over the last seven years and contributed over $380M to Core FFO in 2021.(1) |
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| COMPENSATION DISCUSSION AND ANALYSIS |
Unrivaled scale and scope in logistics real estate
| · | Global scale unmatched among logistics REITs: $2.2 trillion of goods flow through our facilities annually, equivalent to 2.5% of the |
Building a resilient supply chain:COVID-19 put the spotlight on the importance of supply chain resilience. We focus on our customers’ needs: well-located, high-quality logistics space in the world’s most vibrant consumption markets. With more than 1 billion square feet of prime logistics facilities located in supply chain-critical zones across four continents, we help our customers meet the demands of the supply chain revolution that has been accelerated by the pandemic. |
| · | Scale-enabled solutions: Our size and scope allow us to invest in and deliver solutions, services, and products to our customers on top of prime real estate. See the following page for a discussion of how we seek to go beyond real estate to optimize our customers’ logistics operations. |
NO OTHER LOGISTICS REIT PROVIDES A TRUE COMPARISON
► | Prologis is the only logistics REIT(3) offering customer products and solutions focused on logistics operations, energy, transportation, workforce and technology needs and sustainability as a service, underpinned by venture capital for cutting-edge innovations. | |
► | Our Strategic Capital AUM alone is 4xtimes larger than the average total AUM of the Other Logistics REITs Group. | |
| (1) | Source: Oxford Economics, IMF, Prologis Research as of June 30, 2020. |
| (2) | Duke Realty Corporation, EastGroup Properties, Inc., First Industrial Realty Trust, Stag Industrial, Inc., Goodman Group and Segro plc. AUMs of Other Logistics REITs are derived from publicly available data as of December 31, 2021. Prologis AUM includes estimated investment capacity. |
| (3) | Based on disclosure of customer solutions, services or products in Form 10-K or equivalent filings. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 50 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Unlocking the advantages of scale for our customers
| · | Our scale allows us to go beyond the capabilities of a typical real estate company. Our investments in technology and data have paid off as our customers seek solutions, services and products to meet the demands of the future economy. |
The Five Pillars Our Essentials business and other solutions, services, and products focus on five areas critical to our customers’ logistics needs. |  |  | ||||||||
| Prologis Ventures, our dedicated venture capital group, provides capital and support for tech-focused start-ups to integrate state-of-the-art technologies across these five pillars. Our investments in innovation help our customers succeed in the rapidly evolving logistics industry, strengthening customer relationships while expanding our income streams. | REDUCED OPERATING COSTS As one of the world’s largest LED lighting buyers, we can procure LED cost-effectively for our customers to significantly reduce energy costs. 57% of our portfolio (by area) uses LED lighting, equivalent to 6,491 soccer fields. Our goal is to reach 100% LED lighting by 2025. | SUSTAINABLE POWER SOURCES We have installed over 285 MW of solar power generation, enough to power 50,200 average households, making us the #1 real estate company andthird overall in U.S. corporate onsite solar capacity.(1) Our sustainable energy and EV charging programs support our customers’ transition to clean energy. | ||||||||
 |  |  | ||||||||
| LABOR PAINPOINT SOLUTIONS | INNOVATIONS IN TRANSPORT | LOGISTICS OF THE FUTURE | ||||||||
| The digital training platform of our Community Workforce Initiative focuses on building a skilled and ready labor pipeline for our customers and creating economic opportunities in our communities. At year-end 2021, CWI had trained over 13,000 logistics workers across the U.S. and internationally. | We invest in start-ups that are developing technologies to streamline and simplify the transportation of goods via freight telematics, automated logistics optimization and fleet management strategies, among others. | Our Smart Building devices and services help our customers optimize productivity while reducing move-in time and capital expense. Features include turnkey fiber optic networks; IoT sensors that collect detailed facility data to enable more informed decisions; and SmartDocks that provide statistical insights to reduce dock inefficiency and dwell time. | ||||||||
| (1) | Ranking by SEIA in the 2019 Solar Means Business Report. Equivalencies based on average U.S. household. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 51 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Refined Compensation Comparison Group
Rationale and methodology
We refined our peer comparison group in 2021 to reflect stockholder feedback, select peers of appropriate size, and align with the following considerations about our continued growth and ongoing business transformation:
CONTINUED BUSINESS EXPANSION | + | COMPETITION FOR TALENT ACROSS INDUSTRIES | = | PEER GROUP REFLECTING PROLOGIS’ BUSINESS AND TALENT MARKETS | ||||
| We are continuing to transform beyond a traditional REIT, evidenced by the growth in our worldwide operations, development and Strategic Capital platforms, assets under management, and our enterprises beyond real estate such as Prologis Essentials. As a result, there is no directly comparable REIT or other peer in the market. | We compete for talent not just with other REITs, but increasingly with companies across industries, including with private equity firms and private real estate investors and developers. We need the financial acumen to conduct complex transactions, such as in our Strategic Capital business and Prologis Ventures group. We also require the technological expertise to manage global logistics operations and drive cutting-edge logistics innovation in our Essentials business and sustainability initiatives. | Our compensation comparison group should reflect these realities and comprise companies similar to us in scope. It should more accurately align with our key business and talent markets, which we consider to be (1) real estate; (2) business-to-business technology; and (3) complex financial services. | ||||||
| · | With guidance from Pay Governance, our Compensation Committee consultant for 2021, the Committee selected a group of 19 companies of appropriate size and complexity (with revenues generally 0.5x to 2x our revenues and market capitalizations from 0.25x to 2x our market cap). This peer group also gives equal weight to the three industry sectors we identified as our business and talent markets. Our 2021 peer group is listed on the following page. |
| · | Among these peers, Prologis was in the 77th percentile of market capitalization of the group when it was constituted. At that time, our market capitalization was $108B versus a peer group average of $74B. Prologis is in the 39th percentile of this group for FY2020 revenue. |
| · | Some of the REITs in our refined peer group also include technology companies in their own peer groups. |
| · | We include five large-cap REITs of appropriate size in our refined peer group. However, with $215.1B in AUM, Prologis’ AUM is 184% larger than the Large-cap REIT Group average AUM of $75.6B.(1) |
| · | Moreover, Prologis is differentiated from other REITs in terms of scope and diversity of business ventures, including our Strategic Capital and Essentials businesses. Therefore, a peer group comprised solely of REITs would be insufficient to represent the nature of our business and the talent pool we target for recruiting. |
| · | Accordingly, we selected peers that include a mix of large-cap REITs, complex financial services and business-to-business technology that reflect the full scope of our business. |
| (1) | AUMs of Large-cap REIT Group companies are derived from publicly available data as of December 31, 2021. Prologis AUM includes estimated investment capacity. |
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| COMPENSATION DISCUSSION AND ANALYSIS |
Total size of Strategic Capital, a critical component of our business, must be considered in peer group selection
| · | Our consolidated revenues do not fully capture our Strategic Capital business: Our NEOs manage a business that is significantly larger than our consolidated revenues alone indicate. In fact, consolidated revenues do not capture the majority of our Strategic Capital business. Of the $95.4B total assets under management (AUM) in our Strategic Capital business, $78.7 billion of those assets are held in unconsolidated Strategic Capital ventures. The assets held in our unconsolidated ventures are not included in our consolidated balance sheet and, therefore, revenue associated with such assets is not reflected in our consolidated revenues. |
| · | Our NEOs are assessed on the performance of our total business, including Strategic Capital: Our NEOs are assessed on the performance of our full portfolio, including all assets held by our Strategic Capital ventures. Selecting peers based solely on consolidated revenues and thereby comparing the total compensation of our NEOs to that of executives at other companies with significantly smaller AUM disregards a large portion of our NEOs’ responsibilities related to the performance and operation of the real estate in our Strategic Capital ventures. These duties include leasing, development, acquisition, disposition and maintenance of real estate; capital sourcing; financial, legal and tax planning; structuring and operation of our two public Strategic Capital ventures; and management of customer and investor relationships across 19 countries. |
Compensation comparison group for 2021:
| REITS | FINANCIAL SERVICES | TECHNOLOGY | ||||||
· American Tower Corporation · Crown Castle International · Equinix · Ventas · Welltower | · Carlyle · Evercore · Jefferies · Lazard · Northern Trust · S&P Global · State Street | · Adobe · Automatic Data Processing · Global Payments · Intuit · Paychex · ServiceNow · Workday | ||||||
Compensation did not increase in response to the peer group changes
The Compensation Committee did not increase the compensation amount of any NEO in 2021 in response to the refinement of our peer group. This includes both core and outperformance compensation.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 53 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Summary of Compensation Elements
We position core compensation around the peer group median; outperformance compensation is paid only for significant above-market performance
| • | Our Compensation Committee’s 2021 competitive analysis confirmed that our core compensation is within a reasonable band of median pay among the companies in our refined peer comparison group. |
| • | We allow greater earning opportunities only if high-reach outperformance hurdles are met and significant value is created for our stockholders. POP and PPP awards are only a small fraction of the total stockholder value created. |
| – | POP: Hurdle is 100% formulaic – three-year compound annualized TSR must exceed the MSCI U.S. REIT Index by 100 bps or no POP awards are paid. In 2018, we adopted an absolute maximum cap on the total POP award pool of $100 million. We have not increased that cap since then, even though our TSR was 207.9% over the same period. |
| – | PPP: Hurdles are 100% formulaic and negotiated with third parties who have a keen interest in setting high-reach hurdles that will incentivize very strong fund performance. When hurdles are met our stockholders benefit doubly, as Prologis receives promote fees while the value of our ownership share of the ventures also increases. PPP awards vary greatly year-to-year due to performance period timing and achievement of hurdles, thus averaging PPP awards across multiple years better reflects the size of this program than any one year (see page 74). |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 54 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Our compensation philosophy emphasizes pay-for-performance alignment and talent retention
| · | Customized compensation elements:The components of our compensation program are specifically designed to support the unique value-creating drivers of our business. We have compensation elements supporting progress toward annual strategic priorities, strong stockholder return, and outperformance in our Strategic Capital business. |
| · | Attracting and retaining talent: Our outperformance compensation program supports our efforts to attract and retain top talent from competitive, high-incentive labor markets such as finance, tech and private real estate. Significant vesting periods, such as our seven-year POP vesting schedule, encourage our top talent to stay with the company for the long term. This supports our significant investment in talent trained to execute on our unique business model. |
| · | Incentivizing management beyond NEOs: Our compensation program, including our stock ownership guidelines, run deep into the organization beyond NEOs. For instance, about 100 participants have the opportunity to earn POP and PPP awards each year, which represents approximately 5% of our total employee base. More than half of the POP and PPP compensation pools are awarded to non-NEOs each year. Our compensation program aligns our broader management team with the same high-reach goals set for our NEOs. |
STRONG COMPENSATION GOVERNANCE | ||||||||
What We Do | What We Don’t Do | |||||||
| Most pay is at-risk and not guaranteed |
| No guaranteed salary / bonus increases | |||||
| Robust stock ownership requirements: CEO: $10 million Other NEOs: 3x salary Other Senior Officers: 1x salary (~120 individuals) Directors: 5x annual cash retainer |
| No employment agreements for NEOs guaranteeing compensation | |||||
| No excise tax gross-ups | |||||||
| No hedging or pledging of our common stock | |||||||
| Clawback policy for NEOs |
| No adjustments to any compensation due to the pandemic, including no changes to long-term performance awards | |||||
| Double-trigger change-in-control provisions | |||||||
| Annual compensation risk-related review |
| No repricing or buyouts of stock options without stockholder approval | |||||
| Minimal perquisites (eliminated parking and financial planning benefits for NEOs in 2021) | |||||||
| · | NEO team key to long-term company performance: In 2021, the Compensation Committee reaffirmed its belief that our experienced NEO team, which has an average tenure of over 25 years at Prologis and collectively over 170 years of experience, has been critical to Prologis’ results. Furthermore, this team is essential to training the next generation of company leaders. For example, Mr. Olinger’s leadership was vital in extensively preparing our next CFO, Mr. Arndt, for the role to ensure an effective succession in our financial strategy. This additional lens affirmed the Committee’s determination that our compensation program supports long-term value creation. The Committee will continue to assess our program to ensure compensation is consistent with the experience and tenure of our future leaders. |
| · | Our CEO leads by example: Demonstrating commitment to our stockholders, our CEO’s total equity ownership at the end of 2021 (that counts toward his minimum stock ownership requirement) was over 64 times greater than the minimum he is required to retain. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 55 |
| COMPENSATION DISCUSSION AND ANALYSIS |
CEO compensation assessed against long-term stockholder value creation
As part of its 2021 compensation program review, the Compensation Committee considered whether our largely formulaic pay-for-performance program is working as designed to generate long-term returns for our stockholders. During that review, the Committee took special note of our CEO’s leadership and found that his compensation is consistent with the long-term value he continues to deliver to our stockholders:
| · | Resilience during the pandemic: Our outperformance during the COVID-19 pandemic demonstrates Mr. Moghadam’s steadfast leadership in all operating environments. Since the beginning of the pandemic in January 2020, our TSR was 97.5%. |
| · | Growth the right way: As a result of Mr. Moghadam’s vision and guidance, over the last 10 years we: |
| – | Became an S&P 100 company. |
| – | Consummated the transformative AMB-ProLogis merger in 2011 and subsequently executed $31 billion in merger transactions, acquiring four logistics REITs with prime assets complementary to our infill strategy, accretive upon merger and overdelivering on all underwritten synergies. |
| – | Raised $31.2 billion of capital from 132 institutional investors in our Strategic Capital vehicles and grew fees in that business by 158.4% (not including promotes). |
| – | Enhanced the quality of our portfolio by strategically selling over $19.9B of our owned and managed assets while deleveraging our balance sheet, achieving A3/A- credit ratings(1) from Moody’s and S&P, respectively. This makes us one of the top credit-rated REITs, bringing tremendous value in the lower cost of capital an A-rated company can command. |
| – | Became the #1 ranked REIT on the 2022 Corporate Knights’ Global 100 Most Sustainable Corporations in the World list. |
| – | Executed a unique strategy to build embedded growth potential, capitalizing on our portfolio of scarce infill properties and using our scale to continue to grow Essentials revenues and venture capital investments. |
| (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. |
Outperformance over the |
| 56 |
| COMPENSATION DISCUSSION AND ANALYSIS |
2021 Core Compensation - Base Salary and Bonus Opportunity
CEO base salary continues at $1; NEO base salaries reflect their duties
| · | At our CEO’s request, the Compensation Committee reduced his base salary to $1 in 2019 and did not increase his base salary in 2021. |
| · | 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 determined the actual amounts using the operational performance criteria from our bonus program. |
| · | 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 goals are not achieved, he will earn less than $999,999. |
| · | The Compensation Committee determined that the maximum value of this award ($999,999) would be paid if company performance was at or greater than target (using our corporate score assessed against our annual bonus plan metrics). As discussed in greater detail below, our corporate results yielded above-target performance and a corporate score for annual bonus purposes of 175% of target. |
| · | As such, the Compensation Committee awarded Mr. Moghadam $999,999 in equity with 4-year vesting in lieu of 2021 salary. Because this equity award was granted in 2022, it will be reported in our Summary Compensation Table for the year 2022. See discussion of our bonus determinations for further detail. |
| · | In late 2020, our Compensation Committee, with data and input from our compensation consultant, determined that the base salaries and target bonuses of Gene Reilly, Gary Anderson and Ed Nekritz should be increased to reflect increases in their responsibilities. The base salaries of these NEOs were last increased in 2015 and their bonus targets have not been modified since the AMB-ProLogis merger in 2011. Prologis’ total portfolio AUM has increased by 262% since their last base salary increase while our G&A expense as a percentage of AUM has decreased by 3,208 bps. Over the same period, our Essentials business and our sustainability, energy, government affairs and other programs have also grown dramatically. These developments in our business have correspondingly resulted in a meaningful expansion of the scope and magnitude of the duties of these NEOs. We increased the base salaries of the applicable NEOs from $600,000 in 2020 to, for Mr. Reilly, $700,000, and for Mr. Anderson and Mr. Nekritz, $650,000, each beginning in 2021. The bonus targets were also increased from $750,000 to, for Mr. Reilly, $1,050,000, for Mr. Anderson, $877,500, and for Mr. Nekritz, $845,000. In its 2021 competitive analysis, our Compensation Committee confirmed that these updated base salaries and bonus targets continue to be within the band of competitive pay among the companies in our 2021 refined compensation comparison group. The base salaries and target bonuses of Mr. Moghadam and Mr. Olinger were not altered for 2021. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 57 |
| COMPENSATION DISCUSSION AND ANALYSIS |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 58 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Bonus structure supports our top strategic priorities
How we select our bonus metrics and set our targets:
| · | Our bonus metrics are set annually to reflect the company’s business imperatives and to tie to our 3-year strategic plan. |
| · | We set targets to incentivize progress on our current strategic priorities, which may change from year to year as goals are achieved and strategy evolves. For example, given our intensified focus on customer centricity, we added a net promoter score (NPS) to measure customer satisfaction. We also included an average occupancy metric in our Portfolio Operations category to increase the focus of our team on leasing the assets in our portfolio, which became a greater focus following the emergence of COVID-19 in 2020. |
| · | We set our bonus metrics to drive strong operational performance over the long-term. For example, our performance has resulted in a 9.7% dividend CAGR, 18.0% net earnings per share CAGR, 12.3% Core FFO per share CAGR, over the past seven years.(1) |
| (1) | 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. |
Portfolio Operations metrics are the most heavily weighted:
| · | Our 2021 bonuses were largely determined by our performance on operational metrics in the Portfolio Operations category (weighted at 50% of our total score vs. 25% for the two other categories). These operational metrics for 2021 were: (i) Core FFO per share, (ii) GAAP same store NOI growth, (iii) rent change on rollovers and (iv) average occupancy. These metrics have the most impact on the success of our business and are important to our stockholders in assessing the health and performance of our business. |
| · | Our 2021 Core FFO per share(1) target was set at a rigorous level, requiring significantly better performance than in 2020. Our target 2021 Core FFO per share (excluding promotes) was set about 9% higher than our 2020 Core FFO per share (also adjusted to exclude promotes). |
| · | Our target rent change on rollover (RCOR) metric for 2021 was 18.0% and our SSNOI 2021 target was 2.4%, both for our full owned and managed portfolio. They were set at rigorous levels based on a lease-by-lease and property-level analysis conducted to determine targets based on market indicators. Because the composition of the pool of properties changes from year to year, RCOR and SSNOI metrics year-over-year may not be comparable. Likewise, average occupancy is dependent on market conditions and the status of leases in our portfolio, among other conditions. Therefore, although set at rigorous levels for the current set of properties, RCOR, SSNOI and average occupancy metrics may not necessarily show an increase from year to year. |
| · | Similarly, the metrics in the Deployment and Development Stabilizations category are a function of our development pipeline projections at the time the bonus targets are set. We set these metrics based on our then-current assessment of the properties that will be available to stabilize and contribute to ventures in the applicable year, which fluctuates |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 59 |
| COMPENSATION DISCUSSION AND ANALYSIS |
from the development pipeline of prior measurement periods. As such, while we set our development stabilizations, development stabilizations – margin, and contributions to Strategic Capital metrics at rigorous levels for 2021, the targets we set for these metrics may not necessarily be higher than the performance we achieved in the prior period. |
2021 bonus assessment results
| · | Based on strong NEO performance against the quantitative metrics of our bonus scorecard, our Compensation Committee concluded that we earned an above-target corporate score resulting in bonus payouts of 175% of target. See the tables below for more detail on how our corporate score was calculated. |
CATEGORY-BY-CATEGORY METRIC RESULTS
| PORTFOLIO OPERATIONS | WEIGHTED AT 50% | ABOVE TARGET OVERALL | ||||||||||||||||||
| Key Performance Metric | Metric Weighting | Threshold 50% of Target Bonus | Target Performance 100% of Target Bonus | Stretch Performance 200% of Target Bonus | Actual 2021 Performance(4) | |||||||||||||||
Core FFO per share | 30% | $3.85 | $3.89 | $3.93 | $4.09 | |||||||||||||||
Same Store NOI Growth - Net Effective(1)(2) | 10% | 1.9% | 2.4% | 2.9% | 5.2% | |||||||||||||||
Rent Change on Rollover(2)(3) | 5% | 16.0% | 18.0% | 20.0% | 23.5% | |||||||||||||||
Average Occupancy(2) | 5% | 94.8% | 95.8% | 96.8% | 96.4% | |||||||||||||||
Total Category Score |
| 196% of target | ||||||||||||||||||
| (1) | Core FFO per share and Same Store NOI Growth - Net Effective are non-GAAP measures. See Appendix A for definitions and discussions of non-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 with promotes is $4.15 per share. |
| (2) | Same Store NOI Growth - Net Effective, Rent Change on Rollover and Average Occupancy are based on our owned and managed portfolio. |
| (3) | Rent Change on Rollover is generally the change in average annual rent upon lease renewal. |
| (4) | For comparison, actual 2020 performance for Portfolio Operations metrics: Core FFO per share ($3.58); Same Store NOI Growth - Net Effective (2.4%); Rent Change on Rollover (21.3%); Average Occupancy (95.5%). |
DEPLOYMENT AND
| DEVELOPMENT STABILIZATIONS | WEIGHTED AT 25% | ABOVE TARGET OVERALL | ||||||||||||||||||
| Key Performance Metric | Metric Weighting | Threshold Performance 50% of Target Bonus | Target Performance 100% of Target Bonus | Stretch Performance 200% of Target Bonus | Actual 2021 Performance(1) | |||||||||||||||
Development Stabilizations | 7.5% | $2.55B | $2.80B | $3.10B | $3.41B | |||||||||||||||
Development Stabilizations -Margin | 10% | 17.5% | 21.5% | 25.5% | 45.0% | |||||||||||||||
Contributions to Strategic Capital ventures | 7.5% | $2.10B | $2.35B | $2.60M | $4.46B | |||||||||||||||
Total Category Score | �� | 200% of target | ||||||||||||||||||
| (1) | For comparison, actual 2020 performance for Deployment and Development Stabilizations metrics: Development Stabilizations ($3.05B); Development Stabilizations – Margin (35.2%); Contributions to Strategic Capital ventures ($2.39B). |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022
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60
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| COMPENSATION DISCUSSION AND ANALYSIS |
| 3CS AND G&A/AUM | WEIGHTED AT 25% | ABOVE TARGET OVERALL | ||||||||||||||||||
| Key Performance Metric | Metric Weighting | Threshold Performance 50% of Target Bonus | Target Performance 100% of Target Bonus | Stretch Performance 200% of Target Bonus | Actual 2021 Performance(4) | |||||||||||||||
Essentials Net Revenue (includes ESG metrics like LED lighting / solar) | 5% | $50M | $55M | $60M | $64M | |||||||||||||||
Procurement Savings(1) | 5% | $145M | $155M | $165M | $267M | |||||||||||||||
Culture & Talent | 5% | 63% | 72% | 79% | 79% | |||||||||||||||
G&A as a Percentage of AUM | 5% | 36 bps | 35 bps | 34 bps | 36 bps | |||||||||||||||
NPS Score(3) | 5% | 56 | 59 | 62 | 65 | |||||||||||||||
Total Category Score | 157% of target | |||||||||||||||||||
| (1) | Procurement Savings generally represent our costs compared to our current rates and are predominately savings related to our development and capex program, such as on construction materials. In the current market conditions, with materials tied to commodity pricing, i.e. steel, we would compare our costs to the market rate. |
| (2) | C&T Composite Score is made up of three components: overall employee engagement survey score (50% weight); percentage of regrettable turnover at or below 25% of all turnover (25% weight); and percentage of diverse hires in U.S. real estate roles (25% weight). |
| (3) | Net Promoter Score (NPS) is a metric administered by Qualtrics. NPS measures the loyalty of customers to a company. NPS scores are measured with a number ranging from -100 to +100, a higher score is desirable. |
| (4) | For comparison, actual 2020 performance for 3Cs and G&A/AUM category: Essentials Net Revenue ($20M); Procurement Savings ($135M); G&A as a Percentage of AUM (35 bps); NPS Score (56). We did not use a composite score for the Talent & Culture metric in 2020. |
OVERALL CORPORATE SCORE | 175% OF TARGET | ABOVE TARGET OVERALL | ||
| · | Determination of our corporate score: The weightings of the above-target scores for each of the three categories yielded an overall corporate score of 187.5% of target. Following a holistic assessment of our entire compensation program results for 2021, the Compensation |
INDIVIDUAL PERFORMANCE | EACH AT 175% OF TARGET | ABOVE TARGET OVERALL | ||
| · | Committee assessment of Mr. Moghadam’s individual contributions: Under Mr. Moghadam’s leadership, the executive team led the company in another year of significant accomplishment. Our continued focus on customers’ needs, our significant well-located land bank, our Strategic Capital and |
| · | Committee assessment of other NEO contributions: |
| – | Portfolio Operations: Our NEO team delivered Core FFO(1) of $4.09 per share (excluding Strategic Capital promotes), representing 14.2% year-over-year growth. Mr. Reilly delivered exceptional operating results: RCOR, SSNOI Growth and Average Occupancy all exceeded their rigorous targets. Mr. Nekritz led his team in negotiations and execution of over $10.0 billion in real estate transactions. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 61 |
| COMPENSATION DISCUSSION AND ANALYSIS |
| – | Development and Development Stabilizations: Even in the face of unprecedented material shortages and rising costs, the profitability of our overall development program continued to be excellent in 2021. Mr. Reilly oversaw the stabilization of developments above our stretch goal and with margins that also significantly exceeded our stretch goal. |
| – | 3Cs and G&A/AUM: Mr. Anderson delivered an above-stretch $267 million in procurement savings as well as Essentials net revenue above our stretch target by outperforming in LED lighting, solar and energy resale. Mr. Reilly and Mr. Anderson led customer-focused efforts that increased our global NPS score by 9 points and improved the real estate employee engagement score by 5% from 2020 to 90%. Mr. Nekritz continued to elevate our ESG leadership, resulting in top ESG rankings from third-party reviewers and the expansion of our Community Workforce Initiative to 15 markets. Diverse hires in our real estate roles were 73% in the United States. Globally, 50% of all real estate roles are held by female employees. We exceeded our regrettable turnover goal, with less than 25% of all turnover being regrettable. |
| – | Balance sheet considerations: Our balance sheet and credit metrics are the strongest in our history. We have significant liquidity as well as debt capacity to self-fund our growth for the foreseeable future. Under Mr. Olinger’s leadership, we maintained our A3/A- ratings by Moody’s and S&P(2), respectively, with one of the top balance sheets in our industry. Mr. Olinger, who was named Institutional Investor’s #1 REIT CFO for the third consecutive year, completed over $11.5 billion in debt transactions with an average rate of 1.3% and average term of 7.7 years. |
| – | Strategic Capital considerations: Mr. Anderson, Mr. Olinger and Mr. Nekritz oversaw the wind-up of our UKLV venture, which resulted in 26.2% IRR versus its 9-10% target and generated 45M sterling in 2021 gross promotes. Our Strategic Capital team negotiated and closed $3.2 billion of commitments into open-ended vehicles. We also raised $4.4 billion for our Strategic Capital business, our third largest raise since the merger of AMB and ProLogis in 2011, and our Strategic Capital ventures are all outperforming their benchmarks. |
| (1) | Core FFO per share and SSNOI are non-GAAP measures. See Appendix A for definitions and discussions of non-GAAP measurements and reconciliations to the most directly comparable GAAP measures. |
| (2) | 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. |
2021 ANNUAL BONUS PAYMENTS
All 2021 NEO bonuses were settled in equity and not paid in cash.
| 2021 Bonus*
| ||||||||||||
NEO | 2021 Target Bonus Value | % of Target** | Amount Paid | |||||||||
Hamid Moghadam | $ | 1,500,000 | 175% | $ | 2,625,000 | |||||||
Thomas Olinger | $ | 750,000 | 175% | $ | 1,312,500 | |||||||
Eugene Reilly | $ | 1,050,000 | 175% | $ | 1,837,500 | |||||||
Gary Anderson | $ | 877,500 | 175% | $ | 1,535,625 | |||||||
Edward Nekritz | $ | 845,000 | 175% | $ | 1,478,750 | |||||||
| * | Target bonus levels are based on salary for the year, or in the case of Mr. Moghadam, based on $1,000,000. |
| ** | Percentages are rounded. Our corporate score equals 175% of target. Generally, the Compensation Committee determine individual scores based on assessments of individual contributions to our business plan in each of the three categories described above. Individual scores for Messrs. Moghadam, Olinger, Reilly, Anderson and Nekritz are each 175% of target. Beginning in 2021, corporate scores are weighted 80% and individual scores are weighted 20% for all NEOs. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 62 |
| COMPENSATION DISCUSSION AND ANALYSIS |
2020 CEO2021 Core Compensation - Annual LTI Equity Awards
Annual LTI equity awards are 100% based on performance and not guaranteed
| (1) | Beginning with the 2022-2024 performance period to avoid implementation during an ongoing performance period. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 63 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Annual LTI equity award benchmark index is an appropriate balance of logistics and large cap REITs
| · |
|
| · | The |
| · | 50% large-cap REITs: Very few logistics REITs and even fewer global logistics REITs exist. The logistics REITs that do exist are much smaller than Prologis, so we also use the Cohen & Steers REIT Index to compare our performance against larger sized companies. The Cohen & Steers REIT Index is a performance benchmark that includes approximately 30 large-cap REITs and is important to our stockholders to evaluate our performance against other large-cap REITs. Including this index in our LTI formula also mitigates the volatility of the smaller logistics REITs and prevents any one company’s performance from having overriding influence on our LTI awards. |
| (1) | For awards granted in 2022. |
| (2) | The annualized three-year TSR for the Cohen & Steers REIT Index and the global and U.S. logistics REIT comparison groups were 20.0%, 40.1% and 38.5%, respectively. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 64 |
| COMPENSATION DISCUSSION AND ANALYSIS |
LTI EQUITY AWARDS FOR THE 2021 PERFORMANCE YEAR (GRANTED IN 2022)(1)
| 2021 Actual Award Value
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NEO | 2021 Target Award Value | % Target | $ | |||||||||
Hamid Moghadam | $ | 8,250,000 | 150% | $ | 12,375,000 | |||||||
Thomas Olinger | $ | 2,100,000 | 150% | $ | 3,150,000 | |||||||
Eugene Reilly | $ | 2,600,000 | 150% | $ | 3,900,000 | |||||||
Gary Anderson | $ | 2,300,000 | 150% | $ | 3,450,000 | |||||||
Edward Nekritz | $ | 2,100,000 | 150% | $ | 3,150,000 | |||||||
| (1) | The Compensation Committee considers LTI equity awards granted in 2022 to be part of compensation for the 2021 performance year. These awards will be reported in our Summary Compensation Table for the year 2022. |
Prior year: annual LTI equity awards for the 2020 performance year (granted in 2021)
| · | Although the Summary Compensation Table presentation requires disclosure of LTI equity awards granted in 2021 to be included in aggregate compensation for 2021, the Compensation Committee considers these awards to be compensation for the 2020 performance year. As such, LTI equity awards granted in 2021 are part of the Compensation Committee’s assessment of compensation for the 2020 performance year, not the 2021 performance year. |
| · | 2018-2020 company performance resulted in 670 bps outperformance relative to the index of the logistics REIT comparison groups and the Cohen & Steers REIT Index. In accordance with our equity formula, equity awards for the 2020 performance year were paid to all NEOs at 150% of target. See our 2021 proxy statement for further detail. |
| · | For the 2020 performance year, all NEOs received the same LTI equity award values as their awards for the 2021 performance year. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 65 |
| COMPENSATION DISCUSSION AND ANALYSIS |
100% of CEO’s compensation paid in equity
| · | To demonstrate |
| · | This election helps achieve maximum alignment between our stockholders’ interests and our CEO’s interests. |
SUMMARY OF CEO CORE COMPENSATION FOR 20202021 PERFORMANCE YEAR
Annual Base Salary | Annual Bonus | Annual LTI Equity Award | Aggregate Core Compensation for 2020 Performance Year(1) | Annual Bonus | Annual LTI Equity Award | Aggregate Core Performance Year(2) | ||||||
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) | ||||||||||
Salary lowered to $1 in 2019 | For 2021 performance paid in 2022
Minimum: 0% Target: $1,500,000 Maximum: $3,000,000 | For 2019-2021 performance granted in 2022 (including performance-based equity compensation paid in lieu of salary) (3) | ||||||||||
$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 | Paid in equity at 175% of target ($2,625,000) | Paid at 150% of target $12,375,000 Plus $999,999 paid in lieu of salary | $16,000,000 | ||||||
| (1) | AMB Property Corporation, which merged with ProLogis in 2011 to create the current company, completed its IPO in 1997. |
| (2) | 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 |
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. The Compensation Committee settles these amounts in LTIP Units that have a two-year mandatory holding period from the date of issuance (in addition to relevant vesting periods). |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 66 |
| COMPENSATION DISCUSSION AND ANALYSIS |
CEO core compensation directly correlates with company performance.stockholder return
| · | The |
| · | Although we had strong operational performance in 2015, our three-year annualized TSR at the end of 2015 underperformed the TSR |
| · | Since 2015, we have outperformed |
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CORRELATION OF CEO CORE COMPENSATION WITH RELATIVE TSR AND OPERATIONAL PERFORMANCE
| (1) | 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. |
| (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 |
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. |
| 67 |
| COMPENSATION DISCUSSION AND ANALYSIS |
$24.2 billion in value created for stockholders when POP compensation was awarded.2021 Outperformance Compensation
| · |
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| – | We created $55.8 billion of value over the performance of MSCI REIT Index, the measurement index that we use to determine whether POP awards are payable. By exceeding PPP hurdles for the relevant performance periods, we created $309 million of value for our stockholders. The corresponding POP and PPP awards paid to our CEO were only 0.04% and 1.4% of the value generated for our stockholders in our outperformance programs, respectively.(1) |
| (1) | See footnotes to “CEO POP Awards are a Small Fraction of Total Value Created for Stockholders by Exceeding the POP Measurement Index” and “CEO PPP Awards are a Small Fraction of Total Value Created for Stockholders When We Achieved PPP Hurdles.” |
| (2) | CEO Total Compensation for a performance year includes core compensation (base salary, bonus, annual LTI equity awards and equity paid in lieu of salary) plus PPP awards paid in the performance year and aggregate POP awards paid for any performance periods ending on the applicable performance year. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 68 |
| COMPENSATION DISCUSSION AND ANALYSIS |
2021 Outperformance Compensation – POP
Rewards significant relative TSR outperformance and incentivizes long-term retention
| · | POP is a critical element of our compensation program: |
| – | Talent recruiting and retention: In the highly competitive market for talent brought on by the “Great Resignation”, POP is a critical tool used to attract top management talent. Similarly, POP’s long vesting period supports the retention of our NEOs, whose experience is critical to executing our strategy and training our next generation of leaders. |
| – | Geared toward optimal stockholder return: POP extends to about 100 participants, supporting a teamwork mentality deep in our organization that motivates POP participants across the company to drive long-term outperformance. POP performance hurdles require that significant stockholder value is created for POP awards to pay out. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 69 |
| COMPENSATION DISCUSSION AND ANALYSIS |
HOW IT WORKS continued
Prologis Outperformance Plan (POP)
| · | No POP payment when absolute TSR is negative: POP awards cannot be paid when our absolute TSR is negative. If a pool |
| · |
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| – | Adopted absolute maximum cap: We implemented a limit on the potential size of the POP award pool by applying an absolute maximum cap of $100 million on the total aggregate POP pool for all participants starting with the 2018-2020 performance period. |
| – | Although we delivered TSR of 207.9% since 2018, we have maintained the POP maximum award pool cap at $100 million. |
| – | Adopted extended vesting: We imposed seven-year cliff vesting on the bulk (80%) of earned POP awards. |
| – | Although the new vesting construct was effective for performance periods starting in 2018, our NEOs demonstrated deep commitment to the company by voluntarily electing to apply this vesting construct retroactively to their awards earned for the 2016-2018 and 2017-2019 performance periods. The NEOs did not receive any benefit in exchange for their election. |
Stockholders’ share of POP value creation: 99.8% of the value generated above the POP measurement index for the 2019-2021 performance period
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 70 |
| COMPENSATION DISCUSSION AND ANALYSIS |
2021 CEO POP Compensation
$55.8 billion in value created for stockholders above measurement index when POP compensation was awarded
| · | By |
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CEO POP AWARDS(1) ARE A SMALL FRACTION OF TOTAL VALUE CREATED FOR STOCKHOLDERS INBY EXCEEDING THE POP HURDLESMEASUREMENT INDEX(2)
CEO POP awards were only 0.08%0.04% of value generated for stockholders by
exceeding POP hurdlemeasurement index
| (1) | CEO POP award for the |
| (2) |
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| (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, |
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$2.6 billion in value created for stockholders when2021 Outperformance Compensation – PPP compensation was paid.
Rewards significant operating outperformance of our Strategic Capital ventures
| · | Incentivizes Strategic Capital outperformance, a key driver of competitive advantage: Strategic Capital is a high-margin business that accelerates our growth responsibly. The assets held in our Strategic Capital business yield higher returns than the assets we own directly because Strategic Capital generates additional income from management fees as well as “promotes” when applicable ventures perform exceptionally well. As discussed in the following pages, PPP |
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PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 72 |
| COMPENSATION DISCUSSION AND ANALYSIS |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 73 |
| COMPENSATION DISCUSSION AND ANALYSIS |
| · | PPP awards are highly variable based on |
| · | Average annual PPP awards |
AVERAGE ANNUAL PPP AWARDS BETTER REFLECT PROGRAM SIZE
We created an average of $1.1B in value for our stockholders in years when PPP hurdles were met |
| (1) |
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$309M in value created for stockholders when PPP compensation was paid
| · | 71% YOY decrease in CEO PPP compensation: In 2021, our CEO’s PPP compensation decreased by 71% year-over-year. This is not a reflection of a decrease in our Strategic Capital performance. Rather, it is due to the fact that PPP awards are dependent not only on performance, but also on the timing of performance periods and calculation opportunities negotiated with Strategic Capital investors. There were fewer such opportunities in 2021. |
| Prologis 2021 promote / PPP performance hurdle detail |
| Across all promotes paid to Prologis in 2021 that gave rise to PPP awards, the weighted average performance period was 4.1 years and the hurdles required a minimum weighted average IRR of 9.4%. |
| – | Prologis’ net promote revenue in 2021 was $77 million. |
| – | Prologis also earned a total of $185 million in management and other fees from the ventures that paid promotes to Prologis in 2021. |
CEO PPP AWARDS ARE A SMALL FRACTION OF TOTAL VALUE CREATED FOR STOCKHOLDERS WHEN WE ACHIEVED PPP HURDLES(1)
CEO PPP awards were only 0.6%1.4% of the total value created for stockholders when we achieved the promote hurdles
| (1) | The “total value created for stockholders when we achieved PPP hurdles” is calculated by determining our ownership share of the growth in net asset value (adjusting for dividends) of the applicable ventures during the incentive period, gross of any promote accrual for the applicable ventures, adding in management fees paid by such ventures to Prologis during the same period. The “total value created when we achieved the PPP hurdles” excludes equity transactions that, while impacting net asset value, did not create value for the venture, such as capital contributions, returns of capital, etc. It also excludes Prologis’ ownership share of management fees paid to Prologis by the ventures. In |
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HOW IT WORKS
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2020 Compensation Decisions: Annual Base Salary and Bonus Opportunity
CEO base salary continues at $1; No increases made to NEO base salaries.
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HOW IT WORKS
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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
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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
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The Compensation Committee’s approach to our 2020 bonus allocation
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Corporate score and NEO bonus assessments
At-target bonuses awarded despite above-target achievement to reallocate funds to reward customer-focused non-NEOs
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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% | ||||||||||||
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Balance Sheet Considerations
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2020 ANNUAL BONUS DECISIONS REDUCED NEO BONUSES TO RE-ALLOCATE PAY TO NON-NEOS
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NEO | 2020 Target Bonus Value | Earned Bonus Prior to Reduction | Percentage Reduction | Amount Paid (100% of Target) After Reduction** | ||||||||||||
Hamid Moghadam | $1,500,000 | $1,752,000 | -14% | $1,500,000 | ||||||||||||
Thomas Olinger | $ 750,000 | $ 844,500 | -11% | $ 750,000 | ||||||||||||
Eugene Reilly | $ 750,000 | $ 844,500 | -11% | $ 750,000 | ||||||||||||
Edward Nekritz | $ 750,000 | $ 844,500 | -11% | $ 750,000 | ||||||||||||
Gary Anderson | $ 750,000 | $ 844,500 | -11% | $ 750,000 | ||||||||||||
Michael Curless | $ 750,000 | $ 844,500 | -11% | $ 750,000 | ||||||||||||
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Annual LTI equity award benchmarks are a balance of logistics and large cap REITs.
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LTI EQUITY AWARDS FOR THE 2020 PERFORMANCE YEAR (GRANTED IN 2021)(1)
| 2020 Actual Award Value | ||||||||||||
NEO | 2020 Target Award Value | % Target | $ | |||||||||
Hamid Moghadam | $ | 8,250,000 |
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| 150% |
| $ | 12,375,000 |
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Thomas Olinger | $ | 2,100,000 |
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| 150% |
| $ | 3,150,000 |
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Eugene Reilly | $ | 2,600,000 |
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| 150% |
| $ | 3,900,000 |
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Edward Nekritz | $ | 2,100,000 |
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| 150% |
| $ | 3,150,000 |
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Gary Anderson | $ | 2,300,000 |
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| 150% |
| $ | 3,450,000 |
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Michael Curless | $ | 1,600,000 |
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| 150% |
| $ | 2,400,000 |
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Annual LTI equity awards for the 2019 performance year (granted in 2020)
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2020 Compensation Decisions: Outperformance Plans
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HOW IT WORKS
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HOW IT WORKS
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Other Compensation Elements and Considerations
LTIP Units
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NEO waivers of retirement eligibility benefits
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Senior-level benefits
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Change-in-control benefits
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Other considerations
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Say-on-Pay voting results for 2020 stockholder meeting
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Risk mitigation
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Stock ownership guidelines
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Hedging and pledging policies
All hedging and pledging of common stock are prohibited: Our insider trading policy prohibits all NEOs, employees and directors from hedging or pledging shares of our common stock. All our NEOs and directors are currently in compliance with this prohibition.
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Compensation recoupment (clawback) policy
The Board has adopted a compensation clawback policy, which provides that in the event of a substantial restatement of our previously issued financial statements, a review will be undertaken by the Board of performance-based compensation awarded to certain officers that was attributable to our financial performance during the time periods restated. If the Board determines that an officer was improperly compensated and that it is in our best interests to recover or cancel such compensation, the Board will pursue all reasonable legal remedies to recover or cancel such performance-based compensation. The policy further provides that if the Board learns of any misconduct by certain officers that caused the restatement, the Board shall take such action as it deems necessary to remedy the misconduct, prevent its recurrence and, if appropriate, based on all relevant facts and circumstances, punish the wrongdoer. Such punishment by the Board could include dismissal, legal action for breach of fiduciary duty or such other action to enforce the officer’s obligations to us as may fit the facts surrounding the particular case. In determining the appropriate punishment, the Board may take into account punishments imposed by third parties. The Board’s power to determine the appropriate punishment for the wrongdoer is in addition to, and not in replacement of, remedies imposed by such third parties.
In addition, if the Compensation Committee determines that a present or former employee has used for profit or disclosed to unauthorized persons confidential or trade secrets of us or any of our affiliates, breached any contract with or violated any fiduciary obligation to us or any of our affiliates, or engaged in any conduct which the committee determines is injurious to us or any of our affiliates, the committee may cause that employee to forfeit his or her outstanding awards under the 2020 LTIP (as defined below). In addition, in exercise of its powers and authorities under the 2020 LTIP, it is the committee’s policy to determine that a participant is in good standing in the course of administering the 2020 LTIP. If a participant is not in good standing, the committee (or its delegate) may cause the participant’s awards, whether vested or unvested, to be forfeited.
Equity grant policy and program administration
Awards are administered by our human resources and stock plan administration departments. Grants are made generally in the first quarter of the year, after promotion, at the time of new hire or in accordance with PPP. Equity grant dates are not scheduled based on the timing of the release of material non-public information.
We discontinued the issuance of stock option awards after February 2011.
Impact of accounting and tax treatment
To the extent reasonable and allowable, executive compensation will be deductible by the company for federal income tax purposes. However, the Compensation Committee may design compensation program components that are not deductible. In addition, in December 2020, the Internal Revenue Service released final regulations under 162(m), which may limit the future deductibility of certain executive compensation amounts. Because we intend to qualify as a REIT under the Internal Revenue Code, we generally distribute 100% of our net taxable income each year, and as a result do not pay U.S. federal income tax. As such, we do not expect the possible loss of executive compensation deductions to have a material impact on us. We intend that executive compensation comply with 409A of the Internal Revenue Code, which may impose additional taxes on our NEOs for Section 409A. In addition, we expense base salaries and annual bonus awarded in the year they are earned. In accordance with ASC Topic 718, we expense the value of equity awards granted over the vesting period of such grants.
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Talent and Compensation Committee Report
We, the members of the Talent and Compensation Committee, have reviewed and discussed CD&A set forth above with the management of the company and, based on such review and discussion, have recommended to the Board that this CD&A be included in this proxy statement and, through incorporation by reference of this proxy statement, the company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Talent and Compensation Committee:
George L. Fotiades (Chair)
David P. O’Connor
William D. Zollars
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Summary Compensation Table for Fiscal Year 2020*
Name and Principal Position (a) | Year (b) | Salary(1) ($) (c) | Bonus(1)(2)(3) (d) | Stock (e) | Non-Equity (g) | All Other (i) | Total ($) (j) | |||||||||||||||||||||
Hamid Moghadam |
| 2020 |
| $ | 1 |
| $ | 1,500,000 |
| $ | 32,851,741 |
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| — |
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| $80,935 |
| $ | 34,432,677 |
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Chief Executive Officer |
| 2019 |
| $ | 1 |
| $ | 1,800,000 |
| $ | 28,499,922 |
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| — |
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| $83,515 |
| $ | 30,383,438 |
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| 2018 |
| $ | 1,000,000 |
| $ | 1,800,000 |
| $ | 25,313,854 |
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| — |
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| $87,546 |
| $ | 28,201,400 |
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Thomas Olinger |
| 2020 |
| $ | 600,000 |
| $ | 750,000 |
| $ | 7,942,733 |
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| $2,121,982 |
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| $48,985 |
| $ | 11,463,700 |
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Chief Financial Officer |
| 2019 |
| $ | 600,000 |
| $ | 750,000 |
| $ | 7,787,616 |
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| $1,812,766 |
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| $43,565 |
| $ | 10,993,947 |
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| 2018 |
| $ | 600,000 |
| $ | 862,500 |
| $ | 6,990,744 |
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| $1,334,760 |
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| $43,135 |
| $ | 9,831,139 |
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Eugene Reilly |
| 2020 |
| $ | 600,000 |
| $ | 750,000 |
| $ | 9,668,732 |
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| $2,121,982 |
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| $48,050 |
| $ | 13,188,764 |
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Chief Investment Officer |
| 2019 |
| $ | 600,000 |
| $ | 1,150,000 |
| $ | 8,537,585 |
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| $1,812,766 |
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| $41,867 |
| $ | 12,142,218 |
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| 2018 |
| $ | 600,000 |
| $ | 975,000 |
| $ | 7,740,763 |
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| $1,334,760 |
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| $40,167 |
| $ | 10,690,690 |
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Edward Nekritz |
| 2020 |
| $ | 600,000 |
| $ | 750,000 |
| $ | 8,818,700 |
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| $2,121,982 |
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| $48,445 |
| $ | 12,339,127 |
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Chief Legal Officer and |
| 2019 |
| $ | 600,000 |
| $ | 925,000 |
| $ | 7,787,616 |
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| $1,812,766 |
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| $41,405 |
| $ | 11,166,787 |
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General Counsel |
| 2018 |
| $ | 600,000 |
| $ | 900,000 |
| $ | 6,990,744 |
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| $1,334,760 |
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| $40,915 |
| $ | 9,866,419 |
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Gary Anderson |
| 2020 |
| $ | 600,000 |
| $ | 750,000 |
| $ | 8,818,700 |
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| $2,121,982 |
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| $48,445 |
| $ | 12,339,127 |
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Chief Operating Officer |
| 2019 |
| $ | 600,000 |
| $ | 925,000 |
| $ | 7,787,616 |
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| $1,812,766 |
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| $44,552 |
| $ | 11,169,934 |
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| 2018 |
| $ | 600,000 |
| $ | 900,000 |
| $ | 6,990,744 |
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| $1,334,760 |
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| $40,915 |
| $ | 9,866,419 |
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Michael Curless |
| 2020 |
| $ | 600,000 |
| $ | 750,000 |
| $ | 7,942,733 |
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| $2,121,982 |
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| $48,552 |
| $ | 11,463,267 |
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Chief Customer Officer |
| 2019 |
| $ | 600,000 |
| $ | 750,000 |
| $ | 7,487,614 |
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| $1,812,766 |
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| $42,290 |
| $ | 10,692,670 |
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| 2018 |
| $ | 600,000 |
| $ | 900,000 |
| $ | 6,690,772 |
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| $1,334,760 |
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| $43,135 |
| $ | 9,568,667 |
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Name | Year(i) | Annual Cash Bonus Award(ii) | Amount Exchanged(iii) | Exchanged Equity Value(iv) | # of Shares or Units(v) | |||||||||||||||
Mr. Moghadam |
| 2020 |
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| $1,500,000 |
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| $1,500,000 |
| $ | 1,500,000 |
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| 14,034 |
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| 2019 |
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| $1,800,000 |
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| $1,800,000 |
| $ | 1,800,000 |
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| 19,094 |
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| 2018 |
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| $1,800,000 |
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| $1,800,000 |
| $ | 1,800,000 |
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| 25,337 |
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Mr. Olinger |
| 2020 |
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| $ 750,000 |
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| $ 750,000 |
| $ | 750,000 |
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| 7,017 |
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| 2019 |
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| $ 750,000 |
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| $ 750,000 |
| $ | 750,000 |
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| 7,955 |
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| 2018 |
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| $ 862,500 |
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| $ 862,500 |
| $ | 862,500 |
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| 12,141 |
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Mr. Reilly |
| 2020 |
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| $ 750,000 |
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| $ 750,000 |
| $ | 750,000 |
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| 7,017 |
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| 2019 |
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| $1,150,000 |
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| $1,150,000 |
| $ | 1,150,000 |
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| 12,199 |
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| 2018 |
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| $ 975,000 |
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| $ 975,000 |
| $ | 975,000 |
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| 13,724 |
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Mr. Nekritz |
| 2020 |
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| $ 750,000 |
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| $ 750,000 |
| $ | 750,000 |
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| 7,017 |
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| 2019 |
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| $ 925,000 |
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| $ 925,000 |
| $ | 925,000 |
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| 9,812 |
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| 2018 |
|
| $ 900,000 |
|
| $ 900,000 |
| $ | 900,000 |
|
| 12,668 |
| ||||||
Mr. Anderson |
| 2020 |
|
| $ 750,000 |
|
| $ 750,000 |
| $ | 750,000 |
|
| 7,017 |
| |||||
| 2019 |
|
| $ 925,000 |
|
| $ 925,000 |
| $ | 925,000 |
|
| 9,812 |
| ||||||
| 2018 |
|
| $ 900,000 |
|
| $ 900,000 |
| $ | 900,000 |
|
| 12,668 |
| ||||||
Mr. Curless |
| 2020 |
|
| $ 750,000 |
|
| $ 750,000 |
| $ | 750,000 |
|
| 7,017 |
| |||||
| 2019 |
|
| $ 750,000 |
|
| $ 750,000 |
| $ | 750,000 |
|
| 7,955 |
| ||||||
| 2018 |
|
| $ 900,000 |
|
| $ 900,000 |
| $ | 900,000 |
|
| 12,668 |
| ||||||
|
|
|
|
|
|
|
Annual LTI Equity Incentive Awards:
Under our annual LTI equity award program, we generally grant equity awards in the first quarter for the performance period ended in the previous year. For example, the annual awards in column (e) for 2020 were granted in February 2020 but were based on a performance period that ended in 2019. The amount of each NEO’s annual award is based on performance criteria and the award is also subject to continued employment.
|
Mr. Moghadam—131,271 LTIP Units valued at $12,374,917
Mr. Olinger—30,232 LTIP Units valued at $2,849,971
|
|
Mr. Reilly—42,431 LTIP Units valued at $3,999,970
Mr. Nekritz—33,414 LTIP Units valued at $3,149,938
Mr. Anderson—33,414 LTIP Units valued at $3,149,938
Mr. Curless—30,232 LTIP Units valued at $2,849,971
The number of LTIP Units was determined using the closing price of our common stock on the award grant date of January 17, 2020 ($94.27). This is the value used for accounting purposes to expense the grant.
|
Mr. Moghadam — 174,197 LTIP Units valued at $12,374,955
Mr. Olinger — 44,341 LTIP Units valued at $3,149,985
Mr. Reilly — 54,898 LTIP Units valued at $3,899,954
Mr. Nekritz — 44,341 LTIP Units valued at $3,149,985
Mr. Anderson — 44,341 LTIP Units valued at $3,149,985
Mr. Curless — 40,118 LTIP Units valued at $2,849,983
The number of LTIP Units was determined using the closing price of our common stock on the award grant date of February 11, 2019 ($71.04). This is the value used for accounting purposes to expense the grant.
|
Mr. Moghadam — 205,155 LTIP Units valued at $12,374,950
Mr. Olinger — 52,221 LTIP Units valued at $3,149,971
Mr. Reilly — 64,655 LTIP Units valued at $3,899,990
Mr. Nekritz — 52,221 LTIP Units valued at $3,149,971
Mr. Anderson — 52,221 LTIP Units valued at $3,149,971
Mr. Curless — 47,248 LTIP Units valued at $2,849,999
The number of LTIP Units was determined using the closing price of our common stock on the award grant date of February 9, 2018 ($60.32). This is the value used for accounting purposes to expense the grant.
Information on how we value equity awards is included in the narrative discussion that follows the Grants of Plan-Based Awards in Fiscal Year 2020 table below. Also see “Compensation Discussion and Analysis.”
POP:
The values in column (e) include the NEO’s allocation of the estimated compensation pool value awarded under POP. This value is included in the NEO’s compensation even though there is no assurance that the value of the allocation will ever be realized by the NEO.
|
|
|
POP and the exchange of the compensation pool allocation for POP LTIP Units are discussed below in the narrative that follows the “Grants of Plan-Based Awards in Fiscal Year 2020” table.
|
|
|
|
Additional information on the allocations of PPP compensation pools and how they are valued is included in the narrative that follows the “Grants of Plan-Based Awards in Fiscal Year 2020” table.
|
|
|
|
|
| 401(k) Plan Match | Financial Planning Services(a) | Parking(a) | Other(b) | Totals(c) | ||||||||||||||||||
Mr. Moghadam |
| 2020 |
|
| — |
|
| $66,500 |
|
| $1,935 |
|
| $12,500 |
| $ | 80,935 |
| ||||||
| 2019 |
|
| — |
|
| $63,275 |
|
| $7,740 |
|
| $12,500 |
| $ | 83,515 |
| |||||||
| 2018 |
| $ | 8,250 |
|
| $61,496 |
|
| $7,800 |
|
| $10,000 |
| $ | 87,546 |
| |||||||
Mr. Olinger |
| 2020 |
| $ | 17,100 |
|
| $18,095 |
|
| $1,290 |
|
| $12,500 |
| $ | 48,985 |
| ||||||
| 2019 |
| $ | 8,250 |
|
| $17,655 |
|
| $5,160 |
|
| $12,500 |
| $ | 43,565 |
| |||||||
| 2018 |
| $ | 8,250 |
|
| $17,165 |
|
| $5,220 |
|
| $12,500 |
| $ | 43,135 |
| |||||||
Mr. Reilly |
| 2020 |
| $ | 17,100 |
|
| $18,095 |
|
| $ 355 |
|
| $12,500 |
| $ | 48,050 |
| ||||||
| 2019 |
| $ | 8,250 |
|
| $17,655 |
|
| $1,418 |
|
| $14,544 |
| $ | 41,867 |
| |||||||
| 2018 |
| $ | 8,250 |
|
| $17,165 |
|
| $2,252 |
|
| $12,500 |
| $ | 40,167 |
| |||||||
Mr. Nekritz |
| 2020 |
| $ | 17,100 |
|
| $18,095 |
|
| $ 750 |
|
| $12,500 |
| $ | 48,445 |
| ||||||
| 2019 |
| $ | 8,250 |
|
| $17,655 |
|
| $3,000 |
|
| $12,500 |
| $ | 41,405 |
| |||||||
| 2018 |
| $ | 8,250 |
|
| $17,165 |
|
| $3,000 |
|
| $12,500 |
| $ | 40,915 |
| |||||||
Mr. Anderson |
| 2020 |
| $ | 17,100 |
|
| $18,095 |
|
| $ 750 |
|
| $12,500 |
| $ | 48,445 |
| ||||||
| 2019 |
| $ | 8,250 |
|
| $17,655 |
|
| $3,000 |
|
| $15,647 |
| $ | 44,552 |
| |||||||
| 2018 |
| $ | 8,250 |
|
| $17,165 |
|
| $3,000 |
|
| $12,500 |
| $ | 40,915 |
| |||||||
Mr. Curless |
| 2020 |
| $ | 17,100 |
|
| $18,095 |
|
| $ 971 |
|
| $12,386 |
| $ | 48,552 |
| ||||||
| 2019 |
| $ | 8,250 |
|
| $17,655 |
|
| $3,885 |
|
| $12,500 |
| $ | 42,290 |
| |||||||
| 2018 |
| $ | 8,250 |
|
| $17,165 |
|
| $5,220 |
|
| $12,500 |
| $ | 43,135 |
| |||||||
|
|
|
|
|
|
|
|
Grants of Plan-Based Awards in Fiscal Year 2020*
Estimated Future Payouts Under Equity Incentive Plan Awards
| ||||||||||||||||||||
Name (a)
| Grant Date
(b)
| Target
| Maximum ($) (h)
| All Other Stock Awards: Number of (i)
| Grant Date Fair Value of Stock ($) (l)
| |||||||||||||||
Annual and PPP Grants: | ||||||||||||||||||||
Hamid Moghadam |
| 01/02/20 | (1) | $ | 4,320,000 |
| $ | 15,000,000 |
|
| — |
| $ | 4,320,000 |
| |||||
| 03/13/20 | (2) |
| — |
|
| — |
|
| 131,271 |
| $ | 12,374,917 |
| ||||||
| 03/13/20 | (3) |
| — |
|
| — |
|
| 10,607 |
| $ | 999,922 |
| ||||||
| 03/27/20 | (4) |
| — |
|
| — |
|
| 16,890 |
| $ | 1,490,880 |
| ||||||
| 09/09/20 | (4) |
| — |
|
| — |
|
| 134,323 |
| $ | 13,666,022 |
| ||||||
Thomas Olinger |
| 01/02/20 | (1) | $ | 1,152,000 |
| $ | 4,000,000 |
|
| — |
| $ | 1,152,000 |
| |||||
| 03/13/20 | (2) |
| — |
|
| — |
|
| 30,232 |
| $ | 2,849,971 |
| ||||||
| 03/27/20 | (4) |
| — |
|
| — |
|
| 4,391 |
| $ | 387,594 |
| ||||||
| 09/09/20 | (4) |
| — |
|
| — |
|
| 34,924 |
| $ | 3,553,168 |
| ||||||
Eugene Reilly |
| 01/02/20 | (1) | $ | 1,728,000 |
| $ | 6,000,000 |
|
| — |
| $ | 1,728,000 |
| |||||
| 03/13/20 | (2) |
| — |
|
| — |
|
| 42,431 |
| $ | 3,999,970 |
| ||||||
| 03/27/20 | (4) |
| — |
|
| — |
|
| 4,391 |
| $ | 387,594 |
| ||||||
| 09/09/20 | (4) |
| — |
|
| — |
|
| 34,924 |
| $ | 3,553,168 |
| ||||||
Edward Nekritz |
| 01/02/20 | (1) | $ | 1,728,000 |
| $ | 6,000,000 |
|
| — |
| $ | 1,728,000 |
| |||||
| 03/13/20 | (2) |
| — |
|
| — |
|
| 33,414 |
| $ | 3,149,938 |
| ||||||
| 03/27/20 | (4) |
| — |
|
| — |
|
| 4,391 |
| $ | 387,594 |
| ||||||
| 09/09/20 | (4) |
| — |
|
| — |
|
| 34,924 |
| $ | 3,553,168 |
| ||||||
Gary Anderson |
| 01/02/20 | (1) | $ | 1,728,000 |
| $ | 6,000,000 |
|
| — |
| $ | 1,728,000 |
| |||||
| 03/13/20 | (2) |
| — |
|
| — |
|
| 33,414 |
| $ | 3,149,938 |
| ||||||
| 03/27/20 | (4) |
| — |
|
| — |
|
| 4,391 |
| $ | 387,594 |
| ||||||
| 09/09/20 | (4) |
| — |
|
| — |
|
| 34,924 |
| $ | 3,553,168 |
| ||||||
Michael Curless |
| 01/02/20 | (1) | $ | 1,152,000 |
| $ | 4,000,000 |
|
| — |
| $ | 1,152,000 |
| |||||
| 03/13/20 | (2) |
| — |
|
| — |
|
| 30,232 |
| $ | 2,849,971 |
| ||||||
| 03/27/20 | (4) |
| — |
|
| — |
|
| 4,391 |
| $ | 387,594 |
| ||||||
| 09/09/20 | (4) |
| — |
|
| — |
|
| 34,924 |
| $ | 3,553,168 |
| ||||||
|
|
|
|
|
|
|
|
|
Narrative Discussion to the Summary Compensation Table for Fiscal Year 2020 and the Grants of Plan-Based Awards in Fiscal Year 2020 Table
Equity compensation plans
At our annual meeting on April 29, 2020, our stockholders approved and adopted the Prologis, Inc. 2020 Long-Term Incentive Plan (the “2020 LTIP”). The 2020 LTIP enables our executive officers, employees, directors and consultants to participate in the ownership of the company and allows us to attract and retain our executive officers, other employees and directors, as well as provide incentives to such persons to maximize our company performance.
In addition, we have other equity compensation plans under which equity awards were outstanding as of December 31, 2020:
|
|
|
All future equity awards will be granted from the 2020 LTIP (or its successor plan) and we will no longer grant any awards from the 2012 LTIP, the AMB Plans or the Trust Plans. The available shares of common stock reserved for issuance under the 2012 LTIP, AMB Plans and the Trust Plans as of April 29, 2020 were added to the share reserve of the 2020 LTIP. All outstanding awards under the 2012 LTIP, AMB Plans and the Trust Plans will remain outstanding until they vest, expire or are forfeited by the participant. At December 31, 2020, we had 34.2 million shares reserved or available for issuance under our plans, including 4.1 million shares of common stock to be issued upon vesting of awards previously granted and 23.5 million shares of common stock remaining available for future issuance under our plans.
The 2020 LTIP does not expire but no further awards can be granted under the plan after the tenth anniversary date of the plan’s approval. The 2020 LTIP does not permit re-pricing of stock options without stockholder approval. Participants, including non-employee directors, in the 2020 LTIP may receive stock options, stock appreciation rights and full value awards, including dividend equivalents. Only employees may receive incentive stock options under the 2020 LTIP; however, we have not granted incentive stock options in the past and currently do not intend to grant stock options of any kind.
For further detail, please see “Equity Compensation Plans” below.
Equity award terms
We currently intend to grant LTIP Units and RSUs for annual LTI equity and PPP awards. Restricted stock awards were last granted in 2012, and stock options were last granted in 2011. In addition, we provided certain executives with opportunities to earn awards under POP. Beginning in 2014, we offered to certain executives the option to elect to receive LTIP Units in lieu of RSUs that may be granted to them under our compensation program. The general terms of our equity awards outstanding at December 31, 2020 are as follows:
RSUs
Each RSU is convertible into one share of common stock upon vesting. The RSUs granted prior to the 2018 annual grant cycle generally vest ratably over a continued service period of three years, such that the awards vest 34% after the first
|
|
year, 33% after the second year and 33% after the third year. RSUs granted since the 2018 annual grant cycle vest ratably over a period of four years, such that 25% of the award vests each year of the four-year period. Going forward, we intend to grant RSUs for annual LTI equity awards and PPP awards with four-year vesting periods. RSUs granted in accordance with the 2018 POP amendment will have a seven-year cliff vesting period (i.e., the entire award vests on a specified future date) after the end of the initial three-year performance period. RSUs have no voting rights. Certain awards, such as special grants due to hiring or retention considerations, may have different vesting terms, including cliff vesting terms. Equity received by the NEOs in exchange for their bonus are fully vested upon issuance. Generally, RSUs earn dividend equivalents (either cash or equity) over the vesting period under the same payment terms as dividends paid on our common stock. RSUs are valued based on the closing price of our common stock on the grant date.
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 2021 in LTIP Units, further aligning NEO and stockholder interests. |
| · | LTIP Units were structured to be generally economically equivalent to RSUs and generally have the same vesting terms as RSUs. |
| · | All LTIP Units have a two-year mandatory holding period from the date of issuance, in addition to any applicable vesting periods. |
NEO 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 the NEOs not waived such provisions, they would be entitled to certain benefits such as the acceleration of vesting of their equity awards upon termination of employment after they meet the retirement-eligibility thresholds under our compensation plans. |
| · | In 2020, the Compensation Committee amended the NEO waivers (to the extent such provisions did not already apply to such awards) to allow for continued vesting of certain awards if an NEO performs approved services for the company or community work after termination. 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, paid time-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 |
| – | Personal use of leased corporate aircraft interest by our CEO if the Company is reimbursed |
| – | Previously, the company paid for financial planning services and parking for all NEOs. We eliminated both of these benefits beginning in 2021, further reducing already minimal NEO perquisites. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 76 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Change-in-control benefits
| · | Our NEOs’ benefits include competitive 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 (generally, two times salary and bonus for NEOs)(1) |
| – | Accelerated vesting of unvested equity awards, available through change-in-control agreements or long-term equity incentive plans |
Risk mitigation
| · | Annual Compensation Committee risk assessments of our compensation program: The Compensation Committee monitors the risk profile with respect to compensation policies and practices. No material risks were found. |
| · | Quarterly reports to Board on company performance against business plan and strategic objectives: The Board provides oversight to ensure that our compensation structure is not driving the company to take excessive operational risks. |
| · | Internal management controls: Controls and procedures ensure operations are completed in line with governance standards to ensure that excessive risks are not taken, including a series of checks and balances with respect to the commitment of capital. |
| · | Real estate risk management: Real estate risk management processes monitor key risks associated with our real estate assets, such as levels of occupancy, non-income-producing assets, leverage, foreign currency exposure and other factors. |
| · | Recoupment policy: This policy is a mechanism to claw back compensation in the event of a financial restatement. |
| · | Stock ownership guidelines: These guidelines align management interests with stockholders. |
Stock ownership guidelines
| · | All NEOs and directors are in compliance. |
| · | The guidelines require stock ownership of at least $10 million for our CEO or a multiple of annual base salary for other officers (3x base salary for other NEOs; and 1x base salary for senior vice presidents, managing directors and regional presidents). The guidelines require share ownership for our directors of 5x the annual Board retainer. |
| · | Stock eligible under the guidelines includes common stock, vested, unvested (provided that any unvested equity awards counted must be full value awards subject only to time-based vesting and must in no way be contingent upon the achievement of any performance requirement) and deferred equity awards (except stock options), associated dividend equivalents, earned LTIP Units and partnership units exchangeable into our common stock. The guidelines require retention of 50% of net shares received under our equity plans upon certain events until ownership thresholds are met. |
| (1) | In 2019, the Compensation Committee amended and restated our CEO’s change-in-control agreement to reflect our CEO’s salary decrease to $1, such that change-in-control benefits would continue to apply on a double-trigger basis and are intended to approximate the same benefits as in the original agreement. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 77 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Hedging and pledging policies
All hedging and pledging of common stock are prohibited: Our insider trading policy prohibits all NEOs, employees and directors from hedging or pledging shares of our common stock. All our NEOs and directors are currently in compliance with this prohibition.
Compensation recoupment (clawback) policy
The Board has adopted a compensation clawback policy, which provides that in the event of a substantial restatement of our previously issued financial statements, a review will be undertaken by the Board of performance-based compensation awarded to certain officers that was attributable to our financial performance during the time periods restated. If the Board determines that an officer was improperly compensated and that it is in our best interests to recover or cancel such compensation, the Board will pursue all reasonable legal remedies to recover or cancel such performance-based compensation. The policy further provides that if the Board learns of any misconduct by certain officers that caused the restatement, the Board shall take such action as it deems necessary to remedy the misconduct, prevent its recurrence and, if appropriate, based on all relevant facts and circumstances, punish the wrongdoer. Such punishment by the Board could include dismissal, legal action for breach of fiduciary duty or such other action to enforce the officer’s obligations to us as may fit the facts surrounding the particular case. In determining the appropriate punishment, the Board may take into account punishments imposed by third parties. The Board’s power to determine the appropriate punishment for the wrongdoer is in addition to, and not in replacement of, remedies imposed by such third parties.
In addition, if the Compensation Committee determines that a present or former employee has used for profit or disclosed to unauthorized persons confidential or trade secrets of us or any of our affiliates, breached any contract with or violated any fiduciary obligation to us or any of our affiliates, or engaged in any conduct which the committee determines is injurious to us or any of our affiliates, the committee may cause that employee to forfeit his or her outstanding awards under the 2020 Long Term Incentive Plan (“2020 LTIP”). In addition, in exercise of its powers and authorities under the 2020 LTIP, it is the committee’s policy to determine that a participant is in good standing in the course of administering the 2020 LTIP. If a participant is not in good standing, the committee (or its delegate) may cause the participant’s awards, whether vested or unvested, to be forfeited.
Equity grant policy and program administration
Awards are administered by our human resources and stock plan administration departments. Grants are made generally in the first quarter of the year, after promotion, at the time of new hire or in accordance with PPP. Equity grant dates are not scheduled based on the timing of the release of material non-public information.
We discontinued the issuance of stock option awards after February 2011.
Impact of accounting and tax treatment
To the extent reasonable and allowable, executive compensation will be deductible by the company for federal income tax purposes. However, the Compensation Committee may design compensation program components that are not deductible. In addition, in December 2020, the Internal Revenue Service released final regulations under 162(m), which may limit the future deductibility of certain executive compensation amounts. Because we intend to qualify as a REIT under the Internal Revenue Code, we generally distribute 100% of our net taxable income each year, and as a result do not pay U.S. federal income tax. As such, we do not expect the possible loss of executive compensation deductions to have a material impact on us. We intend that executive compensation comply with 409A of the Internal Revenue Code, which may impose additional taxes on our NEOs for Section 409A. In addition, we expense base salaries and annual bonus awarded in the year they are earned. In accordance with ASC Topic 718, we expense the value of equity awards granted over the vesting period of such grants.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 78 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Talent and Compensation Committee Report
We, the members of the Talent and Compensation Committee, have reviewed and discussed the Compensation Discussion and Analysis set forth above with the management of the company and, based on such review and discussion, have recommended to the Board that this Compensation Discussion and Analysis be included in this proxy statement and, through incorporation by reference of this proxy statement, the company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Talent and Compensation Committee:
George L. Fotiades (Chair)
David P. O’Connor
William D. Zollars
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 79 |
| SUMMARY COMPENSATION TABLE |
Summary Compensation Table for Fiscal Year 2021*
Name and Principal Position (a) | Year (b) | Salary(1) ($) (c) | Bonus(1)(2)(3) ($) (d) | Stock ($) (e) | Non-Equity ($) (g) | All Other (i) | Total ($) (j) | |||||||||||||||||||||
Hamid Moghadam | 2021 | $ | 1 | $ | 2,625,000 | $ | 22,263,989 | — | $ | 12,500 | $ | 24,901,490 | ||||||||||||||||
Chief Executive Officer | 2020 | $ | 1 | $ | 1,500,000 | $ | 32,851,741 | — | $ | 80,935 | $ | 34,432,677 | ||||||||||||||||
| 2019 | $ | 1 | $ | 1,800,000 | $ | 28,499,922 | — | $ | 83,515 | $ | 30,383,438 | |||||||||||||||||
Thomas Olinger | 2021 | $ | 600,000 | $ | 1,312,500 | $ | 5,491,318 | $ | 608,204 | $ | 25,500 | $ | 8,037,522 | |||||||||||||||
Chief Financial Officer | 2020 | $ | 600,000 | $ | 750,000 | $ | 7,942,733 | $ | 2,121,982 | $ | 48,985 | $ | 11,463,700 | |||||||||||||||
| 2019 | $ | 600,000 | $ | 750,000 | $ | 7,787,616 | $ | 1,812,766 | $ | 43,565 | $ | 10,993,947 | ||||||||||||||||
Eugene Reilly | 2021 | $ | 696,539 | $ | 1,837,500 | $ | 6,847,295 | $ | 608,204 | $ | 25,500 | $ | 10,015,038 | |||||||||||||||
Chief Investment Officer | 2020 | $ | 600,000 | $ | 750,000 | $ | 9,668,732 | $ | 2,121,982 | $ | 48,050 | $ | 13,188,764 | |||||||||||||||
| 2019 | $ | 600,000 | $ | 1,150,000 | $ | 8,537,585 | $ | 1,812,766 | $ | 41,867 | $ | 12,142,218 | ||||||||||||||||
Gary Anderson | 2021 | $ | 648,269 | $ | 1,535,625 | $ | 6,397,331 | $ | 608,204 | $ | 25,500 | $ | 9,214,929 | |||||||||||||||
Chief Operating Officer | 2020 | $ | 600,000 | $ | 750,000 | $ | 8,818,700 | $ | 2,121,982 | $ | 48,445 | $ | 12,339,127 | |||||||||||||||
| 2019 | $ | 600,000 | $ | 925,000 | $ | 7,787,616 | $ | 1,812,766 | $ | 44,552 | $ | 11,169,934 | ||||||||||||||||
Edward Nekritz | 2021 | $ | 648,269 | $ | 1,478,750 | $ | 6,097,318 | $ | 608,204 | $ | 25,500 | $ | 8,858,041 | |||||||||||||||
Chief Legal Officer and | 2020 | $ | 600,000 | $ | 750,000 | $ | 8,818,700 | $ | 2,121,982 | $ | 48,445 | $ | 12,339,127 | |||||||||||||||
General Counsel | 2019 | $ | 600,000 | $ | 925,000 | $ | 7,787,616 | $ | 1,812,766 | $ | 41,405 | $ | 11,166,787 | |||||||||||||||
| * | Columns (f) and (h) have been omitted from this table because they are not applicable. |
| (1) | No salary or bonus amounts were deferred under our nonqualified deferred compensation plans in any year (see the narrative discussion that follows the Nonqualified Deferred Compensation in Fiscal Year 2021 table below). Amounts deferred under the Prologis 401(k) Savings Plan (“401(k) Plan”) at the election of the NEO from salary and/or bonus payments are included in the amounts presented in columns (c) or (d) and are as follows: |
| · | Mr. Olinger, Mr. Reilly, Mr. Anderson and Mr. Nekritz: $26,000 in 2021, $26,000 in 2020 and $25,000 in 2019. |
| (2) | Bonuses earned for a fiscal year are paid in the subsequent fiscal year (e.g., the bonuses in column (d) earned for performance in 2021 were paid in the first quarter of 2022). |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 80 |
| SUMMARY COMPENSATION TABLE |
| (3) | The value of equity awards received is equal to 100% of the cash bonus exchanged and, as no exchange premium applied, such awards were fully vested upon issuance on March 13, 2020, March 3, 2021, and February 24, 2022, respectively. The amount in column (d) includes the actual bonus awarded to the NEO participating in the bonus exchange regardless of whether cash or stock awards were received. |
Name | Year(i) | Annual Cash Bonus Award(ii) | Amount Exchanged(iii) | Exchanged Equity Value(iv) | # of Shares or Units(v) | |||||||||||||||
Mr. Moghadam |
| 2021 |
|
| $2,625,000 |
|
| $2,625,000 |
| $ | 2,625,000 |
|
| 17,108 |
| |||||
| 2020 |
|
| $1,500,000 |
|
| $1,500,000 |
| $ | 1,500,000 |
|
| 14,034 |
| ||||||
| 2019 |
|
| $1,800,000 |
|
| $1,800,000 |
| $ | 1,800,000 |
|
| 19,094 |
| ||||||
Mr. Olinger |
| 2021 |
|
| $1,312,500 |
|
| $1,312,500 |
| $ | 1,312,500 |
|
| 8,554 |
| |||||
| 2020 |
|
| $ 750,000 |
|
| $ 750,000 |
| $ | 750,000 |
|
| 7,017 |
| ||||||
| 2019 |
|
| $ 750,000 |
|
| $ 750,000 |
| $ | 750,000 |
|
| 7,955 |
| ||||||
Mr. Reilly |
| 2021 |
|
| $1,837,500 |
|
| $1,837,500 |
| $ | 1,837,500 |
|
| 11,976 |
| |||||
| 2020 |
|
| $ 750,000 |
|
| $ 750,000 |
| $ | 750,000 |
|
| 7,017 |
| ||||||
| 2019 |
|
| $1,150,000 |
|
| $1,150,000 |
| $ | 1,150,000 |
|
| 12,199 |
| ||||||
Mr. Anderson |
| 2021 |
|
| $1,535,625 |
|
| $1,535,625 |
| $ | 1,535,625 |
|
| 10,008 |
| |||||
| 2020 |
|
| $ 750,000 |
|
| $ 750,000 |
| $ | 750,000 |
|
| 7,017 |
| ||||||
| 2019 |
|
| $ 925,000 |
|
| $ 925,000 |
| $ | 925,000 |
|
| 9,812 |
| ||||||
Mr. Nekritz |
| 2021 |
|
| $1,478,750 |
|
| $1,478,750 |
| $ | 1,478,750 |
|
| 9,637 |
| |||||
| 2020 |
|
| $ 750,000 |
|
| $ 750,000 |
| $ | 750,000 |
|
| 7,017 |
| ||||||
| 2019 |
|
| $ 925,000 |
|
| $ 925,000 |
| $ | 925,000 |
|
| 9,812 |
| ||||||
| (i) | This is the year that the bonus is presented in the Summary Compensation Table. Bonuses for each year were awarded in the first quarter of the following year. |
| (ii) | Represents the bonus awarded to the NEO before the bonus exchange election. |
| (iii) | This column reflects the value of the bonus award that the NEO has elected to exchange. All NEOs elected to exchange 100% of their bonuses for 2021, 2020 and 2019. Accordingly, the NEOs exchanged the bonus amounts reflected in column (iii) for equity, and received the remainder of their bonus amounts, if any, in cash. |
| (iv) | Represents the total equity award granted to the NEO under the bonus exchange calculated based on the closing price of our common stock on the date the bonus is awarded. For all years presented, each NEO elected to receive the equity award in the form of LTIP Units. |
| (v) | Information on how we value equity awards is included in the narrative discussion that follows the Grants of Plan-Based Awards in Fiscal Year 2021 table below. |
| (4) | Includes equity compensation contingent on performance paid in lieu of salary. The Compensation Committee determined that the maximum value ($999,999) of Mr. Moghadam’s equity compensation contingent on 2020 performance in lieu of 2020 salary would be paid as company performance was greater than target using our corporate score assessed against our annual bonus plan metrics. 2021 LTIP Units issued on March 3, 2021 (approved by the Compensation Committee on February 2, 2021), were 9,356 LTIP Units valued at $999,969. |
| (5) | Amounts represent the value of equity awards granted in each year including awards granted under our annual LTI equity award program, awards granted under PPP, the allocation of the POP compensation pool to the NEO for the applicable performance period and awards granted to Mr. Moghadam contingent on performance in lieu of salary. |
Annual LTI Equity Incentive Awards:
Under our annual LTI equity award program, we generally grant equity awards in the first quarter for the performance period ended in the previous year. For example, the annual awards in column (e) for 2021 were granted in February 2021 but were based on a performance period that ended in 2020. The amount of each NEO’s annual award is based on performance criteria and the award is also subject to continued employment.
| · | 2021 LTIP Units issued on March 3, 2021 (approved by the Compensation Committee on February 2, 2021), were: |
Mr. Moghadam—115,784 LTIP Units valued at $12,374,994
Mr. Olinger—29,472 LTIP Units valued at $3,149,967
Mr. Reilly—36,489 LTIP Units valued at $3,899,944
Mr. Anderson—32,279 LTIP Units valued at $3,449,980
Mr. Nekritz—29,472 LTIP Units valued at $3,149,967
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 81 |
| SUMMARY COMPENSATION TABLE |
The number of LTIP Units was determined using the closing price of our common stock on the award grant date of February 2, 2021 ($106.88). This is the value used for accounting purposes to expense the grant.
| · | 2020 LTIP Units issued on March 13, 2020 (approved by the Compensation Committee on January 17, 2020), were: |
Mr. Moghadam—131,271 LTIP Units valued at $12,374,917
Mr. Olinger—30,232 LTIP Units valued at $2,849,971
Mr. Reilly—42,431 LTIP Units valued at $3,999,970
Mr. Anderson—33,414 LTIP Units valued at $3,149,938
Mr. Nekritz—33,414 LTIP Units valued at $3,149,938
The number of LTIP Units was determined using the closing price of our common stock on the award grant date of January 17, 2020 ($94.27). This is the value used for accounting purposes to expense the grant.
| · | 2019 LTIP Units issued on March 8, 2019 (approved by the Compensation Committee on February 11, 2019), were: |
Mr. Moghadam—174,197 LTIP Units valued at $12,374,955
Mr. Olinger—44,341 LTIP Units valued at $3,149,985
Mr. Reilly—54,898 LTIP Units valued at $3,899,954
Mr. Anderson—44,341 LTIP Units valued at $3,149,985
Mr. Nekritz—44,341 LTIP Units valued at $3,149,985
The number of LTIP Units was determined using the closing price of our common stock on the award grant date of February 11, 2019 ($71.04). This is the value used for accounting purposes to expense the grant.
Information on how we value equity awards is included in the narrative discussion that follows the Grants of Plan-Based Awards in Fiscal Year 2021 table below. Also see “Compensation Discussion and Analysis.”
POP:
The values in column (e) include the NEO’s allocation of the estimated compensation pool value awarded under POP. This value is included in the NEO’s compensation even though there is no assurance that the value of the allocation will ever be realized by the NEO.
| · | 2021 (2021-2023 Performance Period): Values of the allocation as of the date of the allocation (January 4, 2021) were: Mr. Moghadam ($4,545,000), Mr. Olinger ($1,212,000), Mr. Reilly ($1,818,000), Mr. Anderson ($1,818,000) and Mr. Nekritz ($1,818,000). |
| · | 2020 (2020-2022 Performance Period): Values of the allocation as of the date of the allocation (January 2, 2020) were: Mr. Moghadam ($4,320,000), Mr. Olinger ($1,152,000), Mr. Reilly ($1,728,000), Mr. Anderson ($1,728,000) and Mr. Nekritz ($1,728,000). |
| · | 2019 (2019-2021 Performance Period): Values of the allocation as of the date of the allocation (January 2, 2019) were: Mr. Moghadam ($3,180,000) and all other NEOs (each $1,272,000). |
POP and the exchange of the compensation pool allocation for POP LTIP Units are discussed below in the narrative that follows the “Grants of Plan-Based Awards in Fiscal Year 2021” table.
| (6) | Awards in the form of cash and/or equity awards were granted to participating employees, including all of the NEOs, in March 2021, December 2021, March 2020, September 2020, March 2019, November 2019 and December 2019 under PPP. The value of the equity portion of the award is included in column (e) based on the fair value on the grant date of the equity awards. The cash portion of the award is included in column (g). Because it is not possible to determine whether any incentive fees or promotes will be received in future years, only awards resulting from compensation pools that have funded are included in the compensation of the NEOs. All PPP awards paid in 2021, 2020 and 2019 vest over four years. |
| · | PPP awards paid in 2021: All of Mr. Moghadam’s 2021 PPP awards were paid in the form of equity (in aggregate, 29,622 LTIP Units or $4,344,026). For each of the other NEOs, 35% of the 2021 PPP awards were in the form of cash (in aggregate $608,204). Mr. Olinger, Mr. Reilly, Mr. Anderson and Mr. Nekritz received 65% of their 2021 PPP awards in the form of equity (in aggregate, 7,701 LTIP Units or $1,129,351). The LTIP Units were valued at $102.11, $162.56 and $161.39 per share, the closing price of our common stock on the grant date (March 18, 2021, December 15, 2021, and December 20, 2021, respectively). |
| · | PPP awards paid in 2020: All of Mr. Moghadam’s 2020 PPP awards were paid in the form of equity (in aggregate, 151,213 LTIP Units or $15,156,902). For each of the other NEOs, 35% of the 2020 PPP awards were in the form of cash (in aggregate $2,121,982). Mr. Olinger, Mr. Reilly, Mr. Anderson and Mr. Nekritz received 65% of their 2020 PPP awards in the form of equity (in aggregate, 39,315 LTIP Units or $3,940,762). The LTIP Units were valued at $88.27 and $101.74 per share, the closing price of our common stock on the grant date (March 2, 2020, and August 19, 2020, respectively). |
| · | PPP awards paid in 2019: All of Mr. Moghadam’s 2019 PPP awards were paid in the form of equity (in aggregate, 152,764 LTIP Units or $12,944,967). For each of the other NEOs, 35% of the 2019 PPP awards were in the form of cash (in aggregate $1,812,766). Mr. Olinger, Mr. Reilly, Mr. Anderson and Mr. Nekritz received 65% of their 2019 PPP awards in the form of equity (in aggregate, 39,718 LTIP Units or $3,365,631). The LTIP Units were valued at $69.88, $90.29 and $90.56 per share, the closing price of our common stock on the grant date (March 1, 2019, November 22, 2019, and December 5, 2019, respectively). |
Additional information on the allocations of PPP compensation pools and how they are valued is included in the narrative that follows the “Grants of Plan-Based Awards in Fiscal Year 2021” table.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 82 |
| SUMMARY COMPENSATION TABLE |
| (7) | The amounts in column (i) represent the other compensation amounts paid to each of the NEOs in 2021, 2020 and 2019. These amounts include the following items: |
|
|
| 401(k) Plan Match | Financial Planning Services(a) | Parking(a) | Other(b) | Totals(c) | ||||||||||||||||||
Mr. Moghadam |
| 2021 |
|
| — |
|
| — |
|
| — |
|
| $12,500 |
| $ | 12,500 |
| ||||||
| 2020 |
|
| — |
|
| $66,500 |
|
| $1,935 |
|
| $12,500 |
| $ | 80,935 |
| |||||||
| 2019 |
|
| — |
|
| $63,275 |
|
| $7,740 |
|
| $12,500 |
| $ | 83,515 |
| |||||||
Mr. Olinger |
| 2021 |
| $ | 13,000 |
|
| — |
|
| — |
|
| $12,500 |
| $ | 25,500 |
| ||||||
| 2020 |
| $ | 17,100 |
|
| $18,095 |
|
| $1,290 |
|
| $12,500 |
| $ | 48,985 |
| |||||||
| 2019 |
| $ | 8,250 |
|
| $17,655 |
|
| $5,160 |
|
| $12,500 |
| $ | 43,565 |
| |||||||
Mr. Reilly |
| 2021 |
| $ | 13,000 |
|
| — |
|
| — |
|
| $12,500 |
| $ | 25,500 |
| ||||||
| 2020 |
| $ | 17,100 |
|
| $18,095 |
|
| $ 355 |
|
| $12,500 |
| $ | 48,050 |
| |||||||
| 2019 |
| $ | 8,250 |
|
| $17,655 |
|
| $1,418 |
|
| $14,544 |
| $ | 41,867 |
| |||||||
Mr. Anderson |
| 2021 |
| $ | 13,000 |
|
| — |
|
| — |
|
| $12,500 |
| $ | 25,500 |
| ||||||
| 2020 |
| $ | 17,100 |
|
| $18,095 |
|
| $ 750 |
|
| $12,500 |
| $ | 48,445 |
| |||||||
| 2019 |
| $ | 8,250 |
|
| $17,655 |
|
| $3,000 |
|
| $15,647 |
| $ | 44,552 |
| |||||||
Mr. Nekritz |
| 2021 |
| $ | 13,000 |
|
| — |
|
| — |
|
| $12,500 |
| $ | 25,500 |
| ||||||
| 2020 |
| $ | 17,100 |
|
| $18,095 |
|
| $ 750 |
|
| $12,500 |
| $ | 48,445 |
| |||||||
| 2019 |
| $ | 8,250 |
|
| $17,655 |
|
| $3,000 |
|
| $12,500 |
| $ | 41,405 |
| |||||||
| (a) | In 2019 and 2020, we provided financial planning services and parking, if applicable, to certain employees, including the NEOs, based on their position with the company. In 2021, we eliminated financial planning and parking benefits for our NEOs. |
| (b) | For 2021 includes: matching charitable contributions by the company’s charitable foundation. |
For 2020 includes: matching charitable contributions by the company’s charitable foundation. |
For 2019 includes: (i) matching charitable contributions by the company’s charitable foundation and (ii) anniversary gift for Mr. Reilly and Mr. Anderson. |
Our charitable foundation will match the amount of charitable contributions to qualifying organizations made by our directors and all of our employees. The annual maximum amount of matching contributions in one year applicable to our NEOs is $12,500, not including amounts matched under special matching initiatives related to specific events, such as natural disasters. Matching contributions available in a particular year that are not used may be carried over to the subsequent year. Amounts reported represent charitable contributions of our charitable foundation that were paid directly to outside organizations during the calendar year to match qualifying contributions made by the NEOs during that year and can also include amounts carried over from previous years. |
| (c) | No perquisite amounts are reported in any year for any of the NEOs as the aggregate amount of the incremental costs of any perquisites for an individual NEO does not exceed $10,000 in any year. In 2021, 2020 and 2019, a leased corporate aircraft was used for non-business purposes by Mr. Moghadam. The incremental costs to the company for Mr. Moghadam were de minimis and reimbursed by him. These amounts are not included for Mr. Moghadam in 2019, 2020 and 2021 because the total of perquisites did not exceed $10,000. In 2020, a leased corporate aircraft was used for non-business purposes by Mr. Olinger. The incremental costs to the company for Mr. Olinger were de minimis and reimbursed by him. These amounts are not included for Mr. Olinger in 2020 because the total of perquisites did not exceed $10,000. In 2021, a leased corporate aircraft was used for non-business purposes by Mr. Reilly and Mr. Anderson. The incremental costs to the company for Mr. Reilly and Mr. Anderson were de minimis and reimbursed by them. These amounts are not included for Mr. Reilly and Mr. Anderson in 2021 because the total perquisites did not exceed $10,000. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 83 |
| GRANTS OF PLAN-BASED AWARDS |
Grants of Plan-Based Awards in Fiscal Year 2021*
| Estimated Future Payouts Under Equity Incentive Plan Awards
| ||||||||||||||||||||
Name (a) | Grant Date (b) | Target (g) | Maximum ($) (h) | All Other Stock Awards: Number of (#) (i) | Grant Date Fair Value of Stock ($) (l) | |||||||||||||||
Hamid Moghadam | 01/04/21 | (1) | $ | 4,545,000 | $ | 15,000,000 | — | $ | 4,545,000 | |||||||||||
| 03/03/21 | (2) | — | — | 115,784 | $ | 12,374,994 | ||||||||||||||
| 03/03/21 | (3) | — | — | 9,356 | $ | 999,969 | ||||||||||||||
| 03/18/21 | (4) | — | — | 7,736 | $ | 789,923 | ||||||||||||||
| 12/29/21 | (4) | — | — | 21,886 | $ | 3,554,103 | ||||||||||||||
Thomas Olinger | 01/04/21 | (1) | $ | 1,212,000 | $ | 4,000,000 | — | $ | 1,212,000 | |||||||||||
| 03/03/21 | (2) | — | — | 29,472 | $ | 3,149,967 | ||||||||||||||
| 03/18/21 | (4) | — | — | 2,011 | $ | 205,343 | ||||||||||||||
| 12/29/21 | (4) | — | — | 5,690 | $ | 924,008 | ||||||||||||||
Eugene Reilly | 01/04/21 | (1) | $ | 1,818,000 | $ | 6,000,000 | — | $ | 1,818,000 | |||||||||||
| 03/03/21 | (2) | — | — | 36,489 | $ | 3,899,944 | ||||||||||||||
| 03/18/21 | (4) | — | — | 2,011 | $ | 205,343 | ||||||||||||||
| 12/29/21 | (4) | — | — | 5,690 | $ | 924,008 | ||||||||||||||
Gary Anderson | 01/04/21 | (1) | $ | 1,818,000 | $ | 6,000,000 | — | $ | 1,818,000 | |||||||||||
| 03/03/21 | (2) | — | — | 32,279 | $ | 3,449,980 | ||||||||||||||
| 03/18/21 | (4) | — | — | 2,011 | $ | 205,343 | ||||||||||||||
| 12/29/21 | (4) | — | — | 5,690 | $ | 924,008 | ||||||||||||||
Edward Nekritz | 01/04/21 | (1) | $ | 1,818,000 | $ | 6,000,000 | — | $ | 1,818,000 | |||||||||||
| 03/03/21 | (2) | — | — | 29,472 | $ | 3,149,967 | ||||||||||||||
| 03/18/21 | (4) | — | — | 2,011 | $ | 205,343 | ||||||||||||||
| 12/29/21 | (4) | — | — | 5,690 | $ | 924,008 | ||||||||||||||
| * | Columns (c) through (f), (j) and (k) have been omitted from this table because they are not applicable. Does not include bonus exchanged for equity (valued at 100% of the bonus) paid in 2022 for the 2021 performance year or paid in 2021 for the 2020 performance year. See footnote 3 to the Summary Compensation Tables for fiscal years 2021 and 2022. |
| (1) | Represents the allocation of the estimated POP compensation pool in January 2021 for the 2021-2023 performance period. Since POP rewards only extraordinary performance, there is no Threshold value. Notwithstanding the values of allocations shown in this table, there can be no assurance that the company’s performance at the end of an applicable performance period will result in any payment under POP. The amount in column (h) represents the NEO’s allocation of the maximum pool value for the 2021-2023 Performance Period of $100.0 million. The value in column (l) is the grant-date fair value of the NEO’s allocation based on a valuation of the future compensation pool using a Monte Carlo simulation as of the grant date to estimate a fair value for accounting purposes, estimated at $30.3 million. We used the grant date fair value of the award as an estimate of target value because payments under the award ultimately will be based on performance relative to the MSCI REIT Index over the performance period. Please see discussion regarding POP below. Awards under POP may be paid in either cash or equity (with an additional seven-year cliff vesting requirement on 80% of the applicable award and no additional vesting on 20% of the applicable award). The Compensation Committee has determined that the awards for the 2021-2023 Performance Period will be paid in equity, if at all. POP LTIP Units for the 2021-2023 performance period were issued on December 13, 2021. |
| (2) | Represents the annual long-term equity incentive awards for the performance year ended in 2020 that were granted in 2021. These awards were approved by the Compensation Committee on February 2, 2021, at which time the NEO elected to receive the award in the form of LTIP Units. The LTIP Units were issued on March 3, 2021, and vest ratably over a four-year period. The value in column (l) represents the award in column (i) valued at $106.88 per share, which was the closing price of our common stock on February 2, 2021. This value is used for accounting purposes to expense the grant. Annual long-term equity incentive awards for the performance year ended in 2021 were granted by the Compensation Committee in February 2022 and are not included in this table. See “Compensation Discussion and Analysis.” |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 84 |
| GRANTS OF PLAN-BASED AWARDS |
| (3) | Represents equity compensation contingent on 2020 performance in lieu of 2020 salary and granted in 2021. The Compensation Committee determined that the maximum value of this award ($999,999) would be paid as company performance was greater than target using our corporate score assessed against our annual bonus plan metrics. The LTIP Units were issued on March 3, 2021, and vest ratably over a four-year period. The value in column (l) represents the award in column (i) valued at $106.88 per share, which was the closing price of our common stock on February 2, 2021, the date the Compensation Committee approved the award. This value is used for accounting purposes to expense the grant. |
| (4) | The NEO was awarded a compensation opportunity through participation in PPP. PPP compensation pools were determined in March 2021 and December 2021 after incentive fees, or promotes, were earned and paid to us by six of our co-investment ventures. As a result, the NEOs each earned PPP awards related to these promotes. Mr. Moghadam’s entire award was paid in the form of equity, and the remaining NEOs’ awards were paid in the form of cash (35%) and equity (65%). Mr. Olinger, Mr. Reilly, Mr. Anderson and Mr. Nekritz elected to receive the equity portion of their award in the form of LTIP Units. The LTIP Units were issued in March 2021 and December 2021 and vest ratably over a four-year period. The values of the LTIP Units granted are included in column (l) of this table based on the fair value of $102.11 per share for the March 2021 grant, $162.56 and $161.39 per share for the December 2021 grants which were the closing prices of our common stock on March 18, 2021, December 15, 2021 and December 20, 2021, respectively (the dates the Compensation Committee granted the awards). This value is used for accounting purposes to expense the grant. See “Compensation Discussion and Analysis.” |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 85 |
| DISCUSSION OF SUMMARY COMPENSATION TABLE AND THE GRANTS OF PLAN-BASED AWARDS |
Narrative Discussion to the Summary Compensation Table for Fiscal Year 2021 and the Grants of Plan-Based Awards in Fiscal Year 2021 Table
Equity compensation plans
At our annual meeting on April 29, 2020, our stockholders approved and adopted the Prologis, Inc. 2020 Long-Term Incentive Plan (the “2020 LTIP”). The 2020 LTIP enables our executive officers, employees, directors and consultants to participate in the ownership of the company and allows us to attract and retain our executive officers, other employees and directors, as well as provide incentives to such persons to maximize our company performance.
In addition, we have other equity compensation plans under which equity awards were outstanding as of December 31, 2021:
| · | the Amended and Restated 2002 Stock Option and Incentive Plan and the Third Amended and Restated 1997 Stock Option and Incentive Plan, collectively, the “AMB Plans,” which were both approved by our stockholders; |
| · | the Prologis 2012 Long-Term Incentive Plan (the “2012 LTIP”), which was approved by our stockholders; and |
| · | the ProLogis 2006 Long-Term Incentive Plan, the ProLogis 2000 Share Option Plan for Outside Trustees and the ProLogis 1997 Long-Term Incentive Plan, collectively, the “Trust Plans,” which were assumed by us under the Merger agreement with all outstanding awards converted based on the Merger exchange ratio. The Trust Plans were approved by shareholders of the Trust. |
All future equity awards will be granted from the 2020 LTIP (or its successor plan) and we will no longer grant any awards from the 2012 LTIP, the AMB Plans or the Trust Plans. The available shares of common stock reserved for issuance under the 2012 LTIP, AMB Plans and the Trust Plans as of April 29, 2020, were added to the share reserve of the 2020 LTIP. All outstanding awards under the 2012 LTIP, AMB Plans and the Trust Plans will remain outstanding until they vest, expire or are forfeited by the participant. At December 31, 2021, we had 33.8 million shares reserved or available for issuance under our plans, including 4.6 million shares of common stock to be issued upon vesting of awards previously granted and 23.2 million shares of common stock remaining available for future issuance under our plans.
The 2020 LTIP does not expire but no further awards can be granted under the plan after the tenth anniversary date of the plan’s approval. The 2020 LTIP does not permit re-pricing of stock options without stockholder approval. Participants, including non-employee directors, in the 2020 LTIP may receive stock options, stock appreciation rights and full value awards, including dividend equivalents. Only employees may receive incentive stock options under the 2020 LTIP; however, we have not granted incentive stock options in the past and currently do not intend to grant stock options of any kind.
For further detail, please see “Equity Compensation Plans” below.
Equity award terms
We currently intend to grant LTIP Units and RSUs for annual LTI equity and PPP awards. Restricted stock awards were last granted in 2012, and stock options were last granted in 2011. In addition, we provided certain executives with opportunities to earn awards under POP. Beginning in 2014, we offered to certain executives the option to elect to receive LTIP Units in lieu of RSUs that may be granted to them under our compensation program. The general terms of our equity awards outstanding at December 31, 2021, are as follows:
RSUs
Each RSU is convertible into one share of common stock upon vesting. RSUs granted since the 2018 annual grant cycle vest ratably over a period of four years, such that 25% of the award vests each year of the four-year period. Going forward, we intend to grant RSUs for annual LTI equity awards and PPP awards with four-year vesting periods. RSUs granted in accordance with the 2018 POP amendment will have a seven-year cliff vesting period (i.e., the entire award vests on a specified future date) after the end of the initial three-year performance period. RSUs have no voting rights. Certain awards, such as special grants due to hiring or retention considerations, may have different vesting terms, including cliff
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 86 |
| DISCUSSION OF SUMMARY COMPENSATION TABLE AND THE GRANTS OF PLAN-BASED AWARDS |
vesting terms. Equity received by the NEOs in exchange for their bonus are fully vested upon issuance. Generally, RSUs earn dividend equivalents (either cash or equity) over the vesting period under the same payment terms as dividends paid on our common stock. RSUs are valued based on the closing price of our common stock on the grant date.
LTIP Units
Certain participants in the 2020 LTIP can elect to receive LTIP Units instead of RSUs. LTIP Units have similar terms to RSUs with respect to vesting provisions, voting rights and dividends. LTIP Units are different from POP LTIP Units granted under POP (as discussed below). LTIP Units are structured with the intent that the units will generally be economically equivalent to the RSUs that would be issued for the applicable awards and generally have the same vesting terms as the RSUs that are granted. Under certain conditions, an LTIP Unit is convertible into a common unit and then redeemable for one share of our common stock, or at our option, cash. Among other conditions, LTIP Units cannot be converted until they are vested and a waiting period of two years from the date of issuance is complete. Like RSUs, LTIP Units earn cash distributions equal to the dividend paid on our common stock. After vesting and other conditions are met, LTIP Units remain outstanding until such time as the holder of the LTIP Units elects to convert.
For any equity awards granted starting in 2017, including issuances of LTIP Units, Mr. Moghadam has waived any vesting benefits related to meeting retirement-eligibility thresholds under our incentive plan. Our other NEOs executed a similar waiver applicable to equity awards granted after September 2018. In accordance with a 2020 amendment to such waivers, vesting under such awards will continue after the NEOs terminate employment as long as the NEO performs approved community work or services for the company. The 2020 amendment did not impact the NEOs’ waiver of their retirement-eligibility benefits.
POP
Please see “Compensation Discussion and Analysis” for a discussion of the general structure of POP and how it fits into our overall compensation program.
Under POP, NEOs are allocated a percentage of a potential compensation pool for each performance period (the “POP Allocations”). We made POP Allocations to the NEOs in 2021 for the 2021-2023 performance period, in 2020 for the 2020-2022 performance period and in 2019 for the 2019-2021 performance period and in 2018 for the 2018-2020 performance period.
The POP Allocations are valued using a Monte Carlo simulation as of the grant date. POP Allocations were structured with the intent that the allocations have no economic value to the participants unless and until performance criteria are met and an award is paid for the applicable performance period.
For the 2021-2023 and 2020-2022 performance period,periods, the Compensation Committee made POP Allocations to the NEOs such that 15% of the compensation pool will be paid to Mr. Moghadam, 6% of the compensation pool will be paid to each of Mr. Reilly, Mr. Nekritz,Anderson and Mr. AndersonNekritz and 4% of the compensation pool will be paid to each of Mr. Olinger and Mr. Curless if such awards are earned. For the 2019–2021 and 2018–2020 performance periods, the Compensation Committee made POP Allocations to the NEOs such that 15% of the compensation pool will be paid to Mr. Moghadam and 6% of the compensation pool will be paid to each of the other NEOs if such awards are earned. In allocating the percentage of the compensation pools to the NEOs, the Compensation Committee took into consideration external market data concerning the typical ratio of CEO compensation to that of other NEOs and employees. The Compensation Committee generally allocated a smaller portion of the total compensation pool to the NEOs relative to the other participants than is typical in the outperformance plans of other companies the committee reviewed at the inception of the plan. The compensation pool for each performance period covered approximately 100 participants at the beginning of each performance period.
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Earned POP awards can be paid in either cash or equity. The Compensation Committee has determined that the awards will be paid, if at all, in equity. Earned POP awards cannot be paid unless and until absolute TSR becomes positive. Any earned POP award will expire seven years after the end of the performance period if absolute TSR does not become positive within that period.
POP LTIP Units. Certain members of the executive management team, including the NEOs, elected to exchange their POP Allocations for special LTIP Units (the “POP LTIP Units”) as defined under the operating partnership agreement of Prologis, L.P., as amended and/or restated from time to time.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 87 |
| DISCUSSION OF SUMMARY COMPENSATION TABLE AND THE GRANTS OF PLAN-BASED AWARDS |
The POP LTIP Units are structured with the intent that the units will be comparable economically to the awards under POP. A participant electing to receive the POP LTIP Units will receive the same percentage of the pool as if the participant had not participated in the exchange. Like other forms of awards under the plan, the POP LTIP Units will have no economic value to the participants until and unless the performance criteria are achieved at the end of a performance period and other conditions are met. Once the Compensation Committee determines whether the performance criteria have been met, the POP LTIP Units will be forfeited to the extent not earned based on the terms of POP. To the extent an award is earned, aan NEO will retain the number of POP LTIP Units equal in economic value to the percentage of the performance pool originally allocated to the NEO at the beginning of the applicable performance period. Any POP LTIP Units in excess of such amount will be forfeited. Additional LTIP Units will be issued to true up the original number of POP LTIP units issued for the performance period to the extent such original issuance was insufficient to cover the value of the earned award.
Upon the satisfaction of certain conditions, including achievement of the relevant performance criteria, each POP LTIP Unit may be convertible into a common unit of the operating partnership and then redeemable for one share of our common stock, or cash at our option.
As has become standard tax structuring for profits interests that only vest if performance hurdles are met, the POP LTIP Units are entitled to distributions during the performance period equal to 10% of our common stock dividend. However, contrary to most performance-based programs at other REITs, we are requiring participants to make a significant, non-refundable capital contribution for the POP LTIP Units they receive. This feature is intended to make POP LTIP Units comparable economically to POP Allocations to applicable participants. This structure is designed so that participants receive no additional compensation as a result of the exchange of POP Allocations into POP LTIP Units. This creates downside risk for participants if the performance hurdles are not achieved causing the forfeiture of the capital invested in their POP LTIP Units.
As such, the issuance of POP LTIP Units in exchange for POP Allocations does not affect the compensation amounts for the NEOs in the Summary Compensation Table or in the Grants of Plan-Based Awards Table. The exchange of the POP LTIP Units for POP Allocations does not result in incremental fair value for accounting purposes and does not change the total compensation of the NEOs. As a result, the issuance of the POP LTIP Units in exchange for POP Allocations does not change the presentation of the value of the POP Allocations in the Summary Compensation Table or in the Grants of Plan-Based Awards Table.
As discussed in CD&A,the Compensation Discussion and Analysis, the POP compensation pool only funds if and to the extent our three-year, compound annualized TSR exceeds the three-year compound annualized TSR of the MSCI REIT Index by 100 basis points.
| · | 2016-2018 performance period: This performance period began on January 1, 2016, and ended on December 31, 2018, and included 110 participants at its start. The grant-date fair value of the potential compensation pool on June 3, 2016, the date POP Allocations were awarded, was $26.6 million, determined using a Monte Carlo simulation. Variables used in the simulation under a risk-neutral premise include: (i) expected volatility of our common stock of 23%; (ii) expected volatility of the MSCI REIT Index of 18%; and (iii) correlation between our common stock and the MSCI REIT Index of 89%. The potential compensation pool was capped at $115.0 million, which was 0.5% of our equity market capitalization at December 31, 2015. Awards for the 2016-2018 performance period were determined by the Compensation Committee on January 9, 2019, resulting in pool funding of $115.0 million. Of the total pool, $75.0 million was paid to participants, including the NEOs, in 2019 in the form of equity subject to the holding and vesting requirements as described below. The holdback pool in excess of the $75.0 million is payable in three approximately equal installments after the first, second and third anniversary of the end of the 3-year performance period, respectively, subject to our continued TSR performance at least equal to the MSCI REIT Index. On January 18, 2022, January 15, |
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| · | 2017-2019 performance period: This performance period began on January 1, 2017, and ended on December 31, 2019, and included 112 participants at its start. The grant-date fair value of the potential compensation pool on January 3, 2017, the date POP Allocations were awarded, was $20.4 million, determined using a Monte Carlo simulation. Variables used in the simulation under a risk-neutral premise include: (i) expected volatility of our common stock of 25%; (ii) |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 88 |
| DISCUSSION OF SUMMARY COMPENSATION TABLE AND THE GRANTS OF PLAN-BASED AWARDS |
expected volatility of the MSCI REIT Index of 19%; and (iii) correlation between our common stock and the MSCI REIT Index of 88%. The potential compensation pool was capped at $142.1 million, which was 0.5% of our equity market capitalization at December 31, 2016. Awards for the 2017-2019 performance period were determined by the Compensation Committee on January 15, 2020, resulting in pool funding of $142.1 million. Of the total pool, $75.0 million was paid to participants, including the NEOs, in 2020 in the form of equity subject to subject to the holding and vesting requirements as described below with respect to the NEO awards. The holdback pool in excess of the $75.0 million is payable in three approximately equal installments after the first, second and third anniversary of the end of the 3-year performance period, respectively, subject to our continued TSR performance at least equal to the MSCI REIT Index. On January 18, 2022, and January 15, 2021, the Compensation Committee certified that our performance exceeded the MSCI REIT Index and awarded one-third of the holdback pool to participants including the NEOs. Such awards included a $3.4 million award paid to Mr. Moghadam and $1.3 million awards paid to each of our other NEOs in January 2022 and 2021. The remaining amount will be paid in accordance with the plan as described below. |
| · | 2018-2020 performance period: This performance period began on January 1, 2018, |
| · | 2019-2021 performance period: This performance period began on January 1, 2019, |
| · | 2020-2022 performance period: This performance period began on January 1, 2020, and will end on December 31, 2022, and included 114 participants at its start. The value of the potential compensation pool on January 2, 2020, the date POP Allocations were awarded, was $28.8 million, determined using a Monte Carlo simulation. Variables used in the simulation under a risk-neutral premise include: (i) expected volatility of our common stock of 19%; (ii) expected volatility of the MSCI REIT Index of 13%; and (iii) correlation between our common stock and the MSCI REIT Index of 81%. The potential compensation pool was capped at $100.0 million. As of December 31, |
| · | 2021-2023 performance period: This performance period began on January 1, 2021, and will end on December 31, 2023, and included 111 participants at its start. The value of the potential compensation pool on January 4, 2021, the date POP Allocations were awarded, was $30.3 million, determined using a Monte Carlo simulation. Variables used in the simulation under a risk-neutral premise include: (i) expected volatility of our common stock of 32%; (ii) expected volatility of the MSCI REIT Index of 29%; and (iii) correlation between our common stock and the MSCI REIT Index of 82%. The potential compensation pool was capped at $100.0 million. As of December 31, 2021, the projected value of this compensation pool was $100.0 million. |
In 2018, our NEOs voluntarily elected to apply long-term cliff vesting to 80% of any awards earned for the 2016-2018 and 2017-2019 performance periods. Under their election, 20% of amounts earned under applicable hurdles will be paid at the time applicable hurdles are met. A holding requirement will apply to these amounts until the sixth year after the beginning
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 89 |
| DISCUSSION OF SUMMARY COMPENSATION TABLE AND THE GRANTS OF PLAN-BASED AWARDS |
of the performance period. 80% of amounts earned under applicable hurdles will be subject to cliff vesting until the tenth year after the beginning of the performance period.
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In the case of the 2016-2018 performance period, for example, Mr. Moghadam was paid an initial award of $11.3 million. 20% of the $11.3 million award was paid to him in LTIP units in January 2019. A holding period appliesapplied to this amount until 2022 (the sixth year after the beginning of the performance period). LTIP units comprising 80% of the $11.3 million are subject to cliff vesting until 2026 (ten years after the beginning of the performance period). As we exceeded the MSCI REIT Index threshold at the end of 2019, as well as at the end of 2020 and 2021, Mr. Moghadam was paid 20% of the $2 million holdback award in LTIP units in January 2020, 2021 and 20% of $2 million holdback award in LTIP units in January 20212022, respectively, when the awards were approved by the Compensation Committee. A holding period appliesapplied to these amounts until 2022. LTIP units comprising 80% of the $2 million holdback award paid in January 2020, 2021 and 80% of the $2 million holdback award paid in January 20212022 are subject to cliff vesting until 2026. The same vesting construct will be applied to the $2 million holdback award that can be earned and paid after the end of 2021 if the additional performance hurdle is met, subjecting 80% of such award to cliff vesting until 2026. See discussion of POP in “Compensation Discussion and Analysis” for further details.
PPP Allocations
Please see “Compensation Discussion and Analysis” for a discussion of the general structure of PPP and how it fits into our overall compensation program.
Under PPP, NEOs receive an allocation representing their share of a potential compensation pool (the “PPP Allocations”) that, if funded, will be awarded to the NEO in a percentage of equity with any remainder in cash. The equity portion of the earned award would be paid in RSUs or LTIP Units with a four-year vesting period (or three-year vesting period for awards granted prior to the 2018 annual grant cycle).period. The PPP Allocations have no value unless and until an incentive fee or promote is received and the Compensation Committee grants the applicable PPP award. No awards or values are reported as of the date of the PPP Allocations because it is not possible to determine whether any incentive fees or promotes will be received in future years from a particular venture. For accounting purposes, the cash awards will be expensed when earned and paid to participants and the equity awards are expensed over the vesting period.
For each applicable venture prior to February 2020, the Compensation Committee made PPP Allocations to the NEOs such that 15% of the compensation pool will be paid to Mr. Moghadam and 6% of the compensation pool will be paid to Mr. Olinger, Mr. Reilly, Mr. Nekritz, Mr. Anderson Mr. Olinger and Mr. CurlessNekritz if such awards are earned. Starting in February 2020, to reflect shifting responsibilities, the committee reduced PPP Allocations for Mr. Olinger and Mr. Curless to 4% with respect to the future promotes of certain new ventures. In determining the PPP Allocations to the NEOs, the Compensation Committee utilized a similar rationale as with the POP Allocations discussed above.
PPP compensation pools were funded in 2021, 2020 2019 and 2018.2019. The value of a PPP award earned by aan NEO is reported as compensation in the year the award is paid to the NEO on the date of determination by the Compensation Committee. The cash awards earned by the NEOs in 2021, 2020 2019, and 20182019 under PPP are included as “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table for Fiscal Year 20202021 for the respective year. The equity awards (LTIP Units) are included as “Stock Awards” in the Summary Compensation Table for Fiscal Year 20202021 for the respective year.
Stock options
We discontinued the issuance of stock options prior to the Merger in June 2011. Stock options outstanding are all vested and exercisable. Stock options granted generally vested ratably over a continued service period of three years, however, certain stock options previously granted as a result of the bonus exchange vested over a one-year period (25% per quarter). Stock options were granted with an exercise price equal to the closing price of our common stock on the grant date. The exercise price for any outstanding stock option may not be decreased after the grant date except for reductions approved by our stockholders or if there is an overall adjustment to our outstanding shares, such as an adjustment triggered by a stock split. Stock options expire on the tenth anniversary of the grant date.
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Outstanding Equity Awards at Fiscal Year-End
(DECEMBER 31, 2020)2021)*
| Stock Awards(1) | Stock Awards(1)
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Name (a) | Number of (#) (g) | Market ($) (h) | Equity Incentive (#) (i) | Equity Incentive ($) (j) | Number of Shares or Units of Stock That Have Not Vested (#) (g) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) (h) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested (#) (i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j) | ||||||||||||||||||||||||
Hamid Moghadam |
| 38,276 | (2) | $ | 3,814,586 |
|
| 51,288 | (2) | $ | 8,634,848 |
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| 7,900 | (3) | $ | 1,330,044 |
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| 1,215 | (4) | $ | 204,557 |
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| 8,548 | (3) | $ | 851,894 |
|
| 87,098 | (5) | $ | 14,663,819 |
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| 102,577 | (4) | $ | 10,222,824 |
|
| 21,482 | (6) | $ | 3,616,710 |
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| 15,800 | (5) | $ | 1,574,628 |
|
| 54,898 | (7) | $ | 9,242,627 |
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| 2,430 | (6) | $ | 242,174 |
|
| 106,408 | (8) | $ | 17,914,851 |
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| 130,647 | (7) | $ | 13,020,280 |
|
| 12,667 | (9) | $ | 2,132,616 |
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| 32,223 | (8) | $ | 3,211,344 |
|
| 100,742 | (10) | $ | 16,960,923 |
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| 82,348 | (9) | $ | 8,206,802 |
|
| 125,140 | (11) | $ | 21,068,570 |
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| 141,878 | (10) | $ | 14,139,561 |
|
| 7,736 | (12) | $ | 1,302,433 |
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| 16,890 | (11) | $ | 1,683,257 |
|
| 21,886 | (13) | $ | 3,684,727 |
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| 134,323 | (12) | $ | 13,386,630 |
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| 177,964 | (16) | $ | 29,962,019 |
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| 161,605 | (13) | $ | 16,105,554 |
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| 125,092 | (17) | $ | 21,060,489 |
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| 97,603 | (14) | $ | 9,727,115 |
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| 120,408 | (18) | $ | 20,271,891 |
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| 32,717 | (18) |
| — | (18) |
| 11,722 | (19) |
| — | (19) | |||||||||||||||||||||
| 49,516 | (19) |
| — | (19) |
| 15,154 | (20) |
| — | (20) | |||||||||||||||||||||
| 168,615 | (20) |
| — | (20) |
| 168,350 | (21) |
| — | (21) | |||||||||||||||||||||
| 168,350 | (21) |
| — | (21) |
| 145,264 | (22) |
| — | (22) | |||||||||||||||||||||
| 145,264 | (22) |
| — | (22) |
| 99,866 | (23) |
| — | (23) | |||||||||||||||||||||
Thomas Olinger |
| 4,118 | (3) | $ | 410,400 |
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| 13,055 | (2) | $ | 2,197,940 |
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| 26,110 | (4) | $ | 2,602,123 |
|
| 22,170 | (5) | $ | 3,732,541 |
| |||||||||||||||||||||
| 33,255 | (7) | $ | 3,314,193 |
|
| 5,585 | (6) | $ | 940,291 |
| |||||||||||||||||||||
| 8,378 | (8) | $ | 834,951 |
|
| 14,272 | (7) | $ | 2,402,834 |
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| 21,409 | (9) | $ | 2,133,621 |
|
| 22,674 | (8) | $ | 3,817,395 |
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| 30,232 | (10) | $ | 3,012,921 |
|
| 3,293 | (9) | $ | 554,409 |
| |||||||||||||||||||||
| 4,391 | (11) | $ | 437,607 |
|
| 26,193 | (10) | $ | 4,409,853 |
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| 34,924 | (12) | $ | 3,480,526 |
|
| 29,472 | (11) | $ | 4,961,906 |
| |||||||||||||||||||||
| 64,642 | (13) | $ | 6,442,222 |
|
| 2,011 | (12) | $ | 338,572 |
| |||||||||||||||||||||
| 39,040 | (14) | $ | 3,890,726 |
|
| 5,690 | (13) | $ | 957,968 |
| |||||||||||||||||||||
| 9,951 | (15) | $ | 991,717 |
|
| 2,054 | (14) | $ | 345,811 |
| |||||||||||||||||||||
| 4,108 | (16) | $ | 409,403 |
|
| 316 | (15) | $ | 53,202 |
| |||||||||||||||||||||
| 632 | (17) | $ | 62,985 |
|
| 71,185 | (16) | $ | 11,984,707 |
| |||||||||||||||||||||
| 12,868 | (18) |
| — | (18) |
| 50,035 | (17) | $ | 8,423,893 |
| |||||||||||||||||||||
| 19,807 | (19) |
| — | (19) |
| 48,163 | (18) | $ | 8,108,723 |
| |||||||||||||||||||||
| 67,446 | (20) |
| — | (20) |
| 4,689 | (19) |
| — | (19) | |||||||||||||||||||||
| 67,340 | (21) |
| — | (21) |
| 6,063 | (20) |
| — | (20) | |||||||||||||||||||||
| 38,737 | (22) |
| — | (22) |
| 67,340 | (21) |
| — | (21) | |||||||||||||||||||||
| 38,737 | (22) |
| — | (22) | |||||||||||||||||||||||||||
| 26,631 | (23) |
| — | (23) | |||||||||||||||||||||||||||
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| Stock Awards(1) | ||||||||||||||||
Name (a) | Number of (#) (g) | Market ($) (h) | Equity Incentive (#) (i) | Equity Incentive ($) (j) | ||||||||||||
Eugene Reilly |
| 9,951 | (2) | $ | 991,717 |
| ||||||||||
| 4,336 | (3) | $ | 432,126 |
| |||||||||||
| 32,327 | (4) | $ | 3,221,709 |
| |||||||||||
| 4,108 | (5) | $ | 409,403 |
| |||||||||||
| 632 | (6) | $ | 62,985 |
| |||||||||||
| 41,173 | (7) | $ | 4,103,301 |
| |||||||||||
| 8,378 | (8) | $ | 834,951 |
| |||||||||||
| 21,409 | (9) | $ | 2,133,621 |
| |||||||||||
| 42,431 | (10) | $ | 4,228,673 |
| |||||||||||
| 4,391 | (11) | $ | 437,607 |
| |||||||||||
| 34,924 | (12) | $ | 3,480,526 |
| |||||||||||
| 64,642 | (13) | $ | 6,442,222 |
| |||||||||||
| 39,040 | (14) | $ | 3,890,726 |
| |||||||||||
| 12,868 | (18) |
| — | (18) | |||||||||||
| 19,807 | (19) |
| — | (19) | |||||||||||
| 67,446 | (20) |
| — | (20) | |||||||||||
| 67,340 | (21) |
| — | (21) | |||||||||||
| 58,105 | (22) |
| — | (22) | |||||||||||
Edward Nekritz |
| 9,951 | (2) | $ | 991,717 |
| ||||||||||
| 4,305 | (3) | $ | 429,036 |
| |||||||||||
| 26,110 | (4) | $ | 2,602,123 |
| |||||||||||
| 4,108 | (5) | $ | 409,403 |
| |||||||||||
| 632 | (6) | $ | 62,985 |
| |||||||||||
| 33,255 | (7) | $ | 3,314,193 |
| |||||||||||
| 8,378 | (8) | $ | 834,951 |
| |||||||||||
| 21,409 | (9) | $ | 2,133,621 |
| |||||||||||
| 33,414 | (10) | $ | 3,330,039 |
| |||||||||||
| 4,391 | (11) | $ | 437,607 |
| |||||||||||
| 34,924 | (12) | $ | 3,480,526 |
| |||||||||||
| 64,642 | (13) | $ | 6,442,222 |
| |||||||||||
| 39,040 | (14) | $ | 3,890,726 |
| |||||||||||
| 12,868 | (18) |
| — | (18) | |||||||||||
| 19,807 | (19) |
| — | (19) | |||||||||||
| 67,446 | (20) |
| — | (20) | |||||||||||
| 67,340 | (21) |
| — | (21) | |||||||||||
| 58,105 | (22) |
| — | (22) | |||||||||||
| Stock Awards(1)
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Name (a) | Number of Shares or Units of Stock That Have Not Vested (#) (g) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) (h) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested (#) (i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j) | ||||||||||||
Eugene Reilly |
| 16,163 | (2) | $ | 2,721,203 |
| ||||||||||
| 2,054 | (3) | $ | 345,811 |
| |||||||||||
| 316 | (4) | $ | 53,202 |
| |||||||||||
| 27,448 | (5) | $ | 4,621,145 |
| |||||||||||
| 5,585 | (6) | $ | 940,291 |
| |||||||||||
| 14,272 | (7) | $ | 2,402,834 |
| |||||||||||
| 31,823 | (8) | $ | 5,357,720 |
| |||||||||||
| 3,293 | (9) | $ | 554,409 |
| |||||||||||
| 26,193 | (10) | $ | 4,409,853 |
| |||||||||||
| 36,489 | (11) | $ | 6,143,288 |
| |||||||||||
| 2,011 | (12) | $ | 338,572 |
| |||||||||||
| 5,690 | (13) | $ | 957,968 |
| |||||||||||
| 71,185 | (16) | $ | 11,984,707 |
| |||||||||||
| 50,035 | (17) | $ | 8,423,893 |
| |||||||||||
| 48,163 | (18) | $ | 8,108,723 |
| |||||||||||
| 4,689 | (19) |
| — | (19) | |||||||||||
| 6,063 | (20) |
| — | (20) | |||||||||||
| 67,340 | (21) |
| — | (21) | |||||||||||
| 58,105 | (22) |
| — | (22) | |||||||||||
| 39,946 | (23) |
| — | (23) | |||||||||||
Gary Anderson |
| 13,055 | (2) | $ | 2,197,940 |
| ||||||||||
| 2,054 | (3) | $ | 345,811 |
| |||||||||||
| 316 | (4) | $ | 53,202 |
| |||||||||||
| 22,170 | (5) | $ | 3,732,541 |
| |||||||||||
| 5,585 | (6) | $ | 940,291 |
| |||||||||||
| 14,272 | (7) | $ | 2,402,834 |
| |||||||||||
| 25,060 | (8) | $ | 4,219,102 |
| |||||||||||
| 3,293 | (9) | $ | 554,409 |
| |||||||||||
| 26,193 | (10) | $ | 4,409,853 |
| |||||||||||
| 32,279 | (11) | $ | 5,434,492 |
| |||||||||||
| 2,011 | (12) | $ | 338,572 |
| |||||||||||
| 5,690 | (13) | $ | 957,968 |
| |||||||||||
| 71,185 | (16) | $ | 11,984,707 |
| |||||||||||
| 50,035 | (17) | $ | 8,423,893 |
| |||||||||||
| 48,163 | (18) | $ | 8,108,723 |
| |||||||||||
| 4,689 | (19) |
| — | (19) | |||||||||||
| 6,063 | (20) |
| — | (20) | |||||||||||
| 67,340 | (21) |
| — | (21) | |||||||||||
| 58,105 | (22) |
| — | (22) | |||||||||||
| 39,946 | (23) |
| — | (23) | |||||||||||
|
|
| Stock Awards(1) | ||||||||||||||||
Name (a) | Number of (#) (g) | Market ($) (h) | Equity Incentive (#) (i) | Equity Incentive ($) (j) | ||||||||||||
Gary Anderson |
| 9,951 | (2) | $ | 991,717 |
| ||||||||||
| 4,336 | (3) | $ | 432,126 |
| |||||||||||
| 26,110 | (4) | $ | 2,602,123 |
| |||||||||||
| 4,108 | (5) | $ | 409,403 |
| |||||||||||
| 632 | (6) | $ | 62,985 |
| |||||||||||
| 33,255 | (7) | $ | 3,314,193 |
| |||||||||||
| 8,378 | (8) | $ | 834,951 |
| |||||||||||
| 21,409 | (9) | $ | 2,133,621 |
| |||||||||||
| 33,414 | (10) | $ | 3,330,039 |
| |||||||||||
| 4,391 | (11) | $ | 437,607 |
| |||||||||||
| 34,924 | (12) | $ | 3,480,526 |
| |||||||||||
| 64,642 | (13) | $ | 6,442,222 |
| |||||||||||
| 39,040 | (14) | $ | 3,890,726 |
| |||||||||||
| 12,868 | (18) |
| — | (18) | |||||||||||
| 19,807 | (19) |
| — | (19) | |||||||||||
| 67,446 | (20) |
| — | (20) | |||||||||||
| 67,340 | (21) |
| — | (21) | |||||||||||
| 58,105 | (22) |
| — | (22) | |||||||||||
Michael Curless |
| 9,951 | (2) | $ | 991,717 |
| ||||||||||
| 4,180 | (3) | $ | 416,579 |
| |||||||||||
| 23,624 | (4) | $ | 2,354,368 |
| |||||||||||
| 4,108 | (5) | $ | 409,403 |
| |||||||||||
| 632 | (6) | $ | 62,985 |
| |||||||||||
| 30,088 | (7) | $ | 2,998,570 |
| |||||||||||
| 8,378 | (8) | $ | 834,951 |
| |||||||||||
| 21,409 | (9) | $ | 2,133,621 |
| |||||||||||
| 30,232 | (10) | $ | 3,012,921 |
| |||||||||||
| 4,391 | (11) | $ | 437,607 |
| |||||||||||
| 34,924 | (12) | $ | 3,480,526 |
| |||||||||||
| 64,642 | (13) | $ | 6,442,222 |
| |||||||||||
| 39,040 | (14) | $ | 3,890,726 |
| |||||||||||
| 12,868 | (18) |
| — | (18) | |||||||||||
| 19,807 | (19) |
| — | (19) | |||||||||||
| 67,446 | (20) |
| — | (20) | |||||||||||
| 67,340 | (21) |
| — | (21) | |||||||||||
| 38,737 | (22) |
| — | (22) | |||||||||||
| Stock Awards(1)
| ||||||||||||||||
Name (a) | Number of Shares or Units of Stock That Have Not Vested (#) (g) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) (h) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested (#) (i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j) | ||||||||||||
Edward Nekritz |
| 13,055 | (2) | $ | 2,197,940 |
| ||||||||||
| 2,054 | (3) | $ | 345,811 |
| |||||||||||
| 316 | (4) | $ | 53,202 |
| |||||||||||
| 22,170 | (5) | $ | 3,732,541 |
| |||||||||||
| 5,585 | (6) | $ | 940,291 |
| |||||||||||
| 14,272 | (7) | $ | 2,402,834 |
| |||||||||||
| 25,060 | (8) | $ | 4,219,102 |
| |||||||||||
| 3,293 | (9) | $ | 554,409 |
| |||||||||||
| 26,193 | (10) | $ | 4,409,853 |
| |||||||||||
| 29,472 | (11) | $ | 4,961,906 |
| |||||||||||
| 2,011 | (12) | $ | 338,572 |
| |||||||||||
| 5,690 | (13) | $ | 957,968 |
| |||||||||||
| 71,185 | (16) | $ | 11,984,707 |
| |||||||||||
| 50,035 | (17) | $ | 8,423,893 |
| |||||||||||
| 48,163 | (18) | $ | 8,108,723 |
| |||||||||||
| 4,689 | (19) |
| — | (19) | |||||||||||
| 6,063 | (20) |
| — | (20) | |||||||||||
| 67,340 | (21) |
| — | (21) | |||||||||||
| 58,105 | (22) |
| — | (22) | |||||||||||
| 39,946 | (23) |
| — | (23) | |||||||||||
| * | Columns (b), (c), (d), (e) and (f) have been omitted from this table because they are not applicable. |
| (1) | Dollar amounts are based on the closing price of our common stock on December 31, |
| (2) | LTIP Units: vested on |
| (3) | LTIP Units: |
|
|
| (4) | LTIP Units: |
| (5) | LTIP Units: vested on March 8, 2022 (50%), and will vest |
| (6) | LTIP Units: vested on March 15, 2022 (50%), and will vest |
| (7) | LTIP Units: |
| (8) | LTIP Units: vested on March |
| (9) | LTIP Units: will vest in equal amounts on each |
| (10) | LTIP Units: |
| (11) | LTIP Units: vested on March 3, 2022 (25%), and remainder will vest in equal amounts on each March |
| (12) | LTIP Units: vested on March 18, 2022 (25%), and remainder will vest in equal amounts on each |
| (13) | LTIP Units: will vest in equal amounts on each December 29, 2022, 2023, 2024 and 2025. |
| (14) | RSUs: will vest on June 19, 2022. |
| (15) | RSUs: will vest on December 6, 2022. |
| (16) | LTIP Units: units issued for the 2016-2018 POP Performance Period will vest on January 1, 2026. |
LTIP Units: units issued for the 2017-2019 POP Performance Period will vest on January 1, 2027. |
|
|
|
For the 2016-2018 Performance Period, column (i) represents the number of POP LTIP Units issued to the NEO in exchange for the POP Allocation originally allocated to the NEO approved on June 3, 2016. These units may be earned if applicable performance hurdles are met |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 93 |
| OUTSTANDING EQUITY AWARDS |
| with respect to the holdback award amounts for the 2016-2018 Performance Period. On January 18, 2022, Mr. Moghadam and each other NEO earned 13,018 and 5,207 POP LTIP units, respectively, related to the final holdback tranche. See the narrative discussion of POP LTIP Units that follows the Grants of Plan-Based Awards Table for 2021. |
For the 2017-2019 Performance Period, column (i) represents the number of POP LTIP Units issued to the NEO in exchange for the POP Allocation originally allocated to the NEO approved on January 3, 2017. These units may be earned if applicable performance hurdles are met with respect to the holdback award amounts for the 2017-2019 Performance Period. |
|
| (21) | For the 2019-2021 Performance Period, column (i) represents the number of POP LTIP Units issued to the NEO in exchange for the POP Allocation to the NEO under POP approved on January 2, 2019. No value is presented in column (j) because awards under POP have no threshold value. Actual awards will not be determined or paid until the end of the three-year performance period. As of December 31, |
| (22) | For the 2020-2022 Performance Period, column (i) represents the number of POP LTIP Units issued to the NEO in exchange for the POP Allocation to the NEO under POP approved on January 2, 2020. No value is presented in column (j) because awards under POP have no threshold value. Actual awards will not be determined or paid until the end of the three-year performance period. As of December 31, |
| (23) | For the 2021-2023 Performance Period, column (i) represents the number of POP LTIP Units issued to the NEO in exchange for the POP Allocation to the NEO under POP approved on January 4, 2021. No value is presented in column (j) because awards under POP have no threshold value. Actual awards will not be determined or paid until the end of the three-year performance period. As of December 31, 2021, the projected value of the compensation pool for the 2021-2023 Performance Period was $100.0 million. See the narrative discussion of LTIP Units that follows the Grants of Plan-Based Awards Table for 2021. |
|
|
Option Exercises and Stock Vested in Fiscal Year 2020*2021*
| Stock Awards | Stock Awards
| |||||||||||||||
Name (a) | Number of Shares Acquired on Vesting (#) (d) | Value Realized on Vesting ($) (e) | Number of Shares Acquired on Vesting (#) (d) | Value Realized on Vesting ($) (e) | ||||||||||||
Hamid Moghadam |
| 337,712 | (1)(2) | $ | 29,818,515 | (1)(2) | 317,342 | (1)(2) | $ | 34,684,132 | (1)(2) | |||||
Thomas Olinger |
| 100,337 | (1)(3) | $ | 8,750,662 | (1)(3) | 91,339 | (1)(3) | $ | 9,767,411 | (1)(3) | |||||
Eugene Reilly |
| 114,244 | (1)(4) | $ | 9,990,528 | (1)(4) | 100,356 | (1)(4) | $ | 10,755,203 | (1)(4) | |||||
Gary Anderson | 92,353 | (1)(5) | $ | 9,970,864 | (1)(5) | |||||||||||
Edward Nekritz |
| 102,754 | (1)(5) | $ | 9,023,007 | (1)(5) | 92,322 | (1)(6) | $ | 9,967,846 | (1)(6) | |||||
Gary Anderson |
| 102,816 | (1)(6) | $ | 9,028,332 | (1)(6) | ||||||||||
Michael Curless |
| 95,602 | (1)(7) | $ | 8,423,759 | (1)(7) | ||||||||||
| * | Columns (b) and (c) have been omitted from this table because they are not applicable. |
| (1) | Under certain conditions, an LTIP Unit is convertible into a common unit of the operating partnership which can then be redeemed into one share of our common stock (or cash at our election). Among other conditions, LTIP Units cannot be converted until they are vested and after the completion of a requisite waiting period from the date of issuance. See “Narrative Discussion to the Summary Compensation Table for Fiscal Year |
| (2) | Represents the vesting of LTIP Units as presented below: |
| · | 38,276 units with a value of |
| · |
|
| · |
|
| · |
|
| · |
|
| · |
|
| · |
|
| · | 7,900 units with a value of |
| · |
|
| · |
|
| · |
|
| · |
|
| · |
|
| · | 30,103 units with a value of $2,940,461, issued on December 1, 2018, vested on January 15, 2021. |
| (3) | Represents the vesting of LTIP Units as presented below: |
| · |
|
| · |
|
| · |
|
| · |
|
| · | 7,558 units with a value of $765,550, issued on March 13, 2020, vested on March 13, |
| · | 2,793 units with a value of |
| · |
|
|
|
|
|
Represents the vesting of shares as presented below:
|
| · | 2,054 |
| · | 8,731 units with a value of $1,176,240, issued on September 9, 2020, vested on September 9, 2021; |
| · | 316 |
| · | 7,137 units with a value of $1,150,342, issued on December 19, 2019, vested on December 19, 2021; |
| · | 1,636 units with a value of $159,804, issued on December 9, 2016, vested on January 15, 2021; |
| · | 2,749 units with a value of $268,522, issued on December 11, 2017, vested on January 15, 2021; |
| · | 12,041 units with a value of $1,176,165, issued on December 1, 2018, vested on January 15, 2021. |
| (4) | Represents the vesting of LTIP Units as presented below: |
| · |
|
| · |
|
| · | 20,500 units with a value of $1,996,085, issued on March 7, |
|
|
|
| · | 13,725 units with a value of |
| · |
|
| · | 2,793 units with a value of |
| · |
|
| · | 2,054 units with a value of |
| · |
|
| · | 316 units with a value of |
| · |
|
| · |
|
| · |
|
| · | 12,041 units with a value of $1,176,165, issued on December 1, 2018, vested on January 15, 2021. |
| (5) | Represents the vesting of LTIP Units as presented below: |
| · |
|
| · |
|
| · |
|
| · |
|
| · |
|
| · | 2,793 units with a value of |
| · |
|
| · | 2,054 units with a value of |
| · |
|
| · | 316 units with a value of |
| · |
|
| · |
|
| · |
|
| · | 12,041 units with a value of $1,176,165, issued on December 1, 2018, vested on January 15, 2021. |
| (6) | Represents the vesting of LTIP Units as presented below: |
| · |
|
| · |
|
| · |
|
| · |
|
| · |
|
| · | 2,793 units with a value of |
| · |
|
| · | 2,054 units with a value of |
| · |
|
| · | 316 units with a value of |
| · |
|
| · |
|
| · |
|
|
| · |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONQUALIFIED DEFERRED COMPENSATION |
Nonqualified Deferred Compensation in Fiscal Year 2020*2021*
Name (a) | Plans | Executive Contributions in Last FY ($) (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 | — | $ | 14,421,484 | (1) | — | $ | 112,438,414 | AMB NQ Plans & 2012 NQDC Plan | — | $ | 73,806,777 | (1) | — | $ | 186,245,191 | ||||||||||||||||||||
| Notional Account NQDC Plan(2) | — | $ | 10,475,636 | — | $ | 67,280,296 | Notional Account NQDC Plan(2) | — | $ | 13,291,609 | — | $ | 80,571,905 | |||||||||||||||||||||||
Thomas Olinger | AMB NQ Plans & 2012 NQDC Plan | — | $ | 375,845 | (1) | — | $ | 3,246,000 | AMB NQ Plans & 2012 NQDC Plan | — | $ | 2,077,541 | (1) | — | $ | 5,323,541 | ||||||||||||||||||||
Eugene Reilly | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Gary Anderson | — | — | — | — | ||||||||||||||||||||||||||||||||
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 a lump-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 NEO. Participants in the Notional Account NQDC are credited with the excess in value, if any, of their Notional Earnings Account (representing the initial account credit value plus the cumulative earnings or losses associated with the underlying, hypothetical investments, if any) over the initial account credit value. The amount in column (f) represents the excess of the participant’s notional earnings account value over the initial account credit value as of December 31, |
Narrative Discussion to Nonqualified Deferred Compensation in Fiscal Year 20202021 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 and non-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
|
|
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 20202021 compensation (salary, bonus or 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
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 97 |
| NONQUALIFIED DEFERRED COMPENSATION |
employment, or service as a non-employee director, or in the event of a change in control or death of a participant. With respect to equity awards deferred by non-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 is tax-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 a lump-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 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.
|
|
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.
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 98 |
| NONQUALIFIED DEFERRED COMPENSATION |
Each participant in the AMB NQ Plans who continued to be employed by us after the Merger or continued as a non-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 planthe Notional Account NQDC 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,Notional Account NQDC 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.
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 such 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 such 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 was to 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 Notional Account NQDC Plan, including our common stock or cash. This amendment became effective as of April 2021.
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. WeAt the inception of the Notional Account NQDC Plan, 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 iswas entitled to direct the voting of these shares and, as such, they arewere reflected as beneficially owned by him in the stock ownership table presented below.him. Mr. Moghadam iswas not entitled to receive these shares upon distribution of his notional earnings account under the plan.Notional Account NQDC Plan. Upon a distribution event under the plan,Notional Account NQDC Plan, Mr. Moghadam iswas 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. Upon the April 2021 amendment to the Notional Account NQDC Plan, Mr. Moghadam’s notional stock account was valued per the amendment and the account value was invested in an investment measurement fund available under such plan. As a result, Mr. Moghadam is no longer entitled to direct the voting of the 803,945 shares of our common stock in the Notional Account NQDC Plan’s rabbi trust.
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.
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.
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Investment funds and returns for 20202021
The participants in our nonqualified deferred compensation plans can elect measurement funds that are generally 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.Plan. These investment funds are shown below with the returns earned by these investment funds in 2020:2021:
Vanguard Treasury M/M Fund | 0.47% | American Funds Growth Fund of AM R6 | 38.28% | 0.01% | American Funds Growth Fund of AM R6 | 19.69% | ||||||||||||||
American Funds Washington Mutual R6 | 8.08% | Fidelity 500 Index Fund | 18.40% | 28.90% | Fidelity 500 Index Fund | 28.69% | ||||||||||||||
Vanguard Growth Index Fund Inst. | 40.20% | Fidelity Mid Cap Index Fund | 17.11% | 27.27% | Fidelity Mid Cap Index Fund | 22.56% | ||||||||||||||
American Beacon Small Cap Value | 4.03% | Vanguard Target Retirement 2015 | 10.32% | 28.21% | Vanguard Target Retirement 2015 | 5.78% | ||||||||||||||
Vanguard Target Retirement 2020 | 12.04% | Vanguard Target Retirement 2025 | 13.30% | 8.17% | Vanguard Target Retirement 2025 | 9.80% | ||||||||||||||
Vanguard Target Retirement 2030 | 14.10% | Vanguard Target Retirement 2035 | 14.79% | 11.38% | Vanguard Target Retirement 2035 | 12.96% | ||||||||||||||
Vanguard Target Retirement 2040 | 15.47% | Vanguard Target Retirement 2045 | 16.30% | 14.56% | Vanguard Target Retirement 2045 | 16.16% | ||||||||||||||
Vanguard Target Retirement 2050 | 16.39% | Vanguard Target Retirement 2055 | 16.32% | 16.41% | Vanguard Target Retirement 2055 | 16.44% | ||||||||||||||
Vanguard Target Retirement 2060 | 16.32% | Vanguard Target Retirement 2065 | 16.17% | 16.44% | Vanguard Target Retirement 2065 | 16.46% | ||||||||||||||
Vanguard Small Cap Growth Index | 35.31% | Artisan International Inst. | 7.82% | 5.70% | Artisan International Inst. | 9.25% | ||||||||||||||
Fidelity Total International Index Fund | 11.07% | Invesco Global Real Estate Fund R5 | -12.14% | 8.47% | Invesco Global Real Estate Fund R5 | 25.76% | ||||||||||||||
Vanguard Balanced Index Fund Inst. | 16.41% | Vanguard Target Retirement Inc | 10.02% | 14.20% | Vanguard Target Retirement Inc | 5.25% | ||||||||||||||
Vanguard Total International Bond Index Fund Admiral | -2.22% | Vanguard Total World Stock Index Fund | 18.23% | |||||||||||||||||
Fidelity ST Bond Index Fund | 4.68% | Fidelity US Bond Index Fund | 7.80% | -1.12% | Fidelity US Bond Index Fund | -1.79% | ||||||||||||||
Metropolitan High Yield Bond | 11.77% | PIMCO Real Return Inst. | 12.09% | 3.62% | PIMCO Real Return Inst. | 5.67% | ||||||||||||||
Vanguard ST Bond Index Admiral | 4.54% |
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Prologis Stock | 72.33% |
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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 automatic one-year extensions. Some form of benefits (cash payments and/or acceleration of vesting of unvested equity awards) are provided to our 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)defined in the CIC Agreements).
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 isterms are 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 and non-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 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 least two-thirds of the directors still in office at the time of such election or nomination who were directors at the beginning of such period).
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, 2020.2021. The acceleration of vesting of unvested equity awards benefit is estimated using the closing stock price of our common stock on December 31, 20202021, of $99.66$168.36 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, 2020,2021, 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 20202021 performance year. Therefore, these payments are not considered to be severance benefits and such amounts are not included in the amounts presented.
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Name of Executive/Type of Benefit | Death | Disability | After Change in Control: Termination without Cause or Voluntary Termination for Good Reason(1) | Death | Disability | After Change in Control: Termination without Cause or Voluntary Termination for Good Reason(1) | ||||||||||||||||||
Hamid Moghadam |
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Cash severance (salary and bonus)(2) | $ | 1,500,000 | — | $ | 5,000,000 | $ | 1,500,000 | — | $ | 5,000,000 | ||||||||||||||
Health and welfare benefits(3) | — | — | $ | 70,989 | — | — | $ | 58,335 | ||||||||||||||||
280G adjustment(4) | — | — | — | — | — | — | ||||||||||||||||||
Equity awards (vesting accelerated)(5)(6)(7) | $ | 136,180,350 | $ | 136,180,350 | $ | 136,180,350 | $ | 207,761,625 | $ | 207,761,625 | $ | 207,761,625 | ||||||||||||
Total Estimated Value | $ | 137,680,350 | $ | 136,180,350 | $ | 141,251,339 | $ | 209,261,625 | $ | 207,761,625 | $ | 212,819,960 | ||||||||||||
Thomas Olinger |
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Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | $ | 350,000 | — | $ | 2,700,000 | ||||||||||||||
Health and welfare benefits(3) | — | — | $ | 105,189 | — | — | $ | 100,298 | ||||||||||||||||
280G adjustment(4) | — | — | — | — | — | — | ||||||||||||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 43,354,209 | $ | 43,354,209 | $ | 43,354,209 | $ | 65,514,244 | $ | 65,514,244 | $ | 65,514,244 | ||||||||||||
Total Estimated Value | $ | 43,704,209 | $ | 43,354,209 | $ | 46,159,398 | $ | 65,864,244 | $ | 65,514,244 | $ | 68,314,542 | ||||||||||||
Eugene Reilly |
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Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | $ | 750,000 | — | $ | 3,500,000 | ||||||||||||||
Health and welfare benefits(3) | — | — | $ | 90,200 | — | — | $ | 84,335 | ||||||||||||||||
280G adjustment(4) | — | — | — | — | — | — | ||||||||||||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 46,667,048 | $ | 46,667,048 | $ | 46,667,048 | $ | 71,647,819 | $ | 71,647,819 | $ | 71,647,819 | ||||||||||||
Total Estimated Value | $ | 47,017,048 | $ | 46,667,048 | $ | 49,457,248 | $ | 72,397,819 | $ | 71,647,819 | $ | 75,232,154 | ||||||||||||
Edward Nekritz |
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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 |
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Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | $ | 527,500 | — | $ | 3,055,000 | ||||||||||||||
Health and welfare benefits(3) | — | — | $ | 105,189 | — | — | $ | 100,298 | ||||||||||||||||
280G adjustment(4) | — | — | — | — | — | — | ||||||||||||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 44,359,719 | $ | 44,359,719 | $ | 44,359,719 | $ | 68,388,538 | $ | 68,388,538 | $ | 68,388,538 | ||||||||||||
Total Estimated Value | $ | 44,709,719 | $ | 44,359,719 | $ | 47,164,908 | $ | 68,916,038 | $ | 68,388,538 | $ | 71,543,836 | ||||||||||||
Michael Curless |
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Edward Nekritz |
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Cash severance (salary and bonus)(2) | $ | 350,000 | — | $ | 2,700,000 | $ | 495,000 | — | $ | 2,990,000 | ||||||||||||||
Health and welfare benefits(3) | — | — | $ | 113,376 | — | — | $ | 100,298 | ||||||||||||||||
280G adjustment(4) | — | — | — | — | — | — | ||||||||||||||||||
Equity awards (vesting accelerated)(5)(6) | $ | 42,797,010 | $ | 42,797,010 | $ | 42,797,010 | $ | 67,915,951 | $ | 67,915,951 | $ | 67,915,951 | ||||||||||||
Total Estimated Value | $ | 43,147,010 | $ | 42,797,010 | $ | 45,610,386 | $ | 68,410,951 | $ | 67,915,951 | $ | 71,006,249 | ||||||||||||
| (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 |
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| 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 |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 102 |
| POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL |
| of salary) as of December 31, |
| (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 net after-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 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, 2017-2019 performance period, 2018-2020 performance period, 2019-2021 performance period, 2020-2022 performance period and |
As of December 31, |
As of December 31, |
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As of December 31, |
As of December 31, 2021, the value of the aggregate compensation pool for the 2019-2021 performance period is $100.0 million. Awards for the 2019-2021 performance period were determined by the Compensation Committee on January 18, 2022. The portion of that award that vested immediately in January 2022 is excluded from the death, disability and change in control amounts (as the participant would have |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 | 103 |
| POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL |
| been paid this portion regardless of death, disability or a change in control). The portion of the award that is subject to cliff vesting that would accelerate upon termination are included in the death, disability and change in control amounts. |
Under the change in control scenario, the Compensation Committee would determine the size of the compensation pool and pay awards according to the applicable POP agreements. |
| (6) | Any applicable retirement benefit with respect to equity compensation has been waived by our NEOs. Therefore, no acceleration benefit is reported for a retirement scenario except as stated below with respect to Mr. Moghadam. |
| (7) | Mr. Moghadam had |
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| CEO |
We provide fair and equitable compensation to our employees through a combination of competitive base pay, incentives, retirement plans and other benefits. As required by Section 953(b) of the Dodd-Frank Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO, Mr. Moghadam:
For 2020,2021, our last completed fiscal year:
| · | the annual total compensation of the employee identified at the median of our company as of December 31, |
| · | the annual total compensation of our CEO, as reported in the Summary Compensation Table included in this Proxy Statement, was |
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 330218 to 1.
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:
| · | We identified our median compensated employee as of December 31, |
| · | To identify the median employee, we calculated compensation of our employees using their |
| · | As of December 31, |
| · | We did not exclude any employees from our employee population. We excluded a limited number of temporary agency employees, whose compensation is determined by the agency and who are not considered our employees for purposes of the pay ratio calculation. |
| · | We annualized the base pay and cash incentive bonus for |
| · | Foreign salaries were converted to U.S. dollars at the December 31, |
| · | No cost of living adjustments were utilized in the compensation calculation. |
| · | Once the median employee was identified, we calculated the total compensation for our median employee for |
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PROPOSAL 2
Advisory Vote to Approve the Company’s Executive Compensation for 2020 (Proposal 2)2021
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&ACompensation Discussion and Analysis for additional details about our executive compensation programs, including information about the compensation of our NEOs for 2020.2021.
This proposal, commonly known as a “say-on-pay”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 20202021 executive compensation, as discussed and disclosed in the company’s proxy statement for the 20212022 annual meeting of stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Executive Compensation Tables and related narratives.”
You may vote for, vote against or abstain from voting to approve the above resolution on the company’s executive compensation for 2020.2021. Assuming a quorum is present, to be approved by the stockholders, the number of votes cast “For” the proposal must receiveexceed the affirmative votenumber of a majority ofsuch votes cast “Against” the shares of common stock having voting power present in person or by proxy at the annual meeting.proposal. Abstentions and broker non-votes, are considered voting power present in person or by proxy and thusif any, will have no effect on the same effect as votes cast “Against”outcome of the vote on this proposal.
As an advisory vote, this proposal is not binding on the company. However, the Compensation Committee values the opinions of our stockholders and reviews and considers the voting results when making executive compensation decisions. The company currently intends to hold an advisory vote on its executive compensation on an annual basis.
The Board unanimously recommends that the stockholders vote, on an advisory basis, FOR the approval of our 20202021 executive compensation, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission.
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Director Compensation
| Director Compensation | ||
| Nonqualified Deferred Compensation Plans for Directors | ||
| 2012 NQDC Plan and AMB NQ Plans | ||
| Notional Account NQDC Plan | ||
| ProLogis Deferred Fee Plan for Trustees | ||
| Director Compensation for Fiscal Year | ||
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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 April 2020, FW Cook2021, Pay Governance conducted a competitive review of our non-employee director compensation to ensure that our compensation levels are competitive, and the structure of the program is consistent with corporate governance best practices. This analysis used the same comparison group ofcompared our non-employee director compensation to a general industry companiesgroup (1) and to a REIT group composed of the 11 largest publicly traded REITS in the United States.(2) This analysis was conducted prior to our refinement of the peer group that is used to evaluate executive compensation and arethat is listed above under “Compensation Discussion and Analysis.”
FW Cook’sPay Governance’s review found that (i) our non-employee director compensation is just above the 75th percentile of the comparison group and (ii) the mix between the cash and equity components of our non-employee director compensation (39% in cash and 61% in equity) was consistent with median competitive practice.
The Compensation Committee recommended no increases to director compensation. The recommendations were approved by the full Board.
Compensation applicable to service on the Board by our non-employee directors for 20202021 (starting in July 2020)2021) was as follows:
| · | Annual cash retainer: $120,000 |
| · | Annual equity awards: Valued on the grant date at $190,000 |
| – | In the form of deferred share units (“DSUs”), each convertible into one share of our common stock, that will vest upon the earlier of one year from the grant date or the date of the next annual meeting. After vesting, receipt of the underlying common stock is deferred until at least three years from the grant date. The DSUs earn dividend equivalent units (“DEUs”) while they are outstanding. |
| · | Lead independent director retainer: $50,000 |
| · | Annual retainer for serving as chair of a committee: |
| – | Audit: $30,000 |
| – | Compensation: $25,000 |
| – | Governance: $20,000 |
| – | Executive: None |
| · | Excess meeting fee: Meeting fee of $1,500 for each meeting attended in excess of a combined 20 Board and committee meetings per year. |
The equity component of the compensation paid to our directors is awarded under the terms of the 2020 LTIP. See the narrative discussion that follows the Grants of Plan-Based Awards for Fiscal Year 20202021 table above under “Executive Compensation.” In addition, we reimburse our directors for reasonable travel costs incurred to attend the meetings of the Board and its committees.
| (1) | The general industry group is comprised of Advanced Micro Devices, Inc., Altria Group, Inc., Anthem, Inc., Bank Of New York Mellon, Becton Dickinson, Blackrock, Inc., Booking Holdings, Inc., Capital One Financial, CIGNA Corporation, Crown Castle International Corp., CSX Corporation, Dominion Energy, Inc., Equinix, Inc., Estée Lauder Companies, Exelon Corporation, FedEx Corporation, Fidelity National Information, Fiserv, Inc., HCA Healthcare, Inc., Intuit, Inc., Intuitive Surgical, Inc., Mondelez International, Inc., PNC Financial Services Group, S&P Global, Inc., ServiceNow, Inc., Stryker Corporation, Target Corporation, TJX Companies, Inc., Truist Financial Corporation and Zoetis, Inc. |
| (2) | The REIT group is comprised of 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. |
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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 2020.2021. The compensation earned by these directors has been converted into phantom shares in a hypothetical fee deferral account, under the terms of the 2012 NQDC Plan. The footnotes to the Director Compensation for Fiscal Year 20202021 table below contain information on the amount of deferrals applicable to these directors.
In 2012, Mr. Fotiades deferred his annual cash retainer into a cash account under the 2012 NQDC Plan. As of December 31, 2020,2021, Mr. Fotiades’ balance in the cash account under the 2012 NQDC Plan was $292,515,$357,460, including a gain in 20202021 of $68,651.$64,945.
See discussion of our deferred compensation plans in the narrative that follows the Nonqualified Deferred Compensation in Fiscal Year 20202021 table above under “Executive Compensation.”
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 theyshe 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 theirher retirement from the Board, Mr. Losh and Ms. Kennard areis entitled to the excess, if any, of the value in theirher 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 theirher initial account credit value.
The initial account credit values for Mr. Losh and Ms. Kennard were $469,558 and $98,047, respectively.was $98,047. As of December 31, 2020,2021, the value of the notional earnings account exceeded the initial credit value for Ms. Kennard by $99,377,$130,513, including an increase attributable to 20202021 of $38,215. Mr. Losh was fully paid out in the third quarter of 2020. His payout was $743,746 and included a decrease attributable to 2020 of $33,825.$31,136.
See discussion of our deferred compensation plans in the narrative that follows the Nonqualified Deferred Compensation in Fiscal Year 20202021 table above under “Executive Compensation.”
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ProLogis Deferred Fee Plan for Trustees
This plan, which was assumed by us in the Merger, allowed members of the Trust’s board to receive their fees currently or elect to defer the receipt of their fees until after their board service ended. Deferrals were in the form of cash or Trust common shares. For those choosing shares, fees earned were credited to hypothetical fee deferral accounts based on the closing price of the common shares as of the date of the deferral. Under the Merger agreement, the Trust common shares in the deferral account were converted to our common stock using the Merger exchange ratio. Each share in the hypothetical account represents one share of our common stock and earns dividends under the same terms as dividends paid on our common stock. Upon retirement from the Board, the participant will be issued the shares of common stock included in their hypothetical fee deferral account pursuant to specific deferral elections, which generally delay payment until the next fiscal year after service on the Board ends. No additional deferrals could be made under this plan after December 31, 2011.
Mr. Fotiades participated in this plan at the time of the Merger. As of December 31, 2020,2021, including amounts earned as dividends, Mr. Fotiades had a balance of 25,14525,651 shares in his hypothetical fee deferral account.
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Director Compensation for Fiscal Year 2020*2021*
Name (a) | Fees Earned or Paid in Cash(1) ($) (b) | Stock Awards ($) (c) | All Other Compensation ($) (g) | Total(1) ($) (h) | Fees Earned or Paid in Cash(1) ($) (b) | Stock Awards ($) (c) | All Other Compensation ($) (g) | Total(1) ($) (h) | ||||||||||||||||||||||||
Cristina Bita | $120,000 | (2) | $189,967 | (3) | — | (4) | $309,967 | $120,000 | (2) | $189,985 | (3) | $4,500 | (4) | $314,485 | ||||||||||||||||||
George Fotiades | $145,000 | (2) | $189,967 | (3) | $12,500 | (4) | $347,467 | $145,000 | (2) | $189,985 | (3) | $12,000 | (4) | $346,985 | ||||||||||||||||||
Philip Hawkins | $4,615 | — | (3) | — | (4) | $4,615 | ||||||||||||||||||||||||||
Lydia Kennard | $120,000 | $189,967 | (3) | $12,500 | (4) | $322,467 | $120,000 | $189,985 | (3) | $12,500 | (4) | $322,485 | ||||||||||||||||||||
J. Michael Losh | $47,191 | — | (3) | $12,500 | (4) | $59,691 | ||||||||||||||||||||||||||
Irving Lyons III | $170,000 | $189,967 | (3) | $12,500 | (4) | $372,467 | $170,000 | $189,985 | (3) | $12,500 | (4) | $372,485 | ||||||||||||||||||||
Avid Modjtabai | $103,384 | $189,967 | (3) | — | (4) | $293,351 | $120,000 | $189,985 | (3) | $5,000 | (4) | $314,985 | ||||||||||||||||||||
David O’Connor | $120,000 | $189,967 | (3) | $12,500 | (4) | $322,467 | $120,000 | $189,985 | (3) | $12,500 | (4) | $322,485 | ||||||||||||||||||||
Olivier Piani | $120,000 | $189,967 | (3) | — | (4) | $309,967 | $120,000 | $189,985 | (3) | — | (4) | $309,985 | ||||||||||||||||||||
Jeffrey Skelton | $140,000 | $189,967 | (3) | $12,500 | (4) | $342,467 | $140,000 | $189,985 | (3) | $12,500 | (4) | $342,485 | ||||||||||||||||||||
Carl Webb | $142,500 | (2) | $189,967 | (3) | $12,500 | (4) | $344,967 | $150,000 | (2) | $189,985 | (3) | $12,500 | (4) | $352,485 | ||||||||||||||||||
William Zollars | $120,000 | $189,967 | (3) | $12,500 | (4) | $322,467 | $120,000 | $189,985 | (3) | $5,000 | (4) | $314,985 | ||||||||||||||||||||
| * | Columns (d), (e) and (f) have been omitted from this table because they are not applicable. |
| (1) | The compensation structure for the Board is described in the narrative discussion that precedes this table. Mr. Moghadam is an employee of the company and does not receive additional compensation associated with his service on the Board. |
| (2) | Directors may elect to defer their compensation under the 2012 NQDC Plan. Under this plan, the cash compensation is converted into phantom shares that are held in a hypothetical fee deferral account under the terms of the 2012 NQDC Plan. As of December 31, |
· Ms. Bita: |
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· Mr. Fotiades (2013 to 2016): |
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· Mr. Webb: (2013 to |
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Based on their individual elections, each of the directors’ phantom shares will be distributed to them upon termination of service on the Board. See the discussion above and also the narrative discussion that follows the Nonqualified Deferred Compensation in Fiscal Year |
| (3) | Represents the grant date fair value of |
We awarded DSUs under similar terms to our directors in |
Prior to the Merger, we granted restricted stock to our directors, and the Trust granted DSUs to members of its board. The restricted stock had a one-year vesting period and directors could elect to defer the awards after vesting under the AMB NQ Plans discussed above. The DSUs granted by the Trust were immediately vested but were required to be deferred until after the director’s service ended. The DSUs held by those trustees who joined our Board after the Merger were assumed by us under the Merger agreement, were converted based on the Merger exchange ratio, and continue to be deferred. These DSUs earn DEUs while they are outstanding. |
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DSUs and associated accrued DEUs outstanding as of December 31, |
· Ms. Bita: |
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· Mr. Fotiades: |
Receipt of all shares deferred until service on the Board ends, except | |
· Ms. Kennard: |
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· Ms. Modjtabai |
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· Mr. Lyons: |
Receipt of all remaining shares deferred until service on the Board ends | |
· Mr. O’Connor: |
Receipt of all shares deferred until service on the Board ends | |
· Mr. Piani: |
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· Mr. Skelton: |
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· Mr. Webb: |
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· Mr. Zollars: |
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| (4) | The Prologis Foundation will match the amount of charitable contributions to qualifying organizations made by our directors and all of our employees. Amounts reported represent charitable contributions of our charitable foundation that were paid directly to outside organizations to match qualifying contributions made by the director. The annual maximum amount of matching contributions in one year applicable to our directors is $12,500. Matching contributions in a particular year that are not used may be carried over to the subsequent year. |
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The number of shares of our common stock beneficially owned, as of the dates indicated in the footnotes below, by each person known to us to be the beneficial owner of more than five percent, in the aggregate, of our outstanding common stock as of the dates 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 | 93,088,245 | 12.60% | 95,857,871 | 12.96% | ||||||||||||
BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10022 | 76,214,355 | 10.3% | 77,044,162 | 10.4% | ||||||||||||
State Street Corporation(4) State Street Financial Center One Lincoln Street Boston, MA 02111 | 41,816,183 | 5.66% | 47,020,804 | 6.36% | ||||||||||||
| (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”) is included herein based on a Schedule 13G/A filed with the SEC on February 10, |
| (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 beneficial ownership of our common stock by entities related to State Street Corporation is included herein based on a Schedule 13G filed with the SEC on February |
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The following table shows the number of shares of our common stock beneficially owned, as of March 8, 2021,7, 2022, by: (i) our CEO; (ii) our chief financial officer; (iii) our other NEOs; (iv) each of our directors; and (v) our directors and all of our executive officers as a group.
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Name(1) | 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) | 3,257,223 | 855,508 | 4,112,731 | 0.56 | % | 0.54 | % | |||||||||||||
Thomas Olinger(11) | 46,010 | 447,287 | 493,297 | * | * | |||||||||||||||
Eugene Reilly(12) | 2,811 | 333,546 | 336,357 | * | * | |||||||||||||||
Edward Nekritz | 1,799 | 611,923 | 613,722 | * | * | |||||||||||||||
Gary Anderson | 1,881 | 193,373 | 195,254 | * | * | |||||||||||||||
Michael Curless | — | 390,203 | 390,203 | * | * | |||||||||||||||
Directors: | ||||||||||||||||||||
Cristina Bita | — | 3,158 | 3,158 | |||||||||||||||||
George Fotiades | 22,710 | — | 22,710 | * | * | |||||||||||||||
Lydia Kennard | 39,597 | 3,158 | 42,755 | * | * | |||||||||||||||
Irving Lyons III(13) | 91,816 | — | 91,816 | * | * | |||||||||||||||
Avid Modjtabai | — | — | — | |||||||||||||||||
David O’Connor | 4,035 | — | 4,035 | * | * | |||||||||||||||
Olivier Piani | 2,334 | 3,158 | 5,492 | |||||||||||||||||
Jeffrey Skelton | 51,364 | 3,158 | 54,522 | * | * | |||||||||||||||
Carl Webb | 78,529 | 3,158 | 81,687 | * | * | |||||||||||||||
William Zollars | 17,115 | 3,158 | 20,273 | * | * | |||||||||||||||
All directors and executive officers as a group (17 total) | 3,617,224 | 2,850,788 | 6,468,012 | 0.87 | % | 0.85 | % | |||||||||||||
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We currently grant equity awards only under the 2020 LTIP. However, we do have awards outstanding that were granted under the 2012 LTIP, AMB Plans and the Trust Plans. The available shares of common stock under the 2012 LTIP, AMB Plans and the Trust Plans as of April 29, 2020, the date our stockholders approved the 2020 LTIP, were added to the share reserve of the 2020 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 2020 LTIP does not expire but no further awards can be granted under the plan after the tenth anniversary date of the plan approval. Information about our equity compensation plans as of December 31, 2020 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) | |||||||||
Equity compensation plans approved by security holders(1)(2) | 4,060,266 | $33.05 | 23,532,099 | |||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
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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 public accountant. The committee is comprised of the four 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 public accountant 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. 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, 2020 and unaudited financial statements for the quarterly periods ended March 31, June 30 and September 30, 2020 with management and KPMG LLP, the company’s independent public 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 the 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 of non-audit services to us and our affiliates, as pre-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 on Form 10-K for 2020. The foregoing report is provided by the following independent directors, who constitute the committee.
Audit Committee:
Carl B. Webb (Chair)
Cristina G. Bita
Shares Beneficially Owned
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Name(1) | Number of of Common Stock as of March 7, 2022(2) | Number of Shares of Common Stock That May Be Acquired by May 6, 2022 (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) | 2,133,278 | 937,417 | 3,070,695 | 0.41 | % | 0.41 | % | |||||||||||||
Thomas Olinger(11) | 42,204 | 471,182 | 513,386 | * | * | |||||||||||||||
Eugene Reilly(12) | 2,811 | 237,217 | 240,028 | * | * | |||||||||||||||
Gary Anderson | 1,917 | 88,975 | 90,892 | * | * | |||||||||||||||
Edward Nekritz | 1,834 | 587,952 | 589,786 | * | * | |||||||||||||||
Directors: | ||||||||||||||||||||
Cristina Bita | 3,176 | 2,609 | 5,785 | |||||||||||||||||
George Fotiades | 22,710 | — | 22,710 | * | * | |||||||||||||||
Lydia Kennard | 32,773 | 2,609 | 35,382 | * | * | |||||||||||||||
Irving Lyons III(13) | 67,816 | — | 67,816 | * | * | |||||||||||||||
Avid Modjtabai | — | — | — | |||||||||||||||||
David O’Connor | 4,035 | — | 4,035 | * | * | |||||||||||||||
Olivier Piani | 4,557 | 2,609 | 7,166 | |||||||||||||||||
Jeffrey Skelton | 54,540 | 2,609 | 57,149 | * | * | |||||||||||||||
Carl Webb | 81,705 | 2,609 | 84,314 | * | * | |||||||||||||||
William Zollars | 16,956 | 2,609 | 19,565 | * | * | |||||||||||||||
All directors and executive officers as a group (16 total)(14) | 2,470,312 | 2,733,881 | 5,204,193 | 0.70 | % | 0.68 | % | |||||||||||||
| * | 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 6, 2022. 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 6, 2022. |
| (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 2021 table above under “Executive Compensation.” |
| (3) | This column includes shares of our common stock that may be acquired within 60 days of March 7, 2022, through (i) scheduled vesting of restricted stock or restricted stock units, or payment of DSUs and associated accrued DEUs upon distribution and (ii) the exchange of limited partnership units beneficially owned directly or indirectly. Unvested and unearned awards granted under our employee stock plans that do not vest, or are not earned, by May 6, 2022, or vested awards that do not have a scheduled payment date by May 6, 2022, are not included. Vested LTIP Units earned under our employee stock plans that have not been held for the minimum holding period and cannot be converted to common partnership units by May 6, 2022, are not included. Unless indicated otherwise, all interests are owned directly and the indicated person will have sole voting and dispositive power upon receipt. |
PROLOGIS PROXY STATEMENT | MARCH 25, 2022 |
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