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SECURITIES AND EXCHANGE COMMISSION
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the Securities
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EASTGROUP PROPERTIES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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190 East Capitol Street,400 W. Parkway Place, Suite 400100
Jackson,
Ridgeland, Mississippi
3920139157
NOTICE OF
20172021 ANNUAL MEETING OF SHAREHOLDERS
The
20172021 Annual Meeting of Shareholders
(the “Meeting”) of EastGroup Properties, Inc. (the “Company”) will be held on Thursday, May
11, 201727, 2021 at 9:00 a.m., Central Daylight Time,
atin a virtual meeting format. To log on to the
Company’s offices, 190 East Capitol Street, Suite 400, Jackson, Mississippi.Meeting, visit www.virtualshareholdermeeting.com/EGP2021 and enter the unique 16-digit control number included on your Notice of Internet Availability of Proxy Materials, voting instruction form, or proxy card (if you received a printed copy of the proxy materials). Shareholders will be able to vote electronically and submit questions electronically during the Meeting. At the Meeting, shareholders will be asked to:
| 1.
| Elect nine directorsthe eight director nominees named in this proxy statement for a one-year term to serve until the next Annual Meetingannual meeting of Shareholdersshareholders and until their successors are duly elected and qualified; |
2.
| 2. | Cast an advisory vote to ratifyRatify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the 2017 fiscal year;year ending December 31, 2021; |
3.
| 3. | Cast anApprove by a non-binding, advisory vote on executive compensation;the compensation of our Named Executive Officers as described in this proxy statement; |
4.
| 4. | Cast an advisory vote onApprove the frequencyamendment and restatement of future advisory votes on executive compensation;our charter and our bylaws to allow our bylaws to be amended by a majority of stockholder votes; and |
| 5.
| Transact such other business as may properly presented atcome before the Meeting or any adjournment or postponement thereof. |
All shareholders of record at the close of business on March
17, 201726, 2021 are entitled to notice of and to vote at the Meeting or any adjournment thereof.
We are pleased to take advantage of the Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their shareholders electronically. We believe these rules allow us to provide our shareholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of the Meeting.
| | | By Order of the Board of Directors |
| | | |
| |  |
| | | N. Keith McKey |
| | Brent W. Wood
Executive Vice President, Chief
Financial Officer Treasurer and Secretary |
| | |
DATED: | March 31, 2017 | Treasurer |
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Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to be Held on May 27, 2021.
This proxy statement and our 2020 Annual Report to Shareholders are
available at www.proxyvote.com
Whether or not you plan to attend the 2021 Annual Meeting of Shareholders, please carefully read the proxy statement and other proxy materials and complete a proxy for your shares as soon as possible. You may authorize your proxy via the Internet or by telephone by following the instructions on the website indicated in the materials you received in the mail. If you received a Notice of Availability of Proxy Materials, you may also request a paper or an e-mail copy of our proxy materials and a paper proxy card at any time. If you receive a copy of the proxy card by mail, you may sign, date and mail the proxy card in the postage-paid envelope provided. If you attend the Meeting, you may vote via the virtual platform during the Meeting if you wish, even if you previously have submitted your proxy. However, please note that if your shares are held of record by a bank, broker or similar organization and you wish to vote via the virtual platform during the Meeting, you must obtain a “legal proxy” issued in your name from such bank, broker or similar organization.
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Every shareholder’s vote is important. Please complete, sign, date, and return your proxy card,
or authorize your proxy by phone or via the Internet.
Every shareholder’s vote is important. Please complete, sign, date, and return your proxy form, or authorize your proxy by phone or via the Internet. |
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i
The following information is furnished in connection with the
2021 Annual Meeting of Shareholders (the “Meeting”) of EastGroup Properties, Inc. (the “Company”), to be held on May
11, 201727, 2021 at 9:00 a.m., Central Daylight Time,
at the Company’s offices, 190 East Capitol Street, Suite 400, Jackson, Mississippi.in a virtual meeting format. This
Proxy Statement,proxy statement and 2020 Annual Report
on Form 10-K, and Form of Proxyto shareholders are first being made available, and a Notice Regarding the Availability of Proxy Materials is first being mailed, to shareholders on or about
March 31, 2017.April 12, 2021.
ABOUT THE
20172021 ANNUAL MEETING
What is the purpose of the Meeting?
At the Meeting, shareholders will be asked to elect
nine directors of the
Company, cast an advisory vote toeight director nominees named in this proxy statement for a one-year term, ratify the appointment of KPMG LLP
(“KPMG”) as the Company’s independent registered public accounting firm for the
2017 fiscal year
cast anending December 31, 2021, approve by a non-binding, advisory vote
on executivethe compensation
of our Named Executive Officers (as defined below) and
cast an advisory vote onapprove the
frequencyamendment and restatement of
future advisory votes on executive compensation.our articles of incorporation, as amended (our “Charter”) and our amended and restated bylaws (our “Bylaws”) to allow our Bylaws to be amended by a majority of stockholder votes. In addition, management will report on the performance of the Company and respond to questions from
shareholders.shareholders at management’s discretion.
All shareholders of record as of the close of business on Friday, March
17, 201726, 2021 (the “Record
Date��Date”) are entitled to vote at the Meeting. As of the Record Date,
33,896,52240,021,537 shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”)
, were issued and outstanding. Each share of Common Stock outstanding on the Record Date is entitled to one vote on each item submitted to
youshareholders for consideration.
Why didn’t I automatically receive a paper copy of the
Proxy Statement, Proxy Cardproxy statement, proxy card and Annual Report?
The Securities and Exchange Commission (“SEC”) rules allow us to furnish proxy materials to our shareholders electronically. In an effort to lower the costs of delivery of proxy materials, as well as to reduce our use of paper, we have elected to take advantage of these rules by only mailing materials to those shareholders who specifically request a paper copy. On or around
March 31, 2017,April 12, 2021, all shareholders were mailed a Notice Regarding the Availability of Proxy Materials that
containedcontains an overview of the proxy materials and
explainedexplains several methods by which shareholders
couldcan view the proxy materials online or request to receive a copy of proxy materials via regular mail or email. There is NO charge for requesting a
copy.copy of the proxy materials.
How can I get electronic access to the proxy materials?
The Notice Regarding the Availability of Proxy Materials includes a website address that will:
| ● | Provide you with instructions on how to view our proxy materials on the Internet; and |
| ● | Enable you to notify us to send future proxy materials to you by email. |
Provide you with instructions on how to view our proxy materials on the Internet; and
Enable you to notify us to send future proxy materials to you by email.
Choosing to receive future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.
Can I find additional information on the Company’s website?
Yes. Our website is located at www.eastgroup.net. Although the information contained on our website is not part of this proxy statement, you can view additional information on the website, such as our Code of Ethics and Business Conduct, Corporate Governance Guidelines, charters of committees of our Board of Directors (the “Board”) and
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reports that we file with the SEC. A copy of our Code of Ethics and Business Conduct, Corporate Governance Guidelines and each of the charters of our Board committees may be obtained free of charge by writing to EastGroup Properties, Inc.,
190 East Capitol Street,400 W. Parkway Place, Suite
400, Jackson,100, Ridgeland, Mississippi
39201,39157, Attention: Investor Relations.
Voting
in Person atDuring the
Virtual Meeting
. If you are a shareholder“registered owner” or “record holder” (i.e., you hold your shares in your own name as a holder of record andwith our transfer agent, EQ Shareowner Services), you may attend the annual meeting, you mayMeeting virtually and vote in person at the meeting. If your shares during the Meeting. If you are a “beneficial owner” because your bank, broker or similar organization is the holder of Common Stockyour shares (i.e., your shares are held in street name“street name”) and you wish to vote in person atduring the meeting,Meeting, you will need to obtain a “legal proxy” from the bank, broker bank or other nomineesimilar organization that holds your shares of Common Stock of record. If you attend the Meeting and you submit your vote during the Meeting, any previous votes that you submitted by mail or authorized via the Internet or by telephone will be superseded by the vote that you cast during the Meeting. Further instructions for voting during the Meeting can be obtained by calling us at (601) 354-3555.
Voting by Proxy for Shares Registered Directly in the Name of the Shareholder
. If you hold your shares of Common Stock in your own name as a holder of record with our transfer agent, Wells FargoEQ Shareowner Services, you may also instruct the proxy holders named in the proxy card how to vote your shares of Common Stock in one of the following ways: | ● | Vote online. You can access proxy materials and vote at www.proxyvote.com. To vote online, you must have a shareholder identification number provided in the Notice Regarding the Availability of Proxy Materials. |
| ● | Vote by telephone. If you received printed materials, you also have the option to vote by telephone by following the “Vote by Phone” instructions on the proxy card. |
| ● | Vote by regular mail. If you received printed materials and would like to vote by mail, then please mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. |
Vote online. You can access proxy materials and vote at www.proxyvote.com. To vote online, you must have a shareholder identification number, which is provided in the Notice Regarding the Availability of Proxy Materials.
Vote by telephone. If you received printed materials, you also have the option to vote by telephone by following the “Vote by Phone” instructions on the proxy card.
Vote by regular mail. If you received printed materials and would like to vote by mail, then please mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided.
Voting by Proxy for Shares Registered in Street Name.
If your shares of Common Stock are held in street name, you will receive instructions from your bank, broker bank or other nomineesimilar organization that you must follow in order to have your shares voted.Regardless of how you choose to vote, your vote is important to us and we encourage you to vote promptly.
What happens if I return my proxy card without voting on all proposals?
When you return a properly executed proxy card, the
Companyproxy holders named in the proxy card, Marshall A. Loeb and Brent W. Wood, will vote the shares that the proxy card represents in accordance with your directions. If you return the signed proxy card with no direction on a proposal, the
Companyproxy holders will vote your proxy FOR
each of the Board’s
eight director nominees
for director,named in this proxy statement, FOR the ratification of the independent registered public accounting firm
for the fiscal year ending December 31, 2021, FOR the approval,
on an advisory basis, of the compensation of our
executive compensationNamed Executive Officers as disclosed in this proxy statement, and
in favorFOR the approval of
an advisory vote on executive compensation every ONE year.the amendment and restatement of our Charter and our Bylaws to allow our Bylaws to be amended by a majority of stockholder votes.
Will there be any other items of business on the agenda?
Pursuant to the Company’s Bylaws and SEC rules, shareholder proposals must have been received by February
25, 201720, 2021 to be considered at the Meeting. To date, we have received no shareholder proposals and we do not expect any other items of business. Nonetheless, in case there is an unforeseen need, your proxy gives discretionary authority to Marshall A. Loeb and
N. Keith McKeyBrent W. Wood with respect to any other matters that might be
properly brought before the Meeting. Those persons intend to vote that proxy in accordance with their best judgment.
How many votes are needed to hold the Meeting?
In order to conduct the Meeting, the presence, in person at the virtual Meeting or by properly executed proxy, of the holders of shares of Common Stock entitled to cast a majority (i.e., greater than 50%) of all the votes entitled to be cast at the Meeting, is necessary to constitute a quorum. Shares of Common Stock represented by a properly signed, dated and returned proxy card, or proxies submitted by telephone or online, including abstentions and broker non-votes, will be treated as present at the Meeting for purposes of determining a quorum.
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How many votes are needed to approve each proposal?
Proposal 1 concerns the election of
nine directors of the
Company.eight director nominees named in this proxy statement for a one-year term. The votes cast “For” a nominee must exceed the votes cast “Against” the nominee for the nominee to be elected. Neither abstentions nor broker non-votes will have any legal effect on whether this proposal is
approved.approved as they do not count as votes cast for such matter. If a nominee fails to receive more “For” votes than votes cast “Against” and is an incumbent director, the nominee is required to tender a resignation to the Nominating and Corporate Governance Committee of the Board
of Directors for consideration.
If the resignation is not accepted, the nominee will continue to serve as director until the next annual meeting and until the director’s successor is duly elected and qualified or until the director’s earlier resignation or removal.
Proposal 2 concerns
a non-binding advisory vote to ratifyratification of the appointment of KPMG
LLP as the Company’s independent registered public accounting firm for the
2017 fiscal
year.year ending December 31, 2021. This proposal will be approved if the votes cast “For” the proposal exceed the votes cast “Against” the proposal. Neither abstentions nor broker non-votes will have any legal effect on whether this proposal is approved.
TheEven though the vote is advisory and non-binding, the Audit Committee
of the Board will consider a vote against the firm by the shareholders in selecting
ourthe Company’s independent registered public accounting firm in the future.
Proposal 3 concerns
approval by a non-binding, advisory vote
to approveof the compensation
forof the Named
Executive Officers disclosed in the section of this
Proxy Statementproxy statement entitled “Compensation of Executive Officers.” For the
non-binding, advisory vote to be approved, the votes cast “For” the proposal must exceed the votes cast “Against” this proposal. Neither abstentions nor broker non-votes will have any legal effect on whether this proposal is approved.
Proposal 4 concerns
a non-binding advisory vote on whetherapproval of the
shareholder advisory voteamendment and restatement of the Company’s Charter and Bylaws to
approve executive compensation, like that presented in Proposal 3, will occur every one, two or three years. The shareholder vote described in Proposal 4 shallallow the Bylaws to be
determinedamended by
the stockholders representing a majority of
all votes entitled to be cast on the matter. This proposal will be approved if the holders of not less than eighty percent (80%) of all the votes
cast.entitled to be cast on this proposal vote “For” the proposal. Neither abstentions nor broker non-votes will have any legal effect on whether this proposal is approved.
In the event that no option receives a majority of the votes cast, we will consider the option that receives the most votes to be the option selected by shareholders. In either case, this vote is advisory and non-binding on the Board and the Company and the Board may determine that it is in the best interests of the Company to hold an advisory vote on executive compensation more or less frequently than the option recommended by our shareholders.Can I change my vote after I have voted?
Yes. You can revoke your proxy and change your vote at any time before the polls close at the Meeting. You can do this by:
| ● | filing with the Secretary of the Company a written revocation or signing and submitting another proxy with a later date; or |
| ● | attending the Meeting, withdrawing the proxy and voting in person. |
filing with the Secretary of the Company a written revocation;
signing and submitting another proxy with a later date; or
attending the Meeting, withdrawing the proxy and voting during the Meeting.
How do I submit a proposal for the
20182022 Annual Meeting?
If a shareholder wishes to have a proposal considered for inclusion in the Company’s proxy statement for the
20182022 Annual Meeting of Shareholders, the shareholder must submit the proposal in writing to the Secretary of the Company at
190 East Capitol Street,400 W. Parkway Place, Suite
400, Jackson,100, Ridgeland, Mississippi
3920139157 so that the Company receives the proposal by December
1, 2017.13, 2021.
If the proposal is not intended to be included in the Company’s proxy statement, a qualified shareholder intending to introduce a proposal or nominate a director at the
20182022 Annual Meeting of Shareholders should give written notice to the Company’s Secretary not later than February
10, 201826, 2022 and not earlier than January
11, 201827, 2022 (although these dates may be adjusted in the event that the date of the
20182022 Annual Meeting of Shareholders is more than 30 days before or more than 60 days after the anniversary date of the
2017 Annual Meeting of Shareholders)Meeting).
Shareholders also are advised to review the Company’s Bylaws, which contain additional advance notice requirements, including requirements with respect to advance notice of shareholder proposals and director nominations.
Will anyone contact me regarding this vote?
No arrangements or contracts have been made with any solicitors as of the date of this Proxy Statement,proxy statement, although we reserve the right to engage solicitors if we deem them necessary. Such solicitations may be made by mail, telephone, facsimile, email or other electronic means or personal interviews. In addition, we reserve the right to solicit
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proxies through our directors, officers and employees (who will receive no additional compensation for those services). We anticipate that banks, brokerage houses and other institutions, nominees or fiduciaries will be requested to forward the soliciting material to their principals and to obtain authorization for the execution of proxies. The Company may, upon request, reimburse banks, brokerage houses and other institutions, nominees and fiduciaries for their expenses in forwarding proxy material to their principals.
Who has paid for this proxy solicitation?
The Company has paid the entire expense of this proxy statement and any additional materials furnished to shareholders.
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CORPORATE GOVERNANCE AND BOARD MATTERS
Director
Nominees Qualifications and Biographical Information
(1)
| Excludes Marshall A. Loeb, our CEO |
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The biography of each director nominee below contains information regarding that person’s principal occupation, tenure with the Company, business experience, other director positions currently held or held at any time during the past five years, and the specific experience, qualifications, attributes or skills that led to the conclusion by the Board of Directors that such person should serve as a director of the Company.
D. Pike Aloian
Age: 66
Gender: Male
Independent
Director Since: 1999
Committees:
Audit,
Nominating and
Corporate Governance | | | |
| | Select Business Experience: |
| | | | | • | | | Managing Director of Neuberger Berman, a New York-based investment management firm |
| | | | | • | | | Partner of Almanac Realty Investors, LLC (“Almanac”) and its predecessor entities through January 31, 2020, when the firm was acquired by Neuberger Berman |
| | | | | • | | | Serves as a member of the Almanac Investment Committee |
| | | | | | | | |
| | Key Experience/Director Qualifications: |
| | | | | • | | | Financial and investment experience, knowledge of capital markets and experience on other public and private company boards |
| | | | | • | | | Plays senior role in the on-going management of the Almanac business, including the origination, structuring and management of Almanac’s capital investments to public and private real estate companies |
| | | | | • | | | Graduated from Harvard College and received an MBA from Columbia University Graduate School of Business, where he also served as an adjunct professor |
H. Eric Bolton, Jr.
Age: 64
Gender: Male
Independent
Lead Director Since: 2017
Director Since: 2013
Committees:
Audit,
Compensation | | | |
| | Select Business Experience: |
| | | | | • | | | Chief Executive Officer of Mid-America Apartment Communities, Inc. (“MAA”) (NYSE: MAA), a real estate investment trust (“REIT”) that owns and operates apartment communities, since October 2001 and Chairman of the Board of Directors of MAA since September 2002 |
| | | | | • | | | Joined MAA in 1994 as Vice President of Development and was named Chief Operating Officer in February 1996 and promoted to President in December 1996; prior to that time, he was Executive Vice President and Chief Financial Officer of Trammell Crow Realty Advisors |
| | | | | • | | | Served on the Board of Directors of Interstate Hotels and Resorts, Inc. from 2008 to 2010 |
| | | | | | | | |
| | Key Experience/Director Qualifications: |
| | | | | • | | | Brings extensive business and real estate operating experience to the Board |
| | | | | • | | | Serves on the National Association of Real Estate Investment Trusts (“Nareit”) Advisory Board of Governors |
| | | | | | • | | | Received a BBA in Accounting from the University of Memphis and an MBA with a concentration in Finance and Real Estate from the University of North Texas |
D. Pike Aloian, age 62 − Mr. Aloian has served as a director of the Company since 1999. His financial and investment experience, knowledge of capital markets and experience on other public and private company boards prepare him to give the Board his views on real estate investment markets and financial matters. He is a partner of Almanac Realty Investors, LLC (formerly known as Rothschild Realty Managers, LLC), a real estate advisory and investment management firm based in New York that specializes in providing growth capital to public and private real estate companies. At Almanac, Mr. Aloian is responsible for originating investment opportunities, negotiating and structuring transactions, and monitoring the investments over their respective lives. Mr. Aloian served on the Board of Directors of Brandywine Realty Trust from 1999 to 2012 and was most recently a member of its Audit, Corporate Governance and Executive Committees. He graduated from Harvard College and received an MBA from Columbia University.
H.C. Bailey, Jr., age 77 − Mr. Bailey has served as a director of the Company since 1980. He provides valuable insight to the Board with respect to the historical and future direction of the Company based on his many years of experience on the Board together with his decades of experience in the real estate, finance and real estate development areas. He is Chairman and President of H.C. Bailey Company and its affiliated companies and has been employed in various capacities with that company since 1962. The companies’ primary areas of activity have been in real estate investments, development, property management, mortgage banking, financial institutions, lumber and supply company, and general insurance. The companies presently own or have previously owned and/or operated office buildings, hotels, shopping centers, and commercial and residential developments. He is a graduate of the University of Mississippi with a BA degree and a graduate of the School of Mortgage Banking, Northwestern University, Chicago, Illinois, in cooperation with the Mortgage Bankers Association of America.
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Donald F. Colleran
Age: 65
Gender: Male
Independent
Director Since: 2017
Committees:
Compensation,
Nominating and
Corporate Governance | | | |
| | Select Business Experience: |
| | | | | • | | | President and Chief Executive Officer of FedEx Express and also serves on the Strategic Management Committee of FedEx Corporation (“FedEx”), which sets the strategic direction for FedEx |
| | | | | • | | | Joined FedEx in 1989, where he has served in a variety of leadership roles including Executive Vice President, Chief Sales Officer of FedEx from 2016 to 2019 and Executive Vice President, Global Sales of FedEx Services from 2006 to 2016 |
| | | | | | | | |
| | Key Experience/Director Qualifications: |
| | | | | • | | | Leadership positions provide broad experience and allow him to provide valuable insight to the Company and the Board regarding operational and strategic issues |
| | | | | • | | | Serves on the Board of Directors of ABM Industries, since 2018 |
| | | | | • | | | Received a BBA from the University of New Hampshire |
Hayden C. Eaves III
Age: 75
Gender: Male
Independent
Director Since: 2002
Committees:
Compensation,
Nominating and
Corporate Governance | | | |
| | Select Business Experience: |
| | | | | • | | | President of Hayden Holdings, Inc., a family investment management company, and an advisor to IDS Real Estate Group, where he served as a Managing Director until 2006 |
| | | | | • | | | President and Chief Executive Officer of the Western Region of Trammell Crow Company until 1995, where he was responsible for 52 million square feet of industrial, office and retail space in California, Oregon, Washington, Arizona and Nevada |
| | | | | | | | |
| | Key Experience/Director Qualifications: |
| | | | | • | | | Leadership and extensive experience in the real estate, real estate development and real estate operations business, particularly in the California and Arizona real estate markets, are valuable to the Board |
| | | | | • | | | Serves on the Board of Directors of Watson Land Company, a private developer, owner, and manager of industrial properties located in Southern California and Lehigh Valley, Pennsylvania |
| | | | | • | | | Received a BS in Accounting from California State University of Los Angeles |
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H. Eric Bolton, Jr., age 60 − Mr. Bolton was appointed a director of the Company in 2013. He brings extensive business and real estate operating experience to the Board. Mr. Bolton has been David H. Hoster II
Age: 75
Gender: Male
Director Since: 1993
Chairman of the
Board Since: 2016 | | | |
| | Select Business Experience: |
| | | | | • | | | Chief Executive Officer of Mid-America Apartment Communities, Inc. (“MAA”) since October 2001 and Chairman of the Board of Directors of MAA since September 2002. He joined MAA in 1994 as Vice President of Development and was named Chief Operating Officer in February 1996 and promoted to President in December 1996. Prior to that time, he was Executive Vice President and Chief Financial Officer of Trammell Crow Realty Advisors. Mr. Bolton served on the Board of Directors of Interstate Hotels and Resorts, Inc. from 2008 to 2010. He currently serves on the National Association of Real Estate Investment Trusts (“NAREIT”) Advisory Board of Governors. He received a BBA in Accounting from the University of Memphis and an MBA with a concentration in Finance and Real Estate from the University of North Texas.Hayden C. Eaves III, age 71 − Mr. Eaves has served as a director of the Company since 2002. Mr. Eaves’ leadership and experience in the real estate, real estate development and real estate operations business, particularly in the California and Arizona real estate markets, are valuable to the Board. Mr. Eaves has more than 47 years of experience in the real estate industry. He was President and Chief Executive Officer of the Western Region of Trammell Crow Company until 1995, where he was responsible for 52 million square feet of industrial, office and retail space in California, Oregon, Washington, Arizona and Nevada. He is currently President of Hayden Holdings, Inc., a family investment management company and an advisor to IDS Real Estate Group where he served as a Managing Director until 2006. He is also on the Board of Directors of Watson Land Company, a private developer, owner, and manager of industrial properties located in Southern California. Mr. Eaves received a BS in Accounting from California State University of Los Angeles.
Fredric H. Gould, age 81 − Mr. Gould has served as a director of the Company since 1998. He has extensive experience in commercial real estate lending and operations, including as the chief executive of a public real estate company, and he provides the Board with perspective on financial, operational and strategic matters. Mr. Gould is a member of the Board of Directors of BRT Realty Trust and Vice-Chairman of One Liberty Properties, Inc. He is also the Chairman of the General Partner of Gould Investors L.P., a limited partnership engaged in real estate ownership. He previously served on the NAREIT Board of Governors as well as the Board of Directors of the Real Estate Board of New York where he was also a member of its Finance Committee. Mr. Gould received a BBA from Lehigh University and an LLB, cum laude, from New York Law School.
David H. Hoster II, age 71 − Mr. Hoster is Chairman of the Board of Directors, a position he has held since January 2016. Previously, he was the Chief Executive Officer of the Company from 1997 to December 2015. He has served as a director since 1993 and was President of the Company from 1993 to March 2015. His leadership experience and Company and industry knowledge, including 40 years involvement with publicly held REITs and extensive experience with industrial real estate provide valuable insight to the Board of Directors in formulating and executing the Company’s strategy. Mr. Hoster previously served on the NAREIT Board of Governors and he served on the Board of Directors of Trustmark National Bank and Trustmark Corporation until April 2016. He received a BA degree with honors from Princeton University and an MBA from Stanford University Graduate School of Business.
Marshall A. Loeb, age 54 − Mr. Loeb has served as the Company from 1997 to December 2015 and President of the Company from 1993 to March 2015
|
| | | | | • | | | Leadership experience and knowledge of the Company and the industry in which we operate, including over 40 years’ involvement with publicly held REITs |
| | | | | | | | |
| | Key Experience/Director Qualifications: |
| | | | | • | | | Extensive experience with industrial real estate provides valuable insight to the Board in formulating and executing the Company’s strategy |
| | | | | • | | | Served on the Board of Directors of Trustmark National Bank and Trustmark Corporation until April 2016 and on the Nareit Board of Governors |
| | | | | • | | | Received a BA degree with honors from Princeton University and a MBA from Stanford University Graduate School of Business |
Marshall A. Loeb
Age: 58
Gender: Male
Director Since: 2016 | | | |
| | Select Business Experience: |
| | | | | • | | | President of the Company since March 2015 and Chief Executive Officer and a director of the Company since January 2016 |
| | | | | • | | | Rejoined the Company as President and Chief Operating Officer in March 2015 from Glimcher Realty Trust (“Glimcher”), a retail REIT that owns, develops and manages shopping centers in the United States |
| | | | | • | | | He served as President and Chief Operating Officer of Glimcher from 2005 to 2015 until it was acquired by Washington Prime Group Inc. |
| | | | | • | | | Chief Financial Officer of Parkway Properties, Inc. from 2000 to 2005 |
| | | | | • | | | Previously employed by the Company from 1991 to 2000, beginning as an asset manager and rising to senior vice president after having a variety of responsibilities with the Company |
| | | | | | | | |
| | Key Experience/Director Qualifications: |
| | | | | • | | | 30 years of experience with publicly held REITs and brings real estate industry, finance, operations, development, and executive leadership expertise to the Board |
| | | | | • | | | Serves on the Board of Directors of Lamar Advertising Company (Nasdaq: LAMR), one of the largest outdoor advertising companies in the world specializing in billboard, interstate logo, transit and airport advertising formats |
| | | | | • | | | Received a BS in Accounting and a Master of Tax Accounting degree from the University of Alabama, then earned a MBA from the Harvard Graduate School of Business |
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Mary E. McCormick
Age: 63
Gender: Female
Independent
Director Since: 2005
Committees:
Audit,
Nominating and
Corporate Governance | | | |
| | Select Business Experience: |
| | | | | • | | | Executive Director of the Center for Real Estate at The Ohio State University where she is also a Senior Lecturer at the Fisher College of Business |
| | | | | • | | | Served the Ohio Public Employees Retirement System from 1989 through 2005, where she was responsible for directing real estate investments and overseeing an internally managed REIT portfolio |
| | | | | • | | | Served on the boards of multiple public and private real estate companies and as a Senior Advisor for Almanac Realty Partners from 2010 to 2016 |
| | | | | | | | |
| | Key Experience/Director Qualifications: |
| | | | | • | | | Extensive experience in real estate, capital markets, and corporate governance and brings that expertise to Board discussions |
| | | | | • | | | Held a number of leadership positions for a variety of national and regional real estate associations, including Chair of the Pension Real Estate Association |
| | | | | • | | | Serves on the Board of Directors of Xenia Hotels and Resorts, Inc. (NYSE: XHR), a lodging REIT, since 2015, and previously served on the Board of Directors of MAA from 2006 to 2010 |
| | | | | • | | | Member of the Urban Land Institute, NAIOP, Inc., Commercial Real Estate Development Association, and the Pension Real Estate Association |
| | | | | | • | | | Received a Bachelor’s degree and an MBA from The Ohio State University |
Katherine M. Sandstrom
Age: 52
Gender: Female
Independent
Director Since: 2020
Committees:
Audit | |
| | Select Business Experience: |
| | | | | • | | | Served as Senior Managing Director at Heitman LLC (“Heitman”), a real estate investment management firm, as an Advisor from July 2018 to March 2019 and Senior Managing Director and global head of Heitman’s Public Real Estate Securities business from 2013 to 2018 |
| | | | | • | | | Joined Heitman in 1996 and held several senior leadership positions across multiple facets of the institutional real estate investment industry. Additionally, Ms. Sandstrom previously served on Heitman’s Global Management Committee, the Board of Managers and the Allocation Committee |
| | | |
| | Key Experience/Director Qualifications: |
| | | | | • | | | Brings valuable business, financial and investment expertise to the Board |
| | | | | • | | | Serves on the Board of Directors of Healthpeak Properties, Inc. (NYSE: PEAK), a REIT serving the healthcare industry, since 2018 |
| | | | | | • | | | Received a Bachelor of Arts in Accounting from the University of West Florida, and she is a certified public accountant |
Our Bylaws provide that the number of directors will be initially as provided in our Charter, and subsequently as determined by the Board. H.C. Bailey, Jr.'s term expires at the Meeting, and he has not been nominated by the Board to stand for reelection, and Leland R. Speed, the Chairman Emeritus of the Board and a director of the Company,
sincepassed away in January
2016. He rejoined the Company as President and Chief Operating Officer in March 2015 from Glimcher Realty Trust, where he served as President and Chief Operating Officer from 2005 to 2015. From 2000 to 2005, he served as Chief Financial Officer of Parkway Properties, Inc. Mr. Loeb, who was with the Company from 1991 to 2000, began with the Company as an asset manager and rose to senior vice president after having a variety of responsibilities with the Company. Mr. Loeb has more than 25 years of experience with publicly held REITS and brings real estate industry, finance, operations, development, and executive leadership expertise to2021. Accordingly, the Board
of Directors. He received a BS in Accounting and a Master of Tax Accounting degree fromhas adopted resolutions reducing the
University of Alabama, then earned an MBA from the Harvard Graduate School of Business.Mary E. McCormick, age 59 − Ms. McCormick has served on the Board since 2005. Ms. McCormick has extensive experience in real estate, capital markets, and corporate governance and brings that expertise to Board discussions. She served the Ohio Public Employees System from 1989 through 2005, where she was responsible for directing real estate investments and overseeing an internally managed REIT portfolio. In recent years, she has served on the boards of multiple public and private real estate companies and as a Senior Advisor for Almanac Realty Partners. Ms. McCormick has held a number of leadership positions for a variety of national and regional real estate associations, including Chair of the Pension Real Estate Association. Ms. McCormick teaches real estate at the Fisher College of Business, The Ohio State University. She has served on the Board of Directors of Xenia Hotels and Resorts, a lodging REIT, since 2015 and Mid-America Apartment Communities from 2006 to 2010. Ms. McCormick is a member of the Urban Land Institute and the National Association of Corporate Directors. She has a Bachelor’s degree and an MBA from The Ohio State University.
Leland R. Speed, age 84 − Mr. Speed is Chairman Emeritussize of the Board of Directors, a positon he has held since January 2016. He served asfrom ten (10) to eight (8) members, effective at the Chairmanconclusion of the BoardMeeting and the expiration of the Company from 1983 to December 2015 andMr. Bailey's term as a director since 1978. He brings extensive knowledge of the Company, experience in commercial real estate and real estate development as well as his current experience as an active member of public and charitable boards. He served as Chief Executive Officer of the Company and Parkway Properties, Inc. until 1997, as Chairman of the Board of Parkway from 1980 until 2011 and as Chairman Emeritus of Parkway until 2012. From 2004 to 2006 and from March 2011 to January 2012, Mr. Speed served as the Executive Director of the Mississippi Development Authority, the State of Mississippi’s lead economic development agency. He has served in various capacities at NAREIT, including the Board of Governors and was the recipient of the 2008 Industry Leadership Award. He received his BS in Industrial Management from Georgia Institute of Technology and an MBA from the Harvard Graduate School of Business.director.
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Under the New York Stock Exchange (“NYSE”) listing standards, at least a majority of the Company’s directors and all of the members of the Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee must meet the test of “independence” as defined by the NYSE. The NYSE standards provide that, to qualify as an “independent” director, in addition to satisfying certain bright-line criteria, the Board
of Directors must affirmatively determine that a director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company) that would interfere with such person’s ability to exercise independent judgment as a member of the Company’s Board.
Our Board currently has nine members: D. Pike Aloian, H.C. Bailey, Jr., H. Eric Bolton, Jr.,
Donald F. Colleran, Hayden C. Eaves III,
Fredric H. Gould, David H. Hoster II, Marshall A. Loeb, Mary E. McCormick and
Leland R. Speed.Katherine M. Sandstrom. The Board
of Directors has determined that each director who served during the fiscal year ended December 31,
20162020 was, and each current director continues to be, independent other than Mr. Loeb, the Company’s Chief Executive
Officer,Officer; Mr. Hoster, the Company’s Chairman of the
BoardBoard; and Mr. Speed,
who served as the Company’s Chairman Emeritus.
One of our directors serves as an executive officer at a company with whom we may directly or indirectly do business. The Board determined that the commercial relationships involving routine, arms-length transactions between the Company and the other party were not considered a material relationship that would impair the director’s independence. We provide additional details about the relationship in the following table.
Donald F. Colleran | | | FedEx Corporation | | | Routine leasing of space by the Company to FedEx | | | $3,000,000, representing less than 0.9% of the Company’s gross revenues in 2020 |
| | Routine purchases of package delivery services by the Company from FedEx | | | The amount paid by the Company represents a de minimis percentage of FedEx’s gross revenue in fiscal 2020 |
Shareholder Communication
Withwith the Board
The Board has created the position of Lead Independent Director to facilitate and strengthen the Board’s independent oversight of our performance, strategy and succession planning and to promote effective governance standards. The Lead Independent Director presides over the meetings of the non-management directors of the Company. Our current Lead Independent Director is Mr. Bolton. Shareholders and other parties interested in communicating directly with the Lead Independent Director or with the non-management directors as a group may do so by writing to Lead Independent Director, EastGroup Properties, Inc., 190 East Capitol Street,400 W. Parkway Place, Suite 400, Jackson,100, Ridgeland, Mississippi 39201.39157. Correspondence so addressed will be forwarded directly to the Lead Independent Director.Director, who will forward any such communication to the director(s) to whom the communication is addressed. Shareholders and other parties interested in communicating with the directors as a group may also do so via the Contact Us page of EastGroup’s website at www.eastgroup.net.
Code of Ethics and Business Conduct and Other Policies Code of Ethics and Business Conduct
Our Board adopted a Code of Ethics and Business Conduct (the “Code of Ethics”), which governs business decisions made and actions taken by our directors, officers and employees. A copy of this Code of Ethics is available on our website at http://investor.eastgroup.net/govdocs. We intend to disclose on this website any amendment to, or waiver of, any provision of this Code of Ethics applicable to our directors and executive officers that would otherwise be required to be disclosed under the rules of the SEC or the NYSE.
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Corporate Governance Guidelines
Our Board adopted Corporate Governance Guidelines, a copy of which is available on our website at http://investor.eastgroup.net/govdocs.
Copies of our Code of Ethics and Corporate Governance Guidelines may also be obtained free of charge by writing to EastGroup Properties, Inc., 400 W. Parkway Place, Suite 100, Ridgeland, Mississippi 39157, Attention: Investor Relations.
Our current leadership structure is comprised of the Chairman of the Board, a separate Chief Executive Officer, an independent director serving as Lead Independent Director who presides over the non-management directors, and strong, active independent directors. As Chief Executive Officer, Mr. Loeb is responsible for setting the strategic direction of the Company and for the day to day leadership and management of the Company, while Mr. Hoster, Chairman of the Board, provides oversight, direction and leadership to the Board.
Another component of our leadership structure is the active role played by our independent directors in overseeing the Company’s business, both at the Board and Committeecommittee level. SixSeven of the current nine directors and six of the eight director nominees are considered independent under the NYSE listing standards. All of our directors are free to suggest the inclusion of items on the agenda for meetings of our Board of Directors or raise subjects that are not on the agenda for that meeting. In addition, our Board of Directors and each committee have complete and open access to any member of management and 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. Our Board of Directors also holds regularly scheduled executive sessions of only non-management directors, led by the Lead Independent Director, in order to promote discussion among the non-management directors and assure independent oversight of management. Moreover, our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, all of which are comprised entirely of independent directors, also perform oversight functions independent of management.
Board Oversight of Risk Management
The Company believes that its leadership structure allows the Board
of Directors to provide effective oversight of the Company’s risk management function by receiving and discussing regular reports prepared by the Company’s senior management on areas of material risk to the Company, including market
conditions,conditions; tenant concentrations and credit
worthiness,worthiness; leasing activity and
expirations,expirations; compliance with debt
covenants,covenants; management of
our balance sheet and debt
maturities,maturities; access to debt and equity capital
markets,markets; existing and potential legal claims against the
Company,Company; cyber-security including cyber-attacks and computer
viruses,viruses; environmental, social and governance (“ESG”) initiatives; enterprise risk management; and various other matters relating to the Company’s business. Additionally, the Board
of Directors administers its risk oversight function through (i) the required approval by the Board
of Directors (or a committee thereof) of significant transactions and other decisions, including, among others, development and acquisitions of properties, new borrowings and the appointment and retention of the Company’s senior management, (ii) the coordination of the direct oversight of specific areas of the Company’s business by the Compensation, Audit and Nominating and Corporate Governance Committees, and (iii) periodic reports from the Company’s auditors and other outside consultants regarding various areas of potential risk, including, among others, those relating to the qualification of the Company as a REIT for tax purposes, the Company’s internal control over financial reporting, and the security of the electronic systems which the Company relies upon to conduct its business.
See the discussion under the heading “Leadership Structure” above for a discussion of why the Board has determined that its current leadership structure is appropriate.
Committees and Meeting Data
The Board of Directors has a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.Committee; membership of these committees is outlined in the table below. Each member of each of these committees is “independent” as that term is defined in the NYSE listing standards. The Board has adopted a written chartercharters for each of these committees, which are available on our website at www.eastgroup.net.http://investor.eastgroup.net/govdocs.
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The Audit Committee consists of Messrs. Aloian and Bolton and Ms. McCormick. The Audit Committee met six times during the Company’s 2016 fiscal year.
D. Pike Aloian | | | Member | | | | | | Chair |
H.C. Bailey, Jr. | | | | | | Member | | | |
H. Eric Bolton, Jr | | | Member | | | Chair | | | |
Donald F. Colleran | | | | | | Member | | | Member |
Hayden C. Eaves III | | | | | | Member | | | Member |
David H. Hoster II | | | | | | | | | |
Mary E. McCormick | | | Chair | | | | | | Member |
Katherine M. Sandstrom | | | Member | | | | | | |
Number of meetings in fiscal year 2020 | | | 7 | | | 4 | | | 5 |
The Audit Committee oversees the financial reporting of the Company, including the audit by the Company’s independent registered public accounting firm and the internal audit department.
Mmes. McCormick and Sandstrom and Messrs. Aloian and Bolton
and Ms. McCormick have each been designated as an “Audit Committee financial expert” in accordance with the SEC rules and regulations, and the Board has determined that they have accounting and related financial management expertise within the meaning of the listing standards of the
New York Stock Exchange.NYSE. See “Report of the Audit Committee” later in this proxy statement.
The Compensation Committee consists of Messrs. Bailey, Bolton, Eaves and Gould.
The Compensation Committee’s function is to review and recommend to the Board
of Directors appropriate executive compensation policy,
andapprove compensation of the Company’s
directorsexecutive officers and
executive officers.to review and recommend to the Board appropriate compensation of the Company’s directors. The Compensation Committee also reviews and makes recommendations with respect to executive and employee benefit plans and programs.
The Compensation Committee met four times duringMr. Bailey’s term expires at the
Company’s 2016 fiscal year.The NominatingMeeting, and Corporate Governance Committee currently consists of Messrs. Aloian and Eaves and Ms. McCormick. The Nominating and Corporate Governance Committee met five times duringhe has not been nominated by the Company’s 2016 fiscal year. Board to stand for reelection.
The responsibilities of the Nominating and Corporate Governance Committee include assessing Board membership needs and identifying, screening, recruiting and presenting director candidates to the Board, implementing policies regarding corporate governance matters, making recommendations regarding committee memberships and sponsoring and overseeing performance evaluations for the Board as a whole and the directors.
Nominating Procedures
In identifying suitable candidates for nomination as a director, the Nominating and Corporate Governance Committee considers the needs of the Board and the range of skills and characteristics required for effective functioning of the Board. Although the Company does not have a formal policy or guidelines regarding diversity, the Company’s Corporate Governance Guidelines recognize the value of having a Board that encompasses a broad range of skills, expertise, contacts,
background, industry knowledge and diversity of opinion. In evaluating such skills and characteristics, the Committee may take into consideration such factors as it deems appropriate, including those included in the Corporate Governance Guidelines. Current members of the Board with skills and experience that are relevant to the Company’s business and who are willing to continue in service are considered for re-nomination. In addition, the Nominating and Corporate Governance Committee will consider nominees suggested by incumbent Board members, management, shareholders and, in certain circumstances, outside search firms; as such, shareholders may influence the composition of the Board. Under this principle, the Nominating and Corporate Governance Committee will consider written recommendations for potential nominees suggested by shareholders. Any such person will be evaluated in the same manner as any other potential nominee for director. Any suggestion for a nominee for director by a shareholder should be sent to the Company’s Secretary at
190 East Capitol Street,400 W. Parkway Place, Suite
400, Jackson,100, Ridgeland, Mississippi
39201,39157, within the time periods set forth under the heading “About the Meeting – How do I submit a proposal for the
20182022 Annual Meeting?”
.
Board Attendance at Meetings
The Company’s Corporate Governance Guidelines provide that all directors are expected to regularly attend all meetings of the Board and the Board committees on which he or she serves. The Board of Directors held sixfive meetings during the Company’s 20162020 fiscal year, and each meeting wasall directors attended by all75% or more of the directors then in office. Additionally, each director attended at least 75% of the total number ofBoard meetings and meetings held by all committees of the Board of Directors on which he or she served. Each director nominee also is expected to attend the Annual MeetingMeeting. All of Shareholders. In 2016,our board members who were directors at the time of the 2020 Annual Meeting of Shareholders was attended by all of the director nominees elected at that meeting.
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Compensation Committee Interlocks
and Insider Participation
As noted above, the Compensation Committee is comprised of four independent directors: Messrs. Bailey, Bolton,
EavesColleran and
Gould.Eaves. No member of the Compensation Committee is or was formerly an officer or an employee of the
Company.Company or had any other relationships with us requiring disclosure herein. No executive officer of the Company serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Company’s Board,
of Directors, nor has such interlocking relationship existed in the past.
Compensation of Directors
We believe that a combination of cash and equity compensation is appropriate to attract and retain the individuals we desire to serve on our Board and that this approach is comparable to the policies of our peers. We feel that it is appropriate to provide cash compensation to our non-employee directors to compensate them for their time and effort and to provide equity compensation to our non-employee directors to align their long-term interests with those of the Company and our shareholders.
Under the Company’s director compensation program as set forth in the Independent Director Compensation Policy, non-employee directors are paid annual cash retainers for their service as shown below.
Non-employee Director | | | 56,000 |
Lead Independent Director | | | 25,000 |
Audit Committee chairperson | | | 20,000 |
Audit Committee member | | | 10,000 |
Compensation Committee chairperson | | | 15,000 |
Compensation Committee member | | | 7,500 |
Nominating and Corporate Governance Committee chairperson | | | 12,000 |
Nominating and Corporate Governance Committee member | | | 6,000 |
Investment Committee member | | | 6,000 |
In addition, each non-employee director is
paid an annual cash retainer of $40,000 payable ratably on a monthly basis. The chairperson of the Audit Committee receives an additional annual cash retainer in the amount of $15,000 and the chairperson of each of the Compensation Committee and Nominating and Corporate Governance Committee receive an additional annual cash retainer in the amount of $10,000. All other committee chairpersons receive an additional annual $7,500 cash retainer and the Lead Independent Director receives an additional annual $10,000 cash retainer.The director compensation program provides that each non-employee director is paid $1,500 for each Board meeting attended. Non-employee directors serving as members of Board committees are paid $1,000 for each meeting attended. In each case, the non-employee director is also reimbursed for his or her expenses in connection with attendance at each meeting.
of meetings.
A non-employee director who is appointed to the Board outside of an annual meeting of shareholders will receive a prorated amount of the applicable annual cash retainer, based on the time between his or her appointment and our next annual meeting of shareholders.
Pursuant to the Independent Director Compensation Policy,
non-employee directors receive an annual award under the Company’s 2013 Equity Incentive Plan,
non-employee directors receive an annual award in connection with their election to the Board at the annual meeting of shareholders. The annual award consists of shares of the Company’s
common stock with aCommon Stock determined by dividing $100,000 by the fair market value of
$80,000 asa share of
the Company’s Common Stock on the date of grant.
If a fraction results, the number of shares shall be rounded up to the next whole number. A
non-employee director who is appointed to the Board outside of the annual meeting of shareholders will receive a prorated amount of the annual
award.award, based on the time between his or her appointment and our next annual meeting of shareholders.
The Independent Director Compensation Policy also provides that each new non-employee director appointed or elected will receive an automatic award of restricted shares of Common Stock,
under the Company’s 2013 Equity Incentive Plan, on the effective date of election or appointment,
equal tothe number of which equals $25,000 divided by the fair market value of
a share of the Company’s Common Stock on such date.
If a fraction results, the number of shares shall be rounded up to the next whole number. These restricted shares will vest over a four-year period,
upon the performance of future service as a director, subject to
certain exceptions.the director’s continuous service on our Board on each applicable vesting date.
As an officeremployee of the Company, Mr. Loeb did not receive any compensation underfor his service as a director during the Independent Directorfiscal year ended December 31, 2020. The compensation received by Mr. Loeb, as a Named Executive Officer of the Company, is presented in “Compensation of Executive Officers – Summary Compensation Policy in 2016.Table” below. The Company’s non-employee directors received the following aggregate amounts of compensation for the fiscal year ended December 31, 2016:
2020:
Name | | Fees Earned
or Paid in
Cash | | | Stock
Awards (1) | | | Total | |
| D. Pike Aloian | | $ | 65,416 | | | $ | 80,047 | | | $ | 145,463 | |
| H.C. Bailey, Jr. | | $ | 57,916 | | | $ | 80,047 | | | $ | 137,963 | |
| H. Eric Bolton, Jr. | | $ | 58,916 | | | $ | 80,047 | | | $ | 138,963 | |
| Hayden C. Eaves III | | $ | 65,916 | | | $ | 80,047 | | | $ | 145,963 | |
| Fredric H. Gould | | $ | 50,916 | | | $ | 80,047 | | | $ | 130,963 | |
| David H. Hoster II (2) | | $ | 231,413 | | | $ | 80,047 | | | $ | 311,460 | |
| Mary E. McCormick | | $ | 67,916 | | | $ | 80,047 | | | $ | 147,963 | |
| Leland R. Speed (3) | | $ | 804,916 | | | $ | 80,047 | | | $ | 884,963 | |
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D. Pike Aloian | | | 84,504 | | | 100,050 | | | 184,554 |
H.C. Bailey, Jr. | | | 70,129 | | | 100,050 | | | 170,179 |
H. Eric Bolton, Jr. | | | 110,504 | | | 100,050 | | | 210,554 |
Donald F. Colleran(2) | | | 73,129 | | | 100,050 | | | 173,179 |
Hayden C. Eaves III | | | 73,129 | | | 100,050 | | | 173,179 |
David H. Hoster II(3) | | | 112,508 | | | 100,050 | | | 212,558 |
Mary E. McCormick | | | 89,504 | | | 100,050 | | | 189,554 |
Katherine M. Sandstrom(2)(4) | | | 33,798 | | | 112,444 | | | 146,242 |
Leland R. Speed | | | 62,504 | | | 100,050 | | | 162,554 |
| (1)
| Represents the aggregate grant date fair valuevalues of the awardshares and restricted shares of Common Stock awarded to the non-employee directors during the fiscal year ended December 31, 2020, determined in accordance with FASB ASCFinancial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. Such aggregate grant date fair values do not take into account any estimated forfeitures related to service-based vesting conditions. The valuation assumptions used in determining such amounts are described in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 17, 2021. |
(2)
| (2)As of December 31, 2020, Mr. Colleran held 70 shares of restricted stock and Ms. Sandstrom held 208 shares of restricted stock; no other directors held any outstanding equity awards as of that date. |
(3)
| In addition to the standard payments to non-employee directors under the Company’s director compensation program,Independent Director Compensation Policy, the Board approved a cash stipend equal to $50,000 for Mr. Hoster, in connection with Mr. Hoster’shis additional service as Chairman of the Board in 2016.2020. |
(4)
| (3) | In additionMs. Sandstrom was appointed to the standard payments to non-employee directors underBoard in July 2020. In accordance with the Company’s director compensation program,Independent Director Compensation Policy, she received (i) a prorated portion of the annual cash retainers for service on the Board approvedand the Audit Committee, (ii) a one-time cashprorated annual award of shares of Common Stock and (iii) a grant of restricted shares for her initial election to Mr. Speed in the amount of $750,000 as part of the transition to Chairman Emeritus. The award is payable in five equal annual installments of $150,000 on June 30 of each year beginning June 30, 2016.Board. |
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Proposal 1 – Election of Directors
In accordance with our Bylaws, the Board
of Directors has by resolution fixed the number of directors to be elected at the Meeting at
nine. All nine positions on the Board are to be filled by the vote of the shareholders at the Meeting.eight. Each person so elected shall serve until the next Annual Meeting of Shareholders and until his or her successor is
duly elected and
qualified.qualified or until his or her earlier death, resignation or removal.
The nominees for director are: D. Pike Aloian,
H.C. Bailey, Jr., H. Eric Bolton, Jr.,
Donald F. Colleran, Hayden C. Eaves III,
Fredric H. Gould, David H. Hoster II, Marshall A. Loeb, Mary E. McCormick and
Leland R. Speed.Katherine M. Sandstrom. All nominees are currently serving as directors of the Company and were elected at the
20162020 Annual Meeting of
Shareholders.Shareholders, with the exception of Ms. Sandstrom, who was appointed to the Board on July 6, 2020.
Unless instructed otherwise, proxies will be voted “FOR” the nominees listed above. Although the directors do not contemplate that any of the nominees will be unable to serve prior to the Meeting, if such a situation arises, your proxy will be voted in accordance with the best judgment of the person or persons voting the proxy.
Information regarding the director nominees can be found under “Corporate Governance and Board Matters – Director
Nominees Qualifications and Biographical Information.”
The Board of Directors unanimously recommends that shareholders vote “FOR” the election of each of the nominees.
Nominees receiving more “For” votes than votes cast “Against” will be elected. Neither abstentions nor broker non-votes will have any legal effect on whether this proposal is approved.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF EACH OF MMES. MCCORMICK AND SANDSTROM AND MESSRS. ALOIAN, BOLTON, COLLERAN, EAVES, HOSTER AND LOEB TO SERVE ON THE BOARD UNTIL THE 2022 ANNUAL SHAREHOLDER MEETING AND UNTIL A SUCCESSOR FOR EACH IS DULY ELECTED AND QUALIFIED.
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Proposal 2 –
Advisory Vote on the Ratification of Independent Registered Public Accounting Firm
The Audit Committee is responsible for the appointment of the independent registered public accounting firm engaged by the Company. The Audit Committee has appointed KPMG
LLP as independent auditors for
2017.the fiscal year ending December 31, 2021. KPMG was first appointed as our independent registered public accounting firm effective in 1970 to audit the consolidated financial statements of the Company for the fiscal year ended December 31, 1970. During 2020, the Audit Committee conducted an audit proposal process and selected KPMG to continue serving as the Company’s independent registered public accounting firm. The Board is asking shareholders to approve this appointment. KPMG
LLP audited the Company’s financial statements and internal controls over financial reporting for
2016.the fiscal year ended December 31, 2020. A representative of
that firmKPMG will be present at the Meeting and will have an opportunity to make a statement and answer
appropriate questions.
The “Audit Committee Matters” section of this Proxy Statement contains additional information regarding the independent auditors, including a description of the Audit Committee’s Policy for Pre-Approval of Audit and Permitted Non-Audit Services and a summary of Auditor Fees and Services.
The Board
of Directors recommends that you vote “FOR” the appointment of KPMG,
LLP, an independent registered public accounting firm, to serve as the Company’s independent auditors for the
20172021 fiscal year.
Shareholder
approval forratification of the appointment of
ourKPMG as the Company’s independent registered public accounting firm is not required
butby the Company’s Bylaws or otherwise. However, the Board is submitting the
selectionappointment of KPMG
LLPto the shareholders for ratification
as a matter of good corporate practice. If the shareholders fail to ratify the appointment, the Audit Committee may reconsider whether or not to retain KPMG in
order to obtain the
viewsfuture. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of
our shareholders.a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company. This proposal will be approved if the votes cast “For” the proposal exceed the votes cast “Against” the proposal. Neither abstentions nor broker non-votes will have any legal effect on whether this proposal is approved.
The Audit Committee will consider a vote against the firm by the shareholders in selecting our independent registered public accounting firm in the future.THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021.
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Proposal 3 –
Non-Binding, Advisory Vote on Executive Compensation
As required by SEC rules,
Pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are asking our shareholders to
provide anvote on a non-binding, advisory
nonbinding votebasis to approve the compensation awarded to our Named
Executive Officers, as we have described it in the “Compensation of Executive Officers” section of this Proxy Statement.
As described in
greater detail under the heading “Compensation Discussion and Analysis,” we seek to closely align the interests of our Named
Executive Officers with the interests of our shareholders. Our compensation programs are designed to reward our Named
Executive Officers for the achievement of short-term and long-term strategic and operational goals and the achievement of increased total shareholder return, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking.
You may vote for or against the following resolution, or you may abstain.
This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named
Executive Officers and the philosophy, policies and procedures described in this
Proxy Statement.Accordingly,proxy statement, pursuant to Item 402 of Regulation S-K. In accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, we ask ourare asking shareholders to voteapprove, on a non-binding, advisory basis, the following resolution at the Meeting:
“RESOLVED, that the
Company’s shareholders approve, on an advisory basis, the compensation
awardedpaid to the Company’s
Named Officersnamed executive officers, as disclosed
in this proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis,
the compensation tables and
related material included in this Proxy Statement.narrative discussion, is hereby APPROVED.”
The Board of Directors recommends that
You may vote for or against the resolution, or you
vote “FOR” the approval of the foregoing resolution.may abstain. For the advisory vote on the compensation of our Named Executive Officers to be approved, the votes cast “For” the proposal must exceed the votes cast “Against” this proposal. Neither abstentions nor broker non-votes will have any legal effect on whether this proposal is approved.
While
thisthe say-on-pay vote is advisory and
not binding on our Company, the Board andwill be non-binding, the Compensation Committee
expectdoes value the opinions of our shareholders and intends to
considertake the
outcomeresults of the vote
along with other relevant factors, when consideringon this proposal into account in its future
executivedecisions regarding the compensation
decisions.Proposal 4 – Advisory Vote onof our Named Executive Officers. Unless the Frequency of Future Advisory Votes on Executive Compensation
In addition to providing our stockholders with the opportunity to cast an advisory vote on executive compensation, we are also seeking an advisory, nonbinding vote on how frequently the advisory vote on executive compensation should be presented to stockholders, as required by SEC rules. You may vote your shares to have the advisory vote held annually, every two years or every three years, or you may abstain.
Since 2011, our Board has provided shareholders with an opportunity to vote on executive compensation at every annual meeting. The Board continues to believe that advisory votes on executive compensation should be conducted every year so that shareholders may annually express their views on our executive compensation program, which feedback the Compensation Committee considers in structuring the annual compensation program.
The Company recognizes that the shareholders may have different views as to the best approach for the Company, and therefore we look forward to hearing from our shareholders as to their preferencesmodifies its policy on the frequency of anfuture say-on-pay advisory votes, the next say-on-pay advisory vote on executive compensation.
The Boardwill be held at the 2022 annual meeting of Directors recommends a vote of “Every One Year” on Proposal 4 relating toshareholders, and the frequency of futurenext advisory votes on executive compensation.
The non-binding vote on the frequency of holding a say-on-pay vote will occur no later than the 2023 annual meeting of shareholders.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THIS RESOLUTION.
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Proposal 4 – Approval of Articles of Amendment and Restatement of the Charter and Amendment and Restatement of the Bylaws to Allow the Bylaws to be Amended by a Majority of Stockholder Votes We are asking our stockholders to approve an amendment and restatement of the Company’s Charter and Bylaws to allow the Bylaws to be amended by the stockholders representing a majority of all votes entitled to be cast on the matter.
Background
As permitted by the Maryland General Corporation Law, Section 7 of Article VI of the Company’s Charter currently provides that the stockholders may adopt, alter and repeal our Bylaws only by the affirmative vote of 80% of the aggregate votes entitled to be cast with respect thereto, and Article IX of the Company’s Charter requires that this provision of Article VI relating to amendment of the Bylaws may in turn only be amended by the affirmative vote of the holders of not less than 80% of all the votes entitled to be cast on the matter. In addition, Article XV of the Company’s Bylaws currently provides that the Bylaws may be repealed, altered, amended or rescinded by the stockholders of the Company (considered for this purpose as one class) by the affirmative vote of not less than 80% of all of the votes entitled to be cast at any meeting of stockholders called for that purpose (provided that notice of such proposed repeal, alteration, amendment or rescission is included in the notice of such meeting). Consequently, for stockholders to have the right to amend the Bylaws by the affirmative vote of a majority of all votes entitled to be cast on the matter, the Company’s stockholders are required to approve amendments to both the Charter and the Bylaws.
The Board has adopted an amendment and restatement of the Charter (the “Articles of Amendment and Restatement”) and has recommended that our shareholders approve the Articles of Amendment and Restatement at the Meeting. The Articles of Amendment and Restatement (i) amend Section 7 of Article VI so that our stockholders can amend the Bylaws by the affirmative vote of a majority of all votes entitled to be cast on the matter and (ii) amend Article IX(b)(ii) so that the future advisoryamendment or repeal of the Bylaw amendment provision in Article IV does not require the affirmative vote of the holders of not less than 80% of all the votes entitled to be cast on executive compensationthe matter. The Articles of Amendment and Restatement also contain certain other conforming changes and minor updates that do not require the approval of our stockholders. The full text of the proposed Articles of Amendment and Restatement appears as Appendix A to this proxy statement.
The Board has also adopted an amendment and restatement of the Bylaws (the “Amended and Restated Bylaws”), and has recommended that our stockholders approve the Amended and Restated Bylaws at the Meeting. The Amended and Restated Bylaws would permit the stockholders of the Company, to the extent permitted by law, to amend the Amended and Restated Bylaws by the affirmative vote of a majority of all the votes entitled to be cast on the matter pursuant to a binding proposal submitted by a stockholder that (i) owned shares of the Company’s common stock in the amount and for the duration of time specified in Rule 14a-8 under the Exchange Act on the date the bylaw proposal is delivered or mailed to and received by the Company’s Secretary in accordance with the Amended and Restated Bylaws and (ii) continuously owns such shares through the date of the annual or special meeting of stockholders where such proposal will be considered. The foregoing right to amend the frequency receivingAmended and Restated Bylaws would be subject to additional eligibility, procedural and disclosure requirements set forth in Article XV of the greatest numberAmended and Restated Bylaws. The Amended and Restated Bylaws also contain certain other conforming changes and minor updates that do not require the approval of our stockholders. The full text of the proposed Amended and Restated Bylaws appears as Appendix B to this proxy statement.
Text of Proposed Amendments
The proposed Articles of Amendment and Restatement, among other things, amend Section 7 of Article VI of the Charter and Article IX(b) of the Charter to read as follows (text that will be deleted is shown as struck through):
SECTION 7. AMENDMENTS TO THE BYLAWS.
In furtherance and not in limitation of the power conferred by statute, the Board of Directors is expressly authorized to adopt, alter or repeal Bylaws of the Corporation by vote of two-thirds of the Board of Directors. The stockholders may adopt, alter and repeal Bylaws of the Corporation only by the affirmative vote of 80% of the aggregate votes entitled to be cast with respect thereto.
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ARTICLE IX
AMENDMENTS
(b) Certain Amendments Requiring Special Stockholder Vote. Any provision of the Charter of the Corporation to the contrary notwithstanding:
(i) no term or provision of the Charter of the Corporation may be added, amended or repealed in any respect that would, in the determination of the Board of Directors, cause the Corporation not to qualify as a REIT under the Code;
(ii) Article VI, Section 3 (removal of directors) and Section 6 (amendments of Bylaws); Article VIII (indemnification of agents and limitation of liability of officers and directors); and this Article IX shall not be amended or repealed; and
(iii) no provision imposing cumulative voting in the election of directors may be added to the Charter of the Corporation;
unless in each such case, in addition to any vote required by the terms of then outstanding preferred stock, such action is approved by the affirmative vote of the holders of not less than eighty percent (80%) of all of the votes entitled to be cast on the matter.
The proposed Amended and Restated Bylaws, among other things, amends Article XV of the Bylaws to read as follows (additions of text are indicated by underlining, and text that will be deleted is shown as struck through):
ARTICLE IX
AMENDMENTS
In accordance with the Charter, these These Bylaws may be repealed, altered, amended or rescinded (a) by the stockholders of the Corporation (considered for this purpose as one class) by the affirmative vote of not less than 80% of all of the votes entitled to be cast at any meeting of stockholders called for that purpose (provided that notice of such proposed repeal, alteration, amendment or rescission is included in the notice of such meeting), or (b) by vote of two-thirds of the Board of Directors at a meeting held in accordance with the provisions of these Bylaws; provided that Sections 8 and 9 of Article VII of these Bylaws and this sentence may not be altered, amended or repealed by the Board of Directors unless it shall also obtain the affirmative vote of a majority of the votes cast on the matter by the holders of the issued and outstanding shares of common stock of the Corporation at a meeting of stockholders duly called and at which a quorum is present. In addition, to the extent permitted by law, these Bylaws may be repealed, altered, amended or rescinded by the stockholders of the Corporation by the affirmative vote of a majority of all the votes entitled to be cast on the matter, pursuant to a binding proposal that is submitted to the stockholders for approval at a duly called annual meeting or special meeting of stockholders by a stockholder (that provides a timely notice of such proposal which satisfies the notice procedures and all other relevant provisions of Section 12 of Article II of these Bylaws (the “Notice of Bylaw Amendment Proposal”)) (i) that owned shares of common stock of the Corporation in the amount and for the duration of time specified in Rule 14a-8 under the Exchange Act on the date the Notice of Bylaw Amendment Proposal is delivered or mailed to and received by the Secretary of the Corporation in accordance with Section 12 of Article II of these Bylaws and (ii) that continuously owns such shares of common stock of the Corporation through the date of such annual meeting or special meeting of stockholders (and any postponement or adjournment thereof).
The summary of the proposed Articles of Amendment and Restatement and Amended and Restated Bylaws set forth herein is qualified in its entirety by the text of the proposed Articles of Amendment and Restatement and Amended and Restated Bylaws, attached as Appendix A and Appendix B to this proxy statement, respectively.
Effectiveness of Proposed Amendments
Assuming stockholder approval, we anticipate filing the Articles of Amendment and Restatement with the State Department of Assessments and Taxation of Maryland on the day following the Meeting, and the Amended and Restated Bylaws shall be effective concurrently with the acceptance for record of the Articles of Amendment and Restatement. If our stockholders do not approve the proposed amendments, the Charter will continue in effect as currently stated, the Bylaws will not be amended and, subject to the limited restrictions set forth therein, stockholders would be permitted to alter and repeal our Bylaws only by the affirmative vote of 80% of the aggregate votes entitled to be cast with respect thereto.
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Vote Required
Approval of the proposed Articles of Amendment and Restatement and Amended and Restated Bylaws requires the affirmative vote of the holders of not less than eighty percent (80%) of all the votes entitled to be cast on this Proposal 4.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 4 TO AMEND
AND RESTATE THE COMPANY’S CHARTER AND BYLAWS.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) MATTERS EastGroup’s commitment to ESG initiatives is evidenced by its building standards, corporate policies and procedures and positive company culture. The Board oversees our ESG-related efforts and, in such capacity, receives periodic updates from, and provides high-level guidance to, our management on ESG-related topics. In 2019, we formed an ESG Committee currently comprised of our Chief Financial Officer, Chief Accounting Officer and a senior accountant from our corporate accounting team. The ESG Committee meets regularly with the Board to discuss best practices in the areas of sustainability, environmental impact, social initiatives, enterprise risk management and corporate governance matters.
ESG Highlights
Shareholder Power to Amend Bylaws: The Board has approved, and recommended for shareholder approval at the 2021 annual meeting. Neither abstentions nor broker non-votesmeeting, amendments and restatements to EastGroup’s current charter and bylaws to allow EastGroup’s bylaws to be amended by a majority of stockholder votes.
ESG Executive Officer Individual Goals: For 2021, individual compensation goals (which will have any legal effect on whether this proposal is approved. While this vote is advisoryaccount for 20% of performance in connection with our annual incentive plan) will include ESG-related goals for our Chief Executive Officer, Chief Financial Officer and not binding on our Company,Chief Accounting Officer.
Board Diversity: The Board added a second female Board member in July 2020.
Committee Chair Rotations: In May 2020, Mary E. McCormick replaced the previous chair of the Audit Committee; H. Eric Bolton, Jr. replaced the previous chair of the Compensation Committee; and D. Pike Aloian replaced the previous chair of the Nominating and Corporate Governance Committee.
Director Meeting Fees: In 2020, the Board expectseliminated director meeting fees by adopting a retainer compensation program for directors.
Flexible Work Environment: EastGroup continues to takeoffer its employees a flexible work environment during the COVID-19 pandemic.
ESG Reports: In 2020, EastGroup published its second annual Environmental, Social & Governance Report.
Environmental Matters
Protecting the environment is important to us and our employees, families, customers and communities. We strive for efficiency in operating our properties with innovative solutions that lower operational costs and reduce our environmental footprint. Our continued commitment to sustainability best practices creates long-term value for the environment, us and our shareholders. Through our environmental stewardship efforts, we have obtained 25 Leadership in Energy and Environmental Design (“LEED”) certifications, including one LEED Silver certification, and various ENERGY STAR certifications. Regardless of whether we pursue the actual certification, all of our development projects are constructed to LEED standards, reflecting the Company’s commitment to pursue environmentally conscious performance. This development program has produced tremendous value for our shareholders; we have developed approximately 47% of our properties.
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We continue to incorporate a variety of energy efficient, sustainable features into accountour properties, including:
• | | | skylights | | | • | | | irrigation with smart sensors |
• | | | white reflective roofing | | | • | | | wildlife mitigation |
• | | | LED lighting | | | • | | | fans in warehouse |
• | | | motion sensor lighting | | | • | | | preferred parking spaces for green vehicles |
• | | | locally sourced materials | | | • | | | interior windows for natural light |
• | | | locally sourced trash disposal | | | • | | | Energy Star rated heating and cooling units |
• | | | recycled materials | | | • | | | Low E insulated glass |
• | | | electric car charging stations | | | • | | | water efficient plumbing fixtures |
• | | | access to public transportation | | | • | | | drip irrigation systems in drought-tolerant markets |
• | | | bike storage | | | • | | | reclaim water for irrigation where applicable |
Social Matters
We and our employees are committed to social responsibility and are active participants in the outcomecommunities where they live and work. EastGroup’s employees volunteer for numerous charities, and we coordinate volunteer opportunities for our employees and provide paid time off for volunteering in order to encourage participation and increase social engagement in all of the vote, alongcommunities in which we operate. We prioritize charitable contributions that employees are directly involved with such as the Epilepsy Foundation of Mississippi, Goodwill Industries and the Make-A-Wish Foundation.
Additionally, we are focused on human capital. We believe our employees are a critical component of the success and sustainability of the Company, and we are committed to providing a diverse and inclusive work environment that encourages collaboration and teamwork. We are an equal opportunity employer, and we strive to attract, develop and advance a qualified and diverse workforce that will strengthen our company and our culture. Our commitment to our employees and our communities is evident in the social policies and practices we have in place, including:
Workforce Diversity: As of March 26, 2021, we employed 80 team members located in 12 offices in Arizona, California, Florida, Georgia, Mississippi, North Carolina and Texas. Our team is comprised of asset, construction and property management personnel; accounting, administrative, human resources and information technology personnel; and our corporate leadership team. Our current employee base is 75% comprised of women. The officer group is comprised of 40% women and 60% men, and 18% of our employees identify as racial or ethnic minorities. Our Board of Director nominees include two women and six men. With 80 employees and eight director nominees, each team member plays a vital role in the success of the company.
Employee Tenure: We believe our culture supports our employees and creates a positive, professional environment that encourages longevity for our team members. The average tenure of our workforce is 10 years, and 12 years for our officers.
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Compensation, Benefits, Health and Safety: EastGroup offers a comprehensive employee benefits program and what we believe are socially-responsible policies and practices in order to support the overall well-being of our employees and create a safe, professional and inclusive work environment. Some of the benefits we offer include a robust 401(k) matching program, a generous personal leave policy, flexible work schedules, paid time off for volunteering, annual health and wellness checkups, employer-paid health insurance for all full-time employees, a tobacco cessation program, athletic club and tuition reimbursement programs, and a competitive compensation structure.
Training and Development: We have a formal, certificate-based learning program for all employees; learning objectives include topics such as diversity and inclusion, unconscious bias and anti-harassment. Our employees are provided with training, education and peer mentoring programs to further develop their professional skill set, enhancing the level of customer service provided to our customers.
Policies: We have various policies and practices in place, including a Code of Ethics and Business Conduct and a formal Whistleblower Program, Equal Opportunity and Commitment to Diversity, ADA & Reasonable Accommodation, Commitment to Safety, Community Service, Family Medical Leave, Standards of Conduct, Workplace Violence Prevention, Healthy, Wealthy, Wise Benefits Summary, and Cybersecurity policies.
Company and Board Engagement: We value our employees, and our focus on human capital management and other relevant factors, when considering future advisory votessocially-responsible initiatives is at the forefront of discussions and decisions with both management and the Board of Directors.
On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. EastGroup promptly took action to promote the health, safety and well-being of our customers, employees, directors and other stakeholders. We formed a strategic planning committee to discuss the risks and guide the Company through these unprecedented times. Our customers, many of which were characterized as “essential businesses” during the early days of the pandemic, were able to continue operating. By nature of our multi-tenant business distribution building design, our customers each have their own entrances with no common lobbies, minimizing contact between customers. Our employees shifted to remote working arrangements seamlessly. All employees already had or were issued the technology needed to perform their duties remotely. This fostered a better work-life balance where employees could focus on their families and work duties while promoting health and safety for our EastGroup families and communities. Virtual town hall meetings were held with all employees, and virtual meetings continue to be conducted on a regular basis.
Governance Matters
We believe our corporate governance policies are well aligned with the interests of our shareholders. The Company’s Board has long upheld their mission to foster the long-term success of the Company while maintaining the highest regard for our fiduciary responsibility to our shareholders and employees. The Company’s leadership is committed to maintaining the highest standards for policies and practices in place across our company. Highlights of our Corporate Governance program include:
All Board members are elected annually by shareholders (non-staggered board).
Six of the eight Board members standing for re-election are independent.
Two of the eight Board members standing for re-election are women.
The positions of Chairman and CEO are separated.
All stock-based incentive plans have been approved by shareholders.
The Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee are all comprised entirely of independent directors.
During 2020, the Board rotated the Chairpersons of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee.
The Audit Committee meets with independent and internal auditors at least quarterly.
Formal ESG discussions are held with the Board and management at least annually.
Interested parties may communicate directly with the Board through a link on the Company’s website.
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During 2020, the Board eliminated director meeting fees by adopting a retainer compensation program for directors.
Over the past three years, the shares granted to employees and directors have been less than 1% of the shares outstanding.
Compensation is strongly tied to performance, and we do not have employment agreements, automatic salary increases or guaranteed bonuses.
General and administrative expense as a percentage of revenue was less than 5% for the years ended December 31, 2020 and 2019.
The Board has adopted a clawback policy that applies to both cash and equity incentive compensation.
The Board has adopted robust stock ownership guidelines for directors and executive
compensation.officers. No collective bargaining agreements.
No tax gross-ups and generally no single-trigger provisions.
Full Board oversight of risk management.
Strong Code of Ethics and Business Conduct, which is published on the Company’s website.
Our Code of Ethics and Business Conduct governs business decisions made and actions taken by our directors, officers and employees and provides guidance for recognizing potential issues encountered in conducting Company business and for making decisions that conform to our legal and ethical standards. All directors, officers, and employees are expected to be familiar with the Code of Ethics and Business Conduct and adhere to those principals and procedures. The Company has a Whistleblower Policy whereby customers, suppliers, employees and other stakeholders may report, in good faith, details of any instances of illegal and/or unethical conduct.
The Company believes its leadership structure allows the Board to provide effective oversight of the Company’s risk management function by receiving and discussing regular reports prepared by the Company’s senior management on areas of material risk to the Company, including market conditions; tenant concentrations and credit worthiness; leasing activity and expirations; compliance with debt covenants; management of our balance sheet and debt maturities; access to debt and equity capital markets; existing and potential legal claims against the Company; cyber-security including cyber-attacks and computer viruses; ESG initiatives; enterprise risk management; and various other matters relating to the Company’s business.
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The following provides certain information regarding our executive officers. Each individual’s name and position with the Company is indicated. In addition, the principal occupation and business experience for the past five years is provided for each officer and, unless otherwise stated, each person has held the position indicated for at least the past five years. There are no family relationships between any of the directors or executive officers of the Company.
Marshall A. Loeb,
, age 5458 − Mr. Loeb has served as the President of the Company since March 2015 and Chief Executive Officer of the Company since January 2016. He rejoined the Company as President and Chief Operating Officer in March 2015 from Glimcher Realty Trust, where he served as President and Chief Operating Officer from 2005 to 2015. From 2000 to 2005, he served as Chief Financial Officer of Parkway Properties, Inc. Mr. Loeb, who was with the Company from 1991 to 2000, began with the Company as an asset manager and rose to senior vice president after having a variety of responsibilities with the Company. Since 2018, Mr. Loeb has served on the board of directors of Lamar Advertising Company (Nasdaq: LAMR), one of the largest outdoor advertising companies in the world specializing in billboard, interstate logo, transit and airport advertising formats.
Brent W. Wood,N. Keith McKey, age
6651 − Mr.
McKeyWood has served as
the Company’san Executive Vice President since
1993,May 2017 and Chief Financial Officer and
Secretary since 1992 and Treasurer
since 1997. He recently announced his retirement fromof the Company
effective July 31,since August 2017.
John F. Coleman, age 57 − Mr. Coleman has been He was a Senior Vice President of the Company since 2001. From 1994 until 2001, he was a Senior Vice President of Weeks Corporation and its successor Duke Realty Corporation (an industrial/office real estate investment trust).
Bruce Corkern, CPA, age 55 − Mr. Corkern has served as Chief Accounting Officer since 2005 and has been a Senior Vice President and Controller of the Company since 2000. From 1990 until 2000, he was the Vice President of Finance of Time Warner Cable (Jackson/Monroe Division).
Brent W. Wood, age 47 − Mr. Wood has been a Senior Vice President of the Company since 2003. He wasfrom 2003 to 2017, a Vice President of the Company from 2000 to 2003, a Senior Asset Manager of the Company from 1997 to 1999 and Assistant Controller of the Company from 1996 to 1997. He
John F. Coleman, age 61 − Mr. Coleman has been appointedserved as an Executive Vice President and Chief Financial Officer of the Company effective uponsince May 2017. He was a Senior Vice President of the Company from 2001 to 2017. From 1994 until 2001, he was a Senior Vice President of Weeks Corporation and its successor Duke Realty Corporation (an industrial/office REIT).
Ryan M. Collins, age 40 − Mr. McKey’s retirement on JulyCollins has served as a Senior Vice President of the Company since May 2017. From 2005 to May 2017, Mr. Collins served as Vice President and Asset Manager for Clarion Partners (a diversified real estate investment firm).
R. Reid Dunbar, age 45 − Mr. Dunbar has served as a Senior Vice President of the Company since May 2017. From 2005 through May 2017, Mr. Dunbar held various positions with Prologis (an industrial REIT) and was most recently a Senior Vice President.
Staci H. Tyler, age 40 − Ms. Tyler has served as Senior Vice President, Chief Accounting Officer and Secretary since June 1, 2020. Ms. Tyler served as the Company’s Controller from 2017 through May 31, 2017.2020 and Vice President from 2010 through May 31, 2020. She joined the Company in 2007 as Assistant Controller.
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COMPENSATION OF EXECUTIVE OFFICERS Compensation Discussion and Analysis This Compensation Discussion and Analysis (“CD&A”)
describes the significant changes we have made to our 2017 executive compensation program in light of shareholder feedback and guidance from our independent compensation consultant, FPL Associates, L.P. (“FPL”), a nationally recognized compensation consulting firm specializing in the real estate industry. This CD&A also reports on the Company’s performance in
2016,2020, the executive compensation earned in light of that performance, and the performance metrics and other relevant factors the Compensation Committee used in making its
decisions.In this CD&A, when we refercompensation decisions with respect to “executive compensation” we mean primarily the Compensation Committee’s decisions regarding the compensation of our Chief Executive Officer and President, Chief Financial Officer and the three other most highly compensated executive officers (thewho were serving as executive officers on December 31, 2020 (collectively, the “Named Executive Officers”). Our Named Executive Officers for 2016 were Messrs. Loeb, McKey, Coleman, Wood and Petsas.
2017 Changes to the fiscal year ended December 31, 2020 are:
Marshall A. Loeb | | | Chief Executive Officer and President |
Brent W. Wood | | | Executive Vice President and Chief Financial Officer |
John F. Coleman | | | Executive Vice President |
R. Reid Dunbar | | | Senior Vice President |
Ryan M. Collins | | | Senior Vice President |
Executive Summary
2020 Compensation ProgramAt the Company’s 2016 Annual Meeting of Shareholders, approximately 77% of the votes cast were in favor of the advisory vote to approve the Company’s executive compensation. While the vote reflected continued support of the Company’s Overview. Our executive compensation program this levelis developed and monitored by our Compensation Committee. We provide a mix of support wasfixed and at-risk pay incentives that are intended to motivate our executives to execute to achieve short-term and long-term objectives that build sustainable long-term value for our Company. In 2020, our compensation program consisted of the following primary elements:
• We pay a base level of
competitive cash salary to
attract and retain executive
talent.
• We determine base salary based
on experience, job scope,
market data and individual
performance.
• We annually review our Named
Executive Officers’ base salaries
against our peers to maintain
competitive levels. | | | • Our annual cash and equity
incentives are based on the
achievement of objective at-risk
Company performance metrics
to align compensation with
strategic goals.
• Our performance metrics (FFO
(as defined below) per share,
Same PNOI (as defined below)
change, debt to EBITDAre ratio
and fixed charge coverage) are
commonly used measures of
REIT performance.
• A portion of the annual
incentive is based on the
achievement of individual
performance goals to reward
individual initiative,
achievements and contributions. | | | • We grant performance-based
and service-based restricted
shares to our executives.
• Performance-based awards are
only earned by achieving the
Company’s three-year TSR (as defined below) performance
hurdles relative to the Nareit
Equity Index and member
companies of the Nareit
Industrial Index. This is
a critical component of aligning
executive compensation with
shareholders’ interests.
• Service-based awards encourage
executive retention by vesting
ratably over four years. |
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At-Risk Compensation Mix. The graphics below illustrate the mix of 2020 fixed pay (base salary) and at-risk pay incentives (cash incentive compensation and equity awards), presented at target levels, for our Chief Executive Officer and our other Named Executive Officers. At-risk pay incentives constitute the majority of the total compensation package for our executive officers, consistent with our pay-for-performance compensation philosophy and objective, as discussed below. We believe that linking a
decline from the prior years’ advisory votes (approximately 95% in each of 2015 and 2014, 98% in 2013, 97% in 2012, and 97% in 2011) and also below what the Board and management overall deem satisfactory. As a result, the Board and management recognized the need to better understand our investors’ opinions, and initiated a review to gain further feedback from key stakeholders on their perspectivessubstantial portion of our executive
officers’, including our Named Executive Officers’, total compensation
programs.Duringto at-risk pay rewards the springachievement of 2016, we reached out to over 20 shareholders (representing over 70% of our common stock outstanding as of March 31, 2016) to discuss our executive pay and its alignment with performance, and to solicit feedback on our compensation program. We directly connected with shareholders holding in excess of 30% of our outstanding common stock. The Compensation Committee also engaged FPL to assist it in reviewing and revising its executive compensation program.
After carefully considering shareholder feedback, FPL’s recommendations about recent market trends in executive compensation, as well as the views of proxy advisory firms, the Compensation Committee adopted a new executive compensation program for 2017, which it believes is both responsive to the foregoing and designed in the best interests of the Company and its shareholders.
Shareholders largely supported the general framework of our compensation program with respect to the types of performance metrics by which we have historically measured our short-term and long-term performance. We have largely maintained a consistent program which, up until 2016 and as previously noted, our shareholders have strongly endorsed. However, it was also noted that certain aspects of the structure were not aligned with best practices. The following chart summarizes the key points we heard, what actions we have taken, and when the changes are effective.
What We Heard | How We Responded | When Effective |
Shareholders support the means by which we have historically evaluated our short-term performance though generally prefer a more objective framework | We have now ascribed specific weightings to each of the annual performance metrics reviewed and established performance goals and corresponding payout levels across a three-tier construct (i.e., minimum, target, and maximum). Our prior program, which concluded for fiscal 2016 performance, did not have specific weightings and performance goals outside of target level. | Fiscal 2017 |
What We Heard | How We Responded | When Effective |
Shareholders support a focus on long-term total shareholder performance but prefer it be measured on a “forward-looking” as opposed to “backward-looking” basis. | Starting in 2017, we will issue equity grants that are based on “forward-looking”, multi-year, total shareholder return performance in which our executives may earn equity compensation based largely on three-year relative total shareholder return performance as well as a more limited component that vests over time and will serve as an added retention tool. In addition, a portion of the performance-based awards that may be earned will also have additional time-based vesting thereafter. | Fiscal 2017 |
As a result of the Compensation Committee’s consultations and deliberations described above, the Compensation Committee worked throughout the latter part of 2016 to approve and implement, beginning with the Company’s 2017 fiscal year, the new incentive compensation programs for the Company’s executive officers. Combined, our new Short-Term Incentive Program (“STIP”) and Long-Term Incentive Program (“LTIP”) balance short-term and long-term performance account for operational goals as well as stock price performance, and provide the appropriate level of objectivity in an effort to support our Company’s business plan and strategy.
New 2017 Long-Term Incentive Plan
Based on feedback from our extensive shareholder outreach, the Compensation Committee, with input from FPL, approved significant changes to our LTIP for 2017 aimed to more closely alignstrongly aligns the interests of our executive officers, andincluding our Named Executive Officers, with those of our shareholders. UnderA larger portion of our Chief Executive Officer’s total compensation was linked to at-risk pay as compared to the new LTIP, the majorityother Named Executive Officers, in recognition of equity awards (70%our Chief Executive Officer’s overall responsibility for our corporate performance.
Company Highlights. Below are operational and financial highlights for 2020. Funds from operations (“FFO”) and same property net operating income (“Same PNOI”) are
performance based, or at risk,not computed in accordance with U.S. generally accepted accounting principles (“GAAP”). Reconciliations of these non-GAAP measures and
measuredother required disclosure can be found on
a forward-looking, three-year performance period. In order to transition topages 22 and 23 of our Annual Report on Form 10-K for the
new forward-looking program, a one-time transition grant, basedyear ended December 31, 2020, which we filed with the SEC on
the same performance requirements, will be made in 2017. The following table highlights some of the significant changes in the new LTIP for 2017.February 17, 2021. Award composition Total shareholder return (“TSR”) | Changes from a primarily “backward-looking” discretionary program to an objective “forward-looking” program. | | Our TSR for 2020 was 6.7%. The Nareit Industrial REIT Total Return was 12.2% and the Nareit Equity REIT Total Return was -8.0%. |
Grants made in arrears based on subjective assessment of various total shareholder return, or TSR, based metrics | Grants made at outset based on weighted performance goals as well as a small time-based component | | |
Performance period Earnings performance | Changes from a bifurcated annual | | Our 2020 FFO was $5.38 per share, which exceeded the high end of our goal range and multi-year performance period to solely a multi-year performance period.was an increase of 8.0% over 2019. |
Backward looking, one year and five years. | Forward looking, three years. | | |
Performance criteriaSame PNOI growth | Provides | | We experienced 2.1% growth in Same PNOI year over year on a GAAP basis which was between the threshold and target end of our goal range. The Compensation Committee approved an adjustment to Same PNOI growth for TSRa non-cash, tenant-specific charge. After the adjustment, the Same PNOI growth was 2.4%, which resulted in comparison to industrial REITs and120% of the broader REIT industry (eliminates Russell 2000 and absolute TSR)Target award. |
TSR over the performance period measured relative to several indices (including a non-REIT index) as well as absolute total shareholder return | TSR over the performance period measured solely on a relative basis | | |
Vesting periodLeasing | | | We renewed or re-leased 80% of expiring square feet during 2020 and rental rates on new and renewal leases increased an average of 21.7% for awards that are performance based | With the shift in performance periods, modifies vesting conditions to result in a four-year period overall. |
Vests in installments of 25% immediately upon conclusion and over a three-year period following the grant date | Vests 75% followingyear. Occupancy at the end of the three-year performance period2020 stood at 97.3% while average occupancy for 2020 was 96.7%. |
| | | |
Acquisitions | | | We completed acquisitions of operating properties (347,000 square feet), value-add properties (162,000 square feet) and 25% one year laterland (233 acres) for $122 million during 2020. |
| | | |
Development and value-add program | | | We started five new development projects (851,000 square feet) with a projected total investment of $91 million in 2020. Our development and value-add program consisted of 16 projects (2.7 million square feet) at December 31, 2020 with a projected total investment of $292 million. |
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Equity Grant Transition
As previously noted, the Compensation Committee decided to transition to a new long-term incentive compensation structure that is based on forward-looking performance (which features awards made at the beginning of a performance period, subject to being earned) rather than historical performance and grants made at the end or upon conclusion of prior performance. Due to SEC disclosure rules, the Summary Compensation Table included in this proxy statement contains grants made during the most recently completed fiscal year (2016). Our existing program, which makes grants to our executive officers in arrears, are not included in the Summary Compensation Table as such awards for the most recent fiscal year were made in March 2017 (note that these awards have been disclosed underLong-Term Equity Incentive Compensation). As we transition to our new forward looking program, we will also be making grants in 2017 for the new 2017-2019 long-term incentive plan. Consequently, multiple grants will be made in 2017, in which the values of both such grants will be in next year’s (2018) proxy statement. The net-result to our executive officers is neutral in nature (it is simply a timing issue and not one in which they are benefitting or being adversely impacted in terms of the dollar value of opportunity). In order to proactively illustrate the impact, we have prepared the illustration below that highlights the dual sets of grants for 2017 (the illustration does not include a one-time transition grant).
| | | |
Dispositions | | | We sold 126,000 square feet of operating properties for $21 million and realized gains of $13 million. |
| | | |
Dividends | | | We raised the quarterly cash dividend by 5.3% in September 2020 and declared annual cash dividends of $3.08 per share during the year. We have paid 164 consecutive quarterly dividends and increased or maintained the dividend for 28 consecutive years. The Company has increased the dividend 25 times over that period, including increases in each of the last nine years. |
| | | |
Management of the balance sheet | | | We closed on new debt financing to lengthen our debt maturity schedule and fund acquisitions and development, while also maintaining and improving satisfactory liquidity and leverage ratios. We also issued 709,924 shares under our continuous common equity program in 2020 with gross proceeds of $94 million. |
Compensation Philosophy and Objectives
We believe the most effective compensation program is one that promotes our ability to attract and retain highly qualified and motivated individuals
whowhose interests are aligned with
the intereststhose of our shareholders. Our Compensation Committee seeks to develop a well-balanced
compensation program that
not only contains a competitive
fixed pay element through annual base salary, but that is weighted
more towards variable at-risk pay elements through the use of our short-term cash incentive and equity-based compensation,
andas well as our long-term equity-based compensation. We foster a culture where our Named
Executive Officers may increase their cash compensation by contributing to measurable financial performance metrics of the
Company, butCompany; however, we also require meaningful value creation in the form of
total return to our shareholders in order
for our Named Executive Officers to earn a significant portion of their equity compensation. Each element of our compensation program is discussed in more detail below.
To further these objectives, we adhere to the following compensation and corporate governance practices:
✓ ✔ | | | We Pay for Performance: A substantial portion of our compensation is not guaranteed but rather linked to the achievement of key financial metrics that are disclosed to our shareholders. | | ✗ | ✘ | | | No Employment Agreements, Automatic Salary Increases or Guaranteed Bonuses: We do not have employment agreements with any of our Named Officers. Weexecutive officers, and we do not guarantee annual salary increases or bonuses. |
✓ | | | | | | | | | |
✔ | | | We Balance Short-Term and Long-Term Incentives: Our incentive programs provide a balance of annual and longer-term incentives, including a variety of performance metrics that measure both absolute performance (for short-term incentives) and relative performance;performance (for long-term incentives); our existing long-term incentive program exclusively uses total shareholder returnTSR to measure performance. | | ✗ | We Do Not Have Tax Gross-Ups: We do not provide tax gross-ups on any severance, change in control or other payments. |
✓ ✘ | We Can Claw Back Compensation: Our independent directors have the ability to recoup incentive compensation if the Company’s financial results are restated or materially misstated due in whole or in part to intentional fraud or misconduct by one or more of our Named Officers. | | ✗ | We Do Not Pay Dividends or Dividend Equivalents on Unvested Restricted Shares: Restricted shares do not receive dividends or dividend equivalents during the restricted period; accrued dividends are paid only to the extent the restricted shares vest. |
✓ | | | | | | | | | |
✔ | | | We Limit the Maximum Payout Opportunity: We establish maximum amounts that may be earned under any award of performance-based compensation for our executives. | | | ✘ | | | We Do Not Have Tax Gross-Ups and Generally Do Not Have “Single-Trigger” Provisions: We do not provide tax gross-ups on any severance, change in control or other payments. Change in control agreements generally require a “double-trigger”. |
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✔ | | | We Recoup Compensation Under Certain Circumstances: We have a policy that requires the reimbursement of cash and equity incentive compensation in the event of a substantial restatement of our financial results caused by intentional misconduct by senior officers of the Company. | | | ✘ | | | We Do Not Allow Hedging or Pledging: Our executive officers and directors are expressly prohibited from pledging and hedging Company securities. |
| | | | | | | | | |
✔ | | | We Maintain Robust Stock Ownership Guidelines: Our Named Officersexecutive officers and Directorsdirectors are subject to robust stock ownership guidelines. | | ✗ | ✘ | | | No Accelerated Vesting of Performance Awards:We Do Not Allow Hedging or Pledging: Our Named Officers and Directors are expressly prohibited from pledging and hedging company securities.performance shares under long-term incentives do not provide for accelerated vesting in the event of a termination of employment. |
✓ | | | | | | | | | |
✔ | | | We Retain an Independent Compensation Consultant: Our Compensation Committee engages an independent consultant to conduct an annual compensation review and to provide guidance on a variety of compensation matters. | | ✗ | ✘ | | | We Do Not Provide Excessive Perquisites: Our Named Officersexecutive officers are provided with limited perquisites and benefits. |
| | | | | | | | | |
✔ | | | We Have an Independent Compensation Committee: Our Compensation Committee is comprised solely of independent directors. | | | ✘ | | | We Do Not Provide Pension Arrangements or Non-Qualified Deferred Compensation Arrangements: We do not provide a pension program or non-qualified deferred compensation program for any employees. |
2020 Compensation Program Design and “Say-on-Pay” Advisory Vote
We provide shareholders with a “say-on-pay” advisory vote on the Company’s compensation program for its Named Executive
Summary – 2016Officers on an annual basis, in accordance with the preference expressed by shareholders concerning the frequency of such votes at our 2017 annual meeting. Our Compensation
. Committee considered the results of the “say-on-pay” advisory vote conducted at our 2020 annual meeting. As previously indicated, shareholdersreported in our current report on Form 8-K, filed with the SEC on May 27, 2020, approximately 98.4% of the votes cast on the proposal expressed support for the compensation program offered to our Named Executive Officers as disclosed in last voted onyear’s proxy statement, which represents the fourth consecutive year that our “say-on-pay” proposal atwas supported by over 97% of votes cast. Accordingly, our 2016 Annual Meeting, which was held on May 26, 2016. We value the input that we received from shareholders before and after that meeting and believe that we haveCompensation Committee made appropriateno changes to our executive compensation program as a result. However, given the timingresult of the say-on-pay advisory vote. We will be conducting our annual say-on-pay advisory vote as described in Proposal No. 3 of this proxy statement at our 2021 annual meeting. Our Board and our Compensation Committee will consider the outcome of the say-on-pay advisory vote, as well as shareholder feedback received throughout the year, when making compensation decisions for our Named Executive Officers in the future.
Say-on-Pay Shareholder Support
Our shareholders have largely supported the general framework of our compensation program with respect to the types of performance metrics by which we have measured our short-term and long-term performance.
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Accordingly, we continue to use a diverse group of performance metrics in connection with our annual incentive plan (“AIP”), including FFO, Same PNOI change, debt to EBITDAre ratio and fixed charge coverage as well as individual performance goals. The performance metrics used in 2020 remain largely unchanged from the previous year’s metrics. Performance goals and the thorough processcorresponding payout levels were established across a three-tier construct (i.e. threshold, target and maximum).
Since 2017, we have utilized a long-term incentive plan (“LTIP”) based on forward-looking performance. Under the LTIP, the Compensation Committee
undertookissues equity grants that are earned based on three-year relative TSR (2020-2022 for awards granted in 2020) compared to
review and revise the compensation program, the Compensation Committee decided to honor the program that was developed in early 2016 and communicated to management rather than make any rash decisions and try to implement a new structure mid-year. Accordingly, 2016 is the last yearTSR of the
historical program structuremembers of the Nareit Industrial Index and to the broader Nareit Equity Index. Performance goals and the
new program will be effective for fiscal 2017corresponding payout levels were established across a three-tier construct (i.e. threshold, target and
beyond.Our executive compensation program is designed to reward successful annual and long-term performance while aligning the interests of our executive team with the interests of our shareholders by providing incentives based on the achievement of performance goals linked to our financial and strategic results.maximum). A significant portion of the total compensation of our executive officersLTIP is performance based on continued service and our 2016 compensation awards reflect strong alignment between pay and performance.
serves to foster retention.
The operational and financial performance measures considered by the Compensation Committee in determining executive compensation for 2016 are discussed below. Funds from operations, or FFO, and same property net operating income, or NOI, are not computed in accordance with U.S. generally accepted accounting principles (GAAP). Reconciliations of these non-GAAP measures and other required disclosure can be found on page 16 of our Annual Report on Form 10-K for the year ended December 31, 2016 which we filed with the Securities and Exchange Commission on February 15, 2017.
Criteria
| | Result
|
Total shareholder return | | Our total shareholder return, or TSR, for 2016 was 37.8%. |
Relative five-year annualized total shareholder return | | From 2012 to 2016, our annualized TSR was 15.4% compared to 18.0% for the NAREIT Industrial Index, 12.0% for the NAREIT Equity Index and 14.5% for the Russell 2000. |
Earnings performance | | Our FFO, was $4.02 per share, which was near the high end of our initial guidance to investors of $3.93 to $4.03 per share and an increase of 9.5% over 2015. |
Same property net operating income growth | | We experienced 3.1% growth in same property NOI year over year on a GAAP basis which exceeded our target goal of 2.8%. |
Leasing | | We renewed or re-leased 89% of expiring square feet during the year and rental rates on new and renewal leases increased an average of 11.9% for the year. Occupancy at the end of 2016 stood at 96.8% while average occupancy for 2016 was 95.8% which exceeded our goal of 95.0%. |
Acquisitions | | We completed acquisitions of operating properties (358,000 square feet), development-stage properties (996,000 square feet) and development land (197 acres) for $157 million for the year. |
Development | | We started nine new development projects (1.2 million square feet) with a projected total investment of $94 million in 2016. Our development program consisted of 17 projects (2.9 million square feet) at December 31, 2016 with a projected total investment of $235 million. |
Dispositions | | We sold nine operating properties (1.3 million square feet) and 25 acres of land for $81 million and $43 million gain. |
Dividends | | We paid annual cash dividends of $2.44 per share during the year. |
Management of the balance sheet | | We closed on new debt financing to elongate our debt maturity schedule, reduce our overall average corporate borrowing cost and fund acquisitions and development, while also maintaining satisfactory liquidity and leverage ratios. We also issued 875,052 shares under our continuous common equity program in 2016 with net proceeds of $59.3 million. |
Management of General and Administrative (G&A) expenses | | Our G&A expense of $13.2 million was in line with our budgeted goal for the year. As a percentage of revenues, our G&A expense was 5.2%, which was the lowest percentage of the nine industrial REITs reported by KeyBanc Capital Markets in their year-end REIT report, “The Leaderboard.” |
Oversight of Compensation.
Compensation
The Compensation Committee is responsible for implementing our executive pay philosophy, evaluating compensation against the market, and approving the material terms of executive compensation arrangements, such as incentive plan participants, award opportunities, performance goals, and compensation earned under incentive plans.
The committee is comprised entirely of independent directors as defined by the New York Stock Exchange.The Compensation Committee relies upon outside advisors to determineassist in determining competitive pay levels and evaluateevaluating pay program design. In 2016,2020, the Compensation Committee again retained FPL Associates, L.P. (“FPL”), which was first engaged by the Compensation Committee in 2003. The Compensation Committee directed FPL to, among other things: (1)
assist the Compensation Committee in applying our compensation philosophy toward designing a compensation program for our executive officers, including the determination of the portion of total compensation awarded in the form of salary, annual cash incentive and equity-based compensation, as well as selecting the appropriate performance metrics and levels of performance (e.g., threshold, target, high)maximum); (2)
analyze current compensation conditions among the Company’s peers, and assess the competitiveness and appropriateness of compensation levels for our executive officers; (3)
recommend to the Compensation Committee any modifications or additions to the Company’s existing compensation programs that it deemsdeemed advisable; and (4)
make specific recommendations to the Compensation Committee for base salary, annual cash incentive and equity-based awards for our executive officers.
A representative from FPL
generallyfrequently attends meetings of the Compensation Committee and is available to participate in executive sessions and to communicate directly with the Compensation Committee chair or its members outside of meetings.
We paid FPL approximately $40,000 in 2020 for their services as a compensation consultant.
In addition, in 2019, we engaged Ferguson Partners, an executive search firm and an affiliate of FPL, to assist us in the search for a new director. Ferguson Partners was paid approximately $30,000 in 2020 for its services. The decision to engage Ferguson Partners for director search services was made by the Nominating and Corporate Governance Committee. While the Compensation Committee considersdoes not pre-approve these non-executive compensation services, it does annually consider all factors relevant to the consultant’sFPL’s independence from management, including those identified by the NYSE. The Compensation Committee believes that the services provided by Ferguson Partners did not impact the advice and services that FPL provided to the Compensation Committee on executive compensation matters and has determined that FPL has no conflict of interest and is independent.
While Mr. Loeb, our CEO, did participate in general meetings of the Compensation Committee in 2020, he did not participate in executive sessions nor did he participate in any discussions determining his own compensation. Annually, upon request from the Compensation Committee, our CEO provides the Compensation Committee with data pertinent to his and the other executive officers’ performance, particularly in regards to the individual objectives of each executive.
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Peer Group
Analysis.Analysis
The Compensation Committee relies on the peer group analysis prepared by FPL to evaluate pay levels for our executive officers. The peer groups recommended by FPL and
usedapproved by the Compensation Committee are all public real estate companies and are divided into two groups based on
(i) industry sector (the asset-based peer group) and
(ii) equity market capitalization, geographic location and historical performance (the size-geographic-performance peer group, or what we refer to as the SGP peer group). FPL analyzes competitive total direct compensation at the peer REITs listed below, as disclosed in their proxy statements for prior years, as well as information contained in FPL’s proprietary database. The Compensation Committee evaluates the appropriateness of the peer groups annually (based on merger and acquisition activity, growth, property focus, etc.) and
makemakes adjustments accordingly.
The asset-based peer group
used for setting 2020 compensation was unchanged from
20152019 other than by the removal of Liberty Property Trust, which was acquired by Prologis, Inc. on February 4, 2020, and
consiststhe addition of Lexington Realty Trust; the asset-based peer group consisted of the following six
publicexchange-listed REITs that invest in industrial properties.
DCT Industrial Trust Inc.• | Liberty Property Trust |
| | |
Duke Realty Corporation | | | • | | | PS Business Parks, Inc. |
• | |
| | First Industrial Realty Trust, Inc. | | | • | | | Rexford Industrial Realty, Inc. |
• | | | Lexington Realty Trust | | | • | | | STAG Industrial, Inc. |
The SGP peer group
consistsused for setting 2020 compensation consisted of the following
12 public13 exchange-listed REITs, which (i) operate across multiple asset classes and are similar in size to the Company in terms of market capitalization, (ii) are similar in performance to the Company in terms of 3-year annualized TSR and/or (iii) are headquartered in the Sunbelt region of the United States.
Eleven of the thirteen SGP peer group were unchanged from 2019. Columbia Property Trust, Inc. and Washington Real Estate Investment Trust were removed from the peer group and were replaced with Healthcare Realty Trust Incorporated and Life Storage, Inc. for a more appropriate size comparison. The SGP peer group companies are as follows:
• | | | Acadia Realty Trust | | | • | | | PS Business Parks, Inc. |
• | | | CoreSite Realty Corporation | | | • | | | Rexford Industrial Realty, Inc. |
American Assets Trust, Inc.• | QTS Realty Trust |
| | |
Core Realty Corporation | Ramco-Gershenson Properties Trust |
| |
Cousins Properties Incorporated | | | • | | | Sabra Health Care REIT, Inc. |
• | | | First Industrial Realty Trust, Inc. | | | • | | | STAG Industrial, Inc. |
• | | | Healthcare Realty Trust Incorporated | | | • | | | Sunstone Hotel Investors, Inc. |
DCT Industrial Trust• | | | Life Storage, Inc. | Terreno | | • | | | Weingarten Realty CorporationInvestors |
• | |
First Potomac | Physicians Realty Trust | Washington Real Estate Investment Trust | | | | | |
The SGP based peer group was largely unchanged from 2015 with the exception of the removal of Hudson Pacific Properties, Inc. and Medical Properties Trust, Inc. due to their relative size compared to the remaining peers and the addition of Ramco-Gershenson Properties Trust and Terreno Realty Corporation.
The FPL
conducted a study
that compared the Company’s actual
20152019 compensation for
the executive officers (including the
restricted stockequity awards made in
20162020 with respect to
20152019 performance) with the actual
20152019 total compensation
of the top five executives of each of the
companies included in the peer groups.
In addition, FPL analyzed target compensation. The study showed that the target total pay, on a weighted average basis for all executive officers, was between the
25th25th percentile and median of
both the asset-based peer group and the SGP peer
group and lagged the 25th percentile of the asset-based peer group.
Actual total pay, on a weighted average basis for all executive officers, fell below the 25th percentile of both peer groups. The
Compensation Committee then used the peer group data, survey information and other relevant factors to establish the
20162020 compensation program for our executive officers.
These factors provided the framework for compensation decision making and final decisions regarding the compensation opportunity for each executive officer. The Company did not target a specific percentile of the peer group to set compensation and no single factor was determinative in setting pay levels, nor was the impact of any factor on the determination of pay levels quantifiable.
Components of Compensation
.The total compensation opportunity for our Named
Executive Officers in
20162020 incorporated three primary components: base salary,
an annual cash and equity incentive award and a long-term equity incentive
award. The equity incentive awards are based on our stock price at the beginning of theaward (that is earned over a three-year performance
period, which was $55.61 at December 31, 2015. In allocating compensation among these components, the Committee believes that the compensation of our executive officers, specifically our Chief Executive Officer, should be predominately performance-based.The charts below summarize the allocation of the 2016 compensation opportunity for our Chief Executive Officer and other Named Officers:
period).
Base Salary. The Compensation Committee seeks to provide our executive officers with a level of assured cash compensation in the form of base salarysalaries that isare commensurate with their professional status, accomplishments and geographic location. The base salaries are reviewed annually by the Compensation Committee and are adjusted from time to time to recognize competitive market data based on our peer groups, the officer’s level of responsibility,
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outstanding individual performance, promotions and internal equity considerations.
TheBased on a consideration of these factors, the base salaries of our Named
Executive Officers were increased
3%by a range of 3.0%-5.9% for
20162020 to align with
the exception of Mr. Loeb.market. The
Compensation Committee increased the2019 and 2020 base
salary of Mr. Loeb from $500,000 to $550,000 in 2016 to reflect his additional responsibilities resulting from his promotion to Chiefsalaries for each Named Executive Officer
effective January 1, 2016.and the percentage increase from 2019 to 2020 are shown in the following table:
Marshall A. Loeb | | | 675,000 | | | 695,000 | | | 3.0 |
Brent W. Wood | | | 425,000 | | | 450,000 | | | 5.9 |
John F. Coleman | | | 415,000 | | | 432,638 | | | 4.3 |
R. Reid Dunbar | | | 385,000 | | | 401,363 | | | 4.3 |
Ryan M. Collins | | | 340,000 | | | 351,900 | | | 3.5 |
Annual Cash and Equity Incentive Compensation
. Our Named Executive Officers have an opportunity to earn annual incentive awards, paid one-half in cash and one-half in equity, designed to reward annual corporate performance and individual performance. Each year the Compensation Committee establishes a target annual incentive award opportunity for each of our Named Executive Officers following a review of their individual scope of responsibilities, experience, qualifications, individual performance and contributions to the Company, as well as an analysis of the surveys and market data based on our peer groups, as discussed previously.In determining the actual annual incentive awards paid to an executive officer, the Compensation Committee initially considers performance against the pre-established performance goals. The Compensation Committee, in exercising its judgment and discretion to adjust an award up or down, then considers all facts and circumstances when evaluating performance, including the overall responsibilities and contributions of the executives, in making final award determinations.
20162020 AIP Target Opportunity. The Compensation Committee set the
targetedtarget annual cash incentive and
targetedtarget annual equity incentive
for the Chief Executive Officer each equal to
100% of base salary, for the
Chief Financial Officer each equal to 90% of base salary and for the other Named Officers each equal to 60% of base salary. As compared to 2015, no adjustment was made to the targetedfollowing percentage of
annual base
salary for the Named Officers. In addition to establishingsalary: Mr. Loeb (130%), Mr. Wood (85%), Mr. Coleman (60%), Mr. Dunbar (60%) and Mr. Collins (55%). If the target
awards,goal for a corporate performance metric is achieved, then the
Compensation Committee also imposed a maximum on the annual cash and equity incentive compensation that maycorporate performance metric will be deemed to be earned
by each executive officer equalat 100%. If the threshold or maximum goal for a performance metric is achieved, then the corporate performance metric will be deemed to
be earned at 50% or 150%, respectively. Results below threshold result in a zero payout and achievement at levels between threshold and maximum are determined via linear interpolation. No more than 150% of the target
award.award may be earned under the AIP.
Marshall A. Loeb | | | 903,500 | | | 903,500 | | | 6,810 |
Brent W. Wood | | | 382,500 | | | 382,500 | | | 2,883 |
John F. Coleman | | | 259,583 | | | 259,583 | | | 1,957 |
R. Reid Dunbar | | | 240,818 | | | 240,818 | | | 1,815 |
Ryan M. Collins | | | 193,545 | | | 193,545 | | | 1,459 |
(1)
| Shares valued at a closing stock price at the beginning of the performance period, which was $132.67 at December 31, 2019. |
20162020 AIP Corporate Performance Goals. The Compensation Committee approved performance goalsmetrics and their relative weightings for 2016the 2020 annual cash and equity incentive awards following a review of the Company’s business plan and budget for the year. are described below, along with why we believe these were appropriate metrics to use in measuring short-term performance.
FFO Per Share | | | 50% | | | • | | | FFO is a commonly used REIT financial metric defined by Nareit |
| | | | | | | | | |
| | | | | | • | | | Allows shareholders to compare operating performance among REITs over time on a consistent basis |
| | | | | | | | | |
| | | | | | • | | | May significantly impact the trading price of a REIT’s common stock and, therefore, may significantly impact TSR |
| | | | | | | | | |
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Increase in Same PNOI | | | 10% | | | • | | | Internal performance metric measuring growth in our existing real estate portfolio |
| | | | | | | | | |
| | | | | | • | | | Allows shareholders to compare year-over-year improvements in our earnings from established investments and our ability to maintain occupancy and increase rental rates |
| | | | | | | | | |
Debt-to-EBITDAre Ratio | | | 10% | | | • | | | A measure of the Company's financial condition and operating performance relative to our leverage |
| | | | | | | | | |
Fixed Charge Coverage | | | 10% | | | • | | | Fixed charge coverage ratio reflects the strength of our balance sheet and our ability to generate sufficient cash flow to meet our debt obligations and continue to pay or increase our dividend |
| | | | | | | | | |
Individual Objectives | | | 20% | | | • | | | Assessment of individual contributions to the Company’s financial and operational performance, as well as accomplishments relative to annual objectives |
| | | | | | | | | |
| | | | | | • | | | Strongly influenced by objective criteria, such as occupancy, new and renewed leasing rates, development projects, asset recycling and other quantitative and qualitative performance metrics and trends as determined by our Compensation Committee |
| | | | | | | | | |
| | | | | | • | | | Incentivizes and rewards individual initiative, achievements and contributions |
The
annual performance goals were based on the
Company’s total shareholder return, FFO per share, same property net operating income growth and certain Company-wide strategic objectives as more particularly described below:Criteria | | Internal Guideline or
Budget | | 2016
Actual Results | | Goal Met? |
| Total Shareholder Return | | 10% target; 13% high | | 37.8% | | Yes, exceeded maximum level |
| FFO Per Share | | $3.98 target; $4.03 high | | $4.02 | | Yes, between target and maximum level |
| Increase in Same Property NOI | | 2.8% target; 4.2% high | | 3.1% | | Yes, between target and maximum level |
| General and Administrative Costs | | $13.2 million | | $13.2 million | | In line with budget |
| Average Occupancy | | 95.0% | | 95.8% | | Yes |
| Debt to Total Market Capitalization | | Less than 35% | | 31.0% | | Yes |
| Bank Debt (1) | | Less than $230 million | | $192 million at December 31, 2016 | | Yes |
| Fixed Charge Coverage | | Greater than 3.0 to 1.0 | | 4.75 to 1.0 | | Yes |
| Bank Covenants | | In compliance | | In compliance each quarter | | Yes |
Corporate Performance Goals(1)
| | | | | | | | | | | | | | | |
FFO Per Share | | | $5.25 | | | $5.30 | | | $5.35 | | | $5.38 | | | 150% |
Increase in Same PNOI | | | 1.7% | | | 2.2% | | | 2.7% | | | 2.4%(2) | | | 120% |
Debt-to-EBITDAre Ratio | | | 6.0 | | | 5.5 | | | 5.0 | | | 5.3 | | | 120% |
Fixed Charge Coverage | | | 3.0x | | | 3.5x | | | 4.0x | | | 5.8x | | | 150% |
(1)
| (1)FFO, Same PNOI and EBITDAre are not computed in accordance with GAAP. Reconciliations of FFO and Same PNOI and other required disclosure can be found on pages 22 and 23 of our Annual Report on Form 10-K for the year ended December 31, 2020, which we filed with the SEC on February 17, 2021. Reconciliations of EBITDAre and other required disclosure, including disclosure related to the Debt-to-EBITDAre ratio and Interest and Fixed Charge Coverage ratio, can be found on pages 5, 6, 8, 10, 21, 23 and 24 in the Company’s quarterly Supplemental Information for the period ended December 31, 2020, which can be found on the Investor Relations page of the Company’s website at www.eastgroup.net. Interest and Fixed Charge Coverage ratio is calculated as EBITDAre divided by the sum of interest expense plus principal amortization. |
(2)
| The Compensation Committee initially setapproved an adjustment to Same PNOI for a non-cash, tenant-specific charge. Without the goal as less than $150 million but subsequently adjustedadjustment, the limitactual result would have been 2.1%, which would have resulted in connection with the repayment90% of an $80 million unsecured term loan in August 2016.Target. |
The2020 AIP Individual Performance Goals. Each Named Executive Officer was assigned individual goals related to his scope of responsibility and aligned with our overall strategic priorities. These goals account for 20% of a Named Executive Officer’s AIP award and may be qualitative or quantitative in nature. In considering the individual performance of the Named Executive Officers, the Compensation Committee alsodid not set specific factors or goals and
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did not assign specific weightings to any factors considered,
but instead considered them together as part of a comprehensive qualitative review. We believe that disclosure of individual details regarding these performance goals would cause potential significant competitive harm to us without adding meaningfully to the
Company’s financial and other performance, both on an absolute and relative basis, as well as general economic conditions inunderstanding of our business or the
Company’s markets and factors such as property acquisitions, dispositions, equity issuances, and debt financings during the year. TheAIP. Our Compensation Committee
usedsets such individual performance goals at rigorous levels which we believe are sufficiently high to require substantial and sustained performance by the
asset-based peer group for purposes of reviewing relative financial and other performance as discussed below. This peer group was used as these companies focus on industrial properties, which causes their performanceNamed Executive Officers to be
most closely correlated with ours.Criteria | | Peer Group
Range | | Peer Group
Average | | | 2016 Actual
Company Results | |
| Change in Adjusted FFO Per Share (1) | | (5.6)% to 12.6% | | | 5.4 | % | | | 9.5 | % |
Same Property NOI Change (Industrial Assets):
GAAP basis | | 0.1% to 5.9% | | | 3.8 | % | | | 3.1 | % |
| Year-End Occupancy | | 94.4% to 97.2% | | | 95.8 | % | | | 96.8 | % |
| Total Shareholder Return | | 30.4% to 38.1% | | | 33.6 | % | | | 37.8 | % |
| (1) | Adjusted to add back acquisition costs and preferred stock redemption costs and to make certain other adjustments to reflect non-recurring income or expenses at members of the peer group. |
2020 AIP Actual Results. Based on the Compensation Committee’s analysis of all of the foregoing criteria, the Compensation Committee determined that our actual Company results exceeded target performance and awarded annual cash incentive compensation and annual equity incentive compensation to each Named Officer equal to 140%resulted in a weighted average of 143% of the target awardlevel for Company performance goals (95% of maximum) and between threshold and maximum for the individual performance goals (varies by Named Executive Officer, as set forth below.
| | | | | | | Annual Equity Incentive |
Name | | | Annual Cash
Incentive | | | | Shares | | | | Grant Date
Fair Value | |
| Marshall A. Loeb | | $ | 770,000 | | | | 13,846 | | | $ | 1,035,681 | |
| N. Keith McKey | | $ | 481,320 | | | | 8,655 | | | $ | 647,394 | |
| John F. Coleman | | $ | 312,480 | | | | 5,619 | | | $ | 420,301 | |
| Brent W. Wood | | $ | 312,480 | | | | 5,619 | | | $ | 420,301 | |
These performance-basedshown in the table below). The table below summarizes the overall AIP payouts which were based on the corporate and individual performance goals and weightings for each Named Executive Officer.
Marshall A. Loeb | | | 143% | | | 135% | | | 141% | | | 1,273,935 | | | 9,602 |
Brent W. Wood | | | 143% | | | 135% | | | 141% | | | 539,325 | | | 4,065 |
John F. Coleman | | | 143% | | | 140% | | | 142% | | | 368,608 | | | 2,778 |
R. Reid Dunbar | | | 143% | | | 135% | | | 141% | | | 339,553 | | | 2,559 |
Ryan M. Collins | | | 143% | | | 90% | | | 132% | | | 255,479 | | | 1,926 |
The annual incentive equity awards, granted in the form of restricted shares, vested
20%34% on the date
of grantthe performance results were certified by the Compensation Committee and
generally will vest
20%33% on each of January 1,
2018, 2019, 20202022 and
2021. As previously disclosed,2023, subject to continued employment with the
Compensation Committee approved specialCompany through each applicable vesting
provisions whereby shares issued to Mr. McKey vested immediately.date. Dividends on the annual equity incentive awards accumulate beginning January 1,
20162020 and are paid if and when the restricted
stock vests. The Compensation Committee reviewed the Company’s results for the 2016 performance period and approved the actual awards in March 2017. Accordingly, these performance-based equity awards are not reflected in the Summary Compensation Table and other compensation tables in this proxy statement, rather these awards will be reflected as 2017 compensation in accordance with the rules of the SEC.shares vest.
Long-Term Equity Incentive
Compensation.Compensation. Our Named Executive Officers have an opportunity to earn long-term equity incentive awards intended to provide incentives to our executives for the creation of value and the corresponding growth of our stock price over time. The Compensation Committee believes that our equity-based long-term equity incentive awards, together with the annual equity incentive awards discussed above, providesprovide an appropriate balance between performance incentive and retention awards since the recipient must remain employed by the Company for an additional period following the performance period in order for the restricted stockshares to vest.2016LTIP Target Opportunity. The Compensation Committee set the targeted long-term equity incentivestarget for the Chief Executive Officerthree-year LTIP award, equal to 100% of base salary, for the Chief Financial Officer equal to 90% of base salary and for the other Named Officers equal to 60% of base salary. As compared to 2015, no adjustment was made to the targetedfollowing percentage of base salary for the Named Officers. In addition to establishingsalary: Mr. Loeb (216%), Mr. Wood (141%), Mr. Coleman (81%), Mr. Dunbar (80%) and Mr. Collins (79%). For each three-year LTIP award, 70% of the target awards,award was performance-based (i.e., TSR-based) and 30% of the Compensation Committee also imposedtarget award was service-based. If the target goal for a maximum onperformance metric is achieved, then the long-term equity incentive compensation that mayperformance metric will be deemed to be earned by each executive officer equalat 100%. If the threshold or maximum goal for a performance metric is achieved, then the performance metric will be deemed to be earned at 50% or 150%, respectively. Results below threshold result in a zero payout and achievement at levels between threshold and maximum are determined via linear interpolation. No more than 150% of the target award.LTIP award may be earned. The service-based portion of the LTIP award vests 25% per year for four years.
Three-year LTIP Awards
Marshall A. Loeb | | | 1,498,000 | | | 11,291 | | | 7,904 | | | 3,387 |
Brent W. Wood | | | 635,000 | | | 4,786 | | | 3,350 | | | 1,436 |
John F. Coleman | | | 349,000 | | | 2,630 | | | 1,841 | | | 789 |
R. Reid Dunbar | | | 320,000 | | | 2,412 | | | 1,688 | | | 724 |
Ryan M. Collins | | | 279,500 | | | 2,107 | | | 1,475 | | | 632 |
(1)
| Shares valued at a closing stock price at the beginning of the performance period, which was $132.67 at December 31, 2019. |
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2016LTIP Performance Goals.
Similar to prior years, theThe performance goals for the long-term equity incentive awards
wereare based on the Company’s
absolute performance during 2016 as well asTSR over a
comparisonthree-year period (2020-2022 for awards granted in 2020) and include a one-year service-based component following the end of the
Company’s total return to the NAREIT Industrial Index, NAREIT Equity Index and the Russell 2000 Index over the five-year period ended December 31, 2016.performance period. The
Company’s TSR for 2016 was 37.8% and the relative five-year annualized total shareholder return is set forth below:Company/Index
| | Annualized Total
Shareholder Return
|
EastGroup Properties, Inc. | | 15.4% |
NAREIT Industrial Index | | 18.0% |
NAREIT Equity Index | | 12.0% |
Russell 2000 Index | | 14.5% |
Based on the foregoing, the Compensation Committee determined that actual Company results exceeded target performance and awarded long-term equity incentive compensation to each Named Officer equal to 120% of the target award as set forth below.
| | | | Long-Term Equity Incentive | |
| | Name | | Shares | | | Grant Date Fair
Value | |
| | Marshall A. Loeb | | | 11,868 | | | $ | 887,726 | |
| | N. Keith McKey | | | 7,419 | | | $ | 554,941 | |
| | John F. Coleman | | | 4,816 | | | $ | 360,237 | |
| | Brent W. Wood | | | 4,816 | | | $ | 360,237 | |
These shares vested 25% on the date of grant and generally willperformance-based LTIP awards vest 25% on each of January 1, 2018, 2019 and 2020, with the exception of the special vesting provision for Mr. McKey discussed above. Dividends on the awards accumulate beginning January 1, 2016 and are paid if and when the restricted stock vests. The Compensation Committee reviewed the Company’s results75% at the end of the performance period and approved the actual long-term equity incentive awards in March 2017. Accordingly, these performance-based equity awardsremainder on January 1 of the following year, subject to the executive officer’s continued service with the Company through such date. The metrics are not reflectedshown in the Summary Compensation Table and other compensation tables in this proxy statement, rather these awardsfollowing table. Because the performance period is the three-year period ending December 31, 2022, actual results will not be reflected as 2017 compensation in accordance withdetermined until the rulesfirst quarter of the SEC.
2023.
TSR Compared to Nareit Equity Index | | | 250 basis
points below | | | Equal to Index | | | 250 basis points above | | | 35% |
TSR Compared to member companies of the Nareit Industrial Index | | | 25th
Percentile | | | 50th
Percentile | | | 75th
Percentile | | | 35% |
Retentive Service-Based Award | | | n/a | | | award at Target | | | n/a | | | 30% |
Retention
Grants.Grants. On March 4, 2010, the Compensation Committee awarded 20,000 restricted shares of restricted stockper employee as a retention bonus to eachthree of the Company’s Senior Vice Presidents, including Messrs. Coleman and Wood. Each of these Senior Vice Presidents is a seasoned real estate executive whose departure would disrupt the operationsThe final vesting of the Company in the region for which that person is responsible. The Compensation Committee discussed various ways in which to mitigate the risk that one or more of these individuals could be enticed away. The restricted stock awards vest as follows, provided that the applicable officer remains in the employ of the Company as of such date: 1,400 sharesretention grants occurred on January 10, 2016; 2,6002020; therefore, there are currently no outstanding unvested shares on January 10, 2017; 4,000 shares on January 10, 2018; 5,400 shares on January 10, 2019 and 6,600 shares on January 10, 2020.In the event the officer’s employment terminates for reasons other than death or permanent disability, the officer will forfeit all of his interest in shares that have not vested as of the date of termination. If employment terminates as a result of death or permanent disability, the officer or his estate will receive a pro rata number of restricted shares based on the number of full months elapsed since January 1, 2010subject to the date of termination of employment compared to the full vesting period. The Compensation Committee believes these restricted stock awards will give the executive officers incentive to remain with the Company over the long term.
2017 Program Summary
As previously noted, the Compensation Committee has made a number of meaningful changes to the go-forward compensation program. Historically (through and including fiscal 2016), the Committee based their awards on pre-set annual operating metrics and on pre-set total return goals but did not disclose specific weightings and used their discretion on final awards. Although the Committee believes its awards were supported by the operating and total return results, pay practices are now in favor of bright line tests and forward looking plans.
retention grants.
The Committee set the following metrics for 2017. The annual incentive program would be based on the initial guidance for 2017 in the February 1, 2017 earnings press release (adjusted for the updated G&A guidance disclosed in its March 6, 2017 press release):
Amount of Award
| Metric
|
50% | FFO per share |
10% | Same Property NOI Change from the prior year |
10% | General & Administrative Costs |
10% | Fixed Charge Coverage |
20% | Achievement of Individual Goals |
The long-term incentive program would have a transition period for the first two years. The metrics would be the same for the transition periods and the regular period. The metrics are as follows:
Amount of Award
| Metric
|
35% | Total Shareholder Return (TSR) compared to NAREIT Equity Index |
35% | TSR Compared to NAREIT Industrial |
30% | Time Vested |
For 2017, the metric would use the results for one year – 2017. For 2018, the metric would use the results for 2017 and 2018. For 2019, the periods would be the three-years ending in 2019.
Retirement Plans. Plans. We have a 401(k) Plan pursuant to which the Company makes matching contributions of 50% of the eligible employee’s contributions (limited to 10% of compensation as defined by the plan) and may also make annual discretionary contributions. For 2020, the Company made a discretionary contribution of 4.7% of eligible employees’ compensation. The percentages of Company contributions for eligible Named Executive Officers are the same percentages as for other eligible employees. When the Compensation Committee calculates targeted overall compensation for our senior management, it factors in the benefits expected to be received under the 401(k) Plan.
Perquisites and Other Benefits.
The Compensation Committee annually reviews the perquisites that senior management receives.receive. The primary perquisitesperquisite for executive officers areis the Company’s contribution to a 401(k) Plan andprovision of life insurance of 2.5 timesequal to 2.5x base salary up to a maximum amount of $400,000. Executive officers also participate in the Company’s medical insurance plans on the same terms as other officers. In certain circumstances, we provide reimbursement of reasonable expenses for relocations or substantial changes to the location of an executive officer’s workplace. We do not provide our executivesexecutive officers automobiles or reimbursement for country clubs, financial planning or things of a similar nature.
Severance
Benefits. Benefits. In order to recruit executives and encourage retention of employees, we believe it is appropriate and necessary to provide assurance of certain severance payments if the Company terminates the individual’s employment without cause. Pursuant to our Severance and Change in Control Agreements, in the event an executive officerofficer’s employment is terminated involuntarily by the Company without cause, as defined in the applicable agreement, and provided the employee executes a full and irrevocable release of claims, in a form satisfactory to the Company, promptly following termination, the employee will be entitled to receive certain severance benefits discussed below under the heading “Potential Payments upon Termination or Change in Control.” We believe that the size of the severance package for each Named Executive Officer is consistent with severance benefits offered by other companies of our size or in our industry.industry to an officer in a similar position.
Change in Control. Control. Our senior management and other employees have built the Company into a successful real estate investment trust and the Board of Directors believes that it is important to protect them in the event of a change in control. Further, it is the Board’s belief that the interests of shareholders will be best served if the interests of our senior management are aligned with them, and providing change in control benefits should eliminate, or at least reduce, the reluctance of senior management to pursue potential change in control transactions that may result in their job loss, but which may be in the best interests of shareholders. Upon a change in control and a qualifying termination, Messrs. Loeb, Wood and Coleman would receive a lump sum cash severance payment equal to three times the executive’s average annual compensation. Messrs. Dunbar and Collins would receive a lump sum cash severance payment equal to 2.5 times the executive’s average annual compensation. The severance payments would be paid in cash 60 days
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after termination and upon execution of a waiver and release agreement. The executive would also be provided life insurance and be reimbursed for health insurance for a period of time. Relative to the overall value of the Company, these potential change in control benefits are relatively minor. See “Potential Payments upon Termination or Change in Control” for additional information.
Clawback. We have a policy that allowsrequires the clawbackreimbursement of variableincentive compensation in the event of a substantial restatement of our financial results caused by intentional misconduct by senior officers of the Company. The Compensation CommitteeBoard reserves the right to review the incentive compensation received by the senior officers with respect to the period to which the restatement relates, recalculate the Company’s results for the period to which the restatement relates and seek reimbursement of that portion of the incentive compensation that was based on the misstated financial results from the senior officer or officers whose intentional misconduct was the cause of the restatement.
Hedging and Pledging
Policy.Policy. Our Board of Directors has adopted a policy that prohibits Company directors, officers and certain designated employees from (i) engaging in any hedging or monetization transactions involving Company securities or from purchasing or selling any put or call option contract or similar instrument with respect to Company securities and (ii) pledging Company securities as collateral for a loan or holding such shares in a margin account.
Stock Ownership Policy. We have a policy that requires ownership of Company stock by directors and executive officers who have served in their role as a director or executive officer for a minimum of five years. Directors are required to own Company stock with a market value (number of shares multiplied by the current price of common stock) of at least five times the annual cash retainer for directors. Executive officers are required to own Company stock with a market value of at least: (i) five times annual base salary for the Chief Executive Officer, (ii) three times annual base salary for Executive Vice Presidents, and (iii) two times annual base salary for Senior Vice Presidents. Director and executive officer stock ownership is reviewed by the Nominating and Corporate Governance Committee on at least an annual basis, and all directors and executive officers who have served in their role as a director or executive officer for a minimum of five years are currently in compliance.
ReportTax and Accounting ConsiderationsDeductibility of Executive Compensation
Section 162(m) of the U.S. Internal Revenue Code of 1986 (the “Code”), as amended by the Tax Cuts and Jobs Act of 2017 (the “TCJA”), limits to $1 million the deduction that publicly traded corporations may take for compensation paid to “covered employees” of the corporation. Under a series of private letter rulings issued by the Internal Revenue Service (the “IRS”) prior to the enactment of the TCJA, compensation paid by an operating partnership to executive officers of a REIT that serves as its general partner was not subject to the limitation on deductibility under Section 162(m) to the extent such compensation was attributable to services rendered to the REIT’s operating partnership. In December 2020, the IRS issued final Treasury regulations under Section 162(m) (the “Final Regulations”) that overturn the guidance in the private letter rulings and apply Section 162(m)’s $1 million deduction limit to a REIT’s distributive share of any compensation paid by the REIT’s operating partnership to certain current and former executive officers of the REIT. The guidance under the Final Regulations applies to all compensation deductible in tax years ending on or after December 20, 2020 other than compensation paid pursuant to a written binding contract in effect on December 20, 2019 that is not subsequently materially modified. This guidance represents a significant change in IRS guidance regarding the deductibility of compensation for REITs and, to the extent that compensation paid to our executive officers does not qualify for deduction under Section 162(m), a larger portion of stockholder distributions may be subject to U.S. federal income taxation as dividend income rather than return of capital.
Accounting for Stock-Based Compensation
We follow the FASB ASC Topic 718 for our stock-based compensation awards.
Compensation Risk Assessment
In 2020, in consultation with management and FPL, our Compensation Committee’s independent compensation consultant, our Compensation Committee assessed our compensation plans, policies and practices for the Named Executive Officers and other employees and concluded that they do not create risks that are reasonably likely to have a material adverse effect on our company. This risk assessment included, among other things, a review of our cash and equity incentive compensation plans to ensure that they are aligned with our Company performance goals and overall target total direct compensation to ensure an appropriate balance between fixed and variable pay components. Our Compensation Committee conducts this assessment annually.
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Compensation Committee Report The following Report of the Compensation Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 except to the extent the Company specifically incorporates this Report by reference therein.
The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this
Proxy Statement.proxy statement. | | | Submitted by the Compensation Committee: |
| | | |
| | | H. Eric Bolton Jr., Chair |
| | | H.C. Bailey, Jr. |
| | | Donald F. Colleran |
| | | Hayden C. Eaves III Chair
H.C. Bailey, Jr.
H. Eric Bolton Jr.
Fredric H. Gould |
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Summary Compensation Table
The following table summarizes, for the fiscal years ended December 31,
2016, 20152020, 2019 and
2014,2018, the amount of compensation
earned, or paid by the Company to, the Named
Executive Officers.
Marshall A. Loeb
President and Chief Executive Officer
| | | 2020 | | | 695,000 | | | — | | | 2,481,393 | | | 1,273,935 | | | 215,942 | | | 4,666,270 |
| | 2019 | | | 675,000 | | | — | | | 2,683,357 | | | 1,231,875 | | | 143,020 | | | 4,733,252 |
| | 2018 | | | 650,000 | | | — | | | 2,516,243 | | | 1,106,300 | | | 86,689 | | | 4,359,232 |
Brent W. Wood
Executive Vice President and Chief Financial Officer
| | | 2020 | | | 450,000 | | | — | | | 1,034,538 | | | 539,325 | | | 262,615 | | | 2,286,478 |
| | 2019 | | | 425,000 | | | — | | | 1,071,146 | | | 465,375 | | | 203,944 | | | 2,165,465 |
| | 2018 | | | 407,000 | | | — | | | 829,449 | | | 451,770 | | | 156,153 | | | 1,844,372 |
John F. Coleman
Executive Vice President
| | | 2020 | | | 432,638 | | | — | | | 643,485 | | | 368,608 | | | 256,948 | | | 1,701,679 |
| | 2019 | | | 415,000 | | | — | | | 715,862 | | | 366,030 | | | 201,747 | | | 1,698,639 |
| | 2018 | | | 403,000 | | | — | | | 665,884 | | | 353,028 | | | 158,681 | | | 1,580,593 |
R. Reid Dunbar
Senior Vice President
| | | 2020 | | | 401,363 | | | — | | | 593,536 | | | 339,553 | | | 36,481 | | | 1,370,933 |
| | 2019 | | | 385,000 | | | — | | | 671,526 | | | 339,570 | | | 29,350 | | | 1,425,446 |
| | 2018 | | | 371,000 | | | 200,000(5) | | | 551,426 | | | 331,674 | | | 10,978 | | | 1,465,078 |
Ryan M. Collins
Senior Vice President
| | | 2020 | | | 351,900 | | | — | | | 472,503 | | | 255,479 | | | 34,799 | | | 1,114,681 |
| | 2019 | | | 340,000 | | | — | | | 561,230 | | | 258,060 | | | 23,045 | | | 1,182,335 |
| | 2018 | | | 325,000 | | | 65,000(6) | | | 462,303 | | | 259,188 | | | 10,974 | | | 1,122,465 |
Name and Principal Position
| | Year
| | Salary
| | Stock Awards(1)
(1) (2)
| | Non-Equity
Incentive Plan
Compensation
| | All Other
Compensation
(3)
| | Total
|
Marshall A. Loeb
President and Chief Executive Officer (4)
| | 2016
2015 | | $ | 550,000
416,667 | | $ | 539,425
— | | $ | 770,000
479,167 | | $ | 23,709
56,151 | | $ | 1,883,134
951,985 |
N. Keith McKey
Executive Vice President, Chief Financial Officer and Secretary
| | 2016
2015
2014 | | $ | 382,000
371,000
360,000 | | $ | 576,362
869,269
829,335 | | $ | 481,320
383,985
463,320 | | $ | 23,476
22,293
20,610 | | $ | 1,463,158
1,646,547
1,673,265 |
John F. Coleman
Senior Vice President
| | 2016
2015
2014 | | $ | 372,000
361,000
350,000 | | $ | 373,910
563,435
528,023 | | $ | 312,480
249,090
300,300 | | $ | 23,709
22,293
20,610 | | $ | 1,082,099
1,195,818
1,198,933 |
Brent W. Wood
Senior Vice President
| | 2016
2015
2014 | | $ | 372,000
361,000
350,000 | | $ | 373,910
563,435
528,023 | | $ | 312,480
249,090
300,300 | | $ | 20,709
19,293
17,860 | | $ | 1,079,099
1,192,818
1,196,183 |
William D. Petsas
Former Senior Vice President
| | 2016
2015
2014 | | $ | 350,000
350,000
340,000 | | $ | 362,475
547,358
513,463 | | $
| —
241,500
291,720 | | $ | 23,709
22,293
20,610 | | $ | 736,184
1,161,151
1,165,793 |
| (1) | The amounts in this column reflectrepresent the aggregate grant date fair values of the restricted stock awards grantedshares of Common Stock awarded to the Named Executive Officers during 2014, 2015the fiscal years ended December 31, 2020, 2019 and 2016 and2018, as applicable, determined in accordance with FASB ASC Topic 718. Such aggregate grant date fair values do not include any estimated forfeitures related to service-based vesting conditions. The valuation assumptions used in determining such amounts are disclosed asdescribed in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 17, 2021. In the case of the performance-based restricted shares granted in 2020, the aggregate grant date fair value is reported assuming the probable outcome of the awards, computed in accordance with FASB ASC Topic 718 (formerly FAS 123R).performance conditions. The maximum values of such restricted shares as of the grant date were as follows: $3,317,212 for Mr. Loeb, $1,388,708 for Mr. Wood, $857,735 for Mr. Coleman, $791,105 for Mr. Dunbar and $638,357 for Mr. Collins. |
(2)
| (2) | For 2016, theThe amounts in this column do not reflectfor 2020 represent (i) the performance-based restricted shares awarded by the Compensation Committeein March 2020 with respect to 20162019 performance sinceunder the 2019 AIP based on individual performance goals, (ii) performance-based restricted shares awarded in March 2020 with respect to 2020 performance under the 2020 AIP based on corporate performance goals, (iii) performance-based awards were discretionary and wereof restricted shares granted in March 2017. Under2020 for the SEC disclosure rules, thesethree-year LTIP awards will be reflected as 2017 compensation. Seeand (iv) service-based restricted shares granted in March 2020 for the previous discussion in the Compensation Discussion and Analysis under the headings “Annual Cash and Equity Incentive Compensation” and “Long-Term Equity Incentive Compensation”.three-year LTIP awards. |
| (3)
| The amount shownamounts in this column representsrepresent the annual incentive cash awards earned under the Company’s discretionary contribution and matching contribution toAIP for the applicable fiscal year. |
(4)
| The amounts in this column represent the Company’s contributions under its 401(k) Plan for the Named Executive Officer’s benefit, dividends paid on vested restricted stock, and the amount of premium paid by the Company for group term life insurance onfor the Named Officer’s life. The value of perquisitesExecutive Officer. |
Marshall A. Loeb | | | 27,001 | | | 188,370 | | | 571 | | | 215,942 |
Brent W. Wood | | | 27,001 | | | 235,043 | | | 571 | | | 262,615 |
John F. Coleman | | | 27,001 | | | 229,376 | | | 571 | | | 256,948 |
R. Reid Dunbar | | | 23,751 | | | 12,159 | | | 571 | | | 36,481 |
Ryan M. Collins | | | 23,751 | | | 10,477 | | | 571 | | | 34,799 |
(5)
| Since Mr. Dunbar commenced employment with the Company on May 29, 2017, Mr. Dunbar was entitled to a $300,000 signing bonus which was paid in three equal installments on May 29, 2017, January 1, 2018 and other personal benefits are not shown in the table because the aggregate amount of such compensation, if any, is less than $10,000 for each Named Officer.June 30, 2018. |
(6)
| (4) | Since Mr. Loeb was appointed President and Chief Operating Officer ofCollins commenced employment with the Company on MarchJune 1, 20152017, Mr. Collins was entitled to a $130,000 signing bonus which was paid in two equal installments on June 1, 2017 and was promoted to Chief Executive Officer on January 1, 2016.2018. |
TABLE OF CONTENTS
Grants of Plan-Based Awards in
2016| | | | | | Estimated Future Payouts Under
Non-Equity Incentive Plan Awards | | | All Other Stock Awards (#) | | | Grant Date Fair Value of Stock Awards (3) | |
Name | | Grant Date | | Threshold | | | Target | | | Maximum | | | | | |
| Marshall A. Loeb | | 05/25/2016 (1)
03/02/2016 (2) | | $ | 275,000 | | | $ | 550,000 | | | $ | 825,000 | | | | 9,624 | | | $ | 539,425 | |
| N. Keith McKey | | 05/25/2016 (1)
03/02/2016 (2) | | $ | 171,900 | | | $ | 343,800 | | | $ | 515,700 | | | | 10,283 | | | $ | 576,362 | |
| John F. Coleman | | 05/25/2016 (1)
03/02/2016 (2) | | $ | 111,600 | | | $ | 223,200 | | | $ | 334,800 | | | | 6,671 | | | $ | 373,910 | |
| Brent W. Wood | | 05/25/2016 (1)
03/02/2016 (2) | | $ | 111,600 | | | $ | 223,200 | | | $ | 334,800 | | | | 6,671 | | | $ | 373,910 | |
| William D. Petsas | | 05/25/2016 (1)
03/02/2016 (2) | | $ | 105,000 | | | $ | 210,000 | | | $ | 315,000 | | | | 6,467 | | | $ | 362,475 | |
Marshall A. Loeb
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
2020 AIP (Cash)(1) | | | | | | 451,750 | | | 903,500 | | | 1,355,250 | | | | | | | | | | | | | | | |
2020 AIP (Equity)(2) | | | 03/06/20 | | | | | | | | | | | | 2,724 | | | 5,448 | | | 8,172 | | | | | | 715,649 |
2020 Three-Year LTIP Award(3) | | | 03/06/20 | | | | | | | | | | | | 3,952 | | | 7,904 | | | 11,856 | | | | | | 955,989 |
2020 Three-Year LTIP Award(4) | | | 03/06/20 | | | | | | | | | | | | | | | | | | | | | 3,387 | | | 444,916 |
2019 AIP Awards(5) | | | 02/13/20 | | | | | | | | | | | | | | | | | | | | | 2,576 | | | 364,839 |
Brent W. Wood
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
2020 AIP (Cash)(1) | | | | | | 191,250 | | | 382,500 | | | 573,750 | | | | | | | | | | | | | | | |
2020 AIP (Equity)(2) | | | 03/06/20 | | | | | | | | | | | | 1,153 | | | 2,306 | | | 3,459 | | | | | | 302,916 |
2020 Three-Year LTIP Award(3) | | | 03/06/20 | | | | | | | | | | | | 1,675 | | | 3,350 | | | 5,026 | | | | | | 405,183 |
2020 Three-Year LTIP Award(4) | | | 03/06/20 | | | | | | | | | | | | | | | | | | | | | 1,436 | | | 188,633 |
2019 AIP Awards(5) | | | 02/13/20 | | | | | | | | | | | | | | | | | | | | | 973 | | | 137,806 |
John F. Coleman
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
2020 AIP (Cash)(1) | | | | | | 129,792 | | | 259,583 | | | 389,375 | | | | | | | | | | | | | | | |
2020 AIP (Equity)(2) | | | 03/06/20 | | | | | | | | | | | | 783 | | | 1,566 | | | 2,349 | | | | | | 205,710 |
2020 Three-Year LTIP Award(3) | | | 03/06/20 | | | | | | | | | | | | 921 | | | 1,841 | | | 2,762 | | | | | | 222,669 |
2020 Three-Year LTIP Award(4) | | | 03/06/20 | | | | | | | | | | | | | | | | | | | | | 789 | | | 103,643 |
2019 AIP Awards(5) | | | 02/13/20 | | | | | | | | | | | | | | | | | | | | | 787 | | | 111,463 |
R. Reid Dunbar
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
2020 AIP (Cash)(1) | | | | | | 120,409 | | | 240,818 | | | 361,227 | | | | | | | | | | | | | | | |
2020 AIP (Equity)(2) | | | 03/06/20 | | | | | | | | | | | | 726 | | | 1,452 | | | 2,178 | | | | | | 190,735 |
2020 Three-Year LTIP Award(3) | | | 03/06/20 | | | | | | | | | | | | 844 | | | 1,688 | | | 2,533 | | | | | | 204,164 |
2020 Three-Year LTIP Award(4) | | | 03/06/20 | | | | | | | | | | | | | | | | | | | | | 724 | | | 95,105 |
2019 AIP Awards(5) | | | 02/13/20 | | | | | | | | | | | | | | | | | | | | | 731 | | | 103,532 |
Ryan M. Collins
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
2020 AIP (Cash)(1) | | | | | | 96,773 | | | 193,545 | | | 290,318 | | | | | | | | | | | | | | | |
2020 AIP (Equity)(2) | | | 03/06/20 | | | | | | | | | | | | 584 | | | 1,167 | | | 1,751 | | | | | | 153,297 |
2020 Three-Year LTIP Award(3) | | | 03/06/20 | | | | | | | | | | | | 737 | | | 1,475 | | | 2,212 | | | | | | 178,401 |
2020 Three-Year LTIP Award(4) | | | 03/06/20 | | | | | | | | | | | | | | | | | | | | | 632 | | | 83,020 |
2019 AIP Awards(5) | | | 02/13/20 | | | | | | | | | | | | | | | | | | | | | 408 | | | 57,785 |
| (1)
| Represents the possible payouts2020 annual cash incentive bonus opportunities under the Company’s 2016 non-equity2020 AIP. See the description of the annual cash incentive plan discussedaward in further detail above under the heading “Compensation Discussion and Analysis--Annual Cash and Equity Incentive Compensation.”CD&A. The actual amount earned by each Named Executive Officer in 20162020 is reported under the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table. |
| (2)
| Represents actual restricted stock awarded on March 2, 2016 in connection with the Compensation Committee’s discretionary review of the 2015 annual and long-term incentive compensation as discussed under the headings “Compensation Discussion and Analysis--Annual Cash and Equity Incentive Compensation” and “--Long-Term Equity Incentive Compensation” of the Company’s proxy statement for the 2016 Annual Meeting of Shareholders. |
| (3) | Represents the grant date fair value of the award determined in accordance with FASB ASC Topic 718 disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions. The grant date fair value is calculated by multiplying the number of restricted shares that could be earned, based on corporate performance goals only, under the 2020 AIP for 2020 performance. The number of restricted shares earned based on the individual performance goals under the 2020 AIP for 2020 performance, were granted byon February 17, 2021, and are therefore not included in this table. |
(3)
| Represents the closing pricenumber of restricted shares that could be earned under the performance-based portion of the Company’s Common Stockthree-year LTIP awards pursuant to the 2020 LTIP. |
(4)
| Represents the number of restricted shares under the service-based portion of the three-year LTIP awards pursuant to the 2020 LTIP. |
(5)
| Represents restricted shares awarded on February 13, 2020 in connection with the date of grant.individual performance goals under the 2019 AIP for 2019 performance. |
Outstanding Equity Awards at
20162020 Fiscal Year-End
The following table summarizes the number of non-fully vested outstanding equity awards held by each of our Named Executive Officers as of December 31, 2020, including awards earned by December 31, 2020 but not issued until 2021. Please refer to the footnotes of the table for further details. None of our Named Executive Officers hold any stock options.
TABLE OF CONTENTS
Marshall A. Loeb | | | 2,769(2) | | | 382,288 | | | | | | |
| | | 5,436(3) | | | 750,494 | | | | | | |
| | | 634(4) | | | 87,530 | | | | | | |
| | | 2,221(5) | | | 306,631 | | | | | | |
| | | 7,510(6) | | | 1,036,831 | | | | | | |
| | | 1,930(7) | | | 266,456 | | | | | | |
| | | 10,742(8) | | | 1,483,041 | | | | | | |
| | | 3,311(9) | | | 457,117 | | | | | | |
| | | 3,387(10) | | | 467,609 | | | | | | |
| | | | | | | | | 9,009(13) | | | 1,243,783 |
| | | | | | | | | 10,302(14) | | | 1,422,294 |
| | | | | | | | | 7,904(15) | | | 1,091,226 |
| | | | | | | | | 5,448(16) | | | 752,151 |
Brent W. Wood | | | 1,123(2) | | | 155,041 | | | | | | |
| | | 2,036(3) | | | 281,090 | | | | | | |
| | | 261(4) | | | 36,034 | | | | | | |
| | | 915(5) | | | 126,325 | | | | | | |
| | | 3,066(6) | | | 423,292 | | | | | | |
| | | 518(7) | | | 71,515 | | | | | | |
| | | 4,057(8) | | | 560,109 | | | | | | |
| | | 1,355(9) | | | 187,071 | | | | | | |
| | | 1,436(10) | | | 198,254 | | | | | | |
| | | | | | | | | 2,418(13) | | | 333,829 |
| | | | | | | | | 4,216(14) | | | 582,061 |
| | | | | | | | | 3,350(15) | | | 462,501 |
| | | | | | | | | 2,306(16) | | | 318,366 |
John F. Coleman | | | 1,123(2) | | | 155,041 | | | | | | |
| | | 1,854(3) | | | 255,963 | | | | | | |
| | | 238(4) | | | 32,858 | | | | | | |
| | | 834(5) | | | 115,142 | | | | | | |
| | | 2,395(6) | | | 330,654 | | | | | | |
| | | 410(7) | | | 56,605 | | | | | | |
| | | 3,190(8) | | | 440,411 | | | | | | |
| | | 814(9) | | | 112,381 | | | | | | |
| | | 789(10) | | | 108,929 | | | | | | |
| | | | | | | | | 1,915(13) | | | 264,385 |
| | | | | | | | | 2,534(14) | | | 349,844 |
| | | | | | | | | 1,841(15) | | | 254,168 |
| | | | | | | | | 1,566(16) | | | 216,202 |
Name | | Stock Awards (1) |
| | Number of Shares of
Restricted Stock That
Have Not Vested
(#) | | Market Value of Shares
of Restricted Stock
That Have Not Vested
(2)
($) |
| Marshall A. Loeb | | 7,501 | (3) | $ | 553,874 |
| N. Keith McKey | | — | | | — |
| John F. Coleman | | 33,722 | (4) | $ | 2,490,032 |
| Brent W. Wood | | 33,661 | (5) | $ | 2,485,528 |
| William D. Petsas | | 33,315 | (6) | $ | 2,459,980 |
TABLE OF CONTENTS
R. Reid Dunbar | | | 1,036(11) | | | 143,030 | | | | | | |
| | | 2,250(6) | | | 310,635 | | | | | | |
| | | 378(7) | | | 52,187 | | | | | | |
| | | 2,960(8) | | | 408,658 | | | | | | |
| | | 755(9) | | | 104,235 | | | | | | |
| | | 724(10) | | | 99,955 | | | | | | |
| | | | | | | | | 1,763(13) | | | 243,400 |
| | | | | | | | | 2,350(14) | | | 324,441 |
| | | | | | | | | 1,688(15) | | | 233,045 |
| | | | | | | | | 1,452(16) | | | 200,463 |
Ryan M. Collins | | | 1,031(12) | | | 142,340 | | | | | | |
| | | 1,758(6) | | | 242,709 | | | | | | |
| | | 330(7) | | | 45,560 | | | | | | |
| | | 2,249(8) | | | 310,497 | | | | | | |
| | | 667(9) | | | 92,086 | | | | | | |
| | | 632(10) | | | 87,254 | | | | | | |
| | | | | | | | | 1,544(13) | | | 213,165 |
| | | | | | | | | 2,076(14) | | | 286,613 |
| | | | | | | | | 1,475(15) | | | 203,639 |
| | | | | | | | | 1,167(16) | | | 161,116 |
| (2)(1)
| The market value of such holdings is based on the closing price of a share of the Company’s Common Stock ($73.84)138.06) on December 30, 2016. |
| (3) | Mr. Loeb’s restricted stock holdings as of December 31, 2016 vest as follows provided that he remains employed by the Company on such dates: 2,122 shares on January 1, 2017; 2,122 shares on January 1, 2018; 2,122 shares on January 1, 2019 and 1,135 shares on January 1, 2020. |
(2)
| (4) | Mr. Coleman’s restricted stock holdings asRepresents remaining 20% of December 31, 2016 vest as follows providedaward with a grant date of 3/2/2017 that he remains employed by the Company on such dates: 7,356 shares on January 1, 2017; 2,600 shares on January 10, 2017; 4,473 shares of January 1, 2018; 4,000 shares on January 10, 2018; 2,507 shares on January 1, 2019; 5,400 shares on January 10, 2019; 786 shares on January 1, 2020 and 6,600 shares on January 10, 2020.vested 1/1/2021. |
(3)
| (5) | Mr. Wood’s restricted stock holdings asRepresents remaining 40% of December 31, 2016 vest as follows provided that he remains employed by the Companyaward with a grant date of 5/10/2017 with equal vesting on such dates: 7,295 shares on January 1, 2017; 2,600 shares on January 10, 2017; 4,473 shares on January 1, 2018; 4,000 shares on January 10, 2018; 2,507 shares on January 1, 2019; 5,400 shares on January 10, 2019; 786 shares on January 1, 2020 and 6,600 shares on January 10, 2020.1/1/2021 & 1/1/2022. |
(4)
| (6)Represents remaining 25% of award with a grant date of 5/10/2017 that vested 1/1/2021. |
(5)
| Mr. Petsas’ restricted stock holdings asRepresents remaining 25% of December 31, 2016award with a grant date of 2/13/2020 that vested as follows: 7,1781/1/2021. |
(6)
| Represents remaining 60% of award with a grant date of 6/1/2018 with equal vesting on 1/1/2021, 1/1/2022 & 1/1/2023. |
(7)
| Represents remaining 50% of award with a grant date of 6/1/2018 with equal vesting on 1/1/2021 & 1/1/2022. |
(8)
| Represents remaining 80% of award with a grant date of 2/13/2020 with equal vesting on 1/1/2021, 1/1/2022, 1/1/2023 and 1/1/2024. |
(9)
| Represents remaining 75% of award with a grant date of 3/7/2019 with equal vesting on 1/1/2021, 1/1/2022 & 1/1/2023. |
(10)
| Represents award with a grant date of 3/6/2020 with equal vesting on 2/17/2021, 1/1/2022, 1/1/2023 and 1/1/2024. |
(11)
| Represents remaining 40% of award with a grant date of 5/29/2017 with equal vesting on 1/1/2021 & 1/1/2022. |
(12)
| Represents remaining 40% of award with a grant date of 5/31/2017 with equal vesting on 1/1/2021 & 1/1/2022. |
(13)
| Represents target award under our 2018 Multi-year Long-term Incentive Plan with a TSR performance period of 2018 through 2020. In February 2021, the Compensation Committee determined the Company’s relative TSR exceeded the High level and 13,514, 3,627, 2,873, 2,645 and 2,317 shares were issued to Messrs. Loeb, Wood, Coleman, Dunbar and Collins, respectively. The shares vested 75% on January 1, 2017; 2,600the determination date and will vest 25% on 1/1/2022. |
(14)
| Represents target award under our 2019 Multi-year Long-term Incentive Plan with a TSR performance period of 2019 through 2021. |
(15)
| Represents target award under our 2020 Multi-year Long-term Incentive Plan with a TSR performance period of 2020 through 2022. |
(16)
| Represents 80% of the target award under our 2020 Annual Incentive Plan that is earned based upon achievement of corporate performance metrics. In February 2021, the Compensation Committee determined the results of the plan and 9,602, 4,065, 2,778, 2,559 and 1,926 shares were issued to Messrs. Loeb, Wood, Coleman, Dunbar and Collins, respectively. The shares vested 34% on January 10, 2017;the determination date and 7,537 shareswill vest 33% per year on March 1, 2017. 16,000 shares1/1/2022 and 1/1/2023. The number of restricted stockshares earned based on the individual performance goals under the 2020 AIP for 2020 performance were granted as a retention award were forfeited upon Mr. Petsas’ resignation from the Company.on February 17, 2021, and are therefore not included in this table. |
TABLE OF CONTENTS
Option Exercises and Stock Vested in
20162020
The following table provides information regarding restricted
stock awardsshares that vested during
20162020 for each of the Named
Executive Officers. No stock options were granted to or exercised by the Named
Executive Officers in
20162020, and no options are currently outstanding.
Name | | Stock Awards |
| | Number of Shares
Acquired on Vesting
(#) | | Value Realized on
Vesting
($) |
| Marshall A. Loeb | | 2,123 | | $ | 118,994 |
| N. Keith McKey | | 39,980 | | $ | 2,323,462 |
| John F. Coleman | | 12,256 | | $ | 678,564 |
| Brent W. Wood | | 12,038 | | $ | 666,441 |
| William D. Petsas | | 11,954 | | $ | 661,750 |
Marshall A. Loeb | | | 24,151 | | | 3,297,808 |
Brent W. Wood | | | 16,490 | | | 2,217,566 |
John F. Coleman | | | 15,458 | | | 2,074,916 |
R. Reid Dunbar | | | 2,452 | | | 334,213 |
Ryan M. Collins | | | 2,056 | | | 279,821 |
(1)
| The aggregate value realized upon the vesting of restricted shares represents the aggregate market price of the shares of Common Stock on the date of vesting. |
Potential Payments upon Termination or Change in Control
The Company has entered into Severance and Change in Control Agreements and maintains certain plans that will require the Company to provide compensation to executive officers of the Company in the event of a termination of employment or a change in control of the Company.
The following table shows potential payouts assuming that
the employment of(i) the Named
Executive Officer
was terminatedexperienced a qualifying termination not in connection with a change in control; (ii) the Company experienced a change in control (where all outstanding equity awards were assumed, continued, or substituted by the successor); and (iii) the Company experienced a change in control (where all outstanding equity awards were assumed, continued, or substituted by the successor) and the Named Executive Officer experienced a qualifying termination on such date, in each
situation listed in the table and that termination occurredcase, on the last business day of
2016.| | | Lump Sum
Cash
Severance
Payment | | | Healthcare
and Other
Insurance
Benefits | | | Value of
Unvested
Restricted
Shares
(including
accrued
dividends) | | | Total | |
| Marshall A. Loeb | | | | | | | | | | | | | | | | |
| Voluntary Resignation or Involuntary Termination with Cause | | | — | | | | — | | | | — | | | | — | |
| Involuntary Termination without Cause | | $ | 1,529,166 | | | | — | | | $ | 589,729 | | | $ | 2,118,895 | |
| Voluntary Resignation with Good Reason following a Change in Control | | $ | 2,293,749 | | | $ | 50,000 | | | $ | 589,729 | | | $ | 2,933,478 | |
| Involuntary Termination without Breach of Duty following a Change in Control | | $ | 2,293,749 | | | $ | 50,000 | | | $ | 589,729 | | | $ | 2,933,478 | |
| Death | | $ | 764,583 | | | | — | | | $ | 589,729 | | | $ | 1,354,312 | |
| | | | | | | | | | | | | | | | | |
| N. Keith McKey | | | | | | | | | | | | | | | | |
| Voluntary Resignation or Involuntary Termination with Cause | | | — | | | | — | | | | — | | | | — | |
| Involuntary Termination without Cause | | $ | 1,572,040 | | | | — | | | | — | | | $ | 1,572,040 | |
| Voluntary Resignation with Good Reason following a Change in Control | | $ | 2,358,060 | | | $ | 50,000 | | | | — | | | $ | 2,408,060 | |
| Involuntary Termination without Breach of Duty following a Change in Control | | $ | 2,358,060 | | | $ | 50,000 | | | | — | | | $ | 2,408,060 | |
| Death | | $ | 786,020 | | | | — | | | | — | | | $ | 786,020 | |
Marshall A. Loeb
| | | | | | | | | | | | | | | | | | |
Lump sum cash payment | | | 3,574,616(1) | | | — | | | 5,361,924(2) | | | 1,787,308(3) | | | 173,750(4) | | | — |
Healthcare and other insurance benefits | | | — | | | — | | | 50,000(5) | | | — | | | — | | | — |
Value of acceleration of unvested restricted shares | | | 5,546,825(6) | | | — | | | 10,238,160(7) | | | 8,999,676(8) | | | 8,999,676(8) | | | — |
Total | | | 9,121,441 | | | — | | | 15,650,084 | | | 10,786,984 | | | 9,173,426 | | | — |
Brent W. Wood
| | | | | | | | | | | | | | | | | | |
Lump sum cash payment | | | 1,716,718(1) | | | — | | | 2,575,077(2) | | | 858,359(3) | | | 112,500(4) | | | — |
Healthcare and other insurance benefits | | | — | | | — | | | 50,000(5) | | | — | | | — | | | — |
Value of acceleration of unvested restricted shares | | | 2,158,612(6) | | | — | | | 3,919,302(7) | | | 3,401,609(9) | | | 3,401,609(9) | | | — |
Total | | | 3,875,330 | | | — | | | 6,544,379 | | | 4,259,968 | | | 3,514,109 | | | — |
John F. Coleman
| | | | | | | | | | | | | | | | | | |
Lump sum cash payment | | | 1,541,474(1) | | | — | | | 2,312,211(2) | | | 770,737(3) | | | 108,160(4) | | | — |
Healthcare and other insurance benefits | | | — | | | — | | | 50,000(5) | | | — | | | — | | | — |
Value of acceleration of unvested restricted shares | | | 1,707,367(6) | | | — | | | 2,834,451(7) | | | 2,539,526(9) | | | 2,539,526(9) | | | 2,539,526(13) |
Total | | | 3,248,841 | | | — | | | 5,196,662 | | | 3,310,263 | | | 2,647,686 | | | 2,539,526 |
TABLE OF CONTENTS
| | | Lump Sum Cash Severance Payment | | | Healthcare and Other Insurance Benefits | | | Value of Unvested Restricted Shares (including accrued dividends) | | | Total | |
| John F. Coleman | | | | | | | | | | | | | | | | |
| Voluntary Resignation or Involuntary Termination with Cause | | | — | | | | — | | | | — | | | | — | |
| Involuntary Termination without Cause | | $ | 944,912 | | | | — | | | $ | 1,229,626 | | | $ | 2,174,538 | |
| Voluntary Resignation with Good Reason following a Change in Control | | $ | 944,912 | | | $ | 37,500 | | | $ | 2,889,490 | | | $ | 3,871,902 | |
| Involuntary Termination without Breach of Duty following a Change in Control | | $ | 944,912 | | | $ | 37,500 | | | $ | 2,889,490 | | | $ | 3,871,902 | |
| Death | | $ | 629,941 | | | | — | | | $ | 2,478,986 | | | $ | 3,108,927 | |
| Brent W. Wood | | | | | | | | | | | | | | | | |
| Voluntary Resignation or Involuntary Termination with Cause | | | — | | | | — | | | | — | | | | — | |
| Involuntary Termination without Cause | | $ | 949,410 | | | | — | | | $ | 1,224,241 | | | $ | 2,173,651 | |
| Voluntary Resignation with Good Reason following a Change in Control | | $ | 949,410 | | | $ | 37,500 | | | $ | 2,884,105 | | | $ | 3,871,015 | |
| Involuntary Termination without Breach of Duty following a Change in Control | | $ | 949,410 | | | $ | 37,500 | | | $ | 2,884,105 | | | $ | 3,871,015 | |
| Death | | $ | 632,940 | | | | — | | | $ | 2,473,601 | | | $ | 3,106,541 | |
| William D. Petsas | | | | | | | | | | | | | | | | |
| Voluntary Resignation or Involuntary Termination with Cause | | | — | | | | — | | | | — | | | | — | |
| Involuntary Termination without Cause | | $ | 911,649 | | | | — | | | $ | 1,196,857 | | | $ | 2,108,506 | |
| Voluntary Resignation with Good Reason following a Change in Control | | $ | 911,649 | | | $ | 37,500 | | | $ | 2,856,721 | | | $ | 3,805,870 | |
| Involuntary Termination without Breach of Duty following a Change in Control | | $ | 911,649 | | | $ | 37,500 | | | $ | 2,856,721 | | | $ | 3,805,870 | |
| Death | | $ | 607,766 | | | | — | | | $ | 2,446,217 | | | $ | 3,053,983 | |
Below is a description
R. Reid Dunbar
| | | | | | | | | | | | | | | | | | |
Lump sum cash payment | | | 1,136,103(10) | | | — | | | 1,893,505(11) | | | 757,402(3) | | | 100,341(4) | | | — |
Healthcare and other insurance benefits | | | — | | | — | | | 37,500(12) | | | — | | | — | | | — |
Value of acceleration of unvested restricted shares | | | 1,177,286(6) | | | — | | | 2,217,862(7) | | | 1,946,170 | | | 1,946,170(8) | | | — |
Total | | | 2,313,389 | | | — | | | 4,148,867 | | | 2,703,572 | | | 2,046,511 | | | — |
Ryan M. Collins
| | | | | | | | | | | | | | | | | | |
Lump sum cash payment | | | 920,534(10) | | | — | | | 1,534,223(11) | | | 613,689(3) | | | 87,975(4) | | | — |
Healthcare and other insurance benefits | | | — | | | — | | | 37,500(12) | | | — | | | — | | | — |
Value of acceleration of unvested restricted shares | | | 969,166(6) | | | — | | | 1,867,829(7) | | | 1,629,337(8) | | | 1,629,337(8) | | | — |
Total | | | 1,889,700 | | | — | | | 3,439,552 | | | 2,243,026 | | | 1,717,312 | | | — |
(1)
| Represents 2x average annual compensation for 2020. |
(2)
| Represents 3x average annual compensation for 2020. |
(3)
| Represents 1x average annual compensation for 2020. |
(4)
| Represents 90 days of continuation of base salary. |
(5)
| Represents payment of premiums for life insurance coverage and health plan coverage for 24 months. The value of the payments in this column are based on an estimate of the Company’s cost to provide such benefits to an executive officer equal to $25,000 per year. |
(6)
| Represents the acceleration of all service-based stock awards, including performance-based awards that were previously earned but remain subject to service-based vesting at the date of termination, based on our closing stock price of $138.06 per share as of December 31, 2020, plus accrued dividends. |
(7)
| Represents the acceleration of all service-based stock awards, including performance-based awards that were previously earned but remain subject to service-based vesting at the date of termination, and all performance-based stock awards, assuming that performance criteria are deemed to be achieved at the target level, based on our closing stock price of $138.06 per share as of December 31, 2020, plus accrued dividends. |
(8)
| Represents the acceleration of all service-based stock awards, including performance-based awards that were previously earned but remain subject to service-based vesting at the date of termination, and all performance-based stock awards, pro-rated for the portion of the performance period that the executive was employed and assuming that performance criteria are deemed to be achieved at the target level, based on our closing stock price of $138.06 per share as of December 31, 2020, plus accrued dividends. |
(9)
| Represents the full acceleration of all service-based stock awards, including performance-based awards that were previously earned but remain subject to service-based vesting at the date of termination, and the partial acceleration of all performance-based stock awards, pro-rated for the portion of the performance period that the executive was employed and assuming that performance criteria are deemed to be achieved at the target level, in each case, based on our closing stock price of $138.06 per share as of December 31, 2020, plus accrued dividends. |
(10)
| Represents 1.5x average annual compensation for 2020. |
(11)
| Represents 2.5x average annual compensation for 2020. |
(12)
| Represents payment of premiums for life insurance coverage and health plan coverage for 18 months. The value of the payments in this column are based on an estimate of the Company’s cost to provide such benefits to an executive officer equal to $25,000 per year. |
(13)
| Represents, for employees who meet the age and service requirements under the Company’s Retirement Policy, which is described in further detail below, the full acceleration of all service-based stock awards, including performance-based awards that were previously earned but remain subject to service-based vesting at the date of retirement (presumed to be December 31, 2020, for purposes of this disclosure) and all performance-based stock awards, pro-rated for the portion of the performance period that the executive was employed and assuming that performance criteria are deemed to be achieved at the target level, based on our closing stock price of $138.06 per share as of December 31, 2020, plus accrued dividends. |
For purposes of the
definitions and assumptions that were used in creating the table above.Definitions. A “change of control” means any of the following: (i) any change in control of a nature that would be required to be reported under the Exchange Act proxy rules; (ii) the acquisition by a person or group of beneficial ownership of 30% of the Company’s outstanding voting securities; (iii) a change in the composition of the Board of Directors such that the incumbent directors cease to constitute at least a majority of the Board (including, for purposes of computing a majority, those persons nominated for election by a two-thirds majority of the then incumbent directors who had been similarly nominated); (iv) the security holders of the Company approve a merger or consolidation of the Company, with certain exceptions; or (v) approval by the Company’s shareholders of a complete liquidation of the Company or disposition of all or substantially all of the Company’s assets.
“Averagefootnotes above, average annual compensation”compensation means an amount equal to the annual average of the sum of (i) the executive’s annual base salary from the Company plus (ii) the amount of cash bonus paid by the Company to the executive, in each case
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for the average of the three calendar years that ended immediately before (or, if applicable, coincident with) a specified date, provided that: (A) any such year in which the executive was not employed by the Company shall be excluded from the averaging period; and (B) the base salary and cash bonus for any such year that reflects a partial year of employment shall be annualized.
A termination is for “cause” if it is for anyThe Company accrues dividends on all incentive restricted shares beginning with the first day of the following reasons:applicable performance period. The accrued dividends are delivered to the executive officer when the incentive restricted shares vest. The value of the restricted shares in the above table includes the actual value of the dividends accrued with respect to each restricted share award that is no longer subject to performance criteria.
Pursuant to Severance and Change in Control Agreements, each of our executive officers are entitled to severance payments and benefits if their employment is terminated (i)
the continued failure by the
executiveCompany without “cause,” (ii) due to
perform his material responsibilities and duties towardthe executive’s death, or (iii) following a “change in control” within the “protection period” listed below, by the Company
(otherother than
any such failure resulting fromfor death, disability or “breach of duty”, or by the executive’s
incapacity due to physical or mental illness); (ii) the executive engaging in willful or reckless conduct that is demonstrably injurious to the Company monetarily or otherwise; (iii) the executive’s conviction, entry of a plea of no contest, or admission of guilt, for any felony or any lesser crime if such lesser crime involves fraud or dishonesty, moral turpitude, or any conduct that adversely affects the business or reputation of the Company; (iv) the commission or omission of any act by the executive that constitutes on the part of the executive fraud, dishonesty, or malfeasance, misfeasance, or nonfeasance of duty toward the Company; or (v) any other action or conduct by the executive that is injurious to the Company, its business, or its reputation.A “breach of duty” means (i) the executive’s willful misconduct in the performance of his duties toward the Company; or (ii) the commission or omission of any act by the executive that constitutes on the part of the executive fraud or dishonesty toward the Company.
A termination isresignation for “good reason” if it(as each term is for any of the following reasons: (i) a material diminution in the executive’s duties, responsibilities or authority; (ii) a material reduction in the executive’s base salary; (iii) a material reduction in the executive’s annual or long-term bonus and equity incentive opportunities; (iv) the Company’s material relocation of the executive without the executive’s consent; and (v) the failure by the Company to obtain the assumption of the obligations containeddefined in the Severance and Change in Control Agreement by any successor entity.
Agreement)(each, a “Qualifying Termination”).
Chief Executive Officer, Chief Financial Officer and Executive Vice Presidents | | | 24 months |
Senior Vice Presidents | | | 18 months |
Cash Severance Payment
. Cash severance payments followingUpon a change in control are paid upon an involuntary termination without breach of duty and upon a voluntary termination by the executive for good reason. Additionally, cash severance payments not in connection with a change in control are paid upon an involuntary termination without cause. In each case,Qualifying Termination, the cash portion of each executive’s severance payments areis paid in lump-sum and areis based upon the executive’s average annual compensation as follows:Chief Executive Officer, and Chief Financial Officer and Executive Vice Presidents | | | 2 times | | | 3 times | | | 1 times |
Senior Vice Presidents | | | 1.5 times | | 1.5 | 2.5 times | | | 1 times |
As a condition of the receipt of the cash severance payment not in connection with a change in control
and not due to death, the executive must execute a waiver and release agreement, in a form satisfactory to the Company, that releases the Company and all affiliates from any and all claims of any nature whatsoever, including, without limit, any and all statutory claims, and may not revoke the waiver and release within any revocation period required by law or permitted by the Company.
Benefits. Upon
Additionally, in the event of a disability, each Severance and Change in Control Agreements provides that the executive shall continue to be paid his base salary and remain employed by the Company during the first 90 days of his disability.
Benefits. Pursuant to the Severance and Change in Control Agreements, upon the termination of an involuntary termination withoutexecutive’s employment following a change in control within the protection period listed above, by the Company other than for death, disability or breach of duty, or a voluntary termination by the executiveexecutive’s resignation for good reason, each following a change in control, the Company will provide each executive officer with life insurance coverage and health plan coverage substantially comparable to the coverage the executive was receiving from the Company immediately before termination of employment. In each case, these benefits will continue for a period of 24 months (18 months for the Company’s Senior Vice Presidents) following the date of termination. Equity Acceleration upon an Executive’s Death or Disability. The value of the benefits set forth in the above table is based on an estimate ofaward agreements for restricted shares awarded under the Company’s cost to provide such benefits to an executive officer upon termination following a change in control equal to $25,000 per year.
Equity Acceleration. The Incentive Restricted Share Agreements issued to executive officers in connection with equity awards granted pursuant to the Company’s 20042013 Equity Incentive Plan andprovide that the vesting of all service-based restricted shares, including performance-based awards for which the performance period has ended that remain subject to service-based vesting, will be fully accelerated upon the executive’s death or disability. Additionally, the award agreements for restricted shares awarded under the Company’s 2013 Equity Incentive Plan generally provide that, upon an executive’s interest in alldeath or disability, performance-based awards which have not completed the performance period shall be partially accelerated based on portion of the incentiveperformance period that the executive was employed and assuming that performance criteria are deemed to be achieved at the target level.
Equity Acceleration upon a Termination without Cause. The award agreements for restricted shares shall become vested as ofawarded under the date of his death or termination by reason of his permanent disability, provided, however, the agreements for the restricted stock awarded as a retention bonus to certain executive officers in 2010Company’s 2013 Equity Incentive Plan provide that the numbervesting of all service-based restricted shares, including performance-based awards for which the performance period has ended that remain subject to vestservice-based vesting, will be proratedfully accelerated upon such officer’s death or permanent disability. In addition, a restricted share agreement may also provide that the incentive restricted shares covered by the agreement shall vest upon involuntaryexecutive’s termination by the Company without cause.
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The Company’s 2004
Equity
Incentive Plan provides thatAcceleration upon
the occurrence of a
changeChange in
control, whether or notControl. Pursuant to the executive’s employment is terminated, the executive’s interest in all of the restricted shares that are no longer subject to performance criteria shall become vested and the vesting of restricted shares subject to performance criteria shall be accelerated and the executive shall receive a pro rata number of shares based upon (i) an assumed achievement of all relevant performance objectives at target levels and (ii) the length of time within the performance period elapsed before the effective date of the change in control.The Company’s 2013 Equity Incentive Plan, provides that upon the occurrence of a change in control if the awards thereunder are not continued, assumed or replaced by the successor corporation in connection with a change in control, then (i) each service-based award, including any performance-based awards for which the executive’s interest in all of the restricted sharesperformance period has ended that are no longerremain subject to performance criteriaservice-based vesting, shall become fully vested, and (ii) each performance-based award which has not completed the executive’s interest in any restricted shares subject to performance criteriaperiod shall be deemed to have been achieved at the target performance level and shall become vested.
The
Equity Acceleration upon Certain Terminations of Employment following a Change in Control. Pursuant to the Company’s 2013 Equity Incentive Plan, if and to the extent that awards thereunder are continued, assumed or replaced by the successor corporation in connection with a change in control and the executive’s employment is terminated within the two years following the change in control by the Company accrues dividendsfor any reasons other than “cause” or by the executive for “good reason” (as each term is defined in the plan), then (i) each service-based award, including any performance-based awards for which the performance period has ended that remain subject to service-based vesting, shall be fully accelerated, and (ii) each performance-based award which has not completed the performance period shall be deemed to achieve the target performance level and shall become vested.
Additionally, although none of our Named Executive Officers have received any stock option or stock appreciation rights as of December 31, 2020, each Severance and Change in Control Agreement provides that following a change in control within the protection period listed above, if the executive is terminated by the Company other than for death, disability or breach of duty, or by the executive’s resignation for good reason, then all outstanding stock options and stock appreciation rights issued to the executive by the Company with respect to common stock of the Company shall become immediately exercisable.
Retirement Policy. In November 2019, the Compensation Committee adopted a Retirement Policy for Equity Awards (the “Retirement Policy”) that applies to all employees who receive equity awards. Pursuant to such policy, in the event of an employee’s “retirement,” as defined in the Retirement Policy, subject to the execution and non-revocation of a noncompetition agreement, (i) all time-based equity awards held by the employee shall accelerate and become fully vested on all incentive restricted shares beginning with the first dayearlier of (1) 12 months from the date the employee gives notice of his or her retirement and (2) the original vesting date of the award; and (ii) a pro-rated portion of performance-based equity awards held by the employee shall remain eligible to vest at the end of the performance period based upon achievement of the applicable performance period.metrics and any portion of the performance-based award that is earned at the end of the performance period shall be immediately fully vested. In the event that the employee breaches the terms of the noncompetition agreement, (a) the employee shall be required to return the shares underlying equity awards for which vesting was accelerated or permitted to continue or, if the employee no longer holds such shares, repay the Company the value of such equity awards and (b) shall forfeit the unvested portion of any performance-based awards held by the employee that remain outstanding and unvested on the date of breach.
CEO Compensation Pay Ratio For 2020, the total compensation of our Chief Executive Officer as reported in the Summary Compensation Table (page 38) was $4,666,270 and for the median employee was $98,154. The
accrued dividends are deliveredresulting ratio of the Chief Executive Officer’s pay to the
executive officer when the incentive restricted shares vest. The valuepay of the
unvested restricted stockmedian employee for fiscal year 2020 was 48 to 1. In 2020, we identified the median employee using our entire employee population, excluding our Chief Executive Officer, consisting of 79 full-time employees and 1 part-time employee on December 1, 2020. We identified the median employee based on gross wages paid in the above table includes the actual value of the dividends accrued12-month period ended December 1, 2020. We did not make any annualizing, assumptions, adjustments or estimates with respect to each restricted share awardgross wages paid in the period. As required by SEC rules, after identifying our median employee, we calculated annual total compensation for both our median employee and our CEO using the same methodology that we used to determine our Named Executive Officers’ annual compensation for the Summary Compensation Table.
This information is no longer subjectbeing provided for compliance purposes. Neither the Compensation Committee nor management of the Company used the pay ratio measure in making compensation decisions. Given the different methodologies that companies use to performance criteria.determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.
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Equity Compensation Plan Information The following table summarizes the Company’s equity compensation plan information as of December 31, 2020. The Company does not maintain any equity compensation plans which are not approved by shareholders.
Equity compensation plans approved by security holders(1) | | | — | | | — | | | 1,527,382 |
(1)
| Includes the 2013 Equity Incentive Plan. |
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CERTAIN TRANSACTIONS AND RELATIONSHIPS
Change in Control Agreement
The Company has entered into a change in control agreement with each of the Company’s executive officers. See “Potential Payments Upon
Termination or Change in Control” above.
Separation Agreement
On February 21, 2017, the Company and Mr. Petsas entered into a Separation Agreement with respect to his resignation. Pursuant to the Separation Agreement, (a) Mr. Petsas will receive a severance payment of $1,195,000 payable April 21, 2017; (b) if Mr. Petsas timely elects and is eligible for continued medical insurance coverage under COBRA, the Company will reimburse Mr. Petsas for the premium associated with such insurance coverage for himself and his eligible dependents for a period of eighteen months; and (c) 7,537 unvested shares of restricted stock granted under the Company’s 2013 Equity Incentive Plan became fully vested on March 1, 2017.
In consideration for the promises and payments made by the Company under the Separation Agreement, Mr. Petsas has agreed to a general release of claims in favor of the Company. The Separation Agreement also contains confidentiality and non-disparagement provisions.
Related-Party Transactions Policies and
Procedures.Procedures
In March 2007, the Board
of Directors adopted the written “Statement of Policy with respect to Related Party Transactions” that states that the Company’s Audit Committee is responsible for the review, approval and ratification of transactions between the Company or any of its subsidiaries and a senior officer or director of the Company, members of their immediate family, a shareholder owning in excess of five percent of the Company or an entity which is owned or controlled by one of the foregoing.
The policy requires that any related party transaction, other than transactions available to all employees generally or transactions involving less than $5,000 when aggregated with all similar transactions, shall be consummated or shall continue only if (i) the Audit Committee pre-approves or ratifies such transaction, (ii) the transaction is approved by the disinterested members of the Board, of Directors, or (iii) the transaction involves compensation approved by the Compensation Committee.
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OWNERSHIP OF COMPANY STOCK
Security Ownership of Certain Beneficial Owners
To the best of the Company’s knowledge, no person or group (as those terms are used in Section 13(d)(3) of the
Securities Exchange
Act of 1934, as amended (the “Exchange Act”))Act) beneficially owned, as of March
17, 2017,31, 2021, more than five percent
(5%) of the shares of Common Stock outstanding, except as set forth in the following table.
| Name and Address of Beneficial Owner | | Amount of Common Stock Beneficially Owned | | | Percent of Common Stock (1) | |
| The Vanguard Group, Inc. | | | | | | | |
| Vanguard REIT Index Fund | | | 5,178,953 | (2) | | | 15.3 | % |
| 100 Vanguard Boulevard | | | | | | | | |
| Malvern, Pennsylvania 19355 | | | | | | | | |
| BlackRock, Inc. | | | 4,004,911 | (3) | | | 11.8 | % |
| 55 East 52nd Street | | | | | | | | |
| New York, New York 10022 | | | | | | | | |
| T. Rowe Price Associates, Inc. | | | 2,962,634 | (4) | | | 8.7 | % |
| 100 East Pratt Street | | | | | | | | |
| Baltimore, Maryland 21202 | | | | | | | | |
| JPMorgan Chase & Co. | | | 2,208,421 | (5) | | | 6.5 | % |
| 270 Park Avenue | | | | | | | | |
| New York, New York 10017 | | | | | | | | |
| Invesco Ltd. | | | 1,987,109 | (6) | | | 5.9 | % |
| 1555 Peachtree Street NE, Suite 1800 | | | | | | | | |
| Atlanta, Georgia 30309 | | | | | | | | |
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
| | | 5,631,256(2) | | | 14.1% |
| | | | | | |
The Vanguard Group Inc.
100 Vanguard Boulevard
Malvern, PA 19355
| | | 5,623,369(3) | | | 14.1% |
| | | | | | |
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202
| | | 2,586,389(4) | | | 6.5% |
| | | | | | |
JPMorgan Chase & Co.
383 Madison Avenue
New York, NY 10179
| | | 2,161,897(5) | | | 5.4% |
| | | | | | |
State Street Corp.
One Lincoln Street
Boston, MA 02111
| | | 2,001,471(6) | | | 5.0% |
| (1)
| Based on the number of shares of Common Stock outstanding as of March 17, 2017,31, 2021, which was 33,896,52240,021,537 shares of Common Stock. |
| (2)
| Based solely upon an amended Statement on Schedule 13G filed with the SEC on January 26, 2021 by The Vanguard GroupBlackRock, Inc. (“Vanguard”BlackRock”) and an amended Statement on Schedule 13G filed with the SEC by Vanguard REIT Index Fund (“REIT Fund”), a client of Vanguard. As reported, Vanguardthat indicates that BlackRock has sole voting power with respect to 107,9155,510,957 shares of Common Stock shared voting power with respect to 3,383 shares of Common Stock, soleand dispositive power with respect to 5,078,213 shares of Common Stock, which includes shares owned by REIT Fund, and shared dispositive power with respect to 100,740 shares of Common Stock. As reported, REIT Fund has sole voting power with respect to 2,496,2745,631,256 shares of Common Stock. |
| (3)
| Based solely upon an amended Statement on Schedule 13G filed with the SEC on February 10, 2021 by The Vanguard Group (“Vanguard”) that indicatedindicates that BlackRock, Inc.Vanguard has shared voting power with respect to 173,260 shares of Common Stock, sole dispositive power with respect to 4,004,9115,418,335 shares of Common Stock and sole votingshared dispositive power with respect to 3,868,038205,034 shares of Common Stock. |
| (4)
| Based solely upon an amended Statement on Schedule 13G filed with the SEC on February 16, 2021 by T. Rowe Price Associates, Inc. (“Price Associates”) that indicatedindicates that Price Associates has sole voting power with respect to 699,112 shares of Common Stock and sole dispositive power with respect to 2,962,634 shares of Common Stock and sole voting power with respect to 488,1392,586,389 shares of Common Stock. These shares of Common Stock are owned by various individual and institutional investors which Price Associates serves as investment adviser with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Exchange Act, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. |
| (5)
| Based solely upon an amended Statement on Schedule 13G filed with the SEC on January 22, 2021 that indicatedindicates that JPMorgan Chase & Co. has sole voting power with respect to 2,104,9102,079,141 shares of Common Stock and sole dispositive power with respect to 2,208,4212,161,497 shares of Common Stock. |
| (6)
| Based solely upon a Statement on Schedule 13G filed with the SEC on February 8, 2021 that indicatedindicates that Invesco Ltd.State Street Corp. has soleshared voting power with respect to 541,1101,735,834 shares of Common Stock and soleshared dispositive power with respect to 1,987,1092,001,471 shares of Common Stock. |
Security Ownership of
ManagementDirectors and
DirectorsOfficers
The following table sets forth certain information available to the Company with respect to shares of Common Stock beneficially owned by each director, each nominee for director, each executive officer and all directors, nominees and executive officers as a group, as of March 17, 2017:31, 2021. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to shares. Unless otherwise
| | Amount and Nature of Beneficial Ownership | | | | |
| Name | | Common Stock | | | Unvested Restricted Stock | | | Total Beneficial Ownership | | | Percent of Common Stock (1) | |
| D. Pike Aloian | | | 25,628 | (2) | | | — | | | | 25,628 | | | | * | |
| H.C. Bailey, Jr. | | | 2,900 | | | | — | | | | 2,900 | | | | * | |
| H. Eric Bolton, Jr. | | | 8,124 | | | | 104 | | | | 8,228 | | | | * | |
| Hayden C. Eaves III | | | 11,800 | (3) | | | — | | | | 11,800 | | | | * | |
| Fredric H. Gould | | | 14,878 | (4) | | | — | | | | 14,878 | | | | * | |
| David H. Hoster II | | | 233,787 | (5) | | | — | | | | 233,787 | | | | * | |
| Mary E. McCormick | | | 15,403 | | | | — | | | | 15,403 | | | | * | |
| Leland R. Speed | | | 169,814 | (6) | | | — | | | | 169,814 | | | | * | |
| Marshall A. Loeb | | | 15,348 | | | | 25,356 | | | | 40,704 | | | | * | |
| N. Keith McKey | | | 161,082 | | | | — | | | | 161,082 | | | | * | |
| John F. Coleman | | | 101,322 | | | | 31,873 | | | | 133,195 | | | | * | |
| Bruce Corkern | | | 50,565 | | | | 10,442 | | | | 61,007 | | | | * | |
| Brent W. Wood | | | 78,411 | | | | 31,873 | | | | 110,284 | | | | * | |
| All directors, nominees and executive officers as a group | | | 889,062 | | | | 99,648 | | | | 988,710 | | | | 2.9% |
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indicated below, to the knowledge of the Company, all persons listed below have sole voting and investment power with respect to their shares of common stock, except to the extent authority is shared by spouses under applicable law. Pursuant to the rules of the SEC, the number of shares of common stock deemed outstanding includes shares of the Company’s common stock beneficial ownership of which may be acquired by the persons listed in the table below at any time within 60 days of March 31, 2021. Unless otherwise noted below, the address of each person listed on the table is c/o EastGroup Properties, Inc., 400 W. Parkway Place, Suite 100, Ridgeland, Mississippi 39157.
D. Pike Aloian | | | 31,832(2) | | | * |
H.C. Bailey, Jr. | | | 3,832 | | | * |
H. Eric Bolton, Jr. | | | 11,932 | | | * |
Donald F. Colleran | | | 3,579 | | | * |
Hayden C. Eaves III | | | 11,472(3) | | | * |
David H. Hoster II | | | 206,210(4) | | | * |
Mary E. McCormick | | | 20,457 | | | * |
Katherine M. Sandstrom | | | 934 | | | * |
Marshall A. Loeb | | | 98,659(5) | | | * |
Brent W. Wood | | | 99,871 | | | * |
John F. Coleman | | | 97,239 | | | * |
Ryan M. Collins | | | 10,986 | | | * |
R. Reid Dunbar | | | 15,030 | | | * |
Staci H. Tyler | | | 8,596 | | | * |
All directors, nominees and executive officers as a group (14 persons) | | | 620,629 | | | 1.6% |
| (1)
| Based on the number of shares of Common Stock outstanding as of March 17, 2017,31, 2021, which was 33,896,52240,021,537 shares of Common Stock. |
(2)
| (2) | Does not includeIncludes 2,500 shares of Common Stock beneficially owned by Mr. Aloian’s spouse, as to which he disclaims beneficial ownership. |
| (3)
| Includes (i) 8,5007,540 shares of Common Stock owned by Mr. Eaves as trustee for the Eaves Living Trust; (ii) 1,0002,632 shares of Common Stock owned by Mr. Eaves as trustee for a marital trust; (iii) 500 shares of Common Stock owned by Mr. Eaves as trustee for a generation skipping trust; (iv) 500 shares of Common Stock owned by a family foundation of which Mr. Eaves is President; and (iii)(v) 300 shares of Common Stock owned by Mr. Eaves as trustee. |
| (4)
| Includes 5,222(i) 71,427 shares of Common Stock owned by a family foundation of which Mr. Gould is a trustee. Does not include 3,300 shares of Common Stock beneficially owned by Mr. Gould’s spouse, as to which he disclaims beneficial ownership. |
| (5) | Includes (i) 40,000held in an irrevocable trust, (ii) 36,000 shares of Common Stock owned by a family trust for the benefit of Mr. Hoster’s children and (ii)(iii) 2,430 shares of Common Stock held in a revocable trust. Mr. Hoster is the trustee of the irrevocable trust, Mr. Hoster’s spouse is trustee of the family trust and Mr. Hoster and his spouse are co-trustees of the revocable trust. |
| (6) | Does not include 30,288 Mr. Hoster has shared voting and dispositive power with respect to 2,430 shares of Common Stock beneficially ownedStock. |
(5)
| Includes 578 shares held by Mr. Speed’s spouse,the Loeb Family Foundation, as to which he disclaims beneficial ownership. |
Ownership Guidelines for Directors and Officers
In order to enhance the alignment of the interests of the directors and management with shareholders, the Company has instituted ownership guidelines for directors and officers. Each director who has served for at least five years should own shares of Common Stock with a market value of a minimum of five times the annual cash retainer fee payable to a director. Within five years of their election, officers of the Company are required to own shares of Common Stock having a market value equal to or greater than the following multiples of their base salary:
(1)(i) President and Chief Executive Officer: five times annual base salary;
(2)(ii) Executive Vice President: three times annual base salary; and
(3)(iii) Senior Vice Presidents: two times annual base salary. Each director and executive officer is currently in compliance with the applicable ownership guideline.
TABLE OF CONTENTSSection 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that directors, officers and more than 10 percent shareholders of the Company file reports with the SEC to report a change in ownership within two business days following the day on which the transaction occurs. During 2016 no officer or director of the Company was late in filing a report under Section 16(a).
Report of the Audit Committee
The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 except to the extent the Company specifically incorporates this Report by reference therein.
The Audit Committee of the Company is composed of three directors, each of whom meets the current independence and experience requirements of the NYSE and the SEC. The Audit Committee operates under a written charter which was amended and restated on December
2, 2016.6, 2019. A complete copy of the Audit Committee charter is available on the Company’s website at www.eastgroup.net.
The Board has determined that each of D. Pike Aloian, H. Eric Bolton, Jr. and Mary E. McCormick is an “Audit Committee financial expert” as defined in the current rules of the SEC.The purpose of the Audit Committee is to assist the Board in its general oversight of the Company’s financial reporting, internal controls, and audit functions. Management is primarily responsible for the Company’s financial statements and reporting process. The Company’s independent registered public accounting firm, KPMG LLP, is responsible for performing an independent audit of the Company’s
consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing a report on those statements. The Company has a full-time internal audit department that reports to the Audit Committee and to management. This department is responsible for objectively reviewing and evaluating the adequacy, effectiveness, and quality of the Company’s system of internal controls. The Audit Committee’s responsibilities include oversight of the Company’s independent registered public accounting firm and internal audit department, as well as oversight of the Company’s financial reporting process on behalf of the full
Board of Directors.Board. It is not the duty or the responsibility of the Audit Committee to conduct auditing or accounting reviews or related procedures.
In this context, the Audit Committee has reviewed and discussed with management the audited financial statements for the Company for the fiscal year ended December 31, 2020.
The Audit Committee meets at least quarterly and at such other times as it deems necessary or appropriate to carry out its responsibilities. Those meetings include, whenever appropriate, executive sessions with KPMG without management being present. The Committee met
sixseven times during
2016,2020, including
twothree executive sessions with KPMG. In the course of fulfilling its oversight responsibilities, the Audit Committee met with management, internal audit personnel and KPMG to review and discuss all annual financial statements and quarterly operating results prior to their issuance. Management advised the Audit Committee that the financial statements in the Company’s Annual Report on Form 10-K were prepared in accordance with U.S. generally accepted accounting principles. The Audit Committee also discussed with KPMG matters required to be discussed by
Auditing Standard No. 1301,Communications with Audit Committees, as adopted bythe applicable requirements of the Public Company Accounting Oversight Board
and the SEC, and other matters required by the charter of this committee. In addition, the Audit Committee has received the written disclosures
and the letter from KPMG required by the Public Company Accounting Oversight Board Rule 3526, and has discussed with KPMG their independence from the company and its
management.management.
On the basis of the reviews and discussions the Audit Committee has had with KPMG and management, the Audit Committee recommended to the Board of Directors that the Board approve the inclusion of the Company’s audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2020, for filing with the SEC.
| | | Submitted by the Audit Committee: |
| | | Mary E. McCormick, Chair |
| | | D. Pike Aloian Chair |
| | | H. Eric Bolton, Jr. |
| Mary E. McCormick | | Katherine M. Sandstrom |
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Policy
Forfor Pre-Approval of Audit and Permitted Non-Audit Services
The Audit Committee of the Board has adopted policies and procedures providing for the pre-approval of audit and non-audit services performed by the Company’s independent registered public accounting firm. Pre-approval may be given as part of the Audit Committee’s approval on the engagement of the independent auditor or on an individual case-by-case basis before the independent auditor is engaged to provide each service. The pre-approval of services may be delegated to the Audit Committee chairman, but the decision is subsequently reported to the full Audit Committee.
Auditor Fees and Services In connection with the audit of the
20162020 financial statements, the Company entered into an engagement agreement with KPMG
LLP which set forth the terms by which KPMG
LLP will perform audit services for the Company.
The following table shows the fees paid or accrued by the Company for the audit and other services provided by KPMG
LLP for fiscal years
20162020 and
2015.| | | 2016 | | | 2015 | |
| Audit Fees (1) | | $ | 634,400 | | | $ | 577,500 | |
| Audit-Related Fees | | | — | | | | — | |
| Tax Fees | | | — | | | | — | |
| All Other Fees | | | — | | | | — | |
| Total | | $ | 634,400 | | | $ | 577,500 | |
Audit Fees(1) | | | $727,000 | | | $822,300 |
Audit-Related Fees | | | — | | | — |
Tax Fees | | | — | | | — |
All Other Fees | | | — | | | — |
Total | | | $727,000 | | | $822,300 |
| (1)
| Audit fees include amounts related to professional services rendered in connection with the audits of our annual financial statements and reviews of our quarterly financial statements, the audit of internal control over financial reporting and other services and communications that are normally provided by the auditor in connection with statutory and regulatory filings or engagements. For 20162020 and 2015,2019, this includes $103,500$112,000 and $93,000,$146,000, respectively, for comfort letter procedures and auditor consents in connection with the issuance of Common Stock. |
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The management of the Company does not know of any other matters to come before the Meeting. However, if any other matters properly come before the Meeting, it is the intention of the persons designated as proxies to vote in accordance with their judgment on such matters.
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ARTICLES OF AMENDMENT AND RESTATEMENT
OF
EASTGROUP PROPERTIES, INC.
Pursuant to the Maryland General Corporation Law.
FIRST: Eastgroup Properties, Inc., a Maryland corporation (the “Corporation”), desires to amend and restate its charter (the “Charter”) as currently in effect and as hereinafter amended. The following provisions are all the provisions of the Charter currently in effect and as hereinafter amended:
ARTICLE I
NAME
The name of the Corporation is EastGroup Properties, Inc.
ARTICLE II
DURATION
The duration of the Corporation shall be perpetual.
ARTICLE III
PURPOSES
(a) The purposes for which the Corporation is formed are:
(1) To engage in the business of a real estate investment trust (“REIT”) as that term is defined in the Internal Revenue Code of 1986, as amended, or any successor statute (the “Code”), and to engage in any lawful act or activity for which corporations may be organized under the general laws of the State of Maryland now or hereafter in force including the Maryland General Corporation Law; and
(2) To engage in any one or more businesses or transactions, or to acquire all or any portion of any entity engaged in any one or more businesses or transactions which the Board of Directors may from time to time authorize or approve, whether or not related to the business described elsewhere in this Article III or to any other business at the time or theretofore engaged in by the Corporation.
(b) The foregoing enumerated purposes and objects shall be in no way limited or restricted by reference to, or inference from, the terms of any other clause of this or any other Article of the Charter of the Corporation, and each shall be regarded as independent; and they are intended to be and shall be construed as powers as well as purposes and objects of the Corporation and shall be in addition to and not in limitation of the general powers of corporations under the General Laws of the State of Maryland.
ARTICLE IV
PRINCIPAL OFFICE IN MARYLAND AND RESIDENT AGENT
The present address of the principal office of the Corporation in the State of Maryland is c/o The Corporation Trust Incorporated, 2405 York Road, Suite 201, Lutherville Timonium, Maryland 21093. The name of the resident agent of the Corporation in the State of Maryland is The Corporation Trust Incorporated, a Maryland corporation, 2405 York Road, Suite 201, Lutherville Timonium, Maryland 21093.
ARTICLE V
CAPITAL STOCK
SECTION 1. AUTHORIZED CAPITAL STOCK.
(a) Authorized Shares. The total number of shares of capital stock of all classes that the Corporation has authority to issue is 100,000,000, initially classified as 70,000,000 shares of common stock, par value $0.0001 per share (the “Common Stock”), and 30,000,000 shares of excess stock, par value $0.0001 per share (the “Excess Stock”).
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The Common Stock and the Excess Stock shall each constitute a separate class of capital stock of the Corporation.
(b) Terminology and Aggregate Par Value. All classes of capital stock (except Excess Stock) are referred to herein as “Equity Stock;” all classes of capital stock (including Excess Stock) are referred to herein as “Stock.” The aggregate par value of all of the Corporation’s authorized Stock is $10,000.
SECTION 2. REIT-RELATED RESTRICTIONS AND LIMITATIONS ON THE EQUITY STOCK.
Until the “Restriction Termination Date,” as defined below, all Equity Stock shall be subject to the following restrictions and limitations intended to preserve the Corporation’s status as a REIT.
(a) Definitions. As used in this Article V, the following terms shall have the indicated meanings:
“Beneficial Ownership” shall mean ownership of Equity Stock by a Person who would be treated as an owner of such Equity Stock either directly or constructively through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms
“Beneficially Own” and “Beneficially Owned” and “Beneficial Owner” shall have the correlative meanings.
“Beneficiary” shall mean a beneficiary of the Trust as determined pursuant to Section 5(b) of this Article V.
“Constructive Ownership” shall mean ownership of Equity Stock by a Person who would be treated as an owner of such Equity Stock either directly or indirectly through the application of Section 318 of the Code, as modified by Section 856(d)(5) of the Code. The terms “Constructively Own,” “Constructively Owned” and “Constructive Owner” shall have the correlative meanings.
“Market Price” shall mean the last reported sales price reported on the New York Stock Exchange, Inc. (the “NYSE”), of Equity Stock on the trading day immediately preceding the relevant date, or if not then traded on the NYSE, the last reported sales price of Equity Stock on the trading day immediately preceding the relevant date as reported on any exchange or quotation system over which Equity Stock may be traded, or if not then traded over any exchange or quotation system, then the market price of Equity Stock on the relevant date as determined in good faith by the Board of Directors of the Corporation.
“Ownership Limit” shall mean 9.8% in value or in number of the outstanding Equity Stock, whichever is more restrictive. The number and value of the Equity Stock of the Corporation shall be determined by the Board of Directors in good faith, which determination shall be conclusive for all purposes.
“Person” shall mean an individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended; but does not include an underwriter that participated in a public offering of any Equity Stock for a period of 25 days following the purchase by such underwriter of such Equity Stock.
“Purported Beneficial Transferee” shall mean, with respect to any purported Transfer that results in Excess Stock as defined below in Section 5 of this Article V, the purported beneficial transferee for whom the Purported Record Transferee would have acquired Equity Stock if such Transfer had been valid under Section 2(b) of this Article V.
“Purported Record Transferee” shall mean, with respect to any purported Transfer which results in Excess Stock, the Person who would have been the record holder of Equity Stock if such Transfer had been valid under Section 2(b) of this Article V.
“Restriction Termination Date” shall mean the effective date, if any, for revocation or termination of the Corporation’s REIT election pursuant to Section 856(g) of the Code, as specified in a resolution of the Board of Directors of the Corporation determining that it is no longer in the best interests of the Corporation to attempt to, or continue to, qualify as a REIT. If no such effective date is specified in such resolution, the Restriction Termination Date shall be the date such revocation or termination otherwise becomes effective.
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“Transfer” shall mean any sale, transfer, gift, assignment, devise or other disposition of Equity Stock (including (i) the granting of any option or entering into any agreement for the sale, transfer or other disposition of Equity Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Equity Stock), whether voluntary or involuntary, whether of record beneficially or constructively (including but not limited to transfers of interests in other entities that result in changes in Beneficial Ownership or Constructive Ownership of Equity Stock), and whether operation of law or otherwise. The terms “Transfers” and “Transferred” shall have the correlative meanings.
“Trust” shall mean the trust created pursuant to Section 5(b) of this Article V.
“Trustee” shall mean the Corporation as trustee of the Trust, and any successor trustee appointed by the Corporation.
(b) Ownership Limitation and Transfer Restrictions with Respect to Equity Stock.
(i) Except as provided in Section 2(f) of this Article V, prior to the Restriction Termination Date, no Person shall Beneficially Own or Constructively Own shares of Equity Stock in excess of the Ownership Limit.
(ii) Except as provided in Section 2(f) of this Article V, prior to the Restriction Termination Date, any Transfer that, if effective, would result in any Person Beneficially Owning or Constructively Owning Equity Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such Equity Stock that would be otherwise Beneficial Owned or Constructively Owned (as the case may be) by such Person in excess of the Ownership Limit; and the Purported Record Transferee (and the Purported Beneficial Transferee, if different) shall acquire no rights in such excess shares of Equity Stock.
(iii) Except as provided in Section 2(f) of this Article V, prior to the Restriction Termination Date, any Transfer that, if effective, would result in the outstanding Equity Stock being Beneficially Owned by less than 100 Persons (determined without reference to any rules of attribution) shall be void ab initio as to the Transfer of such Equity Stock which would be otherwise Beneficially Owned by the transferee; and the Purported Record Transferee (and the Purported Beneficial Transferee, if different) shall acquire no rights in such shares of Equity Stock.
(iv) Prior to the Restriction Termination Date, any Transfer that, if effective, would result in the Corporation being “closely held” within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT, shall be void ab initio as to the Transfer of the shares of Equity Stock that would cause the Corporation to be “closely held” within the meaning of Section 856(h) of the Code or otherwise to fail to qualify as a REIT, as the case may be; and the Purported Record Transferee (and the Purported Beneficial Transferee, if different) shall acquire no rights in such shares of Equity Stock.
(v) If the Board of Directors or its designee shall at any time determine in good faith that a Transfer of Equity Stock has taken place in violation of this Section 2(b) or that a Person intends to acquire or has attempted to acquire Beneficial Ownership (determined without reference to any rules of attribution) or Constructive Ownership of any Equity Stock of the Corporation in violation of this Section 2(b), the Board of Directors or its designee shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer, including but not limited to, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer; provided, however, that any Transfers or attempted Transfers in violation of Section 2(b)(ii), Section 2(b)(iii) or Section 2(b)(iv) of this Article V shall automatically result in the conversion and exchange described in Section 2(c), irrespective of any action (or non-action) by the Board of Directors, except as provided in Section 2(f) of this Article V.
(c) Automatic Conversion of Equity Stock into Excess Stock.
Subject to Section 5(a) of this Article V below,
(i) If, notwithstanding the other provisions contained in this Article V, at any time prior to the Restriction Termination Date there is a purported Transfer or other change in the capital structure of the Corporation such that any Person would Beneficially Own or Constructively Own Equity Stock in excess of the Ownership Limit, then, except as otherwise provided in Section 2(f) of this Article V, such shares of Equity Stock in excess of the Ownership Limit (rounded up to the nearest whole share) shall
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automatically (and without action by the Corporation or by any purported Transferor, Purported Record Transferee or Purported Beneficial Transferee of such Equity Stock, in the case of a Transfer) be converted into and exchanged for an equal number of Excess Stock. Such conversion and exchange shall be effective as of the close of business on the business day prior to the date of the purported Transfer or change in capital structure.
(ii) If, notwithstanding the other provisions in this Article V, at any time prior to the Restriction Termination Date there is a purported Transfer or other change in the capital structure of the Corporation that, if effective, would cause the Corporation to become “closely held” within the meaning of Section 856(h) of the Code or otherwise to fail to qualify as a REIT, then the shares of Equity Stock being Transferred, or resulting from any other change in the capital structure of the Corporation, that would cause the Corporation to be closely held” within the meaning of Section 856(h) of the Code or otherwise to fail to qualify as a REIT, as the case may be, (rounded up to the nearest whole share) shall automatically (and without any action by the Corporation or by any purported Transferor, Purported Record Transferee or Purported Beneficial Transferee of such Equity Stock, in the case of a Transfer) be converted into and exchanged for an equal number of shares of Excess Stock. Such conversion and exchange shall be effective as of the close of business on the business day prior to the date of the purported Transfer or change in capital structure.
(d) The Corporation’s Right to Redeem Stock. The Corporation shall have the right to redeem any Stock that is Transferred, or is attempted to be Transferred, in violation of Section 2(b) of this Article V, at a price per share equal to the lesser of (i) the price per share in the transaction that created such violation or attempted violation (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price of the class of Equity Stock to which such shares of Excess Stock relate on the date the Corporation, or its designee, gives notice of such redemption. The Corporation shall have the right to redeem any Stock described in this Section for a period of 90 days after the later of (i) the date of the Transfer or attempted Transfer or (ii) the date the Board of Directors determines in good faith that a Transfer has occurred, if the Corporation does not receive a notice of such Transfer pursuant to Section 2(e) of this Article V.
(e) Notice Requirements and General Authority of the Board of Directors to Implement REIT-Related Restrictions and Limitations.
(i) Any Person who acquires or attempts to acquire shares of Equity Stock in violation of Section 2(b) of this Article V, and any Person who is a Purported Record Transferee or a Purported Beneficial Transferee such that Equity Stock proposed to be acquired is converted into Excess Stock under Section 2(c) of this Article V, shall immediately give written notice or in the event of a proposed or attempted Transfer, give at least 15 days’ prior written notice to the Corporation, of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer on the Corporation’s status as a REIT.
(ii) Prior to the Restriction Termination Date, every Beneficial Owner or Constructive Owner of more than 5.0% (or such other percentage, between 0.5% and 5.0%, as provided in the income tax regulations promulgated under the Code) of the number or value of outstanding Equity Stock of the Corporation shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such Beneficial Owner or Constructive Owner, the number of shares of Equity Stock Beneficially Owned or Constructively Owned, and a description of how such shares are held. Each such Beneficial Owner or Constructive Owner shall provide to the Corporation such additional information that the Corporation may reasonably request in order to determine the effect, if any, of such Beneficial Ownership or Constructive Ownership on the Corporation’s status as a REIT; and
(iii) Prior to the Restriction Termination Date, each Person who is a Beneficial Owner or Constructive Owner of Equity Stock and each Person (including the stockholder of record) who is holding Equity Stock for a Beneficial Owner or Constructive Owner shall provide to the Corporation such information that the Corporation may reasonably request in order to determine the Corporation’s status as a REIT, to comply with the requirements of any taxing authority or governmental agency or to determine any such compliance.
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(iv) Each certificate for Equity Stock shall bear substantially the following legends:
“The Corporation will furnish to any stockholder on request and without charge a full statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of the stock of each class which the Corporation is authorized to issue, of the differences in the relative rights and preferences between the shares of each series of a preferred or special class in series which the Corporation is authorized to issue, to the extent they have been set, and of the authority of the Board of Directors to set the relative rights and preferences of subsequent series of a preferred or special class of stock.
Such request may be made to the secretary of the Corporation or to its transfer agent.”
“Keep this certificate in a safe place. If it is lost, stolen or destroyed, the Corporation will require a bond of indemnity as a condition to the issuance of a replacement certificate.”
“The securities represented by this certificate are subject to restrictions on ownership and transfer for the purpose of the Corporation’s maintenance of its status as a “real estate investment trust” under the Internal Revenue Code of 1986, as amended. Except as otherwise provided pursuant to the Charter of the Corporation, no Person may Beneficially Own or Constructively Own Equity Stock in excess of 9.8%, (in value or in number of shares of Equity Stock, whichever is more restrictive) of the outstanding Equity Stock of the Corporation, with further restrictions and exceptions set forth in the Charter of the Corporation. There shall be no Transfer that would cause a violation of the Ownership Limit, that would result in Equity Stock of the Corporation being Beneficially Owned by fewer than 100 persons or that would result in the Corporation’s being “closely held” under section 856(h) of the Code. Any Person who attempts or proposes to own, Beneficially Own or Constructively Own Equity Stock in excess of the above limitation must notify the Corporation in writing at least 15 days prior to such proposed or attempted Transfer to such Person. If attempt is made to violate these restrictions on Transfers, (i) any purported Transfer will be void and will not be recognized by the Corporation, (ii) the Corporation will have the right to redeem the Stock proposed to be Transferred, and (iii) the Stock represented hereby will be automatically converted into and exchanged for Excess Stock (having no dividend or voting rights), which will be held in trust by the Corporation. All capitalized terms in this legend have the meanings defined in the Charter of the Corporation, a copy of which, including the restrictions on ownership and transfer, will be sent without charge to each stockholder who directs a request to the Secretary of the Corporation.”
(v) Subject to Section 2(f)(iii) of this Article V, nothing contained in this Article V shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its stockholders by preservation of the Corporation’s status as a REIT.
(f) Exemptions.
(i) The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of counsel or other evidence satisfactory to the Board of Directors and upon at least 15 days’ written notice from a Transferee prior to a proposed Transfer that, if consummated, would result in the intended Transferee Beneficially Owning Equity Stock in excess of the Ownership Limit, and upon such other conditions as the Board of Directors may direct, may in its sole and absolute discretion exempt a Person from the Ownership Limit.
(ii) The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of counsel or other evidence satisfactory to the Board Directors, may in its sole and absolute discretion exempt a Person from the limitation on a Person Constructively Owning Equity Stock in excess of the Ownership Limit, if (x) such Person does not and represents that it will not directly own or Constructively Own more than a 9.8% interest (as set forth in Section 856(d)(2)(B) of the Code) in a tenant of the Corporation; (y) the Corporation obtains such representations and undertakings from such Person as are reasonably necessary to ascertain this fact; and (z) such Person agrees that any violation or attempted violation of such representations, undertakings and agreement will result in such Equity Stock in excess of the Ownership Limit being converted into and exchanged for Excess Stock in accordance with Section 2(c) of this Article V.
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(iii) Nothing in this Article V shall preclude the settlement of a transaction entered into through the facilities of any interdealer quotation system or national securities exchange upon which Equity Stock is traded. Notwithstanding the previous sentence, certain transactions may be settled by providing Excess Stock as set forth in this Article V.
(iv) The ownership restrictions set forth in this Section 2 of this Article V shallnot apply until the effective date of the merger between the Corporation and EastGroup Properties, a Maryland real estate investment trust.
SECTION 3. CLASSIFICATION AND RECLASSIFICATION OF STOCK.
(a) Power of Board to Classify or Reclassify Stock. The Board of Directors shall have the power, in its sole discretion and without limitation, to classify or reclassify any unissued Stock, whether now or hereafter authorized, by setting, altering or eliminating in any one or more respects, from time to time, before the issuance of such Stock, any feature of such Stock, including, but not limited to, the designation, preferences, conversion or other rights, voting powers, qualifications and terms and conditions of redemption of, and limitations as to dividends and any other restrictions on, such Stock. The power of the Board of Directors to classify and reclassify any of the shares of capital stock shall include, without limitation, subject to the provisions of the Charter, authority to classify or reclassify any unissued shares of such stock into a class or classes of preferred stock, preference stock, special stock or other stock, and to divide and classify shares of any class into one or more series of such class, by determining, fixing or altering one or more of the following:
(i) The distinctive designation of such class or series and the number of shares which constitute such class or series; provided that, unless otherwise prohibited by the terms of such or any other class or series, the number of shares of any class or series may be decreased by the Board of Directors in connection with any classification or reclassification of unissued shares and the number of shares of such class or series may be increased by the Board of Directors in connection with any such classification or reclassification, and any shares of any class or series which have been redeemed, purchased, otherwise acquired or converted into shares of Common Stock or any other class or series shall become part of the authorized capital stock and be subject to classification and reclassification as provided in this subparagraph.
(ii) Whether or not and, if so, the rates, amounts and times at which, and the conditions under which, dividends shall be payable on shares of such class or series, whether any such dividends shall rank senior or junior to or on a parity with the dividends payable on any other class or series of stock, and the status of any such dividends as cumulative, cumulative to a limited extent or non-cumulative and as participating or non-participating.
(iii) Whether or not shares of such class or series shall have voting rights, in addition to any voting rights provided by law and, if so, the terms of such voting rights.
(iv) Whether or not shares of such class or series shall have conversion or exchange privileges and, if so, the terms and conditions thereof, including provision for adjustment of the conversion or exchange rate in such events or at such times as the Board of Directors shall determine.
(v) Whether or not shares of such class or series shall be subject to redemption and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; and whether or not there shall be any sinking fund or purchase account in respect thereof, and if so, the terms thereof.
(vi) The rights of the holders of shares of such class or series upon the liquidation, dissolution or winding up of the affairs of, or upon any distribution of the assets of, the Corporation, which rights may vary depending upon whether such liquidations dissolution or winding up is voluntary or involuntary and, if voluntary, may vary at different dates, and whether such rights shall rank senior or junior to or on a parity with such rights of any other class or series of stock.
(vii) Whether or not there shall be any limitations applicable, while shares of such class or series are outstanding, upon the payment of dividends or making of distributions on, or the acquisition of, or the use of moneys for purchase or redemption of, any stock of the Corporation, or upon any other action of the Corporation, including action under this subparagraph, and, if so, the terms and conditions thereof.
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(viii) Any other preferences, rights, restrictions, including restrictions on transferability, and qualifications of shares of such class or series, not inconsistent with law and the Charter of the Corporation.
(b) Ranking of Stock. For the purposes hereof and of any articles supplementary to the Charter providing for the classification or reclassification of any shares of capital stock or of any other charter document of the Corporation (unless otherwise provided in any such articles or document), any class or series of stock of the Corporation shall be deemed to rank:
(i) Prior to another class or series either as to dividends or upon liquidation, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable on liquidation, dissolution or winding up, as the case may be, in preference or priority to holders of such other class or series.
(ii) On a parity with another class or series either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates or redemption or liquidation price per share thereof be different from those of such others, if the holders of such class or series of stock shall be entitled to receipt of dividends or amounts distributable upon liquidation, dissolution or winding up, as the case may be, in proportion to their respective dividend rates or redemption or liquidation prices, without preference or priority over the holders of such other class or series.
(iii) Junior to another class or series either as to dividends or upon liquidation, if the rights of the holders of such class or series shall be subject or subordinate to the rights of the holders of such other class or series in respect of the receipt of dividends or the amounts distributable upon liquidation, dissolution or winding up, as the case may be.
SECTION 4. COMMON STOCK.
Subject to the provisions of Sections 2 and 5 of this Article V, the Common Stock shall have the following preferences, rights, powers, restrictions, limitations and qualifications, and such others as may be afforded by law:
(a) Voting Rights. Except as may otherwise be required by law, and subject to action, if any, by the Board of Directors, pursuant to Section 3 of this Article V, each holder of Common Stock shall have one vote in respect of each share of Common Stock held of record on all matters to be voted upon by the stockholders. Holders of shares of Common Stock shall not have cumulative voting rights.
(b) Dividend Rights. After provision(s) with respect to preferential dividends on any then outstanding classes of preferred stock, if any, fixed by the Board of Directors pursuant to Section 3 of this Article V, shall have been satisfied, and after satisfaction of any other requirements, if any, including with respect to redemption rights and preferences, of any such classes of preferred stock, then and thereafter the holders of Common Stock shall be entitled to receive, pro rata in relation to the number of shares of Common Stock held by them, such dividends or other distributions as may be declared from time to time by the Board of Directors out of funds legally available therefor.
(c) Liquidation Rights. In the event of the voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, after distribution in full of the preferential amounts, if any, fixed pursuant to Section 3 of this Article V, to be distributed to the holders of any then outstanding preferred stock, and subject to the right, if any, of the holders of any outstanding preferred stock to participate further in any liquidating distributions, all of the assets of the Corporation, if any, remaining, of whatever kind available for distribution to stockholders after the foregoing distributions have been made shall be distributed to the holders of the Common Stock, ratably in proportion to the number of shares of Common Stock held by them. For purposes of making liquidating distributions pursuant to this Section 4(c) of this Article V, Excess Stock shall be included as part of the preferred stock and the Common Stock to the extent provided in Section 5(e) of this Article V below.
(d) Conversion Rights. Each share of Common Stock is convertible into Excess Stock as provided in Section 2(c) of this Article V.
SECTION 5. EXCESS STOCK.
(a) Condition to Issuance. The provisions of this Article V to the contrary notwithstanding, the automatic conversion and exchange of certain Equity Stock into Excess Stock in the circumstances provided for in Section 2(c) of this Article V shall be deemed not to have occurred, nunc pro tunc, if the Corporation shall have
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determined, in the sole and absolute discretion of the Board of Directors, that the issuance by the Corporation of Excess Stock would cause the Corporation to fail to satisfy the organizational and operational requirements that must be met for the Corporation to qualify for treatment as a REIT.
(b) Ownership of Excess Stock in Trust. Upon any purported Transfer that results in Excess Stock pursuant to Section 2(c) of this Article V, such Excess Stock shall not be issued in certificated form but shall be held by the Corporation, in book entry form, as Trustee in Trust for the exclusive benefit of such Beneficiary or Beneficiaries to whom an interest in such Excess Stock may later be transferred pursuant to Section 5(f) of this Article V. Excess Stock so held in Trust shall be issued and outstanding Stock of the Corporation. The Purported Record Transferee shall have no rights in such Excess Stock except the right to designate a transferee of such Excess Stock upon the terms specified in Section 5(f) of this Article V. The Purported Beneficial Transferee shall have no rights in such Excess Stock except as provided in Section 5(f) of this Article V.
(c) No Voting Rights. Except as required by law, Excess Stock shall not be entitled to vote on any matters.
(d) No Dividend Rights. Excess Stock shall not be entitled to any dividends. Any dividend or distribution paid prior to the discovery by the Corporation that Equity Stock had been converted into Excess Stock shall be repaid to the Corporation upon demand.
(e) Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation, each holder of share(s) of Excess Stock shall be entitled to receive that portion of the assets of the Corporation that would have been distributed to the Equity Stock in respect of which the Excess Stock was issued.
The Corporation, as holder of the Excess Stock in Trust or, if the Corporation has been dissolved, any trustee appointed by the Corporation prior to its dissolution, shall distribute ratably to the Beneficiaries of the Trust, when determined, any such assets received in respect of the Excess Stock in any liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation.
(f) Restrictions on Transfer; Designation of Beneficiary.
(i) Excess Stock shall not be transferable. The Purported Record Transferee may freely designate a Beneficiary of an interest in the Trust (representing the number of shares of Excess Stock held by the Trust attributable to a purported Transfer that resulted in Excess Stock), if the Excess Stock held in the Trust would not be Excess Stock in the hands of such Beneficiary and the Purported Record Transferee does not receive a price for designating such Beneficiary that reflects a price per share of Excess Stock that exceeds (x) the price per share that such Purported Record Transferee paid for the Equity Stock in the purported Transfer that resulted in the Excess Stock; or (y) if the Purported Record Transferee did not give value for such Excess Stock (through a gift, devise or other transaction), the price per share equal to the Market Price on the date of the purported Transfer that resulted in the Excess Stock. Upon such transfer of an interest in the Trust, the corresponding shares of Excess Stock in the Trust shall automatically be exchanged for an equal number of shares of Equity Stock, and such shares of Equity Stock shall be transferred of record to the transferee of the interest in the Trust if such Equity Stock would not be Excess Stock in the hands of such Beneficiary. Prior to any transfer of any interest in the Trust, the Purported Record Transferee must give advance notice to the Corporation of the intended transfer and the Corporation must have waived in writing its redemption rights under Section 2(d) of this Article V.
(ii) Notwithstanding the foregoing, if a Purported Record Transferee receives a price for designating a Beneficiary of an interest in the Trust that exceeds the amounts allowable under Section 5(f)(i) of this Article V, such Purported Record Transferee shall pay, or cause such Beneficiary to pay, such excess to the Corporation.
(g) Conversion Right. Each share of Excess Stock is convertible into Equity Stock as provided in Section 2(c) of this Article V.
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SECTION 6. GENERAL PROVISIONS.
(a) Interpretation and Ambiguities. The Board of Directors shall have the power to interpret and to construe the provisions of this Article V, including any definition contained in Section 1, and the Board of Directors shall have the power to determine the application of the provisions of this Article V with respect to any situation based on the facts known to it, and any such interpretation, construction and determination shall be final and binding on all interested parties, including the stockholders.
(b) Severability. If any provision of this Article V or any application of any such provision is determined to be void, invalid or unenforceable by any court having jurisdiction over the issue, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court.
ARTICLE VI
THE BOARD OF DIRECTORS
SECTION 1. AUTHORIZED NUMBER AND DIRECTORS.
The business and affairs of the Corporation shall be managed by a Board of Directors. The authorized number of directors of the Corporation shall be eight (8), which number may be increased or decreased pursuant to the Bylaws of the Corporation, but shall never be less than the minimum number permitted by the General Laws of the State of Maryland now or hereafter in force. The following persons shall be the directors of the Corporation until their successors are duly elected and qualified, or until their earlier death, retirement, resignation or removal:
David H. Hoster II
D. Pike Aloian
H. Eric Bolton, Jr.
Donald F. Colleran
Hayden C. Eaves III
Marshall A. Loeb
Mary E. McCormick
Katherine M. Sandstrom
SECTION 2. GENERAL TERM OF OFFICE.
Each director shall serve for a term of one year and until such director’s successor is elected and qualified or until such director’s death, retirement, resignation or removal.
SECTION 3. REMOVAL OF DIRECTORS.
A director may be removed from office but only for cause and only by the affirmative vote of the holders of at least two-thirds of the combined voting power of all shares of capital stock entitled to be cast in the election of directors voting together as a single class.
SECTION 4. FILLING VACANCIES.
Except as may otherwise be provided with respect to any rights of holders of preferred stock to elect additional directors, or in any agreement relating to the right to designate nominees for election to the Board of Directors, should a vacancy on the Board of Directors occur or be created (whether arising through death, retirement resignation or removal), other than through an increase but not a decrease, in the number of authorized directors, such vacancy shall be filled by the affirmative vote of a majority of the remaining directors, even though less than a quorum of the Board of Directors. A vacancy on the Board of Directors resulting from an increase in the number of directors shall be filled by the affirmative vote of a majority of the entire Board of Directors. By the vote required to elect a director, the stockholders may fill any vacancy on the Board of Directors resulting from the removal of a director.
SECTION 5. BOARD AUTHORIZATION OF SHARE ISSUANCES.
The Board of Directors of the Corporation may authorize the issuance from time to time of Stock of any class, whether now or hereafter authorized, or securities convertible into Stock of any class, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable, subject to such restrictions or limitations, if any, as may be set forth in the Charter or the Bylaws of the Corporation.
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SECTION 6. PREEMPTIVE RIGHTS.
No holder of any Stock or any other securities of the Corporation, whether now or hereafter authorized, shall have any preemptive right to subscribe for or purchase any Stock or any other securities of the Corporation other than such, if any, as the Board of Directors, in its sole discretion, may determine and at such price or prices and upon such other terms as the Board of Directors, in its sole discretion, may fix; and any Stock or other securities which the Board of Directors may determine to offer for subscription may, as the Board of Directors in its sole discretion shall determine, be offered to the holders of any class, series or type of Stock or other securities at the time outstanding to the exclusion of the holders of any or all other classes, series or types of stock or other securities at the time outstanding.
SECTION 7. AMENDMENTS TO THE BYLAWS.
In furtherance and not in limitation of the power conferred by statute, the Board of Directors is expressly authorized to adopt, alter or repeal Bylaws of the Corporation by vote of two-thirds of the Board of Directors.
SECTION 8. CERTAIN OTHER DETERMINATIONS BY THE BOARD OF DIRECTORS.
The determination as to any of the following matters, made in good faith by or pursuant to the direction of the Board of Directors consistent with the Charter and in the absence of actual receipt of an improper benefit in money, property or services or active and deliberate dishonesty established by a court, shall be final and conclusive and shall be binding upon the Corporation and every holder of Stock: the amount of the net income of the Corporation for any period and the amount of assets at any time legally available for the payment of dividends, redemption of Stock or the payment of other distributions on Stock; the amount of paid-in surplus, net assets, annual or other net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation nor liability for which such reserves or charges shall have been created shall have been paid or discharged); the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Corporation; and any matters relating to the acquisition, holding and disposition of any assets of the Corporation.
SECTION 9. RESERVED POWERS OF THE BOARD OF DIRECTORS.
The enumeration and definition of particular powers of the Board of Directors included in this Article VI shall in no way be limited or restricted by reference to or inference from the terms of any other clause of this or any other provision of the charter of the Corporation, or construed or deemed by inference or otherwise in any manner to exclude or limit the powers conferred upon the Board of Directors under the general laws of the State of Maryland as now or hereafter in force.
ARTICLE VII
PROVISIONS FOR DEFINING, LIMITING AND REGULATING CERTAIN POWERS OF THE CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS
SECTION 1. RELATED PARTY TRANSACTIONS.
Without limiting any other procedure available by law or otherwise to the Corporation, the Board of Directors may authorize any agreement or other transaction with any person, corporation, association, company, trust, partnership (limited or general) or other organization, although one or more of the directors or officers of the Corporation may be a party to any such agreement or any officer, director, stockholder or member of such other party (an “Interested Officer/Director”), and no such agreement or transaction shall be invalidated or rendered void or voidable solely by reason of the existence of any such relationship if: (i) the existence is disclosed or known to the Board of Directors, and the contract or transaction is authorized, approved or ratified by the affirmative vote of a majority of the disinterested directors, even if they constitute less than a quorum of the Board of Directors; or (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, other than the votes of the stock held of record by the Interested Officers/Directors; or (iii) the contract or transaction is fair and reasonable to the Corporation. Any Interested Officer/Director of the Corporation or the stock owned by them or by a corporation, association, company, trust, partnership (limited or general) or other organization in which an Interested Officer/Director may have an interest, may be counted in determining the presence of a quorum at a meeting of the Board of Directors or a committee of the Board of Directors or at a meeting of the stockholders, as the case may be, at which the contract or transaction is authorized, approved or ratified.
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SECTION 2. REIT QUALIFICATION.
After the Corporation has initially elected to qualify as a REIT under the Code, the Board of Directors shall use its reasonable best efforts to cause the Corporation and its stockholders to qualify for U.S. federal income tax treatment in accordance with the provision of the Code applicable to a REIT. In furtherance of the foregoing, the Board of Directors shall use its reasonable best efforts to take such actions as are necessary, and may take such actions as in its sole judgment and discretion are desirable, to preserve the status of the Corporation as a REIT, provided, however, that if the Board of Directors determines in its discretion, that it is no longer in the best interests of the Corporation to continue to have the Corporation qualify as a REIT, the Board of Directors may revoke or otherwise terminate the Corporation’s REIT election pursuant to Section 856(g) of the Code. Nothing contained in the Charter shall limit the authority of the Board of Directors to take such action as it in its sole discretion deems necessary or advisable to protect the Corporation and the interests of the stockholders by maintaining the Corporation’s eligibility to be, and preserving the Corporation’s status as, a qualified REIT under the Code.
SECTION 3. STOCKHOLDER ACTIONS.
(a) Stockholder Meetings. Action shall be taken by the stockholders only at annual or special meetings of stockholders, or by unanimous written consent of the holders of all Equity Stock entitled to vote on such action at a meeting of stockholders, if such written consent is accompanied by a written waiver of any right to dissent signed by each stockholder entitled to notice of the meeting but not entitled to vote at such meeting.
(b) Special Meetings of the Stockholders. Special meetings of the stockholders of the Corporation for any purpose or purposes may be called at any time by the President, the Chief Executive Officer, the Chairman of the Board of Directors, or by a majority of the members of the Board of Directors. Special meetings of stockholders of the Corporation shall be called at the request of the holders of a majority of all the votes entitled to be cast at the meeting.
SECTION 4. OTHER CONSIDERATIONS.
The Board of Directors shall, in connection with the exercise of its business judgment involving a Business Combination (as defined in Section 3-601 of the Corporations and Associations Article of the Annotated Code of Maryland) or any actual or proposed transaction which would or may involve a change in control of the Corporation (whether by purchases of shares of stock or any other securities of the Corporation in the open market, or otherwise, tender offer, merger, consolidation, dissolution, liquidation, sale of all or substantially all of the assets of the Corporation, proxy solicitation or otherwise), in determining what is in the best interests of the Corporation and its stockholders and in making any recommendation to its stockholders, give due consideration to all relevant factors, including, but not limited to (a) the economic effect, both immediate and long-term, upon the Corporation’s stockholders, including stockholders, if any, who do not participate in the transaction; (b) the social and economic effect on the employees, customers of, and others dealing with, the Corporation and its subsidiaries and on the communities in which the Corporation and its subsidiaries operate or are located; (c) whether the proposal is acceptable based on the historical and current operating results or financial condition of the Corporation; (d) whether a more favorable price could be obtained for the Corporation’s stock or other securities in the future; (e) the reputation and business practices of the offeror and its management and affiliates as they would affect the employees of the Corporation and its subsidiaries; (f) the future value of the stock or any other securities of the Corporation; (g) any antitrust or other legal and regulatory issues that are raised by the proposal; and (h) the business and financial condition and earnings prospects of the acquiring person or entity, including, but not limited to, debt service and other existing financial obligations, financial obligations to be incurred in connection with the acquisition, and other likely financial obligations of the acquiring person or entity. If the Board of Directors determines that any proposed Business Combination (as defined in Section 3-601 of the Corporations and Associations Article of the Annotated Code of Maryland) or actual or proposed transaction which would or may involve a change in control of the Corporation should be rejected, it may take any lawful action to defeat such transaction, including, but not limited to, any or all of the following: advising stockholders not to accept the proposal; instituting litigation against the party making the proposal; filing complaints with governmental and regulatory authorities; acquiring the stock or any of the securities of the Corporation; selling or otherwise issuing authorized but unissued stock, other securities or granting options or rights with respect thereto; acquiring a company to create an antitrust or other regulatory problem for the party making the proposal; and obtaining a more favorable offer from another individual or entity.
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SECTION 5. STOCKHOLDER PROPOSALS.
For any stockholder proposal to be presented in connection with an annual meeting of stockholders of the Corporation, including any proposal relating to the nomination of a director to be elected to the Board of Directors of the Corporation, the stockholders must have given timely written notice thereof in Writing to the Secretary of the Corporation in the manner and containing the information required by the Bylaws. Stockholder proposals to be presented in connection with a special meeting of stockholders will be presented by the Corporation only to the extent required by Section 2-502 of the Corporations and Associations Article of the Annotated Code of Maryland.
SECTION 6. VOTING REQUIREMENTS.
Notwithstanding any provision of law requiring the authorization of any action by a greater proportion than a majority of the total number of shares of all classes of capital stock or the total number of shares of any class of capital stock, such action shall be valid and effective if authorized by the affirmative vote of the holders of a majority of the total number of shares of all classes and entitled to vote thereon, except as otherwise provided in the Charter of the Corporation. All mergers, consolidations, share exchanges, recapitalizations or dissolutions to which the Corporation is a party and all sales of all or substantially all the assets of the Corporation shall not be valid and effective unless advised by at least two-thirds of the Board of Directors.
ARTICLE VIII
INDEMNIFICATION OF AGENTS AND LIMITATION OF
LIABILITY OF OFFICERS AND DIRECTORS
SECTION 1. INDEMNIFICATION.
The Corporation shall provide any indemnification permitted by the laws of Maryland and shall indemnify directors, officers, agents and employees as follows: (a) the Corporation shall indemnify its directors and officers, whether serving the Corporation or at its request any other entity, to the full extent required or permitted by the General Laws of the State of Maryland now or hereafter in force, including the advance of expenses under the procedures and to the full extent permitted by law and (b) the Corporation shall indemnify other employees and agents, whether serving the Corporation or at its request any other entity, to such extent as shall be authorized by the Board of Directors or the Corporation’s Bylaws and be permitted by law. The foregoing rights of indemnification shall not be exclusive of any other rights to which those seeking indemnification may be entitled. The Board of Directors may take such action as is necessary to carry out these indemnification provisions and is expressly empowered to adopt, approve and amend from time to time such bylaws, resolutions or contracts implementing such provisions or such further indemnification arrangements as may be permitted by law. No amendment of the Charter of the Corporation or repeal of any of its provisions shall limit or eliminate the right to indemnification provided hereunder with respect to acts or omissions occurring prior to such amendment or repeal or shall limit or eliminate the rights granted under indemnification agreements entered into by the corporation and its directors, officers, agents and employees.
SECTION 2. LIMITATION OF LIABILITY.
To the fullest extent permitted by Maryland statutory or decisional law, as amended or interpreted, no director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages. No amendment of the Charter of the Corporation or repeal any of its provisions shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or omission which occurred prior to such amendment or repeal.
ARTICLE IX
AMENDMENTS
(a) Right to Amend Charter. The Corporation reserves the right to amend, alter, change or repeal any provision contained in the Charter, including any amendments changing the terms or contract rights, as expressly set forth in the Charter, of any of its outstanding stock by classification, reclassification or otherwise, by a majority of the directors’ adopting a resolution setting forth the proposed change, declaring its advisability, and either calling a special meeting of the stockholders entitled to vote on the proposed change, or directing the proposed change to be considered at the next annual stockholders meeting. Unless otherwise provided herein, the proposed change will be effective only if it is adopted upon the affirmative vote of the holders of not less
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than a majority of the aggregate votes entitled to be cast thereon (considered for this purpose as a single class); provided, however, that any amendment to, repeal of or adoption of any provision inconsistent with Article VI, Article VIII or this Article IX will be effective only if it is also advised by at least two-thirds of the Board of Directors.
(b) Certain Amendments Requiring Special Stockholder Vote. Any provision of the Charter of the Corporation to the contrary notwithstanding:
(i) no term or provision of the Charter of the Corporation may be added, amended or repealed in any respect that would, in the determination of the Board of Directors, cause the Corporation not to qualify as a REIT under the Code;
(ii) Article VI, Section 3 (removal of directors); Article VIII (indemnification of agents and limitation of liability of officers and directors); and this Article IX shall not be amended or repealed; and
(iii) no provision imposing cumulative voting in the election of directors may be added to the Charter of the Corporation;
unless in each such case, in addition to any vote required by the terms of then outstanding preferred stock, such action is approved by the affirmative vote of the holders of not less than eighty percent (80%) of all of the votes entitled to be cast on the matter.
SECOND: The amendment to and restatement of the Charter as hereinabove set forth has been duly advised by the Board of Directors of the Corporation and approved by the stockholders of the Corporation as required by law.
THIRD: The current address of the principal office of the Corporation is as set forth in ARTICLE IV of the foregoing amendment and restatement of the original Charter.
FOURTH: The name and address of the Corporation’s current resident agent is as set forth in ARTICLE IV of the foregoing amendment and restatement of the original Charter.
FIFTH: The number of directors of the Corporation and the names of those currently in office are as set forth in ARTICLE VI of the foregoing amendment and restatement of the original Charter.
SIXTH: This amendment and restatement of the Charter did not increase the authorized stock of the Corporation, which is set forth in Article V of the foregoing amendment and restatement of the original Charter.
SEVENTH: The undersigned acknowledges these Articles of Amendment and Restatement to be the corporate act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
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IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment and Restatement to be signed in its name and on its behalf by its Chief Executive Officer and attested to by its Chief Financial Officer on this day of , 2021.
ATTEST: | | | EASTGROUP PROPERTIES, INC. |
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Brent W. Wood
Chief Financial Officer | | | Marshall A. Loeb
Chief Executive Officer |
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APPENDIX B
AMENDED AND RESTATED BYLAWS
OF
EASTGROUP PROPERTIES, INC.
A Maryland Corporation
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EASTGROUP PROPERTIES, INC. AMENDED AND RESTATED BYLAWS
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| N. KEITH McKEY | | | | | |
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| Executive Vice President, Chief Financial Officer, | | | | | |
| Treasurer and Secretary |
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EASTGROUP PROPERTIES, INC.
190 E. CAPITOL STREET
SUITE 400
JACKSON, MS 39201
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VOTE BY MAIL
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E24669-P86015 | KEEP THIS PORTION FOR YOUR RECORDS | | | | | |
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EASTGROUP PROPERTIES, INC.
AMENDED AND RESTATED BYLAWS
Effective , 2021
OFFICES
Section 1. PRINCIPAL OFFICE The principal office of the Corporation shall be located at such place as the Board of Directors may designate.
Section 2. ADDITIONAL OFFICES The Corporation may have additional offices at such places as the Board of Directors may from time to time determine or the business of the Corporation may require.
STOCKHOLDERS
Section 1. ANNUAL MEETING The annual meeting of stockholders shall be held on the date and at the time as the Board of Directors designates. At each annual meeting, the stockholders shall elect members of the Board of Directors and transact any other business as may be properly brought before the meeting. Failure to hold an annual meeting does not invalidate the Corporation’s existence or affect any otherwise valid corporate acts.
Section 2. SPECIAL MEETING At any time in the interval between annual meetings, a special meeting of the stockholders may be called by the President, the Chief Executive Officer or the Chairman of the Board of Directors by vote of a majority of the Board of Directors at a meeting or in writing (addressed to the Secretary of the corporation) with or without a meeting. Special meetings of the stockholders shall also be called by the Secretary at the request of stockholders only on the written request of stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting. A request for a special meeting shall state the purpose of such meeting and the matters proposed to be acted on at such meeting. The Secretary shall inform the stockholders making the request of the reasonably estimated costs of preparing and mailing a notice of the meeting and, upon such stockholders’ payment to the Corporation of such costs, the Secretary shall give notice to each stockholder entitled to notice of the meeting.
Section 3. PLACE OF MEETINGS Meetings of stockholders shall be held at such place in the United States as is set from time to time by the Board of Directors.
Not less than ten nor more than 90 days before each meeting of stockholders, the Secretary shall give notice in writing or by electronic transmission to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting. Such notice shall state the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by applicable law, the purpose of the meeting. Notice is given to a stockholder when it is personally delivered to the stockholder, left at the stockholder’s residence or usual place of business, mailed to the stockholder at his or her address as it appears on the records of the Corporation, or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the shareholder at the shareholder’s address as it appears on the records of the Corporation, with postage thereon prepaid. If transmitted electronically, such notice shall be deemed to be given when transmitted to the shareholder by an electronic transmission to any address or number of the shareholder at which the shareholder receives electronic transmissions. A single notice to all shareholders who share an address shall be effective as to any shareholder at such address who consents to such notice or after having been notified of the Corporation’s intent to give a single notice fails to object in writing to such single notice within 60 days. Failure to give notice of any meeting to one or more shareholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II, or the validity of any proceedings at any such meeting.
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| The Board of Directors recommends you vote FOR all the nominees listed in proposal 1: | | | |
| 1. | Election of Directors | | | |
| | Nominees: | For | Against | Abstain |
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| | 1a. | D. Pike Aloian | ☐ | ☐ | ☐ |
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| | 1b. | H.C. Bailey, Jr. | ☐ | ☐ | ☐ |
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| | 1c. | H. Eric Bolton, Jr. | ☐ | ☐ | ☐ |
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| | 1d. | Hayden C. Eaves III | ☐ | ☐ | ☐ |
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| | 1e. | Fredric H. Gould | ☐ | ☐ | ☐ |
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| | 1f. | David H. Hoster II | ☐ | ☐ | ☐ |
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| | 1g. | Marshall A. Loeb | ☐ | ☐ | ☐ |
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| | 1h. | Mary E. McCormick | ☐ | ☐ | ☐ |
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| | 1i. | Leland R. Speed | ☐ | ☐ | ☐ |
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| For address changes/comments, mark here.
(see reverse for instructions) | ☐ |
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Notwithstanding the foregoing provisions, each person who is entitled to notice waives notice if he or she before or after the meeting delivers a written waiver or a waiver by electronic transmission which is filed with the records of the stockholders’ meetings, or is present at the meeting in person or by proxy.
Any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by applicable law or the Charter to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice.
Section 5. ORGANIZATION AND CONDUCT Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment, by the Chairman of the Board or, in the case of a vacancy in the office or absence of the Chairman of the Board, by one of the following officers present at the meeting: the Vice Chairman of the Board, if there is one, the Chief Executive Officer, the President, the Vice Presidents in their order of rank and seniority, or, in the absence of such officers, a chairman chosen by the shareholders by the vote of a majority of the votes cast by shareholders present in person or by proxy. The Secretary or, in the Secretary’s absence, an Assistant Secretary, or in the absence of both the Secretary and Assistant Secretaries, an individual appointed by the Board of Directors, or in the absence of such appointment, an individual appointed by the chairman of the meeting, shall act as Secretary. In the event that the Secretary presides at a meeting of the shareholders, an Assistant Secretary, or in the absence of Assistant Secretaries, an individual appointed by the Board of Directors or the chairman of the meeting, shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of shareholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to shareholders of record of the Corporation and their duly authorized and constituted proxies and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot. Unless otherwise determined by the chairman of the meeting, meetings of shareholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Unless applicable law or the Charter provides otherwise, at a meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting shall constitute a quorum; but this section shall not affect any requirement under applicable law or the Charter of the Corporation for the vote necessary for the adoption of any measure. The stockholders present either in person or by proxy, at a meeting which has been duly called and convened, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders that results in less than a quorum being present. Whether or not a quorum is present at any meeting of the stockholders, a majority of the stockholders entitled to vote at such meeting, present in person or by proxy, shall have power to adjourn the meeting from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.
A majority of all the votes cast in an election for a director at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director; provided, that directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which there are more candidates for director than there are board seats to be voted upon at such meeting. For purposes of this paragraph, a majority of all the votes cast in an election for directors means that the number of shares voted “for” a candidate for director must exceed the number of votes cast “against” or “withheld” with respect to that candidate. Votes “against” or “withheld” with respect to a candidate for director will count as votes cast with respect to that candidate, but “abstentions” and broker non-votes, if any, with respect to that candidate will not count as votes cast with respect to the candidate. Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted.
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A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by applicable law or by the Charter of the Corporation. Unless otherwise provided in the Charter and other than Excess Stock of the Corporation, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders.
A stockholder may vote the stock the stockholder owns of record either in person or by proxy. A stockholder may sign exactlya writing authorizing another person to act as your name(s) appear(s) hereon. Whenproxy. Signing may be accomplished by the stockholder or the stockholder’s authorized agent signing the writing or causing the stockholder’s signature to be affixed to the writing by any reasonable means, including facsimile signature. A stockholder may authorize another person to act as attorney, executor, administrator,proxy by transmitting, or authorizing the transmission of, an authorization for the person to act as proxy to the person or to any other person authorized to receive the proxy authorization on behalf of the person authorized to act as the proxy, including a proxy solicitation firm or proxy support service organization. The authorization may be transmitted by a telegram, cablegram, datagram, electronic transmission or telephonic means. Unless a proxy provides otherwise, it is not valid more than 11 months after its date. A proxy is revocable by a stockholder at any time without condition or qualification unless the proxy states that it is irrevocable and the proxy is coupled with an interest. A proxy may be made irrevocable for so long as it is coupled with an interest. The interest with which a proxy may be coupled includes an interest in the stock to be voted under the proxy or another general interest in the Corporation or its assets or liabilities. A proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting.
Section 9. LIST OF STOCKHOLDERS At each meeting of stockholders, a full, true and complete list of all stockholders entitled to vote at such meeting, showing the number and class of shares held by each and certified by the transfer agent for such class or by the Secretary, shall be furnished by the Secretary.
Section 10. VOTING OF STOCK BY CERTAIN HOLDERS Stock registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the board of directors of such corporation or other entity presents a certified copy of such bylaw or resolution, in which case such person may vote such stock. Any director or other fiduciary pleasemay vote stock registered in his or her name as such fiduciary, either in person or by proxy.
Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time.
The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date of closing of the stock transfer books, the time after the record date of closing of the stock transfer books within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the stockholder of record of the specified stock in place of the stockholder who makes the certification.
At all meetings of stockholders, unless the voting is conducted by an inspector, the proxies and ballots shall be received, and all questions touching the qualification of voters and the validity of proxies, the acceptance or rejection of votes and procedures for the conduct of business not otherwise specified by these Bylaws, the Charter or law, shall
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be decided or determined by the chairman of the meeting. If demanded by stockholders, present in person or by proxy, entitled to cast 10% in number of votes entitled to be cast, or if ordered by the chairman, the vote upon any election or question shall be taken by ballot and, upon like demand or order, the voting shall be conducted by an inspector, in which event the proxies and ballots shall be received, and all questions touching the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided, by such inspector. Unless so demanded or ordered, no vote need be by ballot and voting need not be conducted by an inspector. The stockholders at any meeting may choose an inspector to act at such meeting, and in default of such election the chairman of the meeting may appoint an inspector. No candidate for election as a director at a meeting shall serve as an inspector thereat.
Each report of an inspector shall be in writing and signed by him, her or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.
Section 12. NOMINATIONS AND STOCKHOLDER BUSINESS (a) Annual Meeting of Stockholders.
(1) Nominations of persons for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting (or any supplement or amendment thereto), (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who (a) was a stockholder of record at the time of giving notice provided for in this Section 12 and at the time of the meeting, (b) is entitled to vote at the meeting, without qualification, and (c) who complied with the notice procedures set forth in this Section 12 as to such business or nomination; clause (iii) shall be the exclusive means for a stockholder to make nominations or submit other business (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and included in the Corporation’s notice of meeting) before an annual meeting of stockholders.
(2) Without qualification, for nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(l) of this Section 12, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation regardless of whether the stockholder’s proposal is intended to be included in the Corporation’s proxy materials or in the stockholder’s materials, and any other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.
(3) To be in proper form, such stockholder’s notice (whether given pursuant to Section 12(a)(2) or Section 12(b)) shall set forth (a) as to each matter the stockholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class, series and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder, and (iv) any material interest of the stockholder in such business and any material interest of any Stockholder Associated Person (as defined below) in such business, individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom, and (b) as to the stockholder giving the notice and any Stockholder Associated Person (i) the name and record address (and current address, if different) of the stockholder and the Stockholder Associated Person, (ii) the class, series and number of shares of capital stock of the Corporation which are beneficially owned or owned of record by the stockholder and by such Stockholder Associated Person, if any, and the nominee holder for, and the number of, shares owned beneficially but not of record by such stockholder and by any such Stockholder Associated Person, (iii) whether and the extent to which any hedging or other transaction or series of transactions has been
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entered into by or on behalf of, or any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock) has been made, the effect or intent of which is to mitigate loss to or manage risk of stock price changes for, or to increase the voting power of, such stockholder or any such Stockholder Associated Person with respect to any share of stock of the Corporation, and a general description of whether and the extent to which such stockholder or such Stockholder Associated Person has engaged in such activities with respect to shares of stock or other equity interests of any other company, and (iv) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the proposal of other business on the date of such stockholder’s notice. For purposes of these Bylaws, “Stockholder Associated Person” shall mean, with respect to any stockholder, (x) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (y) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder, and (z) any person controlling, controlled by or under common control with such Stockholder Associated Person.
(4) Notwithstanding anything in the second sentence of paragraph (a) (1) of this Section 12 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least 70 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 12 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the Corporation.
(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) pursuant to the Corporation’s notice of meeting; (ii) by or at the direction of the Board of Directors; or (iii) provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any stockholder of the Corporation who (a) is a stockholder of record at the time of giving of notice provided for in this Section 12 and at the time of the special meeting, (b) is entitled to vote at such meeting, and (c) complies with the notice procedures set forth in this Section 12 as to nomination. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be) for election to such position as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by this Section 12 with respect to any nomination (including the completed and signed questionnaire, representation and agreement required by Section 12(d)) shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting or if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall any adjournment or postponement of a special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.
(c) General.
(1) Only such persons who are nominated in accordance with the procedures set forth in this Section 12 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 12. Except as otherwise provided by law, the Charter or these Bylaws, the presiding officer of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 12 and, if any proposed nomination or business is not in compliance with this Section 12, to declare that such defective nomination or proposal be disregarded.
(2) For purposes of this Section 12, “public announcement” shall mean disclosure in (i) a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or other widely circulated news or wire service or (ii) a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act.
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(3) Notwithstanding the foregoing provisions of this Section 12, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 12, provided, however, that any references in this Section 12 to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to Section 1(a)(1)(iii) or Section 1(b) of this Section 12. Nothing in this Section 12 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
(d) Submission of Questionnaire, Representation and Agreement. Unless otherwise waived by the Secretary of the Corporation, to be eligible to be a nominee for election or reelection as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 12(a)(2)) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (1) is not and will not become a party to (i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (ii) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (2) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (3) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.
Section 13. INFORMAL ACTION BY STOCKHOLDERS Any action required or permitted to be taken at a meeting of stockholders may be taken without a meeting if there is filed with the records of stockholders meetings a unanimous written consent which sets forth the action and is signed by each stockholder entitled to vote on the matter and a written waiver of any right to dissent signed by each stockholder entitled to notice of the meeting but not entitled to vote at it. Meetings shall not be held by means of a conference telephone or other communications equipment.
DIRECTORS
Section 1. GENERAL POWERS; QUALIFICATIONS The business and affairs of the Corporation shall be managed under the direction of its Board of Directors. All powers of the Corporation may be exercised by or under authority of the Board of Directors, except as conferred on or reserved to the stockholders by applicable law or by the Charter or these Bylaws.
Section 2. NUMBER AND TENURE The Corporation shall have the number of directors provided in the Charter until changed as herein provided. Except as the Charter provides otherwise, a majority of the entire Board of Directors may alter the number of directors set by the Charter to not exceeding 15 nor less than the minimum number required by Maryland law, but the action may not affect the tenure of office of any director. Each director shall hold office for a term of one year and until his or her successor is elected and qualified, or until his or her resignation, removal (in accordance with the Charter), retirement or death.
Section 3. REGULAR MEETINGS After each meeting of stockholders at which directors shall have been elected, the Board of Directors shall meet as soon as practicable for the purpose of organization and the transaction of other business. In the event that no other time and place are specified by resolution of the Board, the President or the Chairman, with notice in accordance with
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Section 6 of this Article III, the Board of Directors shall meet immediately following the close of, and at the place of, such stockholders’ meeting. Any other regular meeting of the Board of Directors shall be held on such date and at any place as may be designated from time to time by the Board of Directors.
Section 4. SPECIAL MEETINGS Special meetings of the Board of Directors may be called at any time by or at the request of the Chairman of the Board, the President or by a majority of the directors then in office by vote at a meeting, or in writing with or without a meeting. The person or persons authorized to call special meetings of the Board of Directors may fix the date, time and place, either within or without the State of Maryland, as the date, time and place for holding any special meeting of the Board of Directors called by them. In the absence of such designation the meeting shall be held at such place as may be designated in the call of the meeting. The Board of Directors may provide, by resolution, the time and place for the holding of special meetings of the Board of Directors without other notice than such resolution.
Section 5. VACANCY ON BOARD The stockholders may elect a successor to fill a vacancy on the Board of Directors which results from the removal of a director. A director elected by the stockholders to fill a vacancy which results from the removal of a director serves for the balance of the term of the removed director. A majority of the remaining directors, whether or not sufficient to constitute a quorum, may fill a vacancy on the Board of Directors which results from any cause except an increase in the number of directors, and a majority of the entire Board of Directors may fill a vacancy which results from an increase in the number of directors. A director elected by the Board of Directors to fill a vacancy serves until the next annual meeting of stockholders and until his or her successor is elected and qualifies.
Except as provided in Section 3 of this Article III, the Secretary shall give notice to each director of each regular and special meeting of the Board of Directors. The notice shall be in writing or delivered by electronic transmission and shall state the time and place of the meeting. Notice is given to a director when it is delivered personally to the director, left at the director’s residence or usual place of business, or sent by electronic mail, telegraph or facsimile transmission, at least 24 hours before the time of the meeting or, in the alternative by mail to his or her address as it shall appear on the records of the Corporation, at least 72 hours before the time of the meeting. Unless these Bylaws or a resolution of the Board of Directors provides otherwise, the notice need not state the business to be transacted at or the purposes of any regular or special meeting of the Board of Directors. No notice of any meeting of the Board of Directors need be given to any director who attends except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened, or to any director who waives such notice if the director, before or after the meeting, delivers a written waiver or a waiver by electronic transmission which is filed with the records of the meeting. Any meeting of the Board of Directors, regular or special, may be adjourned from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.
A majority of the entire Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, provided that, if less than a majority of such directors are present at said meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to the Charter of the Corporation or these Bylaws, the vote of a majority of a particular group of directors is required for action, a quorum must also include a majority of such group.
The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater or lesser proportion is required for such action by the Charter, these Bylaws or applicable law.
Section 9. TELEPHONE MEETINGS Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means constitutes presence in person at the meeting.
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Section 10. INFORMAL ACTION BY DIRECTORS Any action required or permitted to be taken at a meeting of the Board of Directors may be taken without a meeting, if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each director and such consent is filed in paper or electronic form with the minutes of proceedings of the Board of Directors.
Unless restricted by the Charter, the Board of Directors shall have the authority to fix the compensation of directors.
Section 12. REMOVAL OF DIRECTORS The stockholders may remove any director or the entire Board of Directors in the manner provided in the Charter of the Corporation.
Any director or member of a committee may resign at any time. Such resignation shall be made in writing and shall take effect at the time of receipt by the Chairman of the Board, the President or the Secretary or at such later time specified therein. Acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.
Section 14. LOSS OF DEPOSIT No director shall be liable for any loss which may occur by reason of the failure of the bank, trust company, savings and loan association or other institution with whom moneys or stock have been deposited.
Unless required by law, no director shall be obligated to give any bond or surety or other security for the performance of any of his or her duties.
Each director, officer, employee and agent of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be fully justified and protected with regard to any act or failure to act in reliance in good faith upon the books of account or other records of the Corporation, upon an opinion of counsel or upon reports made to the Corporation by any of its officers or employees or by the advisers, accountants, appraisers or other experts or consultants selected by the Board of Directors or officers of the Corporation, regardless of whether such counsel or expert may also be a director.
Section 17. CERTAIN RIGHTS OF DIRECTORS The directors shall have no responsibility to devote their full titletime to the affairs of the Corporation. Any director, officer, employee or agent of the Corporation, in his or her personal capacity or in a capacity as such. Joint owners shouldan affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to or in addition to those of or relating to the Corporation.
The Board of Directors or the stockholders may ratify and make binding on the Corporation any action or inaction by the Corporation or its officers to the extent that the Board of Directors or the stockholders could have originally authorized the matter and, if so ratified, shall have the same force and effect as if the action or inaction had been originally duly authorized, and such ratification shall be binding upon the Corporation and its stockholders.
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS The Board of Directors may appoint from among its members all committees it deems advisable, including but not limited to an Audit Committee, a Nominating and Corporate Governance Committee and a Compensation Committee, composed of one or more directors, to serve at the pleasure of the Board of Directors.
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The Board of Directors may delegate to committees appointed under Section 1 of this Article IV any of the powers of the Board of Directors, except as prohibited by law.
Section 3. RULES; MEETINGS Unless the Board of Directors provides otherwise, each committee shall fix its own rules of procedure and shall meet at such times and at such place or places as may be provided by such rules or as the members of such committee shall provide. Committee meetings may be called by the chairman of the committee, if any, or any two committee members. Notice for such meetings as well as waiver of notice for such meetings of the committee shall be made as contemplated by Article III, Section 6 hereof. At every meeting of any such committee, the presence of a majority of all the members thereof shall constitute a quorum and the affirmative vote of a majority of the members present shall be necessary for the adoption by it of any resolution. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member. Each committee shall keep regular minutes of its meetings and deliver such minutes to the Board of Directors.
Section 4. TELEPHONE MEETINGS Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means constitutes presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the committee and such consent is filled in paper or electronic form with the minutes of proceedings of such committee.
Subject to Section 1 of this Article IV, the Board of Directors shall have the exclusive power at any time, through the approval by the affirmative vote of a majority of a quorum of the Board of Directors, to appoint directors to fill vacancies in, change the membership of, or discharge any committee. Each member of a committee shall continue as a member thereof until the expiration of his or her term as a director, or his or her earlier death, resignation as a member of such committee or as a director, unless sooner removed as a member of such committee by a vote of a majority of the quorum of the Board of Directors or as a director in accordance with these Bylaws.
OFFICERS
Section 1. GENERAL PROVISIONS The officers of the Corporation shall include a President, a Secretary and a Treasurer and may include a Chairman of the Board, a Chief Executive Officer, a Chief Operating Officer, a Chief Financial Officer, one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers. In addition, the Board of Directors may from time to time appoint such other officers with such powers and duties as they shall deem necessary or desirable. The Chairman of the Board shall be a director, other officers need not be directors. Any two or more offices except president and vice president may be held by the same person.
Section 2. ELECTION, TENURE AND REMOVAL OF OFFICERS The Board of Directors shall elect the officers. The Board of Directors may from time to time authorize any committee or officer to appoint assistant and subordinate officers. Election or appointment of an officer, employee or agent shall not of itself create contract rights. All officers shall be appointed to hold their offices, respectively, during the pleasure of the Board or until his or her earlier resignation. The Board of Directors (or, as to any assistant
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or subordinate officer, any committee or officer authorized by the Board) may remove an officer at any time. The removal of an officer does not prejudice any of his or her contract rights. The Board of Directors (or, as to any assistant or subordinate officer, any committee or officer authorized by the Board) may fill a vacancy which occurs in any office for the unexpired portion of the term.
Section 3. CHIEF EXECUTIVE OFFICER The President shall be the Chief Executive Officer of the Corporation unless the Board of Directors designates the Chairman of the Board as Chief Executive Officer. Subject to the control of the Board of Directors and the executive committee (if any), the Chief Executive Officer shall have general executive charge, management and control of the properties, business and operations of the Corporation with all such powers as may be reasonably incident to such responsibilities; he or she may agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation and may sign personally. All holders must sign. Ifall certificates for shares of capital stock of the Corporation; and shall have such other powers and duties as designated in accordance with these Bylaws and as from time to time may be assigned to him or her by the Board of Directors.
Section 4. CHIEF OPERATING OFFICER The Board of Directors may designate a Chief Operating Officer. The Chief Operating Officer shall have the responsibilities and duties as set forth by the Board of Directors or the Chief Executive Officer.
Section 5. CHIEF FINANCIAL OFFICER The Board of Directors may designate a Chief Financial Officer. The Chief Financial Officer shall have the responsibilities and duties as set forth by the Board of Directors or the Chief Executive Officer.
Section 6. CHAIRMAN OF THE BOARD The Board of Directors may designate from among its members a Chairman of the Board as an executive or non-executive chairman. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors at which he or she shall be present, and the Chairman shall have such other powers and duties as designated in these Bylaws and as from time to time may be assigned to the Chairman by the Board of Directors.
Unless the Board of Directors otherwise determines, the President shall have the authority to agree upon and execute all leases, contracts, evidences of indebtedness, authorized deeds, mortgages and other obligations in the name of the Corporation; and, unless the Board of Directors otherwise determines, he or she shall, in the absence of the Chairman of the Board or if there be no Chairman of the Board, preside at all meetings of the stockholders and (should the President be a director) of the Board of Directors; and the President shall have such other powers and duties as designated in accordance with these Bylaws and as from time to time may be assigned to the President by the Board of Directors.
Section 8. VICE PRESIDENTS The Vice Presidents shall perform such duties and have such powers as the Board of Directors may from time to time prescribe. The Board of Directors may designate one or more vice presidents as executive vice president, senior vice president, or vice president for particular areas of responsibility.
The Secretary shall keep the minutes of the meetings of the stockholders, of the Board of Directors and of any committees, in books provided for that purpose; he or she shall see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; he or she shall be custodian of the records of the Corporation; he or she may witness any document on behalf of the Corporation, the execution of which is duly authorized, see that the corporate seal is affixed where such document is required or desired to be under its seal, and, when so affixed, may attest the same. In general, he or she shall perform such other duties customarily performed by a secretary of a corporation, and shall perform such other duties and have such other powers as are from time to time assigned to him or partnership, please signher by the Board of Directors, the Chief Executive Officer, or the President.
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The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in full corporatethe name of the Corporation, all moneys or partnershipother valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors; he or she shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation. In general, he or she shall perform such other duties customarily performed by a treasurer of a corporation, and shall perform such other duties and have such other powers as are from time to time assigned to him or her by the Board of Directors, the Chief Executive Officer or the President.
Section 11. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS Each Assistant Treasurer and Assistant Secretary shall have the usual powers and duties pertaining to his or her office, together with such other powers and duties as may be assigned to him or her by the Chief Executive Officer or the Board of Directors. The Assistant Treasurers shall exercise the powers of the Treasurer during that officer’s absence or inability or refusal to act. The Assistant Secretaries shall exercise the powers of the Secretary during that officer’s absence or inability or refusal to act.
Any officer or agent may resign at any time by giving written notice to the Board of Directors, or to the President or to the Secretary of the Corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
FINANCE
To the extent permitted by applicable law, and except as otherwise prescribed by the Charter of the Corporation or these Bylaws, the Board of Directors or any committee of the Board of Directors within the scope of its delegated authority may authorize any officer, employee or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation when duly authorized or ratified by action of the Board of Directors or such committee and executed by an authorized officer.person.
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The Board of Directors recommends you vote FOR the following proposals: | For | Against | Abstain |
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2. | Advisory vote to ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the 2017 fiscal year. | ☐ | ☐ | ☐ |
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3. | Advisory vote on executive compensation. | ☐ | ☐ | ☐ |
The Board of Directors recommends you vote 1 Year on the following proposal: | 1 Year | 2 Years | 3 Years | Abstain |
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4. | Frequency on Say-On-Pay: Board has determined a say-on-pay vote every year is the best approach. | ☐ | ☐ | ☐ | ☐ |
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NOTE:In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment or postponement thereof. | | | |
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Signature [PLEASE SIGN WITHIN BOX] | Date | | Signature (Joint Owners) | Date | |
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Section 2. CHECKS AND DRAFTS Important Notice Regarding the Availability of Proxy MaterialsAll checks, drafts or other orders for the Annual Meeting:
payment of money, notes or other evidences of indebtedness, in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by the Board of Directors.
All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, or any other officer delegated the authority by the Board of Directors may determine.
Section 4. ANNUAL STATEMENT OF AFFAIRS The President or Chief Financial Officer shall prepare annually a full and correct statement of the affairs of the Corporation, to include a balance sheet and a financial statement of operations for the preceding fiscal year. The statement of affairs shall be submitted at the annual meeting of the stockholders and, within 20 days after the meeting, placed on file at the Corporation’s principal office.
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STOCK
Shares of the Corporation’s capital stock may be certificated or uncertificated, as provided under Maryland law, and this Section 1 of this Article VII shall not be interpreted to limit the authority of the Board of Directors to issue some or all of the shares of capital stock of any or all of the Corporation’s classes or series without certificates. In the event that the Corporation issues shares of stock represented by certificates, such certificates shall be in such form as prescribed by the Board of Directors or a duly authorized officer, shall contain the statements and information required by the Maryland General Corporation Law, as amended from time to time (“MGCL”) and shall be signed by the officers of the Corporation in the manner permitted by the MGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates. There shall be no differences in the rights and obligations of stockholders based on whether or not their shares are represented by certificates.
The Board of Directors shall have the power and authority to make such rules and regulations as it may deem expedient concerning the issue, transfer and registration of capital stock, and may appoint transfer agents and registrars thereof. The duties of the transfer agent and registrar may be combined.
Section 3. LOST CERTIFICATE The Board of Directors of the Corporation may determine the conditions for issuing a new stock certificate in place of one which is alleged to have been lost, stolen or destroyed, or the Board of Directors may delegate such power to any officer or officers of the Corporation. In their discretion, the Board of Directors or such officer or officers may require the owner of the certificate to give a bond, with sufficient surety, to indemnify the Corporation against any loss or claim arising as a result of the issuance of a new certificate. In their discretion, the Board of Directors or such officer or officers may refuse to issue such new certificate save upon the order of some court having jurisdiction in the premises.
Section 4. FIXING OF RECORD DATE The Board of Directors may set, in advance, a record date for the purpose of making any proper determination with respect to stockholders, including which stockholders are entitled to notice of a meeting, vote at a meeting, receive a dividend, or be allotted other rights. The record date may not be prior to the close of business on the day the record date is fixed nor more than 90 days before the date on which the action requiring the determination will be taken and, in the case of a meeting of stockholders, the record date shall be at least ten days before the date of the meeting.
If no record date is fixed and the stock transfer books are not closed, (a) the record date for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders is the later of: (i) the close of business on the day on which the notice of meeting is mailed, or (ii) the 30th day before the meeting; and (b) the record date for the determination of stockholders entitled to receive payment of a dividend or an allotment of any rights shall be the close of business on the day on which the resolution of the directors, declaring the dividend or allotment of rights, is adopted, but the payment or allotment may not be made more than 60 days after the date on which the resolution is adopted.
When a record date for the determination of stockholders entitled to notice of and to vote at any meeting of stockholders has been made as provided in this section, such record date shall continue to apply to the meeting if adjourned or postponed, except when the meeting is adjourned to a date more than 120 days or postponed to a date more than 90 days after the record date fixed for the original meeting, in either of which case a new record date for such meeting may be determined as set forth herein.
The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate share ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder. The stock ledger may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection.
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Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS The Board of Directors may issue fractional stock or provide for the issuance of scrip, all on such terms and under such conditions as they may determine. Notwithstanding any other provision of the Charter or these Bylaws, the Board of Directors may issue units consisting of different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the Board of Directors may provide that for a specified period securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit.
Section 7. CERTIFICATION OF BENEFICIAL OWNERS The Board of Directors may adopt by resolution a procedure by which a stockholder of the Corporation may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may certify; the purpose for which the certification may be made; the form of certification and the information to be contained in it; if the certification is with respect to a record date or closing of the stock transfer books, the time after the record date or closing of the stock transfer books within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board considers necessary or desirable. On receipt of a certification which complies with the procedure adopted by the Board in accordance with this Section 7, the person specified in the certification is, for the purpose set forth in the certification, the holder of record of the specified stock in place of the stockholder who makes the certification.
Section 8. MARYLAND CONTROL SHARE ACQUISITION ACT Notwithstanding any other provision of the Charter or these Bylaws, the Maryland Control Share Acquisition Act, Sections 3-701 through 3-710 of the Maryland General Corporation Law (“MGCL”), shall not apply to any and all acquisitions by any person of shares of stock of the Corporation.
Section 9. BUSINESS COMBINATIONS By virtue of resolutions adopted by the Board of Directors prior to or at the time of adoption of this Section 9 of this Article VII, any business combination (as defined in Section 3-601(e) of the MGCL) between the Corporation and any of its present or future stockholders, or any affiliates or associates of the Corporation or any present or future stockholder of the Corporation, or any other person or entity or group of persons or entities, is exempt from the provisions of Title 3, Subtitle 6 of the MGCL entitled “Special Voting Requirements,” including, but not limited to, the provisions of Section 3-602 of such Subtitle. The Board of Directors may not revoke, alter or amend such resolution or otherwise adopt any resolution that is inconsistent with a prior resolution of the Board of Directors that exempts any business combination (as defined in Section 3-601(e) of the MGCL) between the Corporation and any other person, whether identified specifically, generally or by type from the provisions of Title 3, Subtitle 6 of the MGCL without the affirmative vote of a majority of the votes cast on the matter by the holders of the issued and outstanding shares of common stock of the Corporation.
ACCOUNTING YEAR
The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.
DIVIDENDS
Dividends upon the stock of the Corporation may be authorized by the Board of Directors and declared by the Corporation, subject to the provisions of law and the Charter of the Corporation. Dividends may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the Charter.
Before payment of any dividends, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper
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as a reserve fund for contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine to be in the best interest of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.
INVESTMENT POLICY
Subject to the provisions of the Charter of the Corporation, the Board of Directors may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion.
SEAL
The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall have inscribed thereon the name of the Corporation and the year of its organization. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.
Whenever the Corporation is required to place its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(seal)” adjacent to the signature of the person authorized to execute the document on behalf of the Corporation.
INDEMNIFICATION
Any indemnification, or payment of expenses in advance of the final disposition of any proceeding, shall be made promptly, and in any event within 60 days, upon the written request of the director or officer entitled to seek indemnification (the “Indemnified Party”). The right to indemnification and advances hereunder shall be enforceable by the Indemnified Party in any court of competent jurisdiction, if (i) the Corporation denies such request, in whole or in part, or (ii) no disposition thereof is made within 60 days. The Indemnified Party’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be reimbursed by the Corporation. It shall be a defense to any action for advance for expenses that (a) a determination has been made that the facts then known to those making the determination would preclude indemnification, or (b) the Corporation has not received both (i) an undertaking as required by law to repay such advances in the event it shall ultimately be determined that the standard of conduct has not been met, and (ii) a written affirmation by the Indemnified Party of such Indemnified Party’s good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met.
Section 2. EXCLUSIVITY, ETC. The indemnification and advance of expenses provided by the Charter and these Bylaws shall not be deemed exclusive of any other rights to which a person seeking indemnification or advance of expenses may be entitled under any law (common or statutory), or any agreement, vote of stockholders or disinterested directors or other provision that is consistent with law, both as to action in his or her official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation, shall continue in respect of all events occurring while a person was a director or officer after such person has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of such person. The Corporation shall not be liable for any payment under this Bylaw in connection with a claim made by a director or officer to the extent such director or officer has otherwise actually received payment under an insurance policy, agreement, vote or otherwise, of the amounts otherwise indemnifiable hereunder. All rights to indemnification and advance of expenses under the Charter of the Corporation and hereunder shall be deemed to be a contract between the Corporation and each director or officer of the Corporation who serves or served in such capacity at any time while this Bylaw is in effect. Nothing
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herein shall prevent the amendment of this Bylaw, provided that no such amendment shall diminish the rights of any person hereunder with respect to events occurring or claims made before its adoption or as to claims made after its adoption in respect of events occurring before its adoption. Any repeal or modification of this Bylaw shall not in any way diminish any rights to indemnification or advance of expenses of such director or officer or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this Bylaw or any provision hereof is in force.
Section 3. SEVERABILITY; DEFINITIONS The invalidity or unenforceability of any provision of this Article XII shall not affect the validity or enforceability of any other provision hereof. The phrase “this Bylaw” in this Article XII means this Article XII in its entirety.
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Charter of the Corporation or these Bylaws or pursuant to applicable law, a written waiver or a waiver by electronic transmission from the person or persons entitled to such notice, whether before or after the time stated herein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any meeting need be set forth in the waiver of notice, unless specifically required by applicable law. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.
SUNDRY PROVISIONS
Section 1. BOOKS AND RECORDS The Corporation shall keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its stockholders and Board of Directors and of any executive or other committee when exercising any of the powers of the Board of Directors. The books and records of the Corporation may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. Minutes shall be recorded in written form but may be maintained in the form of a reproduction. The original or a certified copy of these Bylaws shall be kept at the principal office of the Corporation.
The Board of Directors may require any officer, agent or employee of the Corporation to give a bond to the Corporation, conditioned upon the faithful discharge of his or her duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors.
Section 3. VOTING UPON SHARES IN OTHER CORPORATIONS Stock of other corporations, associations or trusts, registered in the name of the Corporation, may be voted by the President, a Vice President or a proxy appointed by either of them. The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution.
Any notice or other document which is required by these Bylaws to be mailed shall be deposited in the United States mail, postage prepaid.
Section 5. EXECUTION OF DOCUMENTS A person who holds more than one office in the Corporation may not act in more than one capacity to execute, acknowledge or verify an instrument required by law to be executed, acknowledged or verified by more than one officer.
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AMENDMENT OF BYLAWS
These Bylaws may be repealed, altered, amended or rescinded by vote of two-thirds of the Board of Directors at a meeting held in accordance with the provisions of these Bylaws; provided that Sections 8 and 9 of Article VII of these Bylaws and this sentence may not be altered, amended or repealed by the Board of Directors unless it shall also obtain the affirmative vote of a majority of the votes cast on the matter by the holders of the issued and outstanding shares of common stock of the Corporation at a meeting of stockholders duly called and at which a quorum is present. In addition, to the extent permitted by law, these Bylaws may be repealed, altered, amended or rescinded by the stockholders of the Corporation by the affirmative vote of a majority of all the votes entitled to be cast on the matter, pursuant to a binding proposal that is submitted to the stockholders for approval at a duly called annual meeting or special meeting of stockholders by a stockholder (that provides a timely notice of such proposal which satisfies the notice procedures and all other relevant provisions of Section 12 of Article II of these Bylaws (the “Notice of Bylaw Amendment Proposal”)) (i) that owned shares of common stock of the Corporation in the amount and for the duration of time specified in Rule 14a-8 under the Exchange Act on the date the Notice of Bylaw Amendment Proposal is delivered or mailed to and Proxy Statementreceived by the Secretary of the Corporation in accordance with Section 12 of Article II of these Bylaws and Form 10-K are available atwww.proxyvote.com(ii) that continuously owns such shares of common stock of the Corporation through the date of such annual meeting or special meeting of stockholders (and any postponement or adjournment thereof).
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EASTGROUP PROPERTIES, INC.
Annual Meeting of Stockholders
May 11, 2017 9:00 AM
This proxy is solicited by the Board of Directors
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| The undersigned hereby appoints MARSHALL A. LOEB and N. KEITH McKEY, or either of them, Proxies for the undersigned, each with full power of substitution, and hereby authorizes them to represent and to vote all shares of common stock, $0.0001 par value per share, of EastGroup Properties, Inc. (the “Company”), which the undersigned would be entitled to vote at the Annual Meeting of Stockholders (the “Meeting”) to be held at the Corporate offices, 190 East Capitol Street, Suite 400, Jackson, Mississippi, 39201, on Thursday, May 11, 2017, at 9:00 a.m., Central Daylight Time, or any adjournment or postponement thereof, and directs that the shares represented by this Proxy shall be voted as indicated on the reverse.
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| This Proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. The Board of Directors favors a vote FOR Proposals 1, 2, and 3 and 1 YEAR for Proposal 4. If no direction is made, this Proxy will be voted FOR Proposals 1, 2, and 3 and 1 YEAR for Proposal 4 and will be voted in the discretion of the proxies named herein with respect to any additional matter as may properly come before the Meeting or any adjournment or postponement thereof. You are encouraged to specify your choices by marking the appropriate boxes, but you need not mark any boxes if you wish to vote in accordance with the Board of Directors’ recommendations. The Proxies cannot vote the shares unless you sign and return this card.
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| | Address Changes/Comments: | | | |
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| | (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) | | |
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| | Continued and to be signed on reverse side | | |
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